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There is a tight link between this problem of estimation, about which you have a clear intuition, and the problem of overall error measurement that concerns us here. They are, in fact, two sides of the same coin. That is because the best estimate is one that minimizes the overall error of the available measurements. Accordingly, if your intuition about the mean being the best estimate is correct, the formula you use to measure overall error should be one that yields the arithmetic mean as the value for which error is minimized.
Noise
Daniel Kahneman, Olivier Sibony, and Cass R. Sunstein
Roper was in a position to exploit all those inefficiencies. With his typical deal profile, Jellison could pay off nearly all the debt from a transaction in as little as three years. All cash could go to service that debt, as opposed to building new factories, paying off an environmental liability, or financing a customer. That quick debt paydown allowed for stepped-up dealmaking. With the high-gross-margin profile of his assets, each incremental unit of growth generated outsized profits and cash, but he didn’t need high growth to make his deals work. Jellison was willing to buy mid-growth.
Lessons From the Titans
Scott Davis, Carter Copeland, and Rob Wertheimer
Keeping your brain young is key. Seeing problems that are glossed over by others is useful. Coming up with solutions to those problems, using the vocabulary and thought process of a designer, is invaluable. Steve Jobs called it “staying a beginner.”
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