Living in trouble

Understanding irrational behaviors

What I love about Daniel Kahneman is that he's opened our eyes to the fact that just because behavior is irrational, doesn't mean we can't understand it. We CAN understand and control irrational behavior, and we don't have to control all of it... Just the part that's doing us harm. I recently discovered the writings of Chris Dillow, who's applying the principles to politics. What a relief.

Stumbling and Mumbling: Cognitive biases, ideology & control, 2016-July-3 by Chris Dillow

If people are subject to cognitive biases when they have big incentives to be right – when they are investing their own money – mightn’t the same be true in politics, where their incentives are less sharp? 

Some experimental research suggests the answer is: yes.

Some of these experiments have been done by Kris-Stella Trump at Harvard. She split money between subjects in different ways and then asked them what they thought would have been a fair division. She found that those who got a very unequal split thought that the fair division should also have been unequal. Those who got a more equal division said that a fair division would have been equal.

This suggests that as inequality increases, our perception of what’s fair becomes more unequal. That causes people to accept inequality. This is an example of a wider cognitive bias – the anchoring effect. 

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How public schools can better speak for themselves

What I love about this story is that it offers a method for schools and other institutions to shift perceptions and behavior in their community. Lots of big city school districts have public relations departments, but few of them "work smarter" to make change the way this team does. It's very inspiring, and I recommend reading the whole story at David Meerman Scott's blog on www.WebInkNow.com

WebInkNow: Brand Journalism at Cleveland Metropolitan School District, 2016-Jun-29 by David Meerman Scott

The Cleveland Metropolitan School District serves some 40,000 students. [Chief Communications Officer] Roseann [Canfora]’s team not only focuses on reaching the families of students, but also those who attend other schools or are considering doing so.

I was surprised by the importance of positioning CMSD vs the other education options available to families including charter schools, parochial schools, private schools, and home schooling that serve children across Cleveland. Many people think would think that a public school system doesn’t worry about “competition” but they must. That was eye opening for me.

[Roseann:] "... The daily stories that big city journalists are drawn to include gang fights, low test scores, truancy, and weapons finding their way past metal detectors. These stories fall short of what I learned in journalism school was our social responsibility to tell the deeper stories, the root causes of these things, the incredible stories of triumph over those challenges that take place in schools every single day. Those are the types of stories we [Roseann's department] now tell....”

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The pitfalls of being a problem solver

When I arrived at Columbia Business School, I was delighted to discover that every subject was just about solving problems. Instead of explaining things, we we always expected to propose solutions. Of course, the problem with business school is we seldom had the opportunity to execute a solution, and even if we did, we weren't around long enough to see if it really worked. 

When I look back, I realize I have often gotten hung up on my solution. But now I've found the right perspective... there's always another problem (and sometimes it's coming from our solution). 

Medium: The BOOTSTART Manifesto, 2016-Jan-4 by Ash Maurya

Love the Problem, Not Your Solution

It starts with a fundamental mind shift. Your customers don’t care about your solution but their goals. Identify the problems or obstacles that get in the way of their goals, and you identify the right solution to build.

Having more passion for your solution than for your customer’s problem, is a problem.

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Investors have a lot of investments, but entrepreneurs have only one life

Recently, I've been talking to many people about possible projects and jobs. They are distressed when I tell them my hourly rate. They respond... so consider that you're hardly making anything now, wouldn't a lower rate be better than nothing??? Uh, no. (Explained below.)

VentureBeat: Why I turned down 500k, pissed off my investors and shut down my startup, 2016-Jun-9 by Tim Romero

I am not particularly risk-averse, but I pay attention to risk and reward. As an investor, I probably would have told me to take the money and try to make it work. But the risk-reward equation for investors is different than it is for founders.

I was deciding whether this venture was worth committing to another year of 70+ hour weeks. I need a higher level of certainty than investors do because my time is more valuable to me than their money is to them. Investors place bets in a portfolio of companies, but I only have one life.

Thinking of you, Orlando...

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Advice to heed before you give or take advice

Sharing our problems and challenges is a great way to build trust. Unfortunately, that behavior inspires many people to try and solve our problems. If you have that inclination please squelch it. And if you can't, consider these words. The whole article is highly recommended--learn the context of this advice!

First Round Review: Advice is Cheap--Context is Priceless, 2016-April by Hiten Shah

Good advice takes pattern recognition and selection, but with that, comes the tendency to rigidly categorize people alongside their situations.

So here’s the mantra of the advice giver: don’t react. Ask yourself how to advise in a way where you’re not judging, so others will remain open to what you’re going to say. That starts with you being open to what they’re saying, too.

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Ways to protect your price when negotiating a sale

Whenever we have to negotiate a sale, we confront the fact that sellers and buyers naturally disagree about price, based on the endowment effect. Science has demonstrated a bias among owners to over-estimate the value of any item they possess. This bias does not make the potential buyer correct, but it ought to give the seller pause. Your buyer is very unlikely to accept your initial offer, all other issues being equal. Fortunately, science is also showing us some ways to better protect the seller's price. 

Harvard Business Review: Why Buyers and Sellers Inherently Disagree on What Things Are Worth, 2016-May-13 by  Carey K. Morewedge

One effective tactic is to direct the attention of buyers and sellers to the information that they ignore. Asking buyers to first think about the valuable attributes of the good they might acquire leads them to value the good more. Asking sellers to first think about what else they might do with the money they would receive—the opportunity cost of owning the good—seems to also reduce the price they demand to give up what they own.

Another effective tactic is to change the reference price that people use to evaluate the good. When buying or acquiring a good, one might remind sellers of cheaper alternatives, like used versions of the same good or similar more economical goods. When selling or trading a good, one might remind buyers of more expensive alternatives to what one is offering.

A third tactic is to get buyers to touch, hold, or imagine owning the good. Experiences like interacting with a product through a touchscreen, receiving a coupon for it, or temporarily being the highest bidder for it in an auction all have the potential to induce the endowment effect for the product if they make us feel like we own it.

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With creating new things, beware the How overwhelming the What

Dave Owens at the Vanderbilt University business school agrees that everyone is creative, and he also notes that in many business, people who don't see themselves as creative professionals have major influence over how things are created. And that changes the what. So if we're planning a new product or process, we have to be self-conscious of what values and power structures we are serving. 

Ozy: A Design Expert on Maximizing Creativity in the Workplace, 2016-Mar-16 by Eugene S. Robinson

“My biggest insight was that you could look at a product as being the manifestation or outcome of a set of interpersonal and organizational ‘negotiations,’ or battles, over subjective decisions,” Owens says, looking much younger than his nearly 50 years. At Dell, “the operations people won most of the battles,” he says, leading to machines that were cheap, modular, efficiently produced and not much to look at. Contrast with Apple’s machines, “you could see that design and marketing had won quite a few more battles — their machines were expensive, hard to produce and beautiful.”

That realization led to certain recondite truths that stretched well beyond all of the laptop and tech making its way past him. Mostly, the ideas that how we build the building blocks affects what we build, and that we actually need the stuff we build to live. “Yeah, take away all the designed stuff and most of us wouldn’t last more than a month,” Owens says with a laugh.

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