“Mankind has always sought to substitute energy for reason, as if running faster will give one a better sense of direction.”
Baruch was an American financier, stock investor, philanthropist, statesman, and political consultant. While the quotation above is about there being no prize for hyperactive trading in markets, the concept of confusing activity for direction applies to all human endeavors.
When we do not trade our energy well, we pay a penalty. This could be in the form of missed opportunities —we call it opportunity cost for this reason— or a heavy tax on our well being. Because we make the mistake of assigning value only to money —as in time is money— we forego choices that could be better for us in the long run for those that provide instant monetary gratification.
In Metaphors we Live By, George Lakoff and Mark Johnson say metaphors are pervasive in our everyday lives and they influence not just language, but also our thoughts and actions. “Time is money” permeates our realities:
You're wasting my time
This gadget will save you hours
I don't have the time to give you
How do you spend your time these days?
That flat tire cost me an hour
I've invested a lot of time in her
I don't have enough time to spare for that
You're running out of time
You need to budget your time
Put aside some time for ping pong
Is that worth your while?
Do you have much time left?
He's living on borrowed time
You don't use your time profitably
I lost a lot of time when I got sick
Thank you for your time
Corresponding to the fact that we act as if time is a valuable commodity —a limited resource, even money— we conceive of time that way.
But this is a relatively new metaphorical concept in our culture, more diffused in certain areas. “There are cultures where time is none of these things,” say Lakoff and Johnson.
Globalization and access are spreading more ideas, faster, yet our identity is still tied to many elements that are cultural —made of our heritage, environment, needs, and type of interactions we have in the world where we grow up and live.
If what we do is not delivering the results we seek, we often think we can fix that by increasing activity when we should reconsider what we are doing instead, and why we are doing it. It's worth remembering that we don't control our environment and are very poor at predicting or anticipating when a change will occur.
“What would I eliminate if I had a magic wand? Overconfidence,” says Daniel Kahneman. The author of a much celebrated best seller Thinking Fast and Slow and winner of the Nobel prize in economics:
... is downbeat about the capacity of his brand of psychology to effect change in the world. I imagine he would simply argue he’s a realist about human nature. And, indeed, studies showing that “skilled” analysts are hopeless at predicting the price of shares have yet to translate into mass sackings or even reduced bonuses on Wall Street or in the City. The same goes for evidence that the influence of a high-quality CEO on the performance of a company is barely greater than chance.
Kahneman and colleague Amos Tversky started their research investigating apparent anomalies and contradictions in human behavior. The evolution of that research provides the backbone to Thinking Fast and Slow. We make decisions and base our behavior on two systems. System 2 is the conscious, rational, sequential thinking we have come to worship in the West to over rationalize life. This is a slow system, because it needs to collect evidence and assemble proof.
System 1 is the intuitive system, and it's much faster. We use it to make decisions that “feel” right —many of which end up working— yet we often can't explain why they worked. Much of the wisdom that is passed down through generations is rooted in system 1-thinking. For example, natural medical remedies that work, therefore they survive over time.
But economies, markets, and most business environment are complex systems. Which is why we cannot predict things by following an exact scientific solution. It's too narrow for the job.
In a complex system intelligence and rationality are not the same thing, yet we mix them up. We can have an intelligent or astute, clear cut rule without it being rational, the brain shortcuts on habits. When we write for the wrong OS —i.e. the rational system 2 instead of the instinctual system 1— we have a lot of wasted energy.
To make better use of instinct we should learn to use heuristics. A heuristic is a rule of thumb the brain uses to choose fast. For example, if something feels too good to be true, it probably is. In Rules of Thumb: 52 Truths for Winning at Business Without Losing Your Self Alan Webber says, “Even in times of great change, the fundamentals of a well lived life and work well done stay constant —we are in charge of our own experience.”
Would we say we're our own best teachers and learners? Experience and observation can come to our rescue to make sense of change and learn from what works. For example, one good way to use reason in business is focusing less on implementing solutions, and more on preventing problems.
Companies still don't apply early intervention and prevention in something as basic as customer service. After a company has thoroughly alienated its customers with poor service, lousy attention, and insulting marketing pitches, it then tries to make it up with insincere apologies.
At the top of major corporations leaders habitually look the other way when they know a serious problem needs their attention, hoping the day of reckoning won't come on their watch. Or they pound the table and demand a fix —without ever acknowledging that their inattention to the root cause of the problem only drives up the cost of a solution, which is often not a solution but only a palliative.
But there is another component to human nature, and all it takes is practice: look reality in the eye, establish an honest assessment of the real nature of the problem, look upstream to see its trues causes, and then roll up your sleeves and attack it early, deeply, and effectively.
Another name for prevention is preparation. Rather than adapting, readiness helps us stay more on the rational side and invest our energy better.
Human behavior is not mathematical. We may not be able to use reason as much as we would like to, because of our strong focus on the things that are numerically representable, as in “time is money,” but we can be more prepared to adjust to circumstances.