Decision-Making

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.

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.

Get Your Priorities Straight

May 28, 2022 By Nagesh Belludi Leave a Comment

Most folks don’t take the time to write down and prioritize their values and goals. That’s the cornerstone of the all time-maximizing strategies.

Without distinct values and priorities, many people devote insufficient time to activities that support their most significant priorities.

No matter your goals, begin by thinking thoroughly about why you are engaging in any activity and what you expect to get out of it. Then be time-conscious. Match your time allocations with these top goals. Deliberately decide if you want to pursue each task required of you. Recall, too, that what you get done, and not time, in and of itself, is the best measure of success.

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.

What Most People Get Wrong About Focus

May 5, 2022 By Nagesh Belludi Leave a Comment

In Choose Wonder Over Worry (2018) self-help author Amber Rae recalls novelist Elizabeth Gilbert’s interaction with a wise older lady who was helping Gilbert with her struggles as a writer:

Lady: “What are you willing to give up in order to have the life you keep saying you want?”

Gilbert: “You’re right—I need to start saying no to things I don’t want to do.”

Lady: “No, it’s much harder than that. You need to learn to start saying no to things you _do_ want to do, with the recognition that you have only one life, and you don’t have time and energy for everything.”

This anecdote is such a powerful illustration of how saying ‘no’ is so much easier when you’re clear about your priorities.

That’s what focus really is—saying ‘no’ to things you’d like to do so that you can free up your time to focus on the pursuits that truly matter—even tasks you have to do, even if they don’t energize and excite you.

Idea for Impact: Setting boundaries isn’t always easy, but it’s essential to establish an overall sense of well-being. Every ‘no’ is a ‘yes’ to something else.

Don’t find any excuse to say ‘yes’ to what shouldn’t be done.
Don’t find any reason to say ‘no’ to what should be done.

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

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