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Leading Through Chaos 5: What’s a Leader to Do?

Leading Through Chaos 5: What’s a Leader to Do?

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Previously, on Leading Through Chaos: Chaos is hard because we can’t plan for it. Our protection? Nassim Nicholas Taleb’s “barbell strategy”: avoid ruin while finding opportunity. Use “effectuation” to find upside opportunity when planning doesn’t work.

Finally, learned about the VICI “Nirvana Zone”, which tells us that long-term thriving happens when decisions are distributed and data-based.

How do you change your entire company? Well, that’s what leaders are for. They can change everything, from one-room startups to the Fortune 500 C-suite.

But before we get to the how-to, we need to cover some important background about the oft-abused, misunderstood “business “vision.” Why does it matter? What role does it serve?

For one, it’s the glue…

My first Leadership “A-ha”

Early in my career I worked for Intuit, the multi-billion-dollar maker of QuickBooks, Turbo Tax, and Quicken. Back then, Intuit as a 100-person company on a shady street in sleepy Menlo Park, California. Our only product was Quicken.

My first day. founder Scott Cook, sat me down with a pad of paper and drew his vision of Intuit. It would be at the center of everyone’s financial lives. Intuit would provide bookkeeping, credit cards, loans, tax preparation, and All the Things that people needed to run their financial lives.

I thought he was ridiculous. Delusions of grandeur, at least. His little 100-person company, with one product, would become the center of everyone’s financial life? cynical snort Pull the other one.

Maybe he was delusional, but he was right. His $16-billion-dollar company is now central to small business accounting, and tax preparation.

The meeting wasn’t for me to admire his vision; it was for him to align me with his vision, so we could make the dream come true.

Here’s what alignment looks like:

Someone has a great new idea: we could open a fried chicken restaurant. Yum! Everyone loves friend chicken. What’s not to love?

In an unaligned company, there might be presentations. Strategy sessions. Deep Thoughts about the market. “Programmers like to eat fried chicken. It’ll be a billion-dollar company by year 2!!” … but would programmers be good at making and selling friend chicken? Probably not.

In a company aligned behind Scott’s vision, we know right away that Intuit Fried Chicken isn’t a fit for a financial services hub. We don’t even need a test kitchen.

Being aligned means that decisions automatically lead in the direction we want to go.

Vision was more than just fancy inspirational words. Vision makes it possible for everyone to make decisions!

My eyes widened at the realization. I was giddy with excitement; I rushed to my fax machine (this was before email was everywhere) and faxed my great discovery to my business school professor, Len! You can see the actual fax here. I kept a copy.

Leading through turbulent times: The Importance of Vision

Vision help people make decisions, and more. Remember how people crave predictability? A well-crafted vision gives people predictability in their decisions and their destination.

(We all know this. We have shared cultural visions. A spouse, kids, and a white picket fence is a vision for “the good life.” It guides direction and decisions. In Silicon Valley, the vision is having a “unicorn” company and private doomsday bunker. That vision also gives predictability.)

Your job?

To craft and communicate a vision for surviving the storm. This series gives you pieces you can use to craft it.

This is not the vision for the company’s product; this is a vision for how you’ll thrive during chaos.

Here are some elements of the vision you can craft to transform your company:

We’re going to get through this. We’ll survive by finding upside opportunity while insuring that we survive.

Transparency and collaboration People commit to decisions they help make. We all know tariffs and political upheaval cause disruptions. Acknowledge that. Invite your employees to discuss what that might mean, how it might change things, and how you’ll survive.

Short-term survival matters. The effectuation principle of “bird in the hand” tells us to ask first, “What can we do with the resources we have?” That means your people, your systems, your relationships, and your assets.

Get people thinking about protecting your downside and boosting your upside, using your existing portfolio of resources.

If people really understand that lean times are coming and everyone’s in it together, it might enable solutions like across-the-board salary cuts instead of layoffs.

Long-term survival matters. If you do have to consider layoffs, think carefully. The AI hype machine claims that people are easily replaced by machines. But are they?

Your company’s capabilities and relationships reside in the systems and people. 

Layoffs tank morale, erode (if not destroy) loyalty, and let critical assets fall by the wayside.

If you’re laying off a cashier, that might not be a problem. Their relationships and knowledge may not be valuable, but even that isn’t guaranteed.

A cashier might be closest to your customers. They may know best what customers are thinking … if anyone asked them.

Your procurement people may have valuable relationships. Your managers may have links to employees critical to your future success. Your product developers may have critical institutional knowledge. Your supervisors may have key operational insights.

And they’ll all have some perspective to spot upside opportunities as they pass by. Most opportunities won’t pan out (thus the “affordable loss” principle). But all you need is one.

Share the vision (wisdom from a Fortune 500 CEO)

When you have your vision of becoming a resilient, flexible company seeking opportunity … you need to make it everybody’s vision.

Unlike Scott Cook, you might not be able to convey the vision to every employee. So you need to lead by example.

My mentor Len (the one I sent the fax to) eventually became COO and Vice-Chairman of a Fortune 500 firm. He would still take my calls, so I called! I called to learn, “What are you working on today? How did you decide to work on those things?”

His answer:

“My only tools in the executive suite are communicating our vision and strategy, and walking the talk.”

