Conversation Agent - Valeria Maltoni

To Lead You Need Thought. This is How it's Made.

“Thought leadership” is a common expression we use with varying definitions. How we define a term says a lot about culture. When I wrote about the topic, I boiled it down to:

The simplest definition of leadership is the ability or capacity to lead. If thought lends credibility to the expression, this part gives it direction and coherence. Can we separate the big ideas from other kinds of thoughts?

Definitions help us navigate thought. At the atomic level, words are the smallest meaningful unit we use to form thoughts and actions. I'm not forgetting sounds, which are inside words and especially useful as we transition to voice commands.

But we're not yet reduced to grunts in our communication. Accents and cadence matter to the rhythm of conversation to convey meaning. Our command and range of words is changing.

Change is part of life, the people we meet and experiences we have change us. We change in response to our environment. But technology has escalated the demand that we adapt to change rapidly.

Each phase of change comes with great benefits in our thinking and our ability to create new worlds — as well as costs.

The birth and development of thinking

When we're children, we connect more readily with things that are physical and human. Because we're experimenting with what it feels like to be alive, and learning is part of our survival strategy. Our environment provides enough stimuli — in good and bad — from which we can draw and learn.

On balance, if we're lucky we're able to invest of our natural curiosity to soak up life's lessons, rather than coat our senses with impermeable defenses because of difficult circumstances. We paint, talk our thoughts out loud, and ask a thousand “why” questions all day long. That's how we find the words to put into writing and populate our dreams and imagination.

As we get older, we refine our technique with practice and the influence of the people and situations we experience. We start collecting the things of others in an attempt to make sense of what we're thinking.

Then our drawings, writing, and talking start reflecting what we're experiencing. This is a new threshold of awareness. We sing ourselves into existence in more than one way.

We may not have the ability to tell who's doing the editing or where the motivation is coming from, but we get words out of the process. We latch onto expressions and terms from culture and social experiences. That's how we try on thoughts and drive our actions.

But these words and thoughts might be fleeting, and thus fragile over time.

A corollary to this phase is that we may discover data and associate it with more durable properties. We begin to seek evidence and data as a means of gaining insights. We're currently experiencing the human version of adolescence in business, for example. The insights we can gain from data are still pretty limited and insufficient, they don't teach us anything new. Nor they tell us where we want to go.

Maybe we can focus the lens enough as we look at the data to see better and learn more. It's an argument we're considering with artificial intelligence (AI). However, many commercial applications are still tracking and measuring the stuff that is easy to track and measure, rather than what we want to know about the future.

It's hard to get life out of data.

Like a painting or an infographic becomes interesting and long-lasting when it contains a deep insight as the organizing principle, so do our thoughts, words, and actions. If you're just adding aesthetics to something, you're not making it meaningful.

Life is in real world situations. When we get out of our office and our heads and observe what's going on around us. This is a step that is becoming rare. When we do step out, we can learn to see a lot. Yet young people are not leaving their apartments anymore#. Going out is too much effort, researchers found.

Digital life is a performative stage — the thinking goes that online we're both safe and comfortable. Online we have the illusion that something is happening, without putting actual skin in the game. Online, our solitude can mimic the solitude of others.

But thinking needs both words and action to flourish, that's how we get feedback. Conversation is thought in action, for example.

How we scale thought

As individuals we have limited scale. You and I can do, process, and think about only so many things at once. In the haste to do and think about as many things are possible, we limit depth. Our words become more efficient. But we trade off meaning.

We also cannot access what other people are thinking. As you're reading this, there's an inner conversation you have that is off limits to me. The good news is that parts of inner conversations download into relationships over time and parts spill into physical things. When we talk and make things together, we enrich our thinking vocabulary.

At some point, we turn our search for meaning from the outside world to our inner world. We explore our thoughts and actions. Sometimes it's easier to borrow the words someone else thought about and apply them to our context. Like I did above with Ferrari. We reference the insight behind what someone else says because of what they make us feel.

The time and energy limitations force us to close doors on some experiences in favor of others. Editing in this stage may be a tool of necessity. We need to stop adding new words to operate in a specific place. To climb faster, we discard or park thoughts as we would things.

Memories are our storage space for parked thoughts. We used to put the words into diaries and entrust them to the care of friends, now we put them online, spreading them widely, often forgetting what we said the minute we write it. Worse, we forget to think through what we want to say. A thoughtless comment is a waste.

What kinds of thought are we scaling in a wasteland?

Building engines

A blog is an example of evolving thinking through words over time. Social media, not so much. Evolution comes from conversation — with thoughts and also through the act of building something.

Likes and traffic give us ego boosts engineered to build cash reserves for a certain business model. We end up watching them, instead of observing and feeling the person and situation on the other side of the conversation. A learning opportunity missed.

I'm an idea person, and I've always gravitated toward activities that would allow me to build tools. When I was little, I used to convert the boxes my sisters gifts came with into environments for them to play. Once I built an entire apartment building with rooms their dolls could use to do things together.

I look at conversation the same way. Conversations create spaces to put words to work. They in turn build our thinking. After we build thought through experiences and encounters, this is how we scale.

Enrico Fermi was the last physicist who could embrace the whole of his science.  He excelled in both theoretical and experimental physics. As a person he was simplicity embodied. He liked a good game, and disliked complicated theories. hence why our quick back-of-the-envelope calculations became the “Fermi method.”

His scientific work has stood the test of time.

Toward the end of his life, Fermi questioned his faith in society at large to make wise choices about nuclear technology. He said:

Some of you may ask, what is the good of working so hard merely to collect a few facts which will bring no pleasure except to a few long-haired professors who love to collect such things and will be of no use to anybody because only few specialists at best will be able to understand them? In answer to such question[s] I may venture a fairly safe prediction.

History of science and technology has consistently taught us that scientific advances in basic understanding have sooner or later led to technical and industrial applications that have revolutionized our way of life. It seems to me improbable that this effort to get at the structure of matter should be an exception to this rule. What is less certain, and what we all fervently hope, is that man will soon grow sufficiently adult to make good use of the powers that he acquires over nature.

To lead we need thought. This is how we make it.

"The Transparency Sale" Explains Why Unexpected Honesty Works

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Ask any person, and they'll tell you they avoid being sold to by anyone—even on behalf of the brands they love. We may enjoy buying things, but on our own terms. To vet products or services we rely on ratings and reviews, word of mouth, and the opinion of the people we know.

Flip the situation and now we're the ones selling—even if it's only an idea. How do we convince the other person or party to hear what we have to say? Are we comfortable communicating the value of our product and service knowing they've done their research, just like we do?

I forgot who said it first, “nothing happens until someone buys.” It may be a little extreme as a statement, but it rings true. This is especially true for businesses that sell to other businesses.  

The Transparency Sale offers a path to selling that doesn't feel icky—on both sides of the transaction. Todd Caponi says, “A newish, top priority for marketers is the need to know what buyers will find when they look — and help their organizations lead with self-aware authenticity.”

Three layers of value

When I read a book, I examine the ideas in three ways—as a learner, as an author, and as a practitioner. Here's my take on The Transparency Sale.

