Right Attitudes

Ideas for Impact

Biases

It Takes Luck as Much as Talent

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In The Frontiers of Management (1986,) Peter Drucker writes about how Thomas J. Watson, Sr. emerged as a pioneer in the development of accounting and computing equipment:

Twice in the 1930s [Thomas J. Watson, Sr.] personally was on the verge of bankruptcy. What saved him and spurred IBM sales during the Depression were two New Deal laws: the Social Security Act in 1935 and the Wage-Hours Act of 1937–38. They mandated records of wages paid, hours worked, and overtime earned by employees, in a form in which the employer could not tamper with the records. Overnight they created markets for the tabulating machines and time clocks that Thomas Watson, Sr., had been trying for long years to sell with only moderate success.

Idea for Impact: It’s hard for people who pride themselves on their extraordinary skills to accept that they’re just as lucky as they’re smart.

Luck is primarily the result of identifying opportunities and taking appropriate action. Watson could capitalize on the newly created need for business machines because he had worked in the field for decades. And he gave this kind of luck much credit without feeling that doing so devalued his talent and hard work.

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The Upsides of Slowing Down

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'Wait Art and Science of Delay' by Frank Partnoy (ISBN 1610390040) Making faster and faster decisions can look like the proper response in a culture obsessed with speediness and efficiency that bleeds into the reckless and hasty. But as investment banker turned-law educator Frank Partnoy’s Wait: The Art and Science of Delay (2012) argues, while fast thinking—like fast food—hits the spot on occasion, too much speed can, however, be counterproductive.

Today we jump faster and more frequently to firm conclusions. We like to believe there is wisdom in our snap decisions, and sometimes there is. But true wisdom and judgment come from understanding our limitations when it comes to thinking about the future. This is why it is so important for us to think about the relevant time period of our decisions and then ask what is the maximum amount of time we can take within that period to observe and process information about possible outcomes. … The amount of time we take to reflect on decisions will define who we are. … Our ability to think about delay is a gift, a tool we can use to examine our lives. Life might be a race against time, but it is enriched when we rise above our instincts and stop the clock to process and understand what we are doing and why. A wise decision requires reflection, and reflection requires pause.

Time pressure, high stakes, and emotionally charged situations make it more likely that we will deviate from rational decisions and fall back on heuristics—caveman thinking indeed. Mental shortcuts may have their place for helping us to navigate quotidian risks like crossing the road or boiling a kettle. However, for every decision that can be made in a moment, there are many others where a considered and judicious approach may save you from calamity.

Idea for Impact: The next time you feel pressured to make a quick decision in the face of the unexpected, try to slow down, take a breath, and ask yourself whether your natural desire to get on with it needs to be tempered with caution.

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Knowing When to Give Up: Establish ‘Kill Criteria’

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'Quit When to Walk Away' by Annie Duke (ISBN 0593422996) Quit: The Power of Knowing When to Walk Away (2022) by the professional poker player and “decision scientist” Annie Duke meditates on how you could become so wedded to some predetermined goals that you don’t reassess your ever-evolving values and priorities based on new information that you may unearth along the way.

Quitting isn’t bad, especially if you’re blindly heading toward a “fixed object goal” that’s perhaps no longer serving your values—even hurting you in some way you didn’t anticipate.

A Mental Model to Help You Cut Your Losses

Duke suggests instituting “kill criteria” in advance. Before a pursuit, ask yourself: what signals you could see in the future would tell you it’s time to quit or change course?

Before entering a marathon, for example, you could decide if the medical tent counsels that you’re hitting your physical limitations, you’d quit trying to push yourself and walk out.

In other words, every goal needs a resolute “unless” for every task, investment, and relationship. E.g., if you’re miserable at your job, you could give it three more months and pre-select some indicators that would tell you if things haven’t improved even after you’ve increased your efforts.

Idea for Impact: Know when to give up. Grit is great—but only for carrying on for hard things that are worthwhile. Beware of tunnel vision; don’t get so narrowly focused on a specific goal and overlook other opportunities or priorities.

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The Greatest Trick a Marketer Can Pull

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The greatest trick a marketer can pull is making you think it’s not marketing.