He couldn’t tell people what to do, but he could coach them through making decisions that aligned with the company’s vision.

A smaller company executive has any more tools, since executives are closer to the front line, but setting direction and being a role model are still two of the biggies1.

Since you want to get everyone making decisions that lead towards this vision, demonstrate the decision-making process. A lot.

When there’s a decision-making meeting, walk through the decision process step-by-step: 

  • Do our options increase our short-term survival chances?
  • Do our options increase our long-term survival chances?
  • Do our options limit our downside (affordable less), with upside potential?
  • Do our options give us information for better future decisions?

At first, talk through those questions on your own. 

Gradually shift. Start asking the group those questions. 

Then begin having groups walk through the questions for themselves.

This is how you cultivate the VICI “Nirvana Zone” for successful decision making. 

What else can help?

This series has been about surviving in an ever-less-predictable business world.

Between international political trends, global warming, and the rise of the tech plutocratic class, prediction-based planning can’t be the only tool in our toolbox. 

Fortunately, you don’t need to have all the answers. You just need a way to find the upside as the world hands you new surprises. 

Crafting a strong culture around the barbell strategy and effectuation, you’ll have a tool for survival and opportunity recognition in a messy, unpredictable world.

  1. My article on a CEO’s job description lays out the components of a CEO’s job. The “role model” part applies to all execs. ↩︎
Leading Through Chaos 5: What’s a Leader to Do?

Leading Through Chaos, part 1: What’s the Root Problem?

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The world is pretty crazy right now, and it’s hard to know what to do. About anything. But even wait-and-see is doing something.

Or maybe, we can step up as leaders. Business leaders. And since everything is in flux, not just business, we can also be family leaders. Friend and community leaders.

Leading or not, we need a way to deal with the chaos.

The first step is understanding why chaos is even a problem.

America has decided to step down as a world power. Given our central role in the world’s economy, America shifts, and so does everyone else. Stock markets are dropping. Currencies are fluctuating. We’re talking decades of ripple effects. And that’s just the economy.

We don’t know what the world order will look like five years from now. We don’t know what our lives will look like. But different. Almost certainly, different.

Personally, I’m plenty scared. My whole life has been based on stories about the future:

  • There’s always opportunity available if you decide to grab it.
  • I have control over my future.
  • My later years will be spent with family and friends.
  • Physical health and fitness is possible, if you just put in the work.
  • The world will generally get better over time, leading to more opportunity, health, prosperity, and safety.

In short, I’ve assumed that everything needed for a vital, fulfilling life is available.

Do Lunch or Be Lunch

But there’s the rub. When those assumptions are up-ended, everything else seems in doubt.

  • Will there be opportunity, two years from now? As I write this, GDP forecasts have dropped from +3% to 0% in the last six weeks.

  • Will there be health care, sanitation, food standards, and public health that can help support me in my old age? It’s looking unlikely.

  • Will my country even be conducive to community, mutual support, happiness and love?

We want to know these things so we can plan for them.

My Harvard Business School professor Howard Stevenson changed my thinking more than anyone else. He has a knack for reframing life situations in powerful ways.

In his book Do Lunch or Be Lunch, he suggests that the fundamental human drive isn’t survival, it’s predictability. Predictability is what helps us survive.

We don’t want to Be Lunch; we don’t want to be the hapless victim of the Saber Tooth Tiger.

We want to Do Lunch. We want to be the ones in control. We want to build, plan, and do so we can be the diners, not the meal.

Building and planning means knowing the future. Or at least knowing what the future is likely to be. That’s why science is great. Science tells us how the world works.

When we combine “how the world works” with “what we see, feel, and hear” (also known as data), we can predict future:

There’s a huge tree outside my window. The branches are near the house (observation). Close branches + wind = broken windows (how the world works). Knowing that, I can ask an arborist to trim the tree.

Note to self: Call the arborist. That tree’s getting a little too close.

It’s far from perfect, but it works better than anything else humans have tried.

Risk? Defuse it!

When you “Do Lunch,” that’s risk management. We do it everywhere.

Financial professionals are always looking for ways to get high returns with downside protection—that’s risk management.

Ever hear of a “hedge fund?” They started as funds designed to help investors “hedge their bets” against downturns in other investments.

Households save for a rainy day. Or for college, just in case our kids don’t get a full scholarship (does anywhere even give full scholarships).

We buy life insurance policies for our families, in case we get eaten by a Saber Tooth tiger.

We audition for Broadway, and also learn a marketable skill, just in case we don’t get selected as Elder Price in Book of Mormon. (h/t to my friend Pete, who despite being a “triple threat” singer, dancer, actor, also learned to code.)

We don’t like chaos because it screws up our ability to predict—and thus control—the future.

Change, even good change, can be bad

The ultimate in predictability would be if we could freeze everything the way it is. I watched the 2023 movie Barbie last night.

In it, the character Gloria (delightfully portrayed by America Ferrera) tells Barbie, “That’s life. It’s all change.” (Barbie’s response? “That’s terrifying—I don’t want that!”)

Nevertheless, the world changes. We can adapt to slow change. It gives us time to learn the new rules. Then we make new predictions and new plans.

Fast change is another matter. Too fast and our systems start breaking down without giving us time to learn the new rules.

