Mental Models

What if Something Can’t Be Measured

July 4, 2022 By Nagesh Belludi Leave a Comment

During a September-2021 Airlines Confidential podcast (via Gary Leff’s View from the Wing,) former Spirit Airlines CEO Ben Baldanza told an exciting story about the airline industry’s systematic approach to reckon if potential new routes are economically feasible:

For the most part, airlines rely on data—required and reported by the Bureau of Transportation Statistics—on ticket purchases that show the number of people flying a given route and what price. For example, New Orleans, which is home to one of the largest Honduran populations in the U.S., has not had direct service to Honduras. Spirit Airlines will therefore analyze data from Sabre Market Intelligence for 2019 showing O&D (Origin and Destination) traffic between New Orleans and Honduras.

Sometimes, though, there’s no data on historical demand on a route, such as when Spirit Airlines was considering service to Armenia, Colombia. There hadn’t ever been a U.S. carrier flying into the airport, so there wasn’t available traffic data Spirit could access. Instead, Spirit looked at telephone data and migrant remittance statistics to get a sense of ties between the U.S. and the Latin American city. Spirit studied the frequency with which people were calling friends and relatives and how much money and how frequently money was being remitted as a reliable metric to determine if the new route was viable.

Spirit Airlines relies heavily on leisure bookings, especially visiting friends and relatives (VFR) traffic. In the absence of historical yield data for a route being considered, Spirit used fund transfers to Latin America as a stand-in variable.

A surrogate metric or proxy metric is exactly that—a substitute used in place of a variable of interest when that variable can’t be measured directly or is difficult to measure. For example, per-capita GDP is often a proxy for the standard of living, and the value of a house is a stand-in for the household’s wealth. Freight tonnage is often a proxy for economic activity.

Idea for Impact: Relying on intuition for sound decision-making isn’t sustainable, so folks need a systematic approach to making those decisions. Use meaningful proxy and surrogate metrics in your decisions to help overcome inherent biases with what can’t be measured.

Why Groups Cheat: Complicity and Collusion

July 2, 2022 By Nagesh Belludi Leave a Comment

News broke out that Ernst & Young revealed this week that its employees cheated on ethics exams. The accounting behemoth is being fined $100 million. That’s one of the biggest fines ever levied against an audit firm.

It’s absurd that specialists responsible for keeping things straight and steering moral enterprise cheated on ethics exams! Ernst & Young’s leadership evidently disregarded the internal reports about the cheating. Perhaps because when people identify so strongly with a group, they’re much more swayed to view the group’s actions positively and accept that group’s norms.

Research by Vanderbilt University’s Jessica Kennedy and colleagues suggests that high-flying people are sometimes more inclined than low-ranking people to adopt what their group recommends, even when it represents an ethics breach. Power sometimes provokes people to so strongly want to identify with their group that they’re willing to overlook when the group’s collective actions cross an ethical line. This affinity is, therefore, urged to sustain transgression instead of stopping its spread, especially when the odds of being caught and punished are slim.

The Best Advice Tony Blair Ever Got: Finding the Time to Think Strategically

June 28, 2022 By Nagesh Belludi Leave a Comment

Former British Prime Minister Tony Blair reminisced, at a 2012 event at the Stanford Graduate School of Business, how easy it is to get so absorbed by the pressures of doing that you rarely ever disentangle yourself from the chock-full of activities and the clutter that can choke strategic thinking.

As the leader of the Opposition, when I went to see him in 1996 at the White House, he explained that one of the hardest things when you get into the government is finding the time to think strategically. It’s being able to create the space so that you’re focused on what you really know counts because otherwise, he said, the system will take you over. You’ll be in meetings from 8:00 in the morning till 10:00 at night, and you think you’re immensely busy, but the tactics and the strategy have all got mixed.