First as a learner—the book starts by redefining transparency based on the brain and decision making and buyer empathy. Caponi explains why doing it right matters and proceeds to make the case for change. The next three sections expand on the question of why change? Why you? Why now? Section five outlines why stay, buy more and advocate. A bonus chapter is about applying transparency to things like job search, recruiting, requests for proposals and more. Simple charts and graphs visualize some of the key concepts. The chapter on mutual decision plans is quite useful in complex sales where more than one decision-maker is involved.

Then as an author—the book is structured as a logical progression of questions, each with a few chapters to explain different aspects of the answer. The afterward about the end of lying drives home the message with a relatable personal story.  Keepers at the end of each chapter summarize the key concepts. Caponi weaves brain science with his sales experience to make the case for transparency. “The second the buyer’s brain senses insincerity, ineptitude, or inconsistency, their brain’s ‘uh-oh’ alarm will sound off subconsciously.” 

Third as a practitioner—unless our mindset about what needs to happen changes, our strategies and tactics are not going to change. What Caponi says rings true from experience, “buyers don't trust what marketing and sales put out anywhere near as much as their accelerating dependence on reviews and feedback. This content is now easily accessible across every channel - used by buyers to better attempt to predict their experience with you, your products and services.”   Based on his research and work, being honest increases the number of qualified opportunities, the average deal size, and the likelihood of closing the deal — and decreases the length of the selling cycle. 

The book offers practical strategies for implementing this type of sales process. It describes the process from email strategies to how to get and why to get references, to negotiating strategies and dealing with legal.

My highlights

This section is about the key actions or takeaways that I'm going to implement—or do differently— because of what I learned in the book.

We so dislike being sold to that we've gone from hiding in our own homes when doors to door sales people approach our neighborhood, to not answering the phone at dinner time, to ignoring emails within the span of ten years. 

Yet email is an effective tool when we learn to empatize with the buyer's inbox. Technology is changing the way people buy, and it can help us change the way we sell, too. The chapter on email contains a very detailed walk-through of what blends in and what stands out.

I read an email pitch recently that was a soft sales pitch using almost every motivational angle.  It tried the celebrity worship angle, the “I'm trustworthy” angle, the personal connection angle, the patriotic angle, the “insider” angle and the FOMO/trendy angle. It read like someone throwing spaghetti at the wall, hoping something sticks. 

Most importantly, it felt insincere, because if things were going so incredibly amazingly awesome, why send out these e-mails?  When people are that wonderful, other people will tell them or they will know.  

If you want to get someone interested in you and what you have to offer, the first step is to show them you are inerested in them. To show them you are interested in them, you must actually be interested in them.

It seems obvious, but clearly so many miss the point. Personalized value lasts, while gimmicky tricks don't go anywhere, as in my example above. 

On mutual decision plans Caponi says:

It is important to remember that with every interaction, you're eigther building trust or eroding it. Using a mutual decision plan builds confidence that this isn't your or your company's first experience addressing the issues that will arise during the purchasing process.

On presenting, he says your last slide shouldn't be a question mark. That slide should contain the information you want people to remember—two key points. 

How behavior spreads

The reason why I talk about behavior may seem obvious—unless we observe what people do and and understand how actions spread, we won't get to the root of motivation. And motivation is one of the powerful human levers, along with availability and triggers, that get us what we want.

There are many things we can do to create rapport before we try to sell something. But it's the post-purchase interaction that will determine if we were successful or not. In other words, signing the contract is the beginning of our relationship, not the end.

It's important to stay involved in the relationship—sales and marketing people are not done. An email confirming the purchase and outlining what will happen next creates the bridge to the team that will deliver the work. This sets the tone for the engagement and carries the momentum forward.

Our behavior is more likely to fall into step with a process when we have an idea of how things will go. When a team is involved in delivering a service or product, a good way to get on the same page is to hold a kick off meeting outlining—the buyer's objectives, why they chose you, a reminder of what they purchased, and introductions.

How we behave at each stage of a collaboration either builds trust or erodes it. Companies that sell directly to consumers are not off the hook. Customer support and the service team are an extension of the team behind the product and service. If the experience is not the same, we know it.

We don't like being sold to, and we don't like having to call support. “Your customers don't want to talk to you,” says Caponi. We really don't. And we really don't want to fill out a survey after troubleshooting. If you learn these simple behavioral norms you're halfway there.

Clients who choose to move on and stop doing business with you will likely give you the logic for their move—little ROI. But dig a bit deeper, and you will find a “feel” answer. Something didn't feel right. Feelings will get you every time, and they spread from one person to a whole team.

Honesty is the best policy

We don't expect honesty. But when we choose to be honest, we lay the ground work for a potential long-term relationship. If the person who emails you out of the blue with a soft sell using every motivational angle were honest, the message would likely come across and might have impact.

Feelings and emotion drive how we make decisions, then we justify them with logic and rationality. We respond to genuine interest, we read it in the tone of an email as we do in the inflection of someone's voice. 

Our brains are wired to make decisions with emotion and gut feelings. We move toward a reward and away from risk. Dr. David Rock created a model to talk about how we make decisions. The five domains of feeling include:

• the relative importance of a purchase to others (status)
• how we feel we can predict the experience (certainty)
• our perception of a sense of control (autonomy)
• whether the purchase will perform as we expect (relatedness)
• a cost/value assessment (fairness)

Plus, we make over 90 percent of our decisions subconsciously. All these reasons and the fact that we resist influence make a case for honesty as the best policy.

I'd give The Transparency Sale a 4.2 star rating. And that, says Caponi, is reason enough to read it. It's a departure from the typical sales book, and this might add an incentive to check it out.

 

"The Strategy Book" Bridges the Gap Between Thinking and Taking Action

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Say “strategy” to anyone and their eyes glaze over. It's not that we don't understand the value of strategic thinking, we do. But there's never enough time to do a proper job of it.

Market pressure seems to override a desire to learn more about the problem—or focus on the right one—the context, and the players. We often don't know enough even about our own business.

Action is how we show results, we reason. Yet, we'd still want to focus on the right actions, making good decisions, understanding competitive pressure, engaging our team, and using a proven process.

If you've ever felt you could use some help thinking strategically about your doing, The Strategy Book will get you there. It will ever teach you how to sell your strategy, not to mention how to measure progress.

“Strategy is moving from where you are to where you want to be,” says Max McKeown. “Smart strategy is the shortest route to desirable ends with available means.” It should include what we're not going to do, along with an intelligent reaction to what others are doing.

Strategists see the past, present, and future as connected and think beyond the tactics.

Three layers of value

When I read a book, I examine the ideas in three ways—as a learner, as an author, and as a practitioner. Here's my take on The Strategy Book.

First as a learner—five of the six parts in the book are about the challenges of creating the strategy and making it work. This is the most important part for success; a compendium of the best ideas on strategy in a format that makes it easier to access and use them. Anyone who's ever tried to teach something knows how hard it is to translate what we know into what other people could use. Starting with “what” we need to think about is a good approach for this topic. The toolkit follows.

Then as an author—the structural organization makes it easy to dip into any of the main questions around strategy like how frequently should I do this? Who should be part of the team?— starting with “your strategic self” and “thinking like a strategist,” to “creating your strategy,” “winning with strategy,” and “making your strategy work.” Each part includes a description, examples, ratings, objective, context, challenge, success, measures for success, checklist, and related ideas. The models and tools section includes diagrams and simple explanations of how you use them. 

