Decision-Making

Are You Ill-Prepared for Being Wrong?

October 31, 2022 By Nagesh Belludi Leave a Comment

We spend so much of our lives being right that, I wonder if, we’re ill-prepared for being wrong.

Since childhood, we’ve been inured that being right is more acceptable than being wrong. Being wrong feels so unpleasant—repulsive even—that we instill a series of strategies to salvage ourselves when we are exposed as being wrong. We learn to trip from our forked tongues explanations, justifications, excuses, and blames for our errors and oversights.

What’s worse, we develop a deep-seated impulse to shirk responsibility and accountability for our actions. We become loath to change our beliefs or behaviors because change takes effort. We envisage change as a challenge to our identity. In the words of Amazon founder Jeff Bezos, “People who are right a lot listen a lot, and they change their mind a lot. They wake up and re-analyze things and change their mind. If you don’t change your mind frequently, you’re going to be wrong a lot. People who are right a lot want to disconfirm their fundamental biases.”

Idea for Impact: What’s lost in all this is that being wrong is not only a central feature of being human. It’s one of the most potent ways of learning. Admitting we were wrong—and conceding we’ll be wrong again—can be so liberating and welcoming.

Never Take the First Offer

October 24, 2022 By Nagesh Belludi Leave a Comment

Gently push back, at least for one round. Especially if you’re a less-aggressive personality type and are programmed to answer ‘yes’ to the first reasonable offer someone makes.

People seldom offer the best they can offer right away because the first offer “anchors” the negotiation. They risk “showing their cards” and divulging some bargaining zones.

If you don’t push back even once, you’ll wind up with a less-than-optimal deal. A straightforward question such as “Can you do better than that?” will help you fend off the first offer politely without being a pushover.

If the counterparty says ‘no’ and you feel you can sustain the process for another round, inquire, “I’d like your help to learn why the first offer is the best you can do.” The key to being a better negotiator isn’t simply presenting your demands but asking detailed questions designed to better understand the other side’s interests.

If their answers make no sense, share your confusion. Offer a strong counteroffer based on your ideal intended outcome and your appraisal of the counterparty’s options and their “reserve price.”

Idea for Impact: Beware of the trap of saying ‘yes’ too quickly. You’ll get farther with a bit of polite persistence than quick surrender.

3 Ways to … Avoid Overthinking

October 17, 2022 By Nagesh Belludi Leave a Comment

Overthinking and over-analyzing the causes and meaning of your thoughts can be tamed through greater self-awareness and mental disengagement.

Set a time limit for your “thinking time,” then make yourself move on to something else or force your decision. Vent your worries to the world, but there’s a risk that you’ll end up even more confused if you keep asking everyone’s opinion. Most of the time, things aren’t as complicated as you perceive them.
Pause and take a step back. Interrupt the thinking process or distract yourself by diverting your attention to something very different. Focused distraction can calm your mind and help you have a coherent view of the whole situation.
Accept that uncertainty is part of this life, and you’ll never have all the facts or know what’s further down the road. Studies suggest we fear an unknown outcome more than a known bad one. Not everything you plan will work out, and that’s ok. It’s often better to set a clear course today and tackle problems that arise tomorrow.

Idea for Impact: Right-size your expectations. Overthinking comes from trying to control what you can’t control.

How to … Overcome the Tyranny of Your To-Do List

September 5, 2022 By Nagesh Belludi Leave a Comment

Long before management consultants made the humble 2×2 matrix their stock-in-trade, President Dwight D. Eisenhower used the format to create one of the most powerful productivity tools of the 20th century: take your itemized to-do list, and dichotomize all the items on their importance and urgency. Then, classify these on a 2×2 with urgency on the x-axis and importance on the y-axis. The items in each bucket warrant a different kind of response.