What happens in leadership is that things come at you the whole time. If you’re not careful, you’ll spend your time dealing with one situation after another. You lose your strategic grip on what’ll determine if you’re a successful government. Many of these crises are real, and you must deal with them. But when you judge your government in history, no one will remember any of them. You’ve got to create the space to be thinking strategically all the time to change the world.

Idea for Impact: It’s your strategic thinking, more than any other single activity, that can influence what you’ll achieve as a leader. Find ways to create more “head time” amid the busyness.

Book Summary: Jack Welch, ‘The’ Man Who Broke Capitalism?

June 23, 2022 By Nagesh Belludi Leave a Comment

The Man Who Broke Capitalism (2022) by New York Times columnist David Gelles contends that the pernicious greed spawned by former General Electric CEO Jack Welch is exceptionally responsible for exposing the structural failings of capitalism in recent decades.

The danger inherent in any ideology grows stronger when it starts to thrive because it swiftly morphs into temptation—a voracious appetite for ever better “returns” in the present case. Welch was indeed the most visible catalyst and a much-imitated champion of brutal capitalism. But Gelles’s narrative draws his book’s lengthy subtitle (“How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America”) excessively, thrusting ad nauseam the well-founded thesis against Welch’s ploys and “the personification of American, alpha-male capitalism.” See my previous articles (here, here, and here) about how the faults of Welch’s strategy become evident many years after his retirement.

Gelles does an agreeable job of outlining the socioeconomic paradigm that has made modern western capitalism’s shortcomings ever more apparent. Starting with influential economist Milton Friedman’s decree in the ’70s that the one and only social responsibility of a business is to maximize profits, Gelles explains the revering of Welch’s “downsizing, deal-making, and financialization” strategy. Without balance, it provided short-term benefits for shareholders, but the long-term well-being of corporations and society lost out. A sense of restraint is most pertinent to the power of capitalism.

Capitalism isn’t irretrievably bound to fail, as Gelles rightly argues, but it needs to be rethought. It’s morally incumbent upon the social order to inhibit the embedded incentives that create powerful tendencies towards short-termism. Gelles offers no more realistic, objective insights than the familiar solutions prescribed by our career politicians.

Overall, Gelles’s pro-Fabian polemic falls short of a fair-minded assessment of the epoch’s economic forces. Indeed, many of Welch’s tactics were timely and necessary, but he pushed them farther and longer. Too, Gelles fails to study counterexamples of many corporate leaders who’ve thoughtfully copied Welch’s playbook and helped their businesses and communities prosper, not least because they were restrained enough to avoid Welchism’s blowbacks.

Recommendation: Speed Read The Man Who Broke Capitalism for a necessary reappraisal of the legacy of Jack Welch. There isn’t much eye-opening here, but author Gelles affords a relevant parable about the power of restraint and the time- and context-validity of ideas.

A Quick Way to Build Your Confidence Right Now

June 20, 2022 By Nagesh Belludi Leave a Comment

Guilt, anxiety, and fear usually manifest as a creeping mindset of what’s lacking. You feel you’re not enough, and you don’t have the resources you need to achieve your goals.

Lack of confidence will probably hold you back more than you may acknowledge. Be mindful of your thoughts and address these negative thinking patterns. Notice how you speak to yourself—harping only on what isn’t enough of or what isn’t working doesn’t instill your self-assuredness.

When you spiral about what is lacking, try the Abundance Mentality—it empowers you to believe in your extant ability. You can make do with what you have and overcome any difficulties. This isn’t some naïve “can do” temperament, but it’s an earnest endeavor to muster hope and agency instead of doubt and helplessness.

Idea for Impact: The less you do, the less confident you’ll feel.

Don’t wait until you feel more confident—often, more ruminating leads to analysis paralysis. Self-confidence comes from successful experiences, and to create these successful experiences, take action.

Take a low-risk action to increase your confidence. Assume you’re the most confident self you’ve ever been and do what that self would do. Prioritize your choices and direct your resources to pressing needs, ignoring other goals.

