Category: Books

Making Messages Stick

Do you remember the last powerpoint presentation you looked through?

Thought not.

There’s an urban legend …

A man goes to bar, is chatted up by pretty girl, who buys him a drink, next thing he wakes up in a bath of ice with a sick feeling, the note says don’t move, call 911. The operator answers “don’t move, someone has stolen your kidney. we’ve had a spate of these recently”.

A powerful and memorable story isn’t it? But none of it true. It’s an urban legend that has been circulating since 1991 and online since 1997.

Why do some ideas stick around for millenia (eg. aesop’s fables: “boy who cried wolf”) and others barely register?

Unworthy or false ideas can often be made sticky, can we make worthy ideas more sticky?

That’s the premise of the excellent Made to Stick written by Chip & Dan Heath (it’s over a decade old, but in the era of fake news remains as relevant as ever.

There are predictable components to a sticky idea, these can help to spot potentially sticky ideas, or to refine messages to make them more sticky.
What are they?

1. Simple . An effective simple messages needs to be “core” and “compact”, ie it needs to be short enough to be conveyed quickly and snappily, and needs to encapsulate the core message. A useful technique is to make use of a “schema” (mental model) that we already have for something else by employing analogy to simplify a message. This simplifies the absorption of a new message by employing a shortcut. The boy who cried wolf is sticky because it compactly captures a fundamental insight on human nature.
2. Unexpected – so far so obvious, but things get sticky when we move from common to uncommon sense, we break the schema. People sit up and take notice.
3. Credible – make it believable through authority or “antiauthority”
4. Concrete – make it real, tangible, something the audience can relate to or easily imagine. try and avoid the abstract, avoid large statistics
5. Emotional – make the audience feel something, connect with the idea
6. Story – above all people remember stories. from birth it’s the way we learn and make sense of the world and studies show that stories tend to stick in the mind far more than statements. in the corporate world particularly so, it can be easily (through the curse of knowledge) to omit the story and focus on the moral. Indeed both story and moral are important but given a choice go for the story not the moral.

there are effectively three types of story narrative
Challenge narrative – David & Goliath, appeal to our perseverance and hard work. inspire us to work harder, take on new challenges and overcome obstacles.
Connection narrative – the good samaritan, Romeo & Juliet, Titanic. they inspire us in social ways. make us want to help and be more tolerant of others. the story of a relationship that bridges a divide
Creativity narrative – The apple on Newton’s head, a story of great genius. It appeals to our desire for a human moment of genius that can create something out of nothing.

There are three killers of sticky ideas
The curse of knowledge – if you know too much you talk in the abstract and jump straight to the morals (omitting the story) and this kills the stickiness of the idea – focus on the concrete and the story.
Decision paralysis – too many options, uncertainty, even irrelevant uncertainty can paralyze us.
Bury the lead – natural tendency to lead with factual information but bury the real kernel
Here’s to worthy & sticky ideas …

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Becoming a Category of One

Do you know a company that defies comparison and exists in a category all by itself …. a “Category of One” as author Joe Calloway puts it?

Are there common, repeatable features of “category of one” firms?

The answer to this question from Joe Calloway’s book is emphatically yes – here are the top nine things I took away …

  1. Think hard about your culture

Culture is vital for category of one. Culture is “how we do things around here”. Culture is the rules, spoken or unspoken that you play by. Culture is what you do when the boss is out of town.

The one thing … all category of one companies have in common is that they talk about the same things over and over – that’s how culture is created. Say it simply, don’t hide your mission away in corporate language.

  1. Greatness is a decision

Greatness needs to be a decision –  to do what it takes to make it happen. It’s not easy and it does require complete commitment to make the changes needed. A commitment to do the heavy lifting of prepration and research. It’s much easier to do something superficial, but ultimately you get what you want most. It’s a moment-of-truth type moment, but you have to get to a gut-level decision (rather than an intellectual decision) to go. Many get the intellectual decision not the “gut level commitment”.

  1. Be ok with change, focus on fast decisions, rather than correct forecasts

Today, major changes don’t happen  occasionally, they happen all the time. It’s more difficult to see them coming. You have to be willing to be wrong in your forecasts. It doesn’t mean you shouldn’t forecast, it means that instead of success being based on getting things right it’s based on being able to move from one decision to the next.

How to change effectively? Be ok with not knowing what’s going to happen next. It doesn’t mean you’re frozen into inaction, but it means that you know you can make the necessary adjustments when the time comes.

  1. EVERYBODY says that their people are the differentiator…

But if in fact your people really are the differentiator, and you can say that about ALL of them, then this is indeed a powerful advantage. So the challenge becomes to create that advantage and then to prove it. It’s not an easy thing to achieve. But you must be able to explain the benefit of the benefit.

