As I write this I am eating a bowl of lentil soup, which reminds me of a story. Let me set the stage….
It’s winter of 1991, and I’m in Kuwait City. As you recall, this is when coalition forces entered Kuwait City as part of a multinational effort to evict Saddam Hussein’s forces from the city – aka “Desert Storm”. Although few US forces actually entered into the city itself, there were some unique US troops running around the city during/after the short ground war. I was in Civil Affairs – the part of the Army that is a liaison between local civilians and governments. Our much cooler colleagues from Special Forces served as liaisons between our military and the local military elements on the ground.
I was part of “Task Force Freedom“, a small task force set up to work through the complex – and impossible to anticipate – challenges that arose during the operation. As the ground war quickly came to an end, our mission turned to getting Kuwait City on the road to recovery.
Our immediate concerns related to basics like security, sanitation and food distribution. The previous months of Iraqi occupation of Kuwait City had been hard on some city residents, so in the early days, along with our other missions, we were in the city making sure large trucks filled with food were distributed to neighborhoods as requested by the Kuwaiti government.
I’m in a Mastermind group. You might think that a Mastermind group is comprised of villains who are hatching fiendish plans of world domination, or even superheroes planning to thwart them, but you would be wrong. In fact, it’s much cooler than that.
Mastermind groups have been around for a long time, and are small groups of peers who come together to hold each other accountable toward their respective objectives and help members solve problems.
Recently, our group has been discussing and (imperfectly) practicing the concepts found in the book The 12 Week Year – a concept where annual objectives are tossed out the window in favor of 12 week objectives. I’ll be writing more about this concept in a later blog post.
There’s more to the 12 week year than compressed time horizons. I won’t cover it all here, but obviously recommend you check it out. However let’s focus on just one aspect from the book, and what I like and don’t like about this powerful quote:
If you read my About Me page, you will see that it ends with this: “Finally, I am an optimist. It’s an exciting time to be alive”.
I thought that now would be the perfect time to revisit optimism – not just as a way of viewing external events and avoiding despair, but as a way to impact events. Let’s start with three well-known characters: Bill Gates, Melinda Gates, and Warren Buffet.
Last week, the Gates Foundation released their annual letter. Since Warren Buffet gave the bulk of his wealth – $30B or so – to the Gates Foundation in 2006, Bill and Melinda addressed this year’s letter directly to Warren. I recommend you read through the letter in its entirety.
In one part of the letter they touch upon why they remain optimistic about many of the major health challenges facing the world. This optimism runs contrary to rampant pessimism. For instance the statistic below:
Bill puts it well here:
“One of my favorite books is Steven Pinker’s The Better Angels of Our Nature. It shows how violence has dropped dramatically over time. That’s startling news to people, because they tend to think things are not improving as much as they are. Actually, in significant ways, the world is a better place to live than it has ever been. Global poverty is going down, childhood deaths are dropping, literacy is rising, the status of women and minorities around the world is improving.”
Optimism (and pessimism) perpetuates itself. While the political world has become practiced in leveraging fear, that approach doesn’t work as well in the private sector, where leaders create outcomes based upon the shared belief and passion of their teams.
Which leads me to a related point: the importance of active optimism, or “applied hope”. Before I get into the provenance of this phrase, let me drop one last (telling) quote from the Gates letter, this line specifically from Melinda:
In the past, I have written about the importance of storytelling. Companies often tell the same stories over and over to signal what is important to the company and why it exists. But I want to provide one bit of caution around something I call the “Golden Story”.
I have worked for a number of high-growth software companies – most of them private companies that were working against the odds every day, trying to secure more customers and new financing. One of the things we would be desperate for was some external validation that our product/market fit was on point. “Product/Market Fit” means that there was a 1) demonstrably large market with a particular problem, 2) that market was providing indicators that it was willing to spend money to address that problem, and 3) participants in the market had selected our product and used it to successfully address the problem.
Since a lot is riding on a young company proving product/market fit, we treated any story that validated our product like gold – and inevitably, we would hear such a story. Perhaps a customer had a great outcome when they used our software exactly as designed, or maybe a major customer had licensed our technology at a high price. It’s natural to love stories like these and to re-tell them.
But in retrospect, sometimes these stories can be false signals, and false signals can lead to bad events. Here are some indicators that the Golden Story you’re telling is a false signal in disguise:
- The recurrence of the story is limited. You keep telling the same story over and over. It is rarely supplanted by new versions.
- The sample size is minuscule. It’s one company out of a thousand. It’s one user out of a million. You make it seem bigger.