Beware of Too Much Information

May 25, 2022 By Nagesh Belludi Leave a Comment

Nearly all decision-making models emphasize the need for much information about the situation and options before making a decision.

Information is worthwhile, no doubt, but information can sometimes be less factual or less precise than it may seem. Besides, too much information may distract you from important issues. Scouting for additional data may cloud the picture rather than arm you with crucial information.

Idea for Impact: Be wary of the usefulness and truth-value of the information you have amassed. The solution to being overwhelmed by too much irrelevant information is selecting relevant information—not merely less information.

Bear in mind that there’s always room for new ideas and new perspectives. Review and challenge your current comprehension of the problem you’re confronting. Don’t be afraid to refine your understanding and explore other possibilities.

Look Back at This Time Last Year

May 20, 2022 By Nagesh Belludi Leave a Comment

Each week, review the prior year’s calendar, logbook, or journal for the same week to see what you were doing. What projects were you working on, and with whom were you interacting?

This habit not only gives you a perspective on how things turned out for you but also reminds you to reconnect with people.

What was most important in your life then? What “would I, could I, should I” decisions were you facing then? Have some of your anticipated troubles never come to pass? What were your most memorable moments? Has much of your worrying been eventually fruitless? What elements of life have you overlooked, and what could you restart or reprioritize now?

Idea for Impact: As you look back, reflect on how every experience, even a negative one, is merely a little step on the path. In the end, life turns out to be okay.

Deliver The Punchline First

May 12, 2022 By Nagesh Belludi Leave a Comment

When Sergey Brin and Larry Page set about to secure early funding for Google, they initiated a presentation at Sequoia Capital, one of the world’s premier venture capital firms, with the logline “Google organizes the world’s information and makes it universally accessible.”

Most busy executives don’t want to sit through a 50-slide presentation. They don’t have the patience to wait for the punchline.

Begin with the conclusion and then go through the rest of your slide deck: your proposals, theses, assumptions, your line of thinking, and the arguments, pro and con.

Meaning, Then Details

Cognitive psychologists have argued that the brain pays more attention to the core of an idea than to its details.

According to the University of Washington molecular biologist John Medina, the human brain craves meaning before details. In Brain Rules (2014,) Medina notes, “Normally, if we don’t know the gist–the meaning–of information, we are unlikely to pay attention to its details. The brain selects meaning-laden information for further processing and leaves the rest alone.”

When listeners comprehend the overarching idea of a pitch, they’ll find it easier to synthesize and digest the information.

Begin Your Next Executive Presentation with the Final Summary Slide First

Most executives have limited willpower and suffer “decision fatigue.” Don’t overload them with less-important details before asking them to decide in your favor. Your “executive summary” slide may be the only one that will get full attention. So make it perfect!

Practice, practice, practice. Few people, if any, have the rhetorical ability to make a persuasive 15-second speech about their significant ideas. The best speakers are the best because they rehearse and get feedback.
Less is more. After getting prized facetime with executives, many talented young professionals produce large slide decks to dazzle the executives with their intelligence and ingenuity. Don’t.
Simplify your “executive summary” message. Perceptive executives tend to be somewhat skeptical of things that ought to be simple but have become too complicated.
Meaning, then detail. The brain processes meaning before detail, and the brain likes hierarchy. Start with the general idea and then present information in a structured, hierarchical approach. Make sure that each detail you communicate traces back to the core concept of your presentation.

Idea for Impact: Get to the Point

Tell busy people what they need to know upfront. Communicate like a newsperson: What’s the number one thing your audience needs to know? Say that first. Then build out from there, keeping the most essential particulars up top.

There’s another smart—if devious—benefit of putting the cart before the horse: delivering your “punchline” first can hook your audience with a compelling proposal first, and then cash in on the confirmation bias to sway them to your case.

Spy thriller novelist Graeme Shimmin offers this excellent guide to writing a killer punchline, logline, or elevator speech.