  1. You brand is not your logo or name – it’s what resides in the mind of your customers

what they think of you, what your promise to them is and whether you’ll keep it. To maintain strength requires focus from everyone in the organisation. Inconsistency is a brand killer. You can advertise 24 hours a day and have some superstars. but if you have some people in the organisation that do not fulfill the promise then that could be a critical weakness to the brand,

  1. Accept that quality product, service and price are all a given. Service and experience are primary competitive factors

A quality product, good service and a competitive price are all at the commodity level. If you have those then you are “a pound of nails”. To transcend commodity you have to go to the next level and the best way into that level is knowledge of the customer.

Price and quality are not the primary competitive factors – these are assumed. Service and experience are the primary competitive factors.

Great service is a very powerful competitive and loyalty factor indeed, but is hard to achieve. So many companies will take the easier route and go for gimmicks rather than do the hard work needed to get service right (which is why we have hotel origami).
“At Les Schwab Tyres they RUN to the car!”

  1.  Follow the Customer rules (the single greatest advantage in business)

1. Know more about the customer than anyone else

  1. Get closer to the customer than anyone else
  2. Emotionally connect better than anyone else

If you’re successful it means you know what used to work.

the new reality is that you have to meet a whole load of customer experience benchmarks that have nothing to do with the industry that you are in. it has to do with the business someone else is in. customers remember an experience from one domain, and it becomes the baseline for all others.

  1. What’s your tiebreaker

what’s your tiebreaker? what’s the one thing that will close the deal in you favor and your competition can’t match.

eg – Be extremely easy to work with
Return calls and emails immediately
Resolve issue in favor of the client whenever possible
Keep expenses as low as possible
If I’m not the right fit for the job, recommend a competitor
Free shipping on orders and returns (Zappos)
No change fees and a ridiculously easy to use website (Southwest)

  1. Design the experience

The customer’s experience of doing business with you has become the new competitive factor.

Does your customer’s experience emerge bottom up from a disparate and assorted series of transactions, interactions or was it designed to be that way with each interaction set up to deliver the experience?
It’s great to receive some positive feedback about a particular member of staff in a store who went out of their way. What’s better is a letter that says that whichever store a customer goes to the experience is always the same.

Stumbling on Happiness

The pursuit of happiness is built into the very definition of human desire.

We treat our future selves as if they were our children, spending most of our waking hours seeking out ways to make them happy. So understanding what does seems pretty important for making decisions today …

But do we really know what will make our future selves happy?

Do we make mistakes and incorrect assumptions when we try and predict what will?

The main takeaway from this entertaining and insightful book by Dan Gilbert is emphatically NO and YES to the above questions. The book carefully points out some of the errors we can commonly make when considering the future, including several classic problems:

Problem 1: When we imagine the future there is a whole lot missing. And the things that are missing matter.

Problem 2: When we imagine the future, we are heavily influenced by the present

Problem 3: we have a  psychological immune system, which will begin manufacturing positive views of very negative events with astonishing effectiveness. Therefore, we overestimate the negative implications of negative outcomes

If Dan Gilbert’s book is strong on entertaining and insightful descriptions of the problems, you could argue it is light on concrete solutions (other than the implicit “try and avoid the problem).

Problem 1 – the pitfalls of imagination

Humans are the only animal that can attempt to look into the future (“prospection”) using the frontal lobe & studies show we spend 12% of our thoughts doing so. Why?

Prospection is associated with two things: Prospection & emotion / prospection & control

“As scientists now recognize, the frontal lobe ‘empowers healthy human adults with the capacity to consider the self’s extended existence throughout time’. The frontal lobe was the last part of the brain to develop and is what distinguishes us from apes – and it what explains their shallow, sloping foreheads compared to ours.

But the ways it works has some shortcomings. imagination’s first shortcoming is its tendency to fill in and leave out without telling us. No one can imagine every feature and consequence of a future event, hence we must consider some and fail to consider others. The problem is that the features and consequences we fail to consider are often quite important.

Imagination’s second shortcoming is its tendency to project the present onto the future (which we explored in the section on presentism).

Imagination’s third shortcoming is its failure to recognize that things will look different once they happen–in particular, that bad things will look a whole lot better, this is due to our psychological immune system.

The fact is that negative events do affect us, but they generally don’t affect us as much or for as long as we expect them to.”

How memories are constructed & how imagination happens

realism (r•ăliz′ m) The belief that things are in reality as they appear to be in the mind.

The general finding–that information acquired after an event alters memory of the event–has been replicated so many times in so many different laboratory and field settings that it has left most scientists convinced of two things.