Third as a practitioner—here the most important question I ask is whether I would be able to incorporate the learning into my work, both in mindset and practice. The strength of the book here is its organization. McKeown summarizes the answers to the common questions you should address, so you can feel prepared to engage the rest of the organization (or your client) right from the start. The best (or most perfect) strategy will fail with no buy-in or ownership. I love the attention to addressing what could go wrong along with the pitfalls of negative thinking. While we should focus as much as possible on preparing for the future, learning to adapt ranks high on successful executions.

The book is written for business leaders with profit and loss (P&L) responsibility—general managers, Vice Presidents, Chief Strategists, CEOs, Presidents, COOs, advisors, and professionals who teach strategy.

If you're a student, you might want to get your hands on it. You'll learn to ask better questions, how to pay attention to market signals, and how to maintain coherence of vision through change.

My highlights

It's often difficult to see how our lives are the product of many decisions and consequences. Businesses face the same challenge. Every company starts with a decision, and from there on, we can see how good or bad each new decision was only after the fact.

Strategy decisions are meant to be about the big picture but some big decisions turn out to have small impact. And often there are small decisions that have a big (or strategic) impact. There are also decisions that appear to be urgent and those that seem less urgent.

We're all aware that priorities matter. But what comes first could change, and different kinds of decisions have different kinds of impact on strategy. This is an example of digging deeper into the question based on context.

The more complex the challenge, the more important to know what we're dealing with. Customers are not just waiting for us to decide, or make a move. They have their own lives to run. “It's hard for people to focus on anything outside their immediate surroundings,” says McKeown.

Anything new coming at us creates more cognitive and material work. Often survival is based on not questioning the way we do things... up to a point. This reminds me of a chart that illustrates the lifespan of the average S&P 500 and that of human beings.

Organizations are dying at a faster rate because they don't calculate the full commercial ROI. Energy is not a consideration so they miss the value of reputation, trust, and brand. Where regulatory pressure or monopoly situations don't protect them, not considering the social and intellectual costs can be disastrous.

It's a slow decline, thus not obvious as we optimize our way into a cliff. Amazon's Jeff Bezos says:

To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.

Fewer transactions, product and service commodification, difficulty attracting and/or retaining customers, and higher customer acquisition costs are just some of the symptoms of a low energy business. Money alone doesn't buy happiness... or longevity.

Before we go ahead and change the game, it's useful to understand the kind of game we're in. Victory is never final, especially if we don't survive it. Avoiding screw-ups is as important as creating winning strategies. This is the most valuable advice in each chapter of the book.

How behavior spreads

A strategy is only as effective as its implementation and it must be a fit to the situation. Winning direction is not enough—if people and teams don't engage with a course of action, it's not going to be effective.

Standard recipes don't work, as it doesn't work when you just copy tactics. But the most important lesson is that leaders fail when no one is following. It's not enough to be smart or to be right to make a difference. Followership matters.

Strategists help companies use what they do best to their advantage, and want to do it, or help them know what they don't know, and want to learn it. We can use the process of strategy to “increase the real-world value of the ideas and icrease engagement with the strategy.”

Process is how we spread ideas and engage others. We need to consider what we intended, but also what emerges from the way people do things, our strengths, collective knowledge and behaviors.

In other words, to succeed it's critical we prepare people to participate. For behavior to spread, we need to address what the strategy looks like at every level of the organization. This involves change.

Two key aspects of managing change are: 1./ saving effort arguing about what to change, and 2./ focusing on the right action to make it happen. Clarity helps with both.

Making your own circumstances

We can learn and adapt from the most successful strategists. But to make something of our work, we must first make it clear what strategy is and what it's designed to do. The business of shaping the future is not a solitary pursuit.

There are five fundamental questions we can use to clarify our own thinking and communicate value and direction:

1. Where are we?
2. Where do we want to go?
3. What changes have to be made?
4. How should changes be made?
5. How shall we measure progress?

The answers are interrelated—change one, and you impact the others. A good strategist has opinions and knowledge, that's how we navigate our work. Many of the tools can help us help others get oriented and create a sense of ownership.

You're probably familiar with the SWOT, an analysis of strength, weaknesses, opportunities, and threats. Or know about Porter's Five Forces of competition, general strategies, and value chain and value systems.

The tools section includes many more techniques and best practices for scenario planning, growth models and handling change. You can use what's appropriate based on your circumstances. Practice by finding examples from your experience, and apply what you're learning.

I hope The Strategy Book will give you better questions and tools to succeed at whatever you're pursuing.

4 Ways Technology Impacts our Ability to Make Decisions

This post is part of a new series on conversations worthy of attention. New email subscribers will receive it as part of the weekly digest.

Marshall McLuhan observed the effects of media and technology. “The medium is the message,” “We become what we behold. We shape our tools, and thereafter our tools shape us,” and “First we build the tools, then they build us,” are three ways of talking about the impact of technology.

True to the Canadian educator and communication theorist observation that “Every society honors its live conformists and its dead troublemakers,” we're still working on our understanding of the effects of media and technology on business and human behavior.

Jennifer Sertl says it's important to reinforce the usefulness of being human, rather than thinking of humans in technological terms. We don't have an on/off switch, for example. Our presence impacts people at a deep level—through feelings and emotions.

In an interview with rdigitallife#, she says technology evolves so gradually that, if we're not careful, we could lose our humanity without even noticing. We're losing our ability to do four things that impact decision-making:

1. scenario-plan — this is a strategic method we use to make flexible long-term plans. We create different scenarios for different future landscapes, so we can make better decisions when problems or changes occur.
2. gain perspective — growth is an imperative in business. As we grow, we have a certain way of looking at what happens. When we see things from a different perspective, we gain a broader appreciation of the world. 
3. know ourselves — the aphorism know thyself is ancient. It's about understanding one's own emotions, desires, and abilities. We cannot set goals, go about life, and have successful relationships if we don't know who we are or what we want.
4. empathize — empathy is the capacity to understand or feel what another person is experiencing from within their frame of reference. It has four important attributes. Cognitive empathy works in tandem with reason. 

These are the things that separate us from the gadgets. 

Our ancestors were tightly connected with each other, which is why they felt only the pain of their family and the people in their village. As we started to travel more and learn new things, we expanded the circle of sympathy to the clan, the tribe, the nation, the race, and maybe all humankind.

It was a process that at its origin had what physicist David Bohm called “participatory thought” — in some cultures there was a shared understanding that everyone was part of the same experience. In his excellent On Dialogue, Bohm explains the meaning of participatory, it's about “to partake of,” and the idea was everyone drew from the same source of energy.

There's more reason to it. 

For the ambitious, near enough may not be good enough.

These are things we can control through our values and principles. Value never disappears, it just shifts to another place. Technology is a useful tool. But we need to reinforce the usefulness of being human to drive innovation.

How much screen and app time is enough to program us? Can you separate how you hope to be from how you're being with your actions in social networks?

 

"The Formula" Explains the Hidden Patterns that Separate the Best Seller from the Flop.

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Failure has become a badge, a rite of passage on our way to success. But generally-speaking nobody likes to fail, or even wants to think about it. We enter every project and new venture with a sense of adventure.