- You’re overly elated. It quiets your doubts, but if you’re honest, you’re pretty surprised.
I recently wrote two posts – one on the psychology dynamic duo of Tversky and Kahneman, as chronicled in Michael Lewis’s book The Undoing Project, the other on the power of being “disagreeable” in the sense of not needing social approval to embark on a worthwhile effort. Today, I’d like to combine them with an interesting example.
In his book, Lewis talks about the eminent economist Richard Thaler and how he was energized when he first discovered Tversky and Kahneman’s research. To understand the context of the story below, you must understand that although Thaler may now be described as an “eminent economist” (and is enough of a big shot to appear with pop star Selena Gomez in the movie “The Big Short” – and let’s be honest, we don’t often see economists hanging out with international pop stars), but at the time of the story below he was not remotely “eminent”.
Richard Thaler’s appearance, with Selena Gomez, in the movie “The Big Short”
In fact, he was clinging to a very precarious faculty position (a position that he had to beg for), had limited career prospects and a young family. So he wasn’t a guy with a safety net should he take a risk.
He was doing research for a thesis on how much money people would need to be paid to accept a certain amount of risk in their profession. As he engaged in a number of experiments, he noticed that people’s responses to various risk questions were contradictory. He eventually discovered Tversky and Kahneman’s insights about the human mind and it’s tendency to play tricks on us, and he wondered about how psychological insights like these could impact the field of economics – particularly given how much certainty economists tended to exhibit regarding their research conclusions.
From Lewis’s book:
“He (Thaler) told his thesis advisor about his findings. ‘Stop wasting your time with questionnaires and start doing real economics’ said his advisor.
Instead, Thaler began to keep a list. On the list were a lot of irrational things people do that economists claim that they don’t do, because economists presume that people are rational.”
If I were to ask you to pick out the most important word in the story above, what would you say it is?
Consider this description.
“Linda is 31 years old, single, outspoken and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in anti-nuclear demonstrations.”
Which of the below descriptions do you think is more likely?
1. Linda is a bank teller
2. Linda is a bank teller and is active in the feminist movement
If you selected number 2 – that Linda is a bank teller and is active in the feminist movement – then you would be like the vast majority of people, regardless of their education level. You would also be wrong.
If you look at the options without thinking too much about the description that preceded it, you would quickly see that the idea that option 2 could be more probable than option 1 is totally illogical. Expressed as a Venn Diagram, “Linda as a Bank Teller” is a big, huge circle, and “Linda as a Bank Teller and an active feminist” could only be a small circle within it. It’s impossible for number 2 to be more probable than option 1.
This common mistake is one of many cognitive quirks we humans have that cause us to make errors in judgement. This particular one is an example of the Representative Heuristic, where we overcompensate for some random fact that causes us to make a mental shortcut to a destination that seems likely, but is wrong. Like many groundbreaking cognitive bias insights, this one was the work of the psychology world’s dynamic duo: Amos Tversky and Daniel Kahneman, whose years of collaboration are the subject of the latest book by Michael Lewis, The Undoing Project.
I probably have read a number of articles that referenced Kahneman and Tversky’s research over the years without really registering their names. However, when Kahneman wrote a book that made much of their academic research accessible for the general interest reader (me!) a few years ago, I took notice. Here’s a video that highlights some of the main themes in Kahneman’s book.
There’s a saying that any creation is a second act, one which is preceded by the imagination. Before we do anything, we conceive of it in our minds. It is this ability to visualize something that doesn’t yet exist that separates us from the animals (well, that and reality television).
In an earlier post, I wrote about something I did once that took “visualization” to an extreme. We were a small company that was on the verge of establishing a company-defining partnership with a multi-national behemoth. Early in the negotiations, I wrote a press release “announcing” the relationship and shared it within our company.
Writing a press release at that point seemed odd since we had months of conference calls and negotiations in front of us. The outcome of those negotiations was far from assured. But it didn’t take long before we all agreed on our “faux press release”, complete with nonexistent quotes from executives from both companies. Even as I wrote it, I knew the release as written would never see the light of day, but it was one of the most powerful press releases I’ve been involved with. Why?
It required that we visualize the outcome, or as Stephen Covey so brilliantly captured it, “begin with the end in mind”. Just as important, but perhaps less appreciated, is how it focused our team on what a “win” would look like, and kept the team motivated as we passed through the inevitable crises and obstacles that arose during the negotiation.
So it was with pleasure when I read this week that it is common practice for developers at Amazon to do the exact same thing. Key quote from the article:
“Before Amazon developers write a single line of code, they have to write the hypothetical product’s press release and FAQ announcement.