First, the act of remembering involves ‘filling in’ details that were not actually stored; and second, we generally cannot tell when we are doing this because filling in happens quickly and unconsciously.

Kant’s new theory of idealism claimed that our perceptions are not the result of a physiological process by which our eyes somehow transmit an image of the world into our brains, but rather, they are the result of a psychological process that combines what our eyes see with what we already think, feel, know, want and believe, and then uses this combination of sensory information and preexisting knowledge to construct our perception of reality.

‘The world as we know it is a construction, a finished product, almost–one might say–a manufactured article, to which the mind contributes as much by its moulding forms as the thing contributes by its stimuli.’

The problem isn’t that our brains fill in and leave out. God help us if they didn’t. No, the problem is that they do this so well that we aren’t aware it is happening.

When we try to overlook, ignore or set aside our current gloomy state and make a forecast about how we will feel tomorrow, we find that it’s a lot like trying to imagine the taste of marshmallow while chewing liver.

Presentism

Because predictions about the future are made in the present, they are inevitably influenced by the present.

We assume that what we feel as we imagine the future is what we’ll feel when we get there, but in fact, what we feel as we imagine the future is often a response to what’s happening in the present.

The time-share arrangement between perception and imagination is one of the causes of presentism, but it is not the only one.

By imagining an event happening now and then correcting for the fact that it was actually going to happen later, we use a method for making judgments that is quite common but that inevitably leads to error.
Because we naturally use our present feelings as a starting point when we attempt to predict our future feelings, we expect our future to feel a bit more like our present than it actually will.

Presentism occurs because we fail to recognize that our future selves won’t see the world the way we see it now. this fundamental inability to take the perspective of the person to whom the rest of our lives will happen is the most insidious problem that someone trying to imagine the future can face.

Reality distortion alert! Rose tinted glasses and The fulcrum between stark reality & comforting illusion 

We may see the world through rose-coloured glasses, but rose-coloured glasses are neither opaque nor clear.

They can’t be opaque because we need to see the world clearly enough to participate in it–to pilot helicopters, harvest corn, feed babies and all the other stuff that smart mammals need to do in order to survive and thrive.

But they can’t be clear because we need their rosy tint to motivate us to design the helicopters (‘I’m sure this thing will fly’), plant the corn (‘This year will be a banner crop’) and tolerate the babies (‘What a bundle of joy!’).

We cannot do without reality and we cannot do without illusion. Each serves a purpose, each imposes a limit on the influence of the other, and our experience of the world is the artful compromise that these tough competitors negotiate.

There are many different techniques for collecting, interpreting and analysing facts, and different techniques often lead to different conclusions, which is why scientists disagree about the dangers of global warming, the benefits of supply-side economics and the wisdom of low-carbohydrate diets.

When facts challenge our favored conclusion, we scrutinize them more carefully and subject them to more rigorous analysis.
When we want to believe that someone is smart, then a single letter of recommendation may suffice; but when we don’t want to believe that person is smart, we may demand a thick manila folder full of transcripts, tests and testimony.

We ask whether facts allow us to believe our favoured conclusions and whether they compel us to believe our disfavoured conclusions.

Distorted views of reality are made possible by the fact that experiences are ambiguous–that is, they can be credibly viewed in many ways, some of which are more positive than others.

To ensure that our views are credible, our brain accepts what our eye sees. To ensure that our views are positive, our eye looks for what our brain wants. The conspiracy between these two servants allows us to live at the fulcrum of stark reality and comforting illusion.

Ignorance of our psychological immune systems causes us to mispredict the circumstances under which we will blame others, but it also causes us to mispredict the circumstances under which we will blame ourselves.
Why do people regret inactions more than actions? One reason is that the psychological immune system has a more difficult time manufacturing positive and credible views of inactions than of actions.

The volunteers in a study valued the club most when its initiation was most painful.
Intense suffering triggers the very processes that eradicate it, while mild suffering does not, and this counterintuitive fact can make it difficult for us to predict our emotional futures.
Apparently, inescapable circumstances trigger the psychological defences that enable us to achieve positive views of those circumstances, but we do not anticipate that this will happen.
Unexplained events seem rare, and rare events naturally have a greater emotional impact than common events do. We are awed by a solar eclipse but merely impressed by a sunset despite the fact that the latter is by far the more spectacular visual treat.
We are more likely to generate a positive and credible view of an action than an inaction, of a painful experience than of an annoying experience, of an unpleasant situation that we cannot escape than of one we can. And yet, we rarely choose action over inaction, pain over annoyance and commitment over freedom.