It's easy to talk about failure from the gold medal podium. Western culture doesn't look upon people who fail to succeed kindly. Unless you can draw a line from failing your way up the ladder to more money and bigger glory, we're just not interested.

Yet any study of success needs to start where things are not going so well. Albert-László Barabási, a self-professed tinkerer, started with disaster. A lifelong student of whore and how links form, Barabási loves to understand the math behind our social fabric.

Numbers provide a framework for figuring out the essence of how we're connected. Hence, why the title of his book, The Formula. The subtitle explains what he set out to break down the mechanism that create success, hence The Universal Laws of Success.

The title sounds gimmicky, but the focus is worthy—the science of networks and how success is the product of collective work. Barabási puts some meat behind the statement, “Your success isn't about you and your performance. It's about us and how we perceive your performance.”

We find the same principles for influence—it's about the influenced. There are hundreds of questions we'd love to answer, from success to achievement and reputation. 

“Is it our performance that pushes us the corporate ladder?”

“Do we get less or more creative during out lifetimes?”

“Should we collaborate or compete with superstars?”

Three layers of value

When I read a book, I examine the ideas in three ways—as a learner, as an author, and as a practitioner. Here's my take on The Formula.

First as a learner—the book follows a logical progression. It starts with a personal introduction to connect us to the question, then the history of how he got to the structure. Barabási presents the scientific method he used to reverse engineer success based on the complex but consistently reproducible mechanisms that orchestrate positive outcomes. Before we can learn about something, we need to define what “it” is, what it means in our context. Hence the definition of success as “the rewards we earn from the communities we belong to.” Are you a collaborator? The recognition is important. Are we talking about a brand? Then visibility matters. Are you a business? Then revenue is critical. Do you hope to make a difference in any field? Then we're talking about impact. I love positive impact, it's in my Twitter bio for a reason. 

Then as an author—structurally, I look at how the information is laid out. Where does the book belong to as a topic? Does it include primary research or just secondary, or merely anecdotes?  Does the evidence balance out the stories? The simple logical progression from first to fifth law is easy to follow. Questions underscore each chapter and help us make important distinctions. For example, between success and achievement. Both rewarding, but with quite different contributions to the substance of our lives. Each chapter begins with a summary of the law, which you can use as a shorthand to review the material later. There are no diagrams. You won't miss them.

Third as a practitioner—here the most important question I ask is whether I would be able to incorporate the learning in mindset and practice. The book's design is to affect how we think about “success” and what we do with that information. It's like when you learn about the theory of flight, and understand the laws of aerodynamics. Or when you're learning how to drive and friction figures in it. For the boaters among us, it's about fluid dynamics. The Laws of Success are similar, says Barabási. We've got to use the insights that are appropriate to how we work. We've got to understand the forces that boost our performance, or we won't be able to repeat the outcomes.

Overall, the book is fascinating. After the introduction there's a story, then 10 more chapters, each law taking two to explain, except for the fifth law, which has only one chapter after which is the conclusion. Several of the notes are worth annotating as well.

Plus you'll learn how Einstein became the most quoted lovable genius.

My highlights

“How do networks—social and professional—affect our access to success?” In an age where it's become harder to be dis-connected than the other way around, this is a vital question to explore. Barabási says success is a collective measure, it's how people respond to our performance.

We do a lot of performing in social situations, online and offline. To figure out how we're doing, we need to study our community and other people's responses to our contributions. It's a collective effort. We put in the work, the others put in the recognition.

Of course, quality and competence need to be there. But if someone accomplishes incredible feats without anyone knowing... or appreciating, it ends up disappearing. They say the winners write history. A similar concept might apply to success.

This is something Enrico Fermi understood well. As one of the first physicists in Italy, he learned German and English so he could publish his research in the journals his community of peer scientists read. 

Any of us has a hard time seeing the impact we have on our networks of family, friends, colleagues, etc. We'd have not to be there to see the control. Just like in the movie, It's a Wonderful Life.

The exceptional rewards of athletes and celebrities are not linked to day-to-day performances. Instead, they reflect the cumulative visibility generated by their wins and losses. Performance is the starting point, along with ambition.  

In education, comparing two schools, one superior in every way from the teachers to the other students, and the other a regular school finds something interesting:

What the data tells us, is that the difference—despite what parents think, teachers suggest, and principals claim—is not because the school enhances their performance. It's because high achievers continue to excel no matter what education a school offers.

It's the superior collective SAT score of who shows up that makes the school superior, not the other way around. The student matters. Two Princeton economists studied the long-term factors of success of college graduates. They found that it derived from the best college a kid applied to, even if she didn't get in.

Confidence and self-belief need to match strong performance. It seems obvious. But what if performance is hard to measure, like in art or the less tangible professional services? The meaningful connections we build around them shape out perception and determine the market price.

You can go through each law and find examples of how it plays out in your life. It's useful to figure out how performance is bounded and success is unbounded to explain a lot about contemporary life.

How behavior spreads

At some point, performance hits an upper ceiling. There's only so much we can do to shave a few seconds off our time, or improving product features. Beyond that point, it's the order in which we speak or present information that wins the day.

Order determines who gets to “frame the key questions” at FDA approval meetings. Order also determines the higher probability of winning music competitions. If you plan to run in one, try to perform second on the last day. 

You get to set the tone in one situation, while in the second, you want to complete it. With a caveat, if you're a female performer, you'll rank two positions below males, no matter when you perform. This is social behavior at work in the form of gender bias. 

The reason why in music performance it's the last who reap the benefits is that the music is new to all at first. But by the last day, everyone's become familiar with it. Mystery solved. How many other instances in life have similar variables?

Creative pitches? New campaign ideas? Job interview? You'll need to balance enough novelty of insight with familiarity to bring people along. 

Sometimes the diversity necessary for positive reception is about relationships. Two people who share a common, strong tie. Say, a colleague and a cousin. This is why it's easier to work with someone you've worked with before, yet might not know too well. The colleague and relative might get along fabulously, because they're both connected to you, yet not to each other. 

Success can come at any time

With persistence, because creativity has no expiration date. Thank Heavens.

If you're willing to try repeatedly for a breakthrough, you will eventually have one. Actor Alan Rickman landed his first movie role at 46; Ray Kroc joined McDonald's at 53; Julia Child was 50 when she hosted her first TV show.

It's not the idea in itself that counts. It's “your ability to turn an idea into a discovery” that makes a difference. Barabási and team call this the “Q-factor.” Success is the product of a creator's Q-factor and the value of idea r. When Q and r are both high, they enhance each other.

Then they found something surprising, the Q-factor doesn't change over the course of our lives. However, there's a silver lining if you keep striking out. If your Q-facto is not resonating with your job, you might be in the wrong career.

Match your Q-factor with your vocation, and your chance of succeeding will improve.

I hope The Formula will give you better questions to succeed at whatever you're pursuing.

"Brave New Work" is a Love Letter to Organizations and the People who Make Them Possible

Mini book read. New email subscribers will receive it as part of the weekly digest.

Reinvention has deep roots in American culture. It's the land of pioneers, the place of the possible. If the current conversation has turned on itself, when we pan out with our lens, we can see the undercurrent clearly—“can do” is in the fabric of the many who made this the land of opportunity.