The fundamental human drive is predictability. — Howard Stevenson (paraphrased)

When change is too fast, we stop investing for the future. Consider college: Who wants to spend four years and thousands to learn advanced skills that might be obsolete in ten years? When college is a path to success, it’s a no-brainer. When the job market changes so fast that college is a six-figure gamble? Not so much.

We can’t plan long-term during unpredictability, so we have to settle for short-term tactics. But that’s dangerous. Because short-term gains often come at the expense of long-term health.

The way to deal with chaos is to find predictability wherever you can.

Start from your bedrock

Find what you can predict and plan for it. Then find other ways to deal with the unpredictable.

If your supply chain is breaking down, or your retirement savings drops by 30%, use risk management for some short-term options. Then learn some new ways to think about strategy under uncertainty. We’ll cover my favorite later in this series.

In the book Anti-Fragile, Nassim Nicholas Taleb lays out a proposal for how we manage risk. It’s a barbell strategy. We deal with the extreme downsides and the extreme upsides.

First and foremost, we arrange our lives to protect against the worst-case scenarios. The risk of ruin. Things there’s no coming back from.

My own retirement strategy started with an investment account that I couldn’t touch until age 59 1/2. It invested in low-risk, long-term, dependably predictable investments. If nothing else worked, it’s protction against ruin.

The second part of Taleb’s strategy is the other end of the barbell: the extreme upsides. Always make sure you have some exposure to the best possible cases.

We’ll cover everything in the next few newsletters — protection from ruin, managing to find upsides through turmoil, and where to lean in as a leader.

But let’s start at the beginning. In the next segment, we’ll look at how to protect yourself against risk of ruin.

Mistakes Matter, So Make More of Them

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I’ve been doing a series of coaching calls with a wide range of successful people, to learn what’s holding them back in life. One of the most common fears: the fear of making mistakes. And it’s no wonder…

It’s election time. And political discussions tell us that anyone who makes a mistake should be shunned for life, barred from public office, and labeled a “flip-flopper” (especially if they change their mind as a result of learning from their mistake). Success literature, however, tells us that we should learn to be comfortable with failure and make mistakes! One of my most accomplished business school professors once said: if you’re not making enough mistakes, you’re not taking enough risks. How about you? Do you know how to make the most of your mistakes?

If you’re not making enough mistakes, you’re not taking enough risks.

Bad Outcomes Don’t Necessarily Mean Mistakes

Our school system trains us for decades that not getting the right answer means we were wrongand somehow didn’t work hard enough. Once we get into the real world, we bring that mindset along with us. If we don’t get the results we want, we assume we made a mistake.

This isn’t necessarily so. Here’s a thought experiment to understand why. Imagine you have two quarters. One is perfectly fair. It has 50%/50% odds of flipping heads or tails. The other is weighted. It has a 60% chance of flipping heads.

We have two Coin Operators, whose job is to flip heads. They’re allowed to choose either coin to flip.

Peyton, Coin Operator #1, chooses to flip the 50/50 coin and gets HEADS.
Harley, Coin Operator #2 chooses to flip the 60/40 coin and gets TAILS.

Who made the mistake? If we look at the outcomes, it appears that Harley made the mistake. But before we know the outcome, we would favor Haley’s decision to choose the coin that is weighted towards heads. Haley pursued the outcome using the right process, even though it was the wrong outcome.

“Stuff” Happens

I hear you cry, “But Harley made the right choice! The outcome should have been heads!” I agree! We really want to believe that our actions will give us the results we want. The real world, however, is sadistic: sometimes things work, and sometimes they don’t. We have a name for this. We call this luck.[1]

We can do the right thing, have bad luck, and get the wrong outcome. We can do the wrong thing, have good luck, and get the outcome we want.

This gives us a critical insight into the nature of mistakes: it isn’t the outcome that lets us know we’ve made a mistake; it’s what we did to get the outcome, our process, that lets us know if we made a mistake.

We’re not taught to think this way. We’re not given societal support to think this way. We don’t evaluate our political candidates this way. We don’t evaluate our employees this way.

But if you want to train yourself to get what you want in life, don’t measure mistakes by outcomes. Burn these definitions into your brain:

  • Success is using a high-quality process, regardless of outcome.
  • Mistakes are using a low-quality process, regardless of outcome.

Other People May Not Suck as Much as We Think

Deep down inside, we all love judging other people, especially politicians. But this new definition of mistakes means we need to be careful. If we judge them based on outcomes, we might end up deciding that the Peytons of the world are amazing and awesome and worthy of backrubs, while the Harleys of the world should eat rocks.

Unfortunately, however, unless we’re paying attention during the entire effort, we rarely know what process someone used to reach their outcome. That makes it harder to judge them accurately.

I took a mediation class, where I had the joy of mediating a 10-party negotiation between the heads of several organizations. Each organization cared about different things, with different priorities. The real estate developers wanted more land. The conservationists wanted land made off-limits to developers. The Mayor cared about economic development and tourist trade. The historical society cared about limiting changes to any part of the city.

The final agreement satisfied no one, but at least everyone was equally dissatisfied. To each organization, the outcome surely looked like a failure. But the representatives reached the best agreement they could, given the conflicting interests, the time available, and the fledgling abilities of the mediator.