The processes by which we generate positive views are many: we pay more attention to favourable information, we surround ourselves with those who provide it and we accept it uncritically. These tendencies make it easy for us to explain unpleasant experiences in ways that exonerate us and make us feel better. The price we pay for our irrepressible explanatory urge is that we often spoil our most pleasant experiences by making good sense of them.

Comparisons

We try to make choices that will make us happy: where to live, with whom to work, whom to marry, how to spend our spare time.

Choices often involve comparison between two alternatives.

But comparisons are not as unbiased as we would like –

Studies show that people are much more likely to agree to pay a small cost after having first contemplated a large one, in part because doing so makes the small cost seems so bearable.

Alas, we are all too easily fooled by such side-by-side comparisons, which is why retailers work so hard to ensure that we make them.

One of the most insidious things about side-by-side comparison is that it leads us to pay attention to any attribute that distinguishes the possibilities we are comparing.

In a study a group of students was offered a choice of where to go on a trip. One of the options was “Extremia” which had some good attributes and some bad ones. When students were asked to choose by eliminating places they didn’t want to go they tended to eliminate Extremia. However when they chose by looking at places they did want to go they chose Extremia. Why would people both select and reject Extremia? Because when we are selecting, we consider the positive attributes of our alternatives, and when we are rejecting, we consider the negative attributes.

Los Angeles vs Columbus. It is a commonly-cited fact that in surveys Americans cite “living in California” as something that would make them more happy (however Californians are not more happy than the average American). Why? Climate is an obvious reason why Los Angeles appeals ahead of, say, Columbus Ohio.

While Los Angeles has a better climate than Columbus, climate is just one of many things that determine a person’s happiness–and yet all those other things are missing from the mental image. If we were to add some of these missing details to our mental image of beaches and palm trees–say, traffic, supermarkets, airports, sports teams, cable rates, housing costs, earthquakes, landslides, and so on–

Comparisons through time

When we think of events in the distant past or distant future we tend to think abstractly about why they happened or will happen, but when we think of events in the near past or near future we tend to think concretely about how they happened or will happen.
When volunteers are asked to ‘imagine a good day’, they imagine a greater variety of events if the good day is tomorrow than if the good day is a year later. Because a good day tomorrow is imagined in considerable detail, it turns out to be a lumpy mixture of mostly good stuff (‘I’ll sleep late, read the paper, go to the movies and see my best friend’) with a few unpleasant chunks (‘But I guess I’ll also have to rake the stupid leaves’). On the other hand, a good day next year is imagined as a smooth puree of happy episodes.

The facts are these: (a) value is determined by the comparison of one thing with another; (b) there is more than one kind of comparison we can make in any given instance; and (c) we may value something more highly when we make one kind of comparison than when we make a different kind of comparison.

context, frequency and recency are three of the factors that determine which meaning we will infer when we encounter an ambiguous stimulus.

But surely these problems get better with experience?

Unfortunately for us, the key answer to this question, as presented by Gilbert is – NO!
Because we tend to remember the best of times and the worst of times instead of the most likely of times, the wealth of experience that young people admire does not always pay clear dividends.

We remember feeling as we believe we must have felt. The problem with this error of retrospection is that it can keep us from discovering our errors of prospection.

Our memory for emotional episodes is overly influenced by unusual instances, closing moments and theories about how we must have felt way back then, all of which gravely compromise our ability to learn from our own experience.

What I’m reading summer 2017

What I read this summer

Stumbling on Happiness
The pursuit of happiness is built into the very definition of human desire. We treat our future selves as though they were our children, spending most of the hours of most of our days…
madetostick
From one of our leading technology thinkers and writers, a guide through the twelve technological imperatives that will shape the next thirty years and transform our lives Much of what will happen in the next thirty years is inevitable, driven by technological trends that are already in motion. 
categoryofone
Do you know a company that defies comparison and exists in a category all by itself …. a “Category of One” as author Joe Calloway puts it? Are there common, repeatable features of…
Productivity
Why Deep Work Matters in a Distracted World
Even though mobile devices have increased our access to information and ability to communicate with others, they’ve also introduced barriers that could negatively impact our work. By…
Struggling to be productive at work? Take a neuroscientist`s...
Do you ever struggle to get things done? Do you sometimes feel your brain is not as sharp any more? Did you used to read books and now find it challenging to even finish a short article in…
The Surprising Cognitive Benefits Of Small Talk At Work
The weather, Mondays, Game of Thrones, that local sports team… These are all generally considered as safe small talk topics at work. But for many people, bonding with colleagues is not…
Simplify podcast, 6 episodes with powerful and simple ways to...
Simplify is for anybody who’s taken a close look at their habits, their happiness, their relationships, or their