Undercurrent is the name of Aaron Dignan's former charge—a company that evolved to help businesses develop innovation capabilities and pipelines. Aaron took his own advice and reinvented the work. Now CEO of The Ready, he and his team collaborate with businesses on their transformation journey.

The next phase of work is about being ready for change. It's relatively esy to do when companies are small—agility is a form of survival—but when companies grow, their own structures and processes get in the way. What makes them strong becomes a liability as context changes rapidly.

We need to be “brave,” says Aaron, and re-learn to adapt to ever changing circumstances. Autonomy is once again a hard-earned skill to navigate the hardened controls that make business efficient, if inflexible. These are the themes of Brave New Work, a long love letter to organizations and the people who want to breathe life into them.

The book itself is brave—rather than offering the usual prescription, it sets the stage to open our minds to a different way of thinking. Work isn't working, but we don't have to keep sabotaging ourselves.

We can reinvent work, and we should.

Three layers of value

When I read a book, I examine the ideas in three ways—as a learner, as an author, and as a practitioner. Here's my take on Brave New Work.

First as a learner—the book is very accessible. The book starts with a conversation about the future, an introduction of the big idea follows, then a discussion about the change and its impact. Aaron has chosen an interesting metaphor to help us understand how we need to cross to the other side and embrace transformation. Any European is very familiar with the roundabout designed to help keep cars moving at intersections, rather than stopping them. Results may vary, but they depend on the driver's choices, and not on the driver's compliance with a traffic light. 

Then as an author—structurally, I look at the information and references, do stories, examples and diagrams / charts help lighten the cognitive load? The questions and framework are useful tools to explain the vision and bring readers along at the same time. Work, evolution, complexity, power and change are principally energetic concepts. The book examines some of these concepts, rather than assuming them, as so many authors do, to jump to solutions.  How we get to where we're going is as important as the destination. 

Third as a practitioner—the grounding of concepts and the examples are useful to make sense of what's happening. It's simple to see how we got here, but it's important to figure out what we can do to improve our course. Permission is the most valuable application of the information. If we want to put this into practice, we want to know “it's within our control”. The two foundational mindsets, “people positive” and “complexity conscious,” are the unifying thread to keep us oriented as we examine each of 12 domains where we need to question and reinvent our approach most. Aaron describes the 12 domains as blocks in the Operating System (OS) Canvas, a framework that is the proving ground for the future of work.

Overall, the book is an easy read. But this doesn't mean it's easy to do. Part I is the homework, Part II is the practice.

Part III is the caution, which is super important to get. We often head into change as if it were easy, yet it's the most difficult thing we can tackle.

Everyone loves to talk about change, but nobody like to be the person to whom it happens, and even less so, the person who changes. It reminds me of a cartoon (above).

My highlights

“There's no word for accountability in Finnish. Accountability is something that is left when responsibility is subtracted,” says educator, researcher, and policy advisor Pasl Sahlberg. It's not a word in Italian, either. The problem is that we do know better, yet we keep behaving as if we could control and predict the world.

In the introduction you will learn that we describe our current frustration about organized work with the same words William J. Donovan, director of the U.S. office of Strategic Services (OSS) used at the end of the Simple Sabotage Field Manual in 1944. He was teaching agents how to disrupt day-to-day business operations.

We succeeded. It seems that since as far back as 1910, everything has changed, except management. In a world that is always changing, where we're called to learn continuously, the organization's chart survives defeat. 

Every person in an organization fits in a box, we're spare parts with written rules about our duties and tasks. Yet, “the genius of the firm” happens “not inside people but between people,” says Aaron. The Ready's way of work reflects this insight.

Our way of working—our operating system—is built on distributed authority, consent, and agreements, so we don't have to rely on positional leaders.

Ecosystems evolve naturally to take care of the problems. Agility is a mindset, not a tool-set, says Aaron. We need to make our way back to it. Fredrick Taylor, who engineered the mother of industrial efficiency, figured out a way to make workers trade autonomy for efficiency.

Once he found out how much it cost, he dictated his terms—a modest percentage wage premium in exchange for doing exactly as I say. Since then, thinking and doing bacame two independent work functions—managers think, workers do. We're still operating under this assumption.

But bureaucracy ruined it for efficiency and has created its own brand of organizational debt. We're now optimizing our way into a cliff. Our way of working has tremendous inertia. The twelve domains contain each some thought starters, in action examples, and key questions for change:

Purpose—can be socially positive or socially destructive. After all, the key difference between a charity and a terrorist organization is intent.

Authority—the default assumption is that you don't have the right to do anything unless you are given permission.

Structure—to accomplish anything, projects often require a marathon of communication and coordination.

Strategy—is about where to play and how to win. But do we do things because they're the right thing to do?

Resources—perhaps no other process is so respected and reviled as the annual planning and budgeting process. Budgets can actually work against performance.

Innovation—every activity in the organization is a black box of potential energy. If every team isn't constantly learning in ways big and small, we're missing our chance to pursue our purpose with everything we've got.

Workflow—is how we divide and do the work, the path and process we use to create value.

Meetings—to meet or not to meet? Maybe we change the question to, how do we meet?

Information—until very recently in human history, all information was trapped in someone's head, or on a piece of paper. This has led to a scarcity mindset.

Membership—isn't binary, it's a social status, an identity, a living agreement. Not every employee feels the same level of loyalty, or inclusion, or participation. 

Mastery—think back on the time in your career when you grew the fastest. What were the conditions that drove that rapid development?

Compensation—lacking purpose and meaning in their work, many professionals view their career as nothing more than a series of stepping stones from one job title and pay package to another.

You can use the Canvas as a way to describe what happens in your organization, as a diagnostic tool, and as a path to imagine how things could be different.

How behavior spreads

In organizations, “culture eats strategy for breakfast.” Behavior spreads through culture. We imitate what others do.

Culture is not something we can control or design, it emerges from our behaviors. As much as we'd like to believe it, we can't change people. Anyone who's ever tried to manage their spouse or kids knows it all too well. 

Management consultant Margaret Wheatley studies organizational behavior. In 1996, she said (emphasis mine) :

“These days, a different ideal for organizations is surfacing. We want organizations to be adaptive, flexible, self-renewing, resilient, learning, intelligent-attributes found only in living systems.

The tension of our times is that we want our organizations to behave as living systems, but we only know how to treat them as machines.”

Only 26 percent of transformation efforts succeed, says McKinsey in a recent report. Front line employees actually think that number is more like 6 percent.

If we can't change people, what can we change? We can change how we change, starting with what we do every day. The power to make a difference is in the present, not in some future outcome we can hardly predict. We can start small, learn by doing, then spread what works.

On creating the future of work

It seems that all of a sudden, we've realized that humans, and not technology, are the point. Look at business titles, and you'll find the word “human” everywhere—human companies, even human marketing! But execution looks more like an excuse to learn more about my private affairs.

I think it started when Fast Company declared: work is personal circa 1997. Twelve years on and the current climate feels like a dystopian novel—recruiting is broken, the mighty shareholder rules, and “at will” has become “at whim”. The policies, daily actions, and organizational structures remain attached to what used to work.

Oxford economist Kate Raworth questions# whether growth is the solution to all our problems. “We need economies that make us thrive, whether they grow or not,” she says. Companies and economies expect demand and never ending growth.