Amazon uses this “working backwards” approach because it forces the team to get the most difficult discussions out of the way early, Jassy says. They need to fully understand what the product’s value proposition will be and how it will be pitched to customers. If the team can’t come up with a compelling press release, the product probably isn’t worth making.”
In an ever changing business environment where leaders are confronted with every sort of barrier to success – competition, limited resources, fire drills, regulation, and so forth – there is one huge barrier to our success which we are only in the earliest stages of understanding: our minds.
The explosion of social psychology insights has been a recent phenomenon. It was less than a hundred years ago when many psychology “experts” adhered to the concept a phrenology, where a person’s personality and character could be determined by evaluating the shape of the skull. To say that humanity has come a long way since then is an understatement.
Phrenology chart. Use with caution.
Much of our insights over the past few decades have demonstrated what we humans are up against. Our brains have evolved a number of biases over the millennia and frankly, many of them were more useful for our distant relatives who had to fend off frequent attacks from wild animals, bad weather and local enemies.
The evolutionary distance between those relatives and ourselves is small. The fact that we spend more time answering email messages than our caveman forefathers shouldn’t kid us about how similarly we confront threats.
One of the differences however is the explosion of incoming information and associated uncertainty.
To help ourselves assert control in such the face of chaotic information overload, we humans consistently exhibit Confirmation Bias – the inclination to seek out and attach emphasis to information which confirm our previously held beliefs. A cousin of confirmation bias is “selective perception” – a similar habit of avoiding emotional discomfort by selecting only information friendly to prior viewpoints.
I’m always interested to hear stories with confirmation bias at play, and I recently ran across one that is a classic business blunder we might relate to. The key here is to not feel superior when you read this. These were smart people who were stuck in a confirmation loop that you may very well be in yourself right now.
The story came via the Fortune Power Sheet, and concerned a story that writer Geoff Colvin had written about Sears, which based upon recent announcements appears to be in a painful death spiral:
If you’re reading this, then you successfully made it through Thanksgiving without being killed by a family member during an emotional discussion about the recent presidential election. Congratulations! For those of you who attended a big Thanksgiving banquet where everyone voted the same way, then you either enjoyed a triumphant dinner with a generous helping of vindication to go along with your pie, or you participated in an emotionally draining group rage where fury and angst edged out “thankfulness”.
This election, more than any I can remember, has created deep emotional divisions. But as George Costanza brilliantly pointed out in a Seinfeld episode, “we’re living in a SOCIETY!” And as members of a society, we need to work together.
But that’s easier said than done when you’re annoyed (ok – really annoyed) about people who proudly wear the political colors of the opposing team. In fact, a related issue comes up in business quite a lot, where partners can bad-mouth the other party so much that the partnership exists only as a business contract, but not as an actual partnership.
And so you find yourself at a dinner table or in a conference room with people who you’re annoyed with before they speak. What are you to do?
The key is to establish the “human moment” apart from the subject that creates the divisions (work/politics/religion/whatever).
Let me share a current event example, and then provide an approach I learned a while ago that has come in handy for me a number of times.
First of all, what formal group of people have demonstrated themselves to be in such a state of permanent conflict that they can’t seem to get anything done? If you guessed “Congress”, then you’re on the right track. One of the troubling facts of American political life is the increasing numbers of Democrats and Republicans who view the other party as a “threat to the nation’s well-being”.
So it was with great interest that I read in a recent version of Fortune’s daily Power Sheet, written by Geoff Colvin, this story:
Probably all of us remember that one English class (or composition class or whatever your school system called it) where the teacher was a stickler for good content and rigorous adherence to the published school writing policy. We learned to construct our arguments following accepted formats, demonstrate the difference between our work and the work of others, and to cite the sources we used by including footnotes and bibliographies which listed the metadata (tech term!) associated with each source – the author, title, publisher, the relevant pages, etc.
It turns out that in our business culture, citing your sources – or, even more importantly, knowing them – is perhaps a lost art but could separate the unserious from the serious.
Since I am always interested in how the world is changing and how globalization is affecting much of that change, it was with interest that I read this article about a town you never heard of: Veles (population: 45,000) in the Yugoslav Republic of Macedonia.
In the recent US presidential elections, much was written about the proliferation of “fake” news sites, which spin fake stories to excite partisans and drive social media shares, clicks, and ad revenue. It turns out that the town of Veles specialized in this cottage industry during the recent US presidential election. Here is a quote from a creator of just one of the 100 fake news sites in Veles: