A Second and 34 Years

The Connection Between Trained Intuition and Mastery

Paula Scher is a designer and graphic artist, responsible for designing some of the most recognizable logos around the world, including the Citibank logo (story below), and the High Line logo for any of my NYC based readers. She was also the first female partner at Pentagram, the legendary UK design firm that was founded in the 1970s.

Paula moved to New York City from Pennsylvania in 1970 to pursue a career in design, and took her first job at Random House in the children’s book publishing division. Shortly after, she left to work at CBS Records and then Atlantic Records, stringing together a 30-year run of legendary album cover designs and typefaces, all before the year 2000.

As someone whose designs are still highly sought after today, it’s clear that Scher has mastered her craft. Her mastery is revealed in one of my favorite stories about business, bureaucracy and intuition.

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In 1998, Citibank and The Travelers Insurance Company merged. They hired Paula to create a new logo. As the legendary story goes, in their first meeting, Paula drew what became the iconic Citi logo on the back of a napkin.

As Scher got up to leave the room, someone from the Citi team asked, How can it be that it’s done in a second?

“It’s done in a second and 34 years,” Scher replied. “It’s done in a second and every experience and everything that’s in my head.”

This is an example of both mastery and intuition at work. Intuition, and more importantly, trained intuition, is what happens when decades of learning and experience presents itself in a singular moment or decision. Trained intuition can be more valuable than knowledge, IQ, and even data. Trained intuition is so effective, that it’s often disguised as a lack of effort or proficiency. You made it look too easy. In fact, to those who don’t possess it, trained intuition looks the same as untrained intuition. That is, taking mental shortcuts before the work has been put in to reach the mastery stage. It can also fool the outside observer into believing they can do the same thing. This couldn’t be further from the truth.

The Citi executives evaluating Scher’s logo were using their untrained intuition to judge someone with trained intuition. I guess if you paid $1.5 million for a back of the napkin logo drawing, you might react the same way they did. But that would not be correct.

As Scher’s career went on, she experienced this same problem repeatedly.

“A lot of clients like to buy process,” she explains. “They think they’re not getting their money’s worth [if] you solve the problem too fast.”

After that initial meeting, Scher said,

“There were a million meetings…What if you do it this way, or that way? Show it to me on stationery. Show it to me on a card. What if we flip the colors? It’s got to be red on top and blue on the bottom. What do you do with the blue wave? Is it something you use in retail? What if you put that back on the credit card?—those were all the things that were being worked out for nearly two years before the thing launched.”

Ultimately, after two years, feeling like they got their money’s worth—Citi went with Scher’s initial sketch, and she was taught an important lesson.

“The design of the logo is never really the hard part of the job, Scher said. “It’s persuading people to use it.”

Trying to persuade people to use trained intuition sounds next to impossible. Fortunately for us investors, we are just tasked with improving our own.

The lessons we can learn from this story are many.

Solving a problem quickly may have nothing to do with solving it proficiently. The two are not mutually exclusive. In fact, to effectively utilize trained intuition, the work is completed beforehand. Scher wasn’t paid a dime by Citi until 30 years into her design career. That logo was the result of who knows how many completed designs, good and bad, and as she mentioned, ‘everything that’s ever been in her head.’

The business of investing requires the development of one’s trained intuition. To be able to rely on ‘everything that’s ever been in your head’, you first have to fill it.

Looking back, it pains me to think about the amount of times I attempted back of the napkin work on an investment idea, only to lose my shirt when my mental shortcuts didn’t pan out as expected. I like to keep things simple, but I was confusing untrained intuition with trained intuition. Some investments even worked out well, causing me to at times lean even further into my untrained hunches.

Every investor needs more things in their head. More time, more reps, more mistakes. Then, and only then, can you effectively utilize intuition. I am still learning this lesson, but I became a better investor when I committed myself to training my intuition, as opposed to taking shortcuts under the guise of simplicity. I just recently intuitively connected work I did on something years ago, to an idea today. We’ll see if I end up on the correct side of my intuition, but it took a lot of work to be able to do that.

After digesting the Paula Scher story, I thought of Warren Buffett and George Soros.

We’ve all heard the legend of Buffett being able to close large deals using a single page term sheet, or how he can distill valuations into a few lines on the back of a napkin. Most readers are also likely familiar with George Soros’ back pain, alerting him to a problem within his portfolio.

In an old interview, Soros’ son Robert goes into more detail about his father’s habits:

“I mean, you know [that] the reason he changes his position on the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm and it’s this early warning sign.”

Soros has admitted to relying greatly on “animal instincts”, saying the onset of acute pain was often “a signal that there was something wrong in my portfolio”.