We've morgaged our future in the constant effort to just keep up. But we're not thriving.

Can we get the future of work right? 

I hope you find Brave New Work as useful as I did.

Risk and Uncertainty in a Complex World

We try to avoid risk and often miscast uncertainty for risk. While they're both a fact of life, it's valuable to understand the difference between the two. Uncertainty and risk are related concepts in economics and the stock market.

    The concepts are related, but not the same. You cannot avoid risk, every act of creation involves it. Even not doing anything has a risk component. But you can learn to move away from uncertainty, especially when you're called to make important decisions.

Dynamic nature of risk

    Since risk is defined as unknowns that have measurable probabilities, we can insure against it. But not all risks are insurable. Because uncertainty involves unknowns with no measurable probability of outcome.

    Risk has odds, while uncertainty doesn't.  Causation is the dimension of risk we need to factor in our thinking, along with the behavioral pattern or risk frequency and severity. How often and how bad is it?

    In risk management we have a simple framework we use to evaluate risk along three dimensions of risk classification:

1. Financial and non-financial — can we measure it in monetary terms?

2. Pure and speculative — is the outcome always a loss, or could there be a gain?

3. Fundamental and particular — what is the relationship of cause and effect? Who causes it?

    Within this classification, however, things change all the time. Because risk is not static, it's dynamic by nature. Frequency and magnitude factor in the calculations. Where you are and the environment around you make a difference.

    Data on risk frequency and severity helps insurance companies figure out predictability of future events. It also helps the individual figure out the cost to insure. Severity or the answer to, “could this be catastrophic?” drives whether to insure or not.

What happens when we confuse risk and uncertainty

    In The Signal and the Noise: Why so Many Predictions Fail - but Some Don't, Nate Silver summarizes the difference between risk and uncertainty:

Risk, as first articulated by the economist Frank H. Knight in 1921, is something that you can put a price on. Say that you'll win a poker hand unless your opponent draws to an inside straight: the changes of that happening are exactly 1 in 11. This is risk. It is not pleasant when you take a 'bad beat' in poker, but at least you know the odds of it and can account for it ahead of time. In the long run, you'll make a profit from your opponents making desperate draws with insufficient odds.

Uncertainty, on the other hand, is risk that is hard to measure. You might have some vague awareness of the demons lurking out there. You might even be acutely concerned about them. But you have no real idea how many of them there are or when they might strike. Your back-of-the-envelope estimate might be off by a factor of 100 or by a factor of 1,000; there is no good way to know. This is uncertainty.

Risk greases the wheels of a free-market economy; uncertainty grinds them to a halt.

    The context Silver used for his comparison is the alchemy the rating agencies performed leading up to the financial crisis of 2008. They spun uncertainty into what looked and felt like risk. We lived the consequences of those decisions.

When risks become hazards

    In thinking about risk as dynamic, we look at probabilities. Frequency and severity are typically inversely proportional. Some things happen frequently but are not severe, some are severe but happen seldom.

    However, there is a type of risk that happens frequently with enough severity to warrant noticing. There are conditions or situations that are likely to increases the chances of a loss from a peril we've identified. We call this a hazard.

    Physical and moral hazards influence the likelihood or a poor outcome from risk. Hazards are like fuel — they can accelerate the gravity of a situation. Since we can identify physical hazards, we can insure against their variables.

    But what happens when we're talking about moral hazard? Character, integrity and mental attitude are not easy to measure. Behaviors can be unintentional or not consciously bad and still remain hazardous.

    There are rules and regulations that govern insurance to risk. But we've seen what happens when we overreach and accumulate too much risk. A collapse of confidence followed the last financial crisis that was catastrophic for many.

Why complexity requires new thinking

    To improve the quality of our decisions, we need also to understand the dynamics that surround risk and uncertainty.

        Our attempts to predict the future are too reliant on linear thinking based on past experience#. In a complex world, past data may not be as useful to forecast risk, things change fast. We're also limited in our ability to handle probabilities.

    Retired economist and Singaporean government official Lam Chuan Leong# says we can classify the way we think and manage events in a two-by-two matrix by combining the findings from Behavioral Economics and Complex Systems.

    Time and complexity are the vectors. When we're called to make decisions but have little time, we behave differently than when we have more time. In our daily activities, we decide using our intuitive system, automatically and quickly.

    Give us more time, and we can reflect on decisions. We use reasoning and analysis. In economics terms, this is the Rational Man Model of thinking. But this may not be enough. Cause and effect are not as consistent in complexity.

   Lam Chuan Leong outlines the four modes of thinking that apply to many of our decisions in business and are influenced by time and complexity:

    But it's not just how we should think about risk that has changed.  Our work has also changed. All the easy problems are taken, and problem-solving now involves few certainties and right answer.

    “We have to make sense of the problem by probing, experimenting, creating environments conducive to the generation of new ideas and new interactions, and responding to emerging patterns and behaviors,” he says.

    This in turn has changed how we manage in a complex world.

Challenges require critical thinking

        As we're increasingly called to probe, sense and respond, we need to create an environment and experiments where innovative patterns can emerge. The increased levels of interaction and communication should be designed to generate ideas and options.

        Leaders are setting boundaries, barrier and incentives to encourage patterns to grow into coherence and general acceptance instead of merely executing the plan.

    But with managing risk there are also cognitive and behavioral challenges:

    We have a hard time identifying the most common pitfalls to logical reasoning.

    Key biases include our desire to rationalize into a story when we want to explain a decision, even though emotion is involved in decision-making, and anchoring — for example, start with a high number, and you're now willing to pay a higher price.

    We also have confirmation bias, we see what we want to see, and ignore evidence that contradicts our beliefs. People react to a particular choice in different ways depending on how it is presented — e.g., as a loss or a gain.

    While in the past we could rely on analysis and control of risk, we need new ideas and innovation to solve future problems. When we think about issues, we should take into account the environment where we operate and its complexity.

    Beyond recognizing our cognitive biases and acknowledging our time constraints, we need to take into account how emotions connect to outcomes in decision-making.

 

Our Attention Filter has Ten Instinct-Shaped Holes in it. Learning What They Are Helps us Deal with Risk.

 We manage to ignore all the noise, including much potentially useful information and data on the facts, yet we pay attention to stories and snippets that trigger our dramatic instincts. That's because we get an emotional high from them.

    Our filter has ten holes in it. Hans Rosling named them in Factfulness. Fear is the most used among them — the others are gap, negativity, straight line, size, generalization, destiny, single perspective, blame, and urgency. Fear is hard-wired into our brain, we fear missing out (FOMO) and we have a strong fear of failure, making a mistake.

    We should learn to distinguish something that is “frightening” from something that is “dangerous”. One is perceived, the other is real risk.

Why trends are useful

    Trends help us create a framework around variables we track over the long term. In Megatrends, John Nasbitt says that each new technology, to be successful, must be coupled with a compensatory human response. Thirty years later, we can tell the trends because they endured in our culture.

    The three main categories of fear: are fear of physical harm, fear of captivity — as in loss of control or loss of freedom — and fear of contamination. They distort our worldview and lead to horror of things we don't fully understand or deal with in every day life, like infection and poison.