It’s easy to say “my [politician, boss, representative] failed by not getting outcome I wanted.” If we really want competent leaders, however, we do better to judge the process they use. Do they take steps to understand the issues? Do they understand whose support is needed and build the necessary coalitions? Do they compromise where needed, and hold firm where needed?

When evaluating others, don’t judge their success and failure from their outcomes. Look as closely as possible at their process.

Getting the Most Out of Your Mistakes

Although mistakes are a sign that you’re really moving, stretching, and growing yourself, that doesn’t mean you want to make the same ones over and over. You want to learn as much as you possibly can each time things don’t work out.

When a mistake happens, hold an After Action Review. Take time to reflect explicitly on what worked, what didn’t, and why. Consider what happened on the ground—what worked out the way you expected, and what didn’t. What happened that you didn’t plan for, and what didn’t happen that you did plan for? Also consider what happened in your head. How did your a priori beliefs factor into what happened? Were your interpretations of what was going on correct? Where did you waste time paying too much attention to trivialities, and where did you miss opportunity by not paying enough attention?

Making mistakes, combined with a good after action review, helps you refine several important aspects of your future thinking.

Mistakes Refine Cause/Effect Thinking

We all have theories about what causes what. Some of our theories are pretty good. We believe that watering a plant will help it grow. We water the plant. It grows. Our cause/effect works, we’re happy, and the plant is happy (maybe even ecstatic, depending on how long it’s been since you last watered it).

Some of our theories really don’t work at all. “Step on a crack, break your mother’s back” isn’t orthopedically sound advice. If you want to protect mom’s back, teaching her proper posture and good form when lifting heavy boxes is a far better plan.

And some of our theories about cause and effect are sort of true. “Work hard and you’ll get ahead” certainly works great while we’re in school. But once we’re in the work world, the link between hard work and advancement is much more tenuous. In many cases, it doesn’t hold at all.

Avoidable mistakes often help us refine our notions of cause and effect. Many people believed that putting money into the stock market would result in a consistent, positive return on their money. In 2008, an entire generation discovered that cause/effect in stock investing is more subtle, and less dependable, than they thought. Next time a financial advisor happily informs them “invest in fund X and you’ll make 11% interest for 43 years,” they’ll (hopefully) know to refine their notion that giving money to a financial advisor automatically leads to a comfortable retirement.

Mistakes Refine Discrimination Abilities

We don’t just learn rules about cause and effect. We also learn how to discriminate between different situations. For example, with the label side down, a tube of toothpaste and a tube of athlete’s foot creme might look identical. One might simply look in the drawer, see a tube, squeeze it onto a toothbrush, and pop that brush right into their mouth and start brushing.

One might then discover one’s mistake. This will lead quickly to the learning that although tubes look the same face down, there are subtle clues as to which tube belongs in the mouth, and which tube belongs in the foot. For example, fine print on the back of the tube that says “for treatment of athlete’s foot and other topical fungal infections. Don’t eat it, you moron.”

That particular mistake is the one that got me to start paying close attention to the difference between tubes of cream.

Then there are my singing lessons, where my voice teacher forced me to listen to recordings of our lesson. When I was able to stop gritting my teeth, I began to develop the ability to distinguish between a tritone and a major fifth. It turns out that when you’re singing harmony, that distinction matters.

Mistakes help us refine the distinctions we make in the world.

Mistakes Refine Luck

And finally, mistakes help us understand the role of luck in what we’re trying to do. To return to our coin toss example, if we know Harley chose the 60/40 coin to flip, and it still came up tails, that tells us that luck played a factor in the outcome. While we would have prefered that Harley flip heads, we can be confident that the outcome of tails reflects luck, and not Harley’s abilities.

We might think mistakes are bad, but nothing could be further from the truth. Mistakes help us learn if we respond correctly. We should understand the roles luck and skill played in our outcome. Analyzing our process will tell us if we our good process gave a poor outcome, or whether we had a genuinely poor process. And we should refine our understanding of cause/effect, our discrimination abilities, and the role of luck. Our greatest advancement happens when we learn when things go wrong. To do anything else would be a mistake.

  1. If you’re a physicist, you call it a wave function. Or quantum mechanics. Or alternate universes, or something. But you’re not a physicist, so let’s stick with luck.  ↩

Time after Time: Put Your Decision-Making Time Horizon to Work

Put Your Decision-Making Time Horizon to Work

Think about the future. Notice what kind of events you expect to happen in the future. Think about the projects you have going on. Think about the good things you expect to happen, and how you plan for them.

You’ll notice that you have a preferred time horizon that you automatically use without thinking about it. For some people, considering “the long term” means thinking five months out. For other people, it means thinking ahead a hundred years… or a thousand years. I’m not talking about the time pressure from Wall Street or other managers; I’m talking about the mental timelines that all of us have, that we use to plan our lives.

Your Time Horizon Matters

The time horizon you use makes a huge difference in how you make decisions. If you naturally have a long time line, you may be able to create great long-term plans. You might not be so good at the short-term, however. Unfortunately, you have to pass through the short-term to get to the long-term, and if the short-term has some surprises, you can be caught unawares. I met a startup entrepreneur whose timeframe was years. He was mentally in a future where his company was already an industry leader. Unfortunately, he lived in that future and didn’t really pay much attention to the next six months. His company hit a few snags, and rather than focus in on the short term, he was so wedded to his long-term vision that he assumed “everything will work out.” It didn’t really penetrate that *he* was the one who had to make it work out.