Take Southwest Airlines, for example, which has consumers persuaded that it’s got the lowest fares. That was true in the ’70s when the airline spurred demand by keeping costs down and offering low fares. But being able to preserve that “lost cost-airline” aura into its sixth decade is commendable, especially with its bloated cost structures.

How about Hallmark, which contrived no end of commercially driven, proclaimed ‘holidays’ (sweetest day? clergy appreciation day?) to guilt people into buying overpriced greeting cards for no discernible reason? Emotional inflation at its finest: “While we’re honored that people so closely link the Hallmark name with celebrations and special occasions, we can’t take credit for creating holidays.”

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Racism and Identity: The Lie of Labeling

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This video examines how categorical labeling and the us-versus-them mentality it fosters are at the heart of division and, subsequently, intolerance and non-acceptance.

From birth, the world force-feeds us these labels, and eventually, we all swallow them. We digest and accept the labels, never ever doubting them, but there’s one problem. Labels are not you, and labels are not me. Labels are just labels. Who we truly are is skin deep. Who we truly are is found inside.

Labels forever blind us from seeing a person for whom they are, but instead force us to see them through the judgmental, prejudicial, artificial filters of who we think they are.

Labels Aren’t Just Idle Placeholders

Labels determine what we see. As essayist James Baldwin cautions in The Price of the Ticket (1985,) “As long as you think you are white, there is no hope for you. Because as long as you think you’re white, I’m forced to think I’m black.”

We’ve used the lie of labeling to define and separate people for millennia. We emotionally and intellectually enslave ourselves when we believe the lie of a label. Then we enslave others. Even forcing people to self-identify by labels reinforces separation, stereotyping, and divisiveness.

Rigid stereotypes of out-group norms follow. Such attitudes are harmful because they overlook the full humanity and uniqueness of all people. When our perceptions of different races are distorted and stereotypical, it’s demeaning, devaluing, limiting, and hurtful to others.

Idea for Impact: Let’s Stop Sidestepping the Human Behind the Labels

What we need now—more than ever—is an individual and collective shift from tolerance to acceptance (it’s possible to be tolerant without being accepting, but it isn’t possible to be accepting without first being tolerant.) In so doing, we can work to create a society in which everyone is valued, appreciated, and embraced.

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“Fly the Aircraft First”

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Today is the 50th anniversary of the Flight 401 disaster. I’ve previously cited how the crew of the ill-fated Eastern Airlines Lockheed L-1011 got so single-mindedly preoccupied with tackling a nose landing gear indicator light malfunction that they didn’t pay attention to the fact that their airliner was descending gradually into the Florida Everglades.

In summary, the pilots were too distracted to fly the aircraft. Human factors, specifically cognitive impairments, can precipitate distractions away from vital tasks.

The incident led to a breakthrough called Crew Resource Management (CRM.) This “human nature innovation” actively orients pilots to prioritize tasks in order of operational safety. The adage “Aviate, Navigate, and Communicate (A-N-C)” reinforces the ‘fly the aircraft first’behaviors until they’re internalized and become routine.

The top priority—always—is to aviate. That means fly the airplane by using the flight controls and flight instruments to direct the airplane’s attitude, airspeed, and altitude. Rounding out those top priorities are figuring out where you are and where you’re going (Navigate,) and, as appropriate, talking to ATC or someone outside the airplane (Communicate.) However, it doesn’t matter if we’re navigating and communicating perfectly if we lose control of the aircraft and crash. A-N-C seems simple to follow, but it’s easy to forget when you get busy or distracted in the cockpit.

Idea for Impact: “Fly the aircraft first.” Know when to set aside the seemingly important things to accomplish the more vital ones.

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Books in Brief: The Power of Introverts

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Susan Cain’s bestselling Quiet: The Power of Introverts in a World that Can’t Stop Talking (2012) investigates how our schools and offices have an intrinsic cultural bias towards extroverts—they’re more likely to be social and enjoy being in high-stimulus environments.

At a business meeting, for example, extroverts hog the conversation, while introverts are often quiet. Extroverts think by talking and arguing, whereas introverts think and process internally.