   When stories combine two fears, like that of a plane crash and kidnapping — tapping into fear of harm and captivity — we're pulled in. Then we get programmed by hearing it over and over again seemingly everywhere. This is a distraction that keeps us from learning the deeper data behind the story and taking action, if appropriate.

    Context helps us allocate resources as needed, including emotional energy. “Now is the time to understand more, so we may fear less,” said Marie Curie. Yes, there are still terrible and painful things happening to people and we should help and empathize.

    Yet the predictive story points to a larger trend that is cause for optimism. That is the story we want to let in our attention filter.

Mimicry and unknown unknowns

    The majority of the stories we get in the media are the local and familiar kind. They merge facts with anecdotes to share things that are of potential human interest, that connect with belief. They trigger us by appealing to our dramatic instincts.

    Sensational headlines draw attention, but distort reality and keep us setting apart what we know from what we don't know. Multiply by the avalanche of similar articles chasing attention, which include many containing false data, and pretty soon it becomes hard to tell a mimic from the real thing.

   Batesian Mimicry# is a form of mimicry where a harmless species has evolved to imitate the warning signals of a harmful species directed at a predator of them both. For example, we should avoid the venom of the Texas Coral Snake while the Mexican Milk Snake and other types of snakes that look similar# are not as bad. 

    Beyond the things we already know, there are things we don't know we should know about. But once we're aware of them, we can learn those things because they're knowable. We can learn to tell the snakes apart, for example. Known known and known unknown are two instances of certainty.

    There are also things we know we don't know, we've identified we don't know them and others we don't know we don't know. The diagram from the Project Management Institute# calls out the nature of risk — uncertainty creates the need for understanding risk.

You can't manage what you don't understand

    Recently, I had a meeting with a group of executives who were looking to evaluate a number of approaches to deal with a situation that involved risk. They had created a brief that called both for preparation and optimization.

    After some conversation I realized that they already had some kind of expectation of what the approach would need to look like. Yet, by their own admission, they did not have a full understanding that the brief and the expectation where not on the same page. There was also domain knowledge uncertainty.

    Their attention was focused on short term tactics, yet the request was for a strategic long term approach. When the focus becomes not the topic but the expectation, the results is a disconnect. The hole (or more than one) in our attention filter leads us to confuse perception with reality.

    In Rosling's definition, risk equals actual danger times our degree of exposure. It's very hard to evaluate something when we have a hole in our knowledge and don't know we do. Said another way, risk is the possibility of suffering loss or harm, not the loss itself. 

    When we learn to manage the sources of exposure to risk, including our own reactions (for example, fear) and experience with uncertain situations, we can begin to benefit from the opportunity brought about by change and creative problem solving.

    To manage risk appropriately, we should remember that if the nature of an occurrence is certain, it is more like a fact or knowledge, If it's uncertain (probability of is less than 1, for example), the impact can be uncertain as well. 

    Evidence and data are useful in decision-making, they also keep us from stressing out and feeling helpless.

    

How we Choose and Differentiate Based on Seeing What isn't There

 

 

Greater choice paralyzes us and makes us poor strategists. This is something we all struggle with in our work and personal lives. There are way too many options to choose from with too little time in a day. When we're done picking a technology marketing stack, multitasking, and ducking in and our of meetings, there's no energy left to pick a toothpaste.

    Do we really need hundreds of products with very little differences? Is it useful personally to become an expert in wine, cereal, and boxed pizza? When we're faced with a wall of choices, how do we pick? Is it worth to have a strategy?

    Users and buyers do have strategies, even when they're not aware of them. Organizations and brand strategies should go beyond the obvious — competing on the shelf and in the market — and get to the heart of what matters to customers by seeing what isn't there.

How we choose

    Offers and price breaks typically work to sway us on commodity products. In other cases, we tend to trust a store brand — for example Trader Joe's label and Whole Foods 365 both have organic product families. Fewer options make them easier to select. Let them filter the choices.

    Most of us have but a few minutes to get what we need at the store at the margin of our days. Which means a few seconds per product. Maybe we look at expiration dates, maybe we scan the list of ingredients, but few wade into comparison territory. If we're researching and/or buying online product reviews do have an impact.

    Yet brands are obsessed with comparison — sometimes using the competitive set to get to a place of parity with others, rather than differentiation. Yet when we let brands filter for us, we do it on the basis of a very specific story they tell us, and we tell ourselves.

    Youngme Moon says most brands that focus too much on market segmentation and product augmentation, while attempting to create differentiation, have actually led to meaning less distinctions. Competitive analysis and comparative metrics have created conformity, resulting in competitive herding, with all competitors blurring together in the mind of the customer.

    Moon offers some high level ideas on creating effective differentiation. For example, subtract features from the offering, creating difference by stripping away the superfluous. Or polarizing, so that some people hate the offering while others love it. Clever marketers have also transformed an offering into a different category in the perception of customers.

How we differentiate

    It's true that a clearer value proposition, a choice by the brand manager, is compelling. True differentiation, however, starts with a clear understanding of the market gap the product supports and the business model that supports the product.

    For the market gap we want to become very good at hearing what is not being said. Observing how people buy, learning what they talk about, and especially when they talk about our product with others — and we're not even in the room. Hence the importance of customer reviews for product/business intelligence.

    This works for service as well, by the way, where it's a combination of things that make it us, us and not another [insert your professional title.] This past week I was talking with a hiring manager who told me “basically what I'm looking for is a unicorn.”

    But could not say which 3 of the two dozen things on her list matters the most. Yet, it's those 3 that matter the most to the success of that unicorn in getting work done best. The multiple talents and plays at once unicorn is just that, a rare (and expensive) thing. Betting on a horse who can win a certain kind of race creates more advantage.

    Because that's how we buy products, too. In the end we pick the one that meets our top 2-3 requirements to get the job done and call it a good day. Google differentiates on the basis of a product and business model. Find what you need as quickly as possible. IKEA makes design affordable, you put in the labor... or pay a little more to have it assembled.

How we tell our story

    Once we we learn to see what isn't there, and create a product or service that adds value, we want to find the best way to communicate that value. This means figuring out the specific language we use to talk about how we help. Something like:

[Organization/Product/Service] is a [adjective]+[short description (should include a term that describes the most important thing)] built for [who we serve].

    Maybe our value is for experts, maybe it's to support everyday choices. How we do what we do can be different. For example, we ship a kit to your house every month#. Maybe we buy at a store that sells everyday items online unbranded#.

With [Organization/Product/Service], [who we serve] can [job it does] + [core differentiator]. 

    Or maybe we link the jobs to be done to customer segments. This works for businesses that sell to other businesses (B2B). Increasingly, users (the ultimate customers) drive the purchasing decisions of intermediaries as well.

    For example, installers care about ease of use of features and how they fit existing or complementary systems. Contractors may have favorites. Ultimate users, the customers who get an addition may care about price and availability, maybe deterioration rate. People with building product experience may know to look for innovation in air flow as well.

    Before we can sell a feature, we need to connect the user with the benefit at a deeper level. It starts by seeing what isn't there. People don't necessarily know or care to learn more... unless we lift the veil of ignorance of why it matters to them specifically.