A purely short-term time horizon is great for day-to-day survival. A short-term calendar has its own problems. It’s easy to make decisions that seem great in the short-term, but lead to long-term ruin. A friend of mine thought his decisions through about three weeks out from the present. Three weeks is less than a credit card statement cycle, however. Each month he would run up more and more credit card debt, because his decisions about “can I afford this?” never really considered the need to pay back the credit card, four weeks in the future. It took him 15 years to pay down the credit card debt he accumulated in college.

Use a Deliberate Time Horizon

Next time you make a decision—about work, or family, or home life—consciously consider the same decision and its consequences on a 2-week, 6-month, and 5-year time horizon. You may find that different decisions work best with different time scales. That’s a good thing! It lets you understand the interplay between short and long-term consequences.

My friend Michael Linenberger noticed that having a to-do list that’s so long your brain wants to explode also has a timeframe attached to it. Different items on your to-do list are associated with different time distances in the future. He’s designed a complete system to take advantage of how people think about time and activities to handle task management with no stress. His system meshes naturally with how people process near-future tasks differently from medium-future tasks, differently from far-future tasks. Today (immediate future), his book on the system is launching and I encourage you to check it out and buy a copy:
   http://masteryourworkday.com/

Next week (medium future), try his system for a week. Just do it for a week and find out whether taking timeframes into account improves your ability to juggle the demands of a task-heavy workload. Then in six months, if it’s still working for you, start asking where else in your life you can take timeframes into account, so you make better decisions and build your life into more of what you want it to be.

Good customer service requires substance and style

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Good customer service requires more than just nice phone manners.

I had a customer service need today. I called the company, whom we’ll call Canadian Mozy, and got a very nice young man named “Johnny.” He seemed to have a genuine American accent, clearly understood my issue, and was able to respond in complete sentences. That’s a good first start. Sometimes, I call a company and someone with a thick foreign accent answers, introducing himself as “Biff Johnson.” That’s a bad sign, especially if you recognize the accent and know that folks in that culture rarely have names like Biff. When a company’s first instruction to their phone reps is, “lie about your name,” you know you’re in for a real treat.

A lot of companies know that having polite reps who tell the truth makes a good impression. Canadian Mozy certainly understood this.

Johnny listened to my problem and explained, “we used to do what you’re asking for. We see we’ve done it for you several times. But our new policy is that we won’t do it any more.” Interestingly, I was asking for something that had no business implications for Canadian Mozy. It did not require them to spend a penny on my request. It did not expose them to any additional risk, nor did it obligate them to anything in the future. It was free for them to provide, they’d provided it before, and some random mid-level pinheaded bureaucrat decided to retract the policy.

Politeness Wasn’t Enough

Did I get good service? Johnny provided extremely polite service. He was gracious and dealt with my hissing, booing, and making funny noises into the phone with professional aplomb. But he was powerless to fix the situation.

As a result, I’m pulling tens of thousands of dollars’ worth of business from Canadian Mozy and shifting it to other vendors. Though Canadian Mozy likes to trumpet themselves as a “partner” to the small businessperson, they aren’t. Their reps aren’t allowed to think for themselves, and the managers who set their policies don’t understand a whit about how to evaluate the actual business impact of a policy decision. They eliminated a policy that gave customers great value at no expense to themselves, and never thought about how customers might react.

This brings me to the much misunderstood truth about customer service:

  • Good customer service requires good style. Your customer support reps must speak the language of your callers, shouldn’t tell obvious lies, and should be polite, courteous, and trained to deal with irate, irrational customers.
  • Good customer service also requires good execution. Your customer support reps must have the training to investigate someone’s problem, and the ability to do something about it, especially when the request is one you’ve honored in the past and which has no downside for you but tremendous upside for your customer.

If you’re missing style or executions, customers get upset. In the language of kindergarten, good support comes down to this: be polite and keep your promises.

One Price Doesn't Fit All

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But offering lots of options can destroy the buying experience.

I’m flying this morning. More accurately, I’m waiting in line after line after line at the airport. Once, I needed my boarding pass. Then I needed my boarding pass and driver’s license. Now, I need my credit card, too. Every line brings a new, extra charge. The check-in kiosk gleefully says it costs $15 for my first checked bag. At the gate, the little headphones cost me. On board, a pillow and blanket—once free free—now cost big bucks. And don’t get me started on the snacks.

Every price tag becomes a separate purchase decision. Every purchase decision makes an impression. The airline has me asking “Is this worth it?” a dozen times during a single flight. And every extra decision risks my deciding “No.”

Any good sales person knows you want your customers crying Yes, Yes, YES! As soon as I think No, they’ve lost me as a customer.

If you offer options, do it at once.

When you have lots of little add-ons that someone can choose up front, that’s fine. Call it “customization.” If I’m buying a new Mini Cooper, I get to run the Mini Cooper customizer. It becomes a game to choose the white racing stripes, chili pepper red paint job, fancy suspension, and cool hubcaps. Will I pay extra to customize? You bet. And since it’s a one-time fantasy fest, I only have to abandon common sense once to sign on the dotted line. Now I have my cool car with lots of options, and I love the chance to go into debt for life for my new tricked out Cooper. But only if it’s a single purchase decision, where the excitement happens all at once. One purchase, and I can enjoy my car forever.