Get Good At Things By Being Bad First

May 2, 2022 By Nagesh Belludi 2 Comments

Your first attempts are going to be bad

A technique used by many a brilliant inventor:

Make something. Get it functional. Get it adequate. It’s okay if it’s subpar.
Then, stumble around. Iterate until it’s good.

Now, that’s a better creative process than making something good on the first go.

Start, even if you’re bad at it

Case in point: Write bad first drafts quickly. Start by getting something—anything—down on paper. Let it all pour out. Let it romp all over the place. No one’s going to see it. You can shape it up later. You can gradually polish the thought flow and enrich the choice of words.

If you aren’t willing to be bad initially, you’ll never get started on anything new.

It’s vastly easier to revise your way into a cut above than drum up brilliance out of thin air.

The way you create something good is by launching into it and then iterating gradually rather than by going into your cave and trying to create that perfect masterpiece.

Essentially, this is agile development. The best programmers write functional code to prove some concept. Along the way, they’ll get a better understanding of the business need for the software and the workflow. Bit by bit, they rework snippets of code and improve continuously.

Idea for Impact: Just start. Do a bad first job.

The bad is the precursor to the good. Bad will get you started. It’ll move you forward. Pressing on, you’ll get illuminated, enlightened, and informed.

Momentum is everything. Don’t put off any contemplated task thinking, “This is hard. I don’t know how to do this well. I’m going to have to do it perfectly. Or I need to wait till I have enough time.” The instant you stop cold and put something off, momentum starts the other way.

Motivation is often the result of an action, not its cause. Taking action—even in small, sloppy ways—naturally produces momentum. It’s a better solution than trying to do it right the first time.

Can’t Expect to Hold the Same Set of Beliefs Your Entire Life

April 7, 2022 By Nagesh Belludi Leave a Comment

It’s okay to challenge your core values and change.

That’s normal and healthy.

It means you’re able to ability to transcend your current worldview and have an open mind. You’re willing to learn about new perspectives. You’re eager to search actively for evidence against your favored beliefs, discover and challenge your internal biases, and change your core values if they no longer make sense.

Having the freedom to change your core beliefs and being able to reason and reconsider your positions on something is an integral part of being human, as Aristotle writes in his Nicomachean Ethics.

Don’t be more committed to the appearance of consistency than to real growth.

Don’t inadvertently buy into the values that predominate popular culture.

When you have doubts and questions and changes of heart and mind, even on fundamental issues such as faith or political orientation, don’t consider them character defects or moral flaws. You’re just exercising your ability for rational thought.

Life should alter you. It should recondition your soul and mind and refocus your lens. Time and experience—the people you meet, the ideas you stumble upon, and how you discover meaning—should all change you. On religion, say, you won’t have the understanding of yourself and of God and the world that you had ten years ago. And you can bet that the same won’t be true ten years from now.

As a human, you grow and change. Your worldview can—and should—reflect that growth. Regardless of what you feel, think, believe, and profess today, if someday in the future you find yourself in a different place, remember: it’s okay to realign your mind—and to speak it.

Idea for Impact: Rethink everything you previously thought out. It’ll only strengthen your character.

You’ll also discover that you’re rarely offended by other people’s opinions anymore, even when they differ significantly from your own. You’ll be care far more about how people justify and rationalize those views. And you’ll get a better appreciation of the nuances—this is much more important than whether or not someone agrees with you.

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Mental Models

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Idea for Impact: The less you do, the less confident you’ll feel.

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Meaning, Then Details

Begin Your Next Executive Presentation with the Final Summary Slide First

Idea for Impact: Get to the Point

Wondering what to read next?

Your first attempts are going to be bad

Start, even if you’re bad at it

Idea for Impact: Just start. Do a bad first job.

Wondering what to read next?

Don’t be more committed to the appearance of consistency than to real growth.

Idea for Impact: Rethink everything you previously thought out. It’ll only strengthen your character.

Wondering what to read next?