I worry that there are people who are put in positions of authority because they’re good talkers, but they don’t have good ideas. It’s so easy to confuse schmoozing ability with talent. Someone seems like a good presenter, easy to get along with, and those traits are rewarded. Well, why is that? They’re valuable traits, but we put too much of a premium on presenting and not enough on substance and critical thinking.

Idea for Impact: Don’t miss out on introverted excellence.

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Be Smart by Not Being Stupid

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No superhuman ability is usually required to dodge the many foolish choices to which we’re prone. A few basic rules are all that’s needed to shield you, if not from all errors, from silly errors.

Charlie Munger often emphasizes that minimizing mistakes may be one of the least appreciated tricks in successful investing. He has reputedly credited much of Berkshire Hathaway’s success to consistently avoiding stupidity. “It is remarkable how much long-term advantage we have gotten by trying to be consistently not stupid instead of trying to be very intelligent.” And, “I think part of the popularity of Berkshire Hathaway is that we look like people who have found a trick. It’s not brilliance. It’s just avoiding stupidity.” They’ve avoided investing in situations they don’t understand or summon experience.

As a policy, avoiding stupidity in investing shouldn’t mean avoiding risk wholly; instead, it’s taking on risk only when there’s a fair chance that you’ll be adequately rewarded for assuming that risk.

Idea for Impact: Tune out stupidity. Becoming successful in life isn’t always about what you do but what you don’t do. In other words, improving decision quality is often more about decreasing your chances of failure than increasing your chances of success.

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The Loss Aversion Mental Model: A Case Study on Why People Think Spirit is a Horrible Airline

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When Spirit Airlines pivoted to competing on price in the late 2000s, it quickly gained a reputation not only for operational inefficiencies but also for its in-your-face, take-it-or-leave attitude towards customer service.

Where other airlines charged by-the-package fares for the flight experience, Spirit pared back service and introduced an a la carte pricing model. Charging for the “ancillaries”—i.e., everything optional, including water—allowed Spirit to keep ticket prices down and appeal to price-sensitive travelers willing to sacrifice the usual amenities for a lower ticket price.

In the ensuing years, the unconventionality of this business model did not go down well with customers. Much of the flying public’s frustration with Spirit had to do with Loss Aversion. That’s the notion that the emotional disappointment of a loss is more extreme than the joy of a comparable gain. If finding a cheaper fare on Spirit felt delightful, giving up some—or all—of the savings to purchase ancillaries and surrender the savings felt utterly miserable.

Passengers felt ripped off by these seemingly hidden fees, especially when the true cost of flying Spirit ended up greater than what the initial ticket price led them to believe.

Spirit became quickly convinced that there was a perception problem—its customers didn’t fully understand how its fares work. Particularly, first-time customers blindly presumed that Spirit Airlines works the same way as other airlines. In reality, there were no hidden or excessive fees, and passengers could only pay for what they need or want. In 2014, the airline introduced its “Spirit 101” campaign to educate customers and alter their perceptions. With time and the increased adaptation of the “Basic Fare” model and curtailed customer service by every other airline, passengers’ expectations have since been right-sized. Spirit Airlines has come a long way, and its customer service has improved vastly.

Further studies on loss aversion have shown that a cascade of successive fees is worse than the cumulative: i.e., three ancillary fees that add up to, say, $70, feel a lot worse than a single $70 fee. Appropriately, Spirit offers a “Bundle it Combo” package.

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Sometimes a Conflict is All About the Process

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There’s a considerable difference between a “decision conflict” and a “process conflict,” and it’s necessary to disentangle the two.

A decision conflict is about a choice or another to be made. But a process conflict is about the approach, e.g., where making a choice has lacked rigorous deliberation (haste, a lack of participation from essential stakeholders, contempt for shared priorities, lack of attention to the tradeoffs, and so forth.) A sound decision has ensued from a meticulous-enough thought process, even if the decision emerges to be defective in the fullness of time.

Idea for Impact: Worry about bad decision processes. Make the “how” the anchor for your decision-making process. Improving the quality of decisions is developing better frameworks for making those decisions.

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