Don’t take away what used to be free.

Of course, don’t customize add-ons that are expected as part of the base product. If I had to pay extra to make sure my Mini came with wheels, it would be annoying, not delightful. But since the car comes with wheels, all my attention is blissfully on my Speed Racer fantasies.

For Goodness’ sake, never start charging for something that used to be bundled into the price. People hate losing things. When once my plane pillow and blanket were complimentary, charging extra for them stirs resentment.

You might think airlines have to start charging for the extras or they’ll go out of business. Maybe. But maybe not. If they just tacked $50 onto the ticket prices and announced that they still give “free” blankets, pillows, and checked luggage, I suspect many people would be willing to purchase. All it takes is one nickel-and-dime experience to realize that a low price ticket might be a smokescreen for an expensive bundle of travel “add-ons.”

If airlines want to offer variable pricing, they shouldn’t charge extra fees. Instead, they could frame the choice as a discount: you get $7 off your ticket if you decline a pillow and blanket. More people would take the blanket and pillow (people often just accept the defaults), so the revenues would be higher. Yet those who really care can still get the lower price. Furthermore, people would be imagining their flight with all the goodies, and would be inclined to forgo the discount since it would seem like losing that amenity—and remember, people hate to lose extras.

How many purchase decisions do your customers make?

What’s your product or service? Do you offer it as a series of purchase decisions? Try an experiment: create an all-in-one pricing bundle and offer discounts for unused options, rather than extra charges for extra options. Track how many customers choose to the default options, how many customers purchase again, and how satisfied customers are with their purchase. You just may find that the best way to serve your customers is to charge them more.

[Note: the way decisions are presented to people makes a huge impact in what they choose. This is called “decision architecture.” You can learn all about decision architecture in the book “Nudge.”]

Cause and Effect in Current Events

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Don’t be surprised when you get the expected result.

Stupidity is running rampant, world wide. It’s frustrating, because the mistakes aren’t rocket science. They’re really simple stuff. People forget their actions have consequences. Let’s explore some cause/effect you should keep in mind, through the lens of current events. Think how these apply to you, so you aren’t surprised by the utterly predictable.

(This is going to be a provocative article. If it offends you, recommend me to all your friends. The provocation may cause many unsubscribes from my list from people who would rather indulge in knee-jerk responses than think for themselves. Oops!! That sentence just lost a dozen, right there…)

Ignore the competition and you’ll lose. Detroit has been whining about how they couldn’t have forseen the current downturn. In business school in **1989**–twenty years ago–we did cases about how uncompetitive the car companies were, and how they were ignoring foreign competition, etc. Anyone who lived through the gas lines and 50+ mpg Honda Civics of the late 70s and hears Detroit complain that they can’t get 30mpg by 2020 should have nothing but utter contempt for the executives running the Big Three.

If you hit people, they won’t sit there and take it. Hello, Israel and Hamas. Are you listening? Kids beat me up in grammar school. It didn’t make me like them. And if I’d been bigger and stronger, I would have hit back. When Hamas broke a cease-fire and sent rockets into Israel, what did they expect to happen? It isn’t a matter of history, or who deserved what. Just that simple question: what did they expect to happen, other than violent retaliation? (Terrorists knocked down two of our office buildings seven years ago, and we started two wars over it, with a body count that some say is over 100,000 civilians. Clearly, if you swat someone who has more firepower, they just might swat back.)

Debt is bad if not managed wisely. Learn this: if you spend $10 today that you don’t have, how can you expect to have $12 to repay it with interest tomorrow? This only makes sense if you invest the $10 with the expectation of making $12 or more. Thinking of credit cards as free money is dumb. Thinking of a $1 trillion yearly budget deficit being used to fund expenses (e.g. war) rather than investment (e.g. R&D, research, education, infrastructure repair) is dumb.

Deliberate get-rich-quick stupidity will be appropriately rewarded. Banks have a thousand-year history of how to evaluate good credit risks. When they write mortgages to people they would never lend to under prudent guidelines, they shouldn’t be surprised when it all collapses. And by the way, every manager involved should be fired. I’d rather have a high school student running the bank than someone with proven bad experience.

Pay current expenses with current dollars. People get so upset and angry about tax levels. Get over it, people. Borrow-and-spend is _more_ toxic than tax-and-spend; you have to pay back with interest. Unless you are spending on investment that will generate a return, tax-and-spend is a much, much healthier policy. In any event, tax vs. borrow is just a financing detail. The problem is *spend*. (And anyone who still believes either party is more fiscally responsible than the other needs to have their head examined. As far as I can tell, the Repubs are abhorrently irresponsible, while the Dems are despicably irresponsible.)

Don’t borrow if you can’t repay. See the previous paragraph. This applies to credit card holders, home owners, governments, and investment banks. If you borrow $100, you have to pay back $110 next year, or even more in following years. Borrowing gives you the illusion that you have a higher standard of living than you can afford. The world will happily correct that misapprehension.