    Culture is a also a factor. The people on the inside of an organization — product or marketing manager, engineering, etc. — may care about certain things. The people outside it — users, customers, social group, etc. — may care more about others. We must know the difference and plan accordingly.

 

Resources:

Different, Youngme Moon

The Paradox of (too much) Choice (Italian), Gianluca Diegoli for the question on utilitarian vs. expert

The Paradox of Choice: Why More is Less, Barry Schwartz

 

 

How we Live Fast & Slow

We often make decisions based on “good enough” information. Our brain is configured to make us act fast and without definite proof. Intuition uses what we call rules of thumb to select an item. The best experiences use this gut instinct to help us do the right thing easily.

    For example, the roundabout in many cities in Europe is designed to keep traffic moving, instead of stopping it. It works based on a simple rule of thumb — if anything comes from the right, you stop. Another example of a rule of thumb we use — if something feels too good to be true, it probably is. 

    Nobel Memorial Prize in Economic Sciences Daniel Kahneman is notable for his work on the psychology of judgment and decision-making. He wrote about this phenomenon in Thinking Fast and Slow. “Good enough” is our System 1 at work, it can help us generate complex patterns of ideas quickly but may be too fast to draw good conclusions. Our slower System 2 gives us the ability to think things through.

    An automatic response to information and situations often serves us just fine in many situations. Human behavior is not mathematical. Yet, in our strategy discussions we focus mostly on the things that we can represent numerically. Instinct is grossly undervalued.

Signaling

     Science has demonstrated that people act based on things like signaling. Companies and brands spend money to build reputation to signal they will be around for a long time. It might not matter as much for products we consider based on convenience and price — we have our online convenience stores, open 24/7, and the algorithm knows what to recommend.

    Individuals signal something with their purchases — we're environmentally conscious by buying an electric car or installing solar panels. Or we want to signal status with luxury purchases. Trying to appeal to reason with data is futile, we use data only to rationalize we made the right choice after the purchase.

    Often the brand story stops with the transaction, a missed opportunity to reinforce the story. Brands are proxies that compress data into a story. Inversely, what is the message when organizations don't invest in signaling?

    Experiences start with a story we tell, the why behind a product or service — vegan fast food, essential clothing without markup, designer eye-wear without breaking the bank, a modern day version of a roadside burger stand, ready to wear luxury, and so on.

    We do make impulse purchases, and our constant connection with a limitless inventory of options online means that availability at the point of need — right place, right time — is also a signal. This includes the impact to perception based on the company brands keep#.

Focusing decision-making

    Not all decisions involve purchasing a product or service, but an idea. In many of these decisions, “fine” (or good enough) can include a healthy dose of luck, which leads to overconfidence. We're all prone to an exaggerated sense of how well we understand the world, especially experts, says Kahneman.

    Sometimes, good enough requires a slower thought. Tip to the wise: frowning is a simple way to engage our slower thinking System 2.

    When we become more aware of the interplay of the fast System 1 and the slower System 2 in our thinking, we can improve our odds of making better decisions. We also don’t make our decisions in a vacuum. As our context changes, our decisions may need tweaking, if not rethinking.

    Context is not just external, we also drive it. For example, what works for us in our twenties may not work so well in our mid-thirties. That’s also because we update what we think are our taste and ideas based on intervening experiences, as we learn (or so we hope.)

    Three things must happen at once for us to do something — 1./ we want to do it; 2./ we're able to do it; 3./ we're prompted to do it. The story provides the priming, how fast or slow we act depends on the type of prompt.

    B.J. Fogg#, founder and director of the Stanford Behavior Design Lab, says, “when motivation is high enough, or a task easy enough, people become responsive to triggers such as the vibration of a phone, Facebook’s red dot, the email from the fashion store featuring a time-limited offer.”

    Willpower can go only so far, and we can answer the design of a system that could lead us down a rabbit hole in search of more, with a system of our own design optimized for better. This means using System 2 to help us focus decision-making.

Thinking in horizons

    Our thinking also has horizons. We live in the here and now, enjoying our experiences, and also think about the future, even when it feels distant and abstract. Both ways of thinking are important to realizing what we want in life — our goals and our dreams.

    Longer-term thinking tends to help us build a more flexible structure to absorb what life throws at us. Resilience is the ability to survive the shocks. Learning continuously and a longer horizon are ways to edge our bets.

    “All civilizations suffer shocks; only the ones that absorb the shocks survive,” says humanist Stewart Brand[1]. In recent years a few scientists have been probing the same issue in ecological systems to understand how they manage change, absorbing and incorporating shocks.

“The answer appears to lie in the relationship between components in a system that have different change-rates and different scales of size. Instead of breaking under stress like something brittle, these systems yield as if they were soft. Some parts respond quickly to the shock, allowing slower parts to ignore the shock and maintain their steady duties of system continuity.”

    Imagine a series of layers, like a cake, each somewhat independent and also interacting with the one closest to it. Stewart Brand says all durable dynamic systems have such a structure with interactions happening between faster layers and slower (more core) layers.

    For example, “fast learns, slow remembers. Fast proposes, slow disposes. Fast is discontinuous, slow is continuous. […] Fast gets all our attention, slow has all the power.”

    Mathematician and physicist Freeman Dyson makes a similar observation about human society. He talks about six time scales, with a twist — “the unit of survival is different at each of the six time scales.”  According to Dyson, the individual is on a time scale of years, while culture is on a time scale of millennia.

    To survive, we need to juggle the demand of different time scales, sometimes in conflict with each other.

“Every human being is the product of adaptation to the demands of all six time scales.  That is why conflicting loyalties are deep in our nature.  In order to survive, we have needed to be loyal to ourselves, to our families, to our tribes, to our cultures, to our species, to our planet.”

Acting fast and slow

    Steward Brand proposes six significant levels of pace and size in the working structure of a robust and adaptable civilization, from fast to slow they are:

• Fashion/Art
• Commerce
• Infrastructure
• Governance
• Culture
• Nature

    Like every dynamic system, it works based on feedback.

    As we grow wiser, we tend to gravitate toward the slower layers, but we can continue to experiment and learn through the fast ones. Fashion is culture running around and trying new things. Hence fads, which come and go.

    Commerce is fashion’s enabler. It helps sift trends from fads. Trends stay with us for a while, becoming part of the fabric of society. The farther from the surface, the longer the payback. Education and science are infrastructure in this model. Culture moves at the pace of language and religion.

    Fast and slow are built into all life forms and human activities.

    Things that are fast lead to things that are slow. To give examples close to my heart, high enjoyment comes from slow food, smart travel starts with fast reach, la dolce vita sits on the surface of work mastery. Italian style is art with brains.

    Finding the answer of what works — the combination of fast and slow that works — happens with the help of time. A community of like minds and a network of connections do create a robust infrastructure to stay the course and absorb the shocks. Hence why we gravitate toward people who act like we think.

    In many cases it's difficult to know what people actually think, even for the people themselves. We look at signaling through story and experience.

    Thinking fast and slow, coupled with a “dynamic performance mindset,” as Dr. Constance Goodwin would say, creates the premise for the stuff that happens between thought and action — comprehension, synthesis, articulation, and conversation.

    We create the system for living fast and slow one moment at a time.

    

[1] Source: Pace Layering: How Complex Systems Learn and Keep Learning