His decisions, then, “are really made using a combination of theory and instinct”.

In the 2013 Berkshire Hathaway letter to shareholders, Buffett outlines his purchases of two different properties in 1986 and 1993, a farm in Nebraska and a building located on the NYU campus.

The letter is 23 pages long and contains 15,000 words. Not one of those words is intuition. Yet, that’s exactly what those purchases were driven by. Buffett was decades into his investment career in both instances, and likely came to his purchase decision within minutes.

There’s also a great story that took place during the financial crisis, prior to Lehman Brother’s failure. Buffett was called in as an emergency lender, and flew to NYC to meet with the Lehman Board. Buffett claims he read the Lehman 10-K on the way to the meeting, and ultimately turned the bank down based on multiple red flags he found.

If you buy that, I’ve got some beachfront property to sell you. The decision was made way before he even got on that plane, and if it wasn’t, he thought about the few key things that mattered to achieving his hurdle and protecting his capital, based on decades of experience. There’s a lot in his head. I would need much longer than a plane ride to come to the same conclusion.

It would be a losing effort to try and emulate Buffett’s intellect or decision making abilities. Just because someone makes something look easy, doesn’t mean it is. But we can improve over time. Trained intuition is available to the prepared mind.

According to the late Daniel Kahneman, who studied the effects of gut instinct for decades, intuition can be effective, but only when it meets three conditions.

• First, there must be some regularity to the field, or a finite set of outcomes. The example here would be the limited amount of options available while playing chess

• Second, feedback needs to be immediate. It’s very difficult to develop intuition when the feedback loop is delayed or longer

• Third, you need frequent and numerous opportunities to hone your expertise. In other words, practice.

While stocks and the broad market fail to meet the criteria of regularity (as does design), intuition can still be trained. The way you get there is to practice, practice, practice, and then try to reject, select and connect.

As described in Nietzsche’s Human, All-Too-Human assembling, ordering, and reordering is the ultimate skill of the great artist or thinker. “It is to the interest of the artist,” Nietzsche writes, “that there should be a belief in sudden suggestions, so-called inspirations; as if the idea of a work of art, of poetry, the fundamental thought of a philosophy shone down from heaven like a ray of grace. In reality, the imagination of the good artist or thinker constantly produces good, mediocre, and bad, but his judgment, trained and sharpened to a fine point, rejects, selects, and connects…All great artists and thinkers are great workers, indefatigable not only in inventing, but also in rejecting, sifting, transforming, ordering and arranging.”

Do this for decades, and you’ll likely arrive in a similar spot as Scher, Soros, and Buffett.

Those three perfected their intuition through an intense learning process. Today, they possess both an intellectual understanding and body sense of what to do. So much that it’s become second nature. The Citi logo was second nature. Soros sells down his portfolio when he feels it physically. Buffett is so great at decision making because much of the upfront work was completed long before he makes today’s decision. Practice crystallizes cognition into intuition.

This is why you often hear musicians having a song idea while in the shower, writers crafting a book while sitting at a bus stop, or investors developing a differentiated insight while relaxing on the beach. This is a form of mastery. Having codified lessons in your brain that your subconscious can pull on when you least expect it. Or when you need it.

Scher had one last thing to say about this topic during an interview about her process.

You’ve talked about the power of free association and how you do some of your best work in mundane moments. Is that something that you build into your process, or do you just take advantage of those moments when they happen?

Scher’s response:

I realized this when I analyzed how I got ideas. Sometimes I feel more productive and can do things quickly while at other times, I’m really struggling with it.. I’ve found that the worst thing for me is thinking about too much. I’m intuitive, and my first idea is likely to be my best because I usually come to it at some point where I’m thinking about something else.

I use taxi-cabs as an analogy because I take a lot of them in New York City, and I’m generally bored in them. So I’m looking out the window and thinking about something else, and suddenly I’ll get an idea or figure out how I’m going to solve something. By the time I get to the office, I know how to do it.

Any one of us could spend the next month riding around in taxicabs. We aren’t stepping out with the information that’s in Scher’s head, or in Buffett’s head.

So practice. Recognize your mistakes. Iterate. Rinse and repeat for decades. Mastery will happen as you fill your head. It will happen not when you know everything, but when you know everything you need. That’s how you invest billions of dollars, and sketch an iconic logo.

On the back of a napkin.

Adam Wilk is the Founder and Portfolio Manager of Greystone Capital Management LLC, a microcap focused, value based investment firm. He enjoys highlighting the connections between various disciplines and writing about the intersection of investing and creativity.