People do what you pay them for, especially if there are no perceived consequences. I’ll let you find the examples for this one. Just look at politicians, lobbyists, and CEOs of failed banks. (Why, please remind me, are any of those people still there? Aren’t we supposed to fire people who demonstrate beyond a shadow of a doubt their utter, complete, and total incompetence to run a solvent business?) This applies to politicians, too. If we connected their pay and career paths to desired national outcome measures, you would likely suddenly see a whole different set of conversations in Congress.

Does email overload help us?

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Tim Sanders wrote a blog entry that references a Business Week article on information overload I commented on last week. The writer suggests that information overload might be good. There might be some valuable information, and besides, young people can handle it just fine.

Sure. In what universe? My Get-it-Done Guy podcast email and people’s reaction to my what is email costing you assessment, suggest many people of us feel our life force being regularly sucked from our bodies by information overload. It makes us jump from topic to topic. It interrupts us when we need to concentrate. And then we feel guilty that we still can’t keep up. Gee, that sounds like a resourceful emotional state for reaching our goals.

Yes, we’re getting more info. Yes, some of it’s useful. But that’s not the point! We need to ask: is it useful enough? Are the benefits—financial, social, or emotional—worth the cost?

For Xerox CEO Anne Mulcahy (mentioned in the article), the answer is Yes. In email, they say things they would never say otherwise. Like that comment about the chocolate mousse, telephone pole, and garter belt. Who would ever say that out loud?

Of course, an anonymous suggestion box would fill the same function. Even better, the tipster could actually include the original garter belt. But apparently, those emails are amazing enough that Anne devotes a lot of time to her email. Since she’s gotten great results at Xerox, for her, the benefits might be worth the cost. (Assuming, of course, that her success is because of email, rather than in spite of it. Maybe a weekly suggestion box would be just as good.)

If you’re top dog, no one pays attention to how you use your time as long as you produce business results. The rest of us aren’t so lucky. Our pointy-haired boss gives us specific goals, and email can suck up a lot of time without moving us towards our real goals. That “Top 10 Reasons Working Here Sucks” email will only help you reach your goal if that goal is a new job at your major competitor’s firm.

When you’re deciding how much time to spend with your inbox, think long and hard about the benefits you’re getting. After all, there’s lots you could be doing with that time. Ask yourself if there is any other way to get those same benefits? If you hired a $50/hour assistant to read and answer your email every day, what would you tell him/her to process versus ignore? Are you following those same guidelines?

Being perfect in every way, I follow my own advice and am ultra careful with my email habits. Even so, I often get sucked in for up to 30 extra minutes a day. Since I’m perfect, that must be the perfect amount of time to waste. But there’s still a nagging feeling: that comes out to three weeks per year. If I’m going to spend three weeks a year blathering mindlessly, I’d rather do it wearing a bathing suit on a sunny Caribbean beach than sitting hunched over my computer in my basement office, looking like one of the Mole People. At least on the beach, I might get a tan.

So don’t take my word for it. Don’t take Tim Sanders’s word for it. And don’t take Business Week’s word for it. Your email time is productive to the extent it helps you get what you want out of life. Hold it to a high standard and if it isn’t performing, drop it from your life faster than that stalker you accidentally dated in college. With email, only you can take control; there’s no way to get a restraining order.

The key to ethical, sane behavior: the *little* voice.

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Your little voice may have all the answers you need.

Have you ever wondered how certain corrupt businesspeople can keep spouting great, moral words while doing the exact opposite in their behavior? You wonder how they can wax eloquent about the need to give customers high-quality products while they happily substitute inferior quality raw materials to save costs. You wonder: are they insane? Probably not. Yes, they hear voices in their head. But we all do that. The problem is that they’re listening to the wrong ones.

In a New York Times article today, John Tierney discusses the science behind hypocrisy and how we fool ourselves. It seems when we distract our conscious mind, we listen mainly to our “gut” (or our “heart,” depending on how poetic an image you prefer), and we know when we’re doing The Wrong Thing. When our conscious minds are free, however, we use them—to self-justify. When we engage in hypocritical or anti-social behavior, our conscious mind goes to work creating justifications so we believe we’re doing the right thing, even when we aren’t.

In the past several years, I’ve become more aware of my own “heart voice.” When I have a troubling decision to make, or strong ambivalence about a situation, I sit quietly. Actually, my brain is usually shrieking gibberish about how unfair I’m being treated, or about how I don’t deserve what’s happening, or about how I’m an utter and complete failure at life because I missed “9 Down” in today’s New York Times crossword puzzle. So here’s this Shrieking Monster in my head, and I let it rant while putting attention on the middle of my chest. Then when the Shrieking Monster stops to take a breath, I quickly ask, “What should I do in this situation?”

Then I sit. After a few minutes, beneath the Monster comes a little, quiet voice. It’s barely even in words. And it has an answer.

The moment the answer comes, I know it’s the right one for me. It’s almost always the moral thing, the ethical thing, the loving thing, the passionate thing. In some weird way, it’s the answer I already knew was right, but just wouldn’t admit to myself. It took a chat with the Little Voice to bring it to the place where it could be heard over the Shrieking Monster voice.

The Shrieking Monster is the one that usually pushes me to do stupid things. It goads me to yell at people when I’m frustrated, to get petulant and childish when I could be forging alliances, and to beat myself up when I don’t do well, even if I did my best. The Little Voice, though, is my own internal Dear Abby: its advice is excellent, even if its hairstyle could stand some updating.