The urgent-and-important tasks in the ‘Do’ quadrant need doing now (e.g., call the fire brigade if your house is burning down.)
The urgent-but-not-important tasks in the ‘Delegate or Automate’ quadrant are best delegated where possible (think booking a hotel or clearing low-priority emails.)
The important-but-not-urgent tasks (strategic planning, training) in the ‘Schedule’ quadrant should take up most of your time. Eisenhower noted that truly vital yet immediate tasks are few and far between: “I have two kinds of problems, the urgent and the important. The urgent are not important, and the important are never urgent.” That means committing to doing the tasks you schedule. Being effective can’t happen if you keep kicking the can down the road.
The neither-important nor-urgent tasks in the ‘Eliminate’ quadrant are usually time-wasting activities and must be eliminated forthwith. They don’t move you towards achieving your goals.

De-prioritize Stuff You Shouldn’t Be Doing in the First Place

The Eisenhower Priority Matrix isn’t entirely ground-breaking. Still, it can help you recognize you can deliver yourself by knowing it’s okay not to complete them all, so long as you get the most vital ones done. The challenge lies in being able to determine what’s essential and what isn’t, as expounded tediously in Steven Covey’s First Things First (1994):

Urgent matters are those that require immediate action. These are the visible issues that pop up and demand your attention now. Often, urgent matters come with clear consequences for not completing these tasks. Urgent tasks are unavoidadable, but spending too much time putting out fires can produce a great deal of stress and could result in burnout.

Important matters, on the other hand, are those that contribute to long-term goals and life values. These items require planning and thoughtful action. When you focus on important matters you manage your time, energy, and attention rather than mindlessly expending these resources. What is important is subjective and depends on your own values and personal goals. No one else can define what is important for you.

The key to productivity is to be very selective in what you pick and execute your most important priorities. Be ready to delegate and be quick and not-to-perfection on as many things as possible. You really don’t need to give 110% on everything.

Idea for Impact: Use the Eisenhower Priority Matrix to Triage Your To-Do List

The Eisenhower method can be an indispensable weapon in your efficiency arsenal. Your life will never be the same when you internalize clarity of habits. Once you’ve been using the matrix for a while, you can realize a pattern of your own behavior. With some discipline, you can change your behaviors to ensure you’re spending more time on the ‘Schedule’ and ‘Do’ quadrants, improving your ability to plan your work.

Try taking a few minutes each day and analyze your task list. Are there things on there that you can delegate or eliminate? Are you genuinely focusing on the right tasks? It’s incredible how much more productive you can be with a bit of planning and forethought.

To Rejuvenate Your Brain, Give it a Break

August 25, 2022 By Nagesh Belludi Leave a Comment

Research suggests that once you hit a “plateau of productivity,” the number of hours you work without a break is inversely proportional to how much you’ll accomplish.

Even brief escapes such as a walk in nature or a run around the block can clear your head and rejuvenate the brain. Just leave the phone behind and seek novelty (e.g., noticing something new or taking different paths.) Engage your mind with the world instead of worrying about the work you’re supposedly taking a break from.

Downtime allows the brain to refresh the specific neural network you’ve been using, make new connections, and inspire you to fresh approaches to tasks.

Idea for Impact: Intermittent escapism can be valuable. It distracts the brain from useless worry, helps generate out-of-the-box ideas, and may even restore a sense of wonder.

Novelist Neil Gaiman said it better, “People talk about escapism as if it’s a bad thing… Once you’ve escaped and come back, the world is not the same as when you left it. You return to it with skills, weapons, and knowledge you didn’t have before. Then you are better equipped to deal with your current reality.”

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

August 11, 2022 By Nagesh Belludi 1 Comment

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.

Quantity is the Path to Quality

July 30, 2022 By Nagesh Belludi Leave a Comment

Happiness is not how much time you spend doing what you love, but how little time you spend doing what you hate.

As in Charlie Munger’s recipe for success: “It is remarkable how much long-term advantage people have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.” And “I know I’ll perform better if I run my nose in my own stupid mistakes.”

Idea for Impact: The road less stupid can keep you from silly errors, if not all errors.

Sometimes a Conflict is All About the Process

July 27, 2022 By Nagesh Belludi Leave a Comment

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.

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.

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.

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De-prioritize Stuff You Shouldn’t Be Doing in the First Place

Idea for Impact: Use the Eisenhower Priority Matrix to Triage Your To-Do List

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