If you’ve never tried this, give it a shot. Ponder a decision that’s giving you angst. Maybe it’s an ethical quandry, or an issue with a co-worker, or that persistent fantasy about wrapping your boss in duct tape upside down, hanging from the ceiling. Choose something really, really important, like: is it fair that I always have to spend the 3 minutes to type up action items after a meeting?

Sit quietly with the situation. Your Shrieking Monster will helpfully point out how unfair it is that you have to type those action items, how your fingers ache, how it’s probably carpel tunnel syndrome and you’ll be crippled for life, and how you really deserve to be the boss and are just not deeply appreciated. Then sit quietly and listen to the Little Voice behind the shrieking monster. It just might have some good advice.

If it seems reasonable, give it a shot. You might find yourself acting more ethically, more morally, more professionally, and more happily. In other words, you just may find your little voice is the key to acting as—not just aspiring to be—your Very Best Self.

Find the article on hypocrisy at http://r.steverrobbins.com/hypocrisyarticle.

Groupthink, brainwashing, and politics: eek!

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You have everything to gain by thinking outside your own box!

Click here to hear this article as a podcast.

Maybe you’ve been successfully brainwashed and just don’t know it. How would you? Pretend you were kidnapped by the People’s Liberation Front of Jordania, which originally attracted you by serving your favorite brand of spaghetti sauce every night of the week (yum!). They successfully brainwashed you, and now you would go on raids with them, eat with them (spaghetti!!), live with them, and genuinely believe in their cause. If someone said to you, “The PLFJ has brainwashed you,” you wouldn’t believe them. You’d go back to contentedly slurping spaghetti.

Schools brainwash us

This is more than an academic question, though it arises in academia as well. People attend schools where they learn certain ways of thinking and are taught that some thinking is preferable to others, or even that some thinking is “right” and some is “wrong.” For example, they teach that the Earth revolves around the sun, and not vice-versa. For centuries, people believed the opposite, and could even be put to death for suggesting the Earth orbited the Sun. So which is the brainwashed? Both have their belief systems, both indoctrinate new people into those beliefs, both have evidence that suffices for them, and both would view the others as living in a fantasy world.

In Business School, students are taught to do cost/benefit analyses, and many of them reframe their entire world in terms of costs and benefits. Great for balancing their checkbook, maybe not so much for making their Sweetie feel loved. “If I spend five minutes cuddling and my time is worth $45/hour…”

In contrast, philosophy majors are taught there are many ways to approach a problem, and may have a very different way of thinking about life (“Amour! Eros! Love! Let’s cuddle!”), and be lousy at balancing their checkbook.

Who’s “right?” Both are. And both have habitual ways of thinking that were taught by a school. How are the schools not brainwashing institutions?

Politics brainwashes us!

Scott McLellan, Pres. Bush’s former Press Secretary, just published a book that reveals how he now believes he had been manipulated and misled for years by Bush. It wasn’t until he left the administration, however, that he had enough perspective to question what he had been told and been living for several years.

We’re all brainwashed, all the time.

If you think about it, you’re probably the member of an exclusive club, all the way down to having your own language. Maybe you’re part of the business club, and you talk about “profits” and “margins” and “business models.” Or you’re a Swing dancer and you talk about doing a “Texas Tommy” (isn’t that illegal in 39 other states?). Or you’re a graphic designer and you know what “Pantone” means.

Now think about your organization. You probably have your own shared beliefs. Those beliefs are a form of brainwashing, and you don’t question them. Everyone takes them for granted, and those who don’t are marginalized or ignored. But the world changes! Yesterday’s “common sense” is today’s backward thinking. “Cars will never take off; they require pavement, and who’ll pay to pave a downtown when so few cars exist to use the roads?”

Sometimes, the world doesn’t even change, the conventional wisdom is just wrong. “The world will only ever need four computers.” “Customers will never buy water in bottles when they can get it free from the tap.”
“I’m really happy to listen to you talk about your ex-boyfriends, dear.”

Find freedom beyond your assumptions

In organizations, getting through your brainwashing is the key to innovation, creativity, and “thinking outside the box.” Indeed, it’s your shared assumptions that are the box!

The key to getting past your brainwashing is to seek out evidence that you might be brainwashed. Write down some of the reasons you know your business is successful:

  • People love our customer service.
  • We are the low-cost provider.
  • We hire the best and the brightest.

Now write down some of the reasons you know your competitors are doomed to fail:

  • They just don’t “get it.”
  • Our customers would never like their product.
  • We’ve locked up the biggest, most important customer.

Take the reasons you just wrote down, muster your courage, and spend some time exploring each one. If your belief is false, how would you find out? What data would you seek? What trends would you be following?

You don’t just have to re-examine your work assumptions. You can also list things you “know” about your family life. Stuff like, “my teenagers won’t listen to me” or “watching TV together is the highest form of quality family time.”

Start seeking some data. Start following some trends. Try a few alternatives. Find out where you’re following the herd, and where you’re really in touch with reality. You’ll learn how much of your life is groupthink, rather than YOUthink. You’ll find yourself thinking outside the box. Although it could scare people around you, it might open your eyes to a whole new world of opportunity. There are advantages to being the sighted man in the land of the blind, and not just because it makes it easier to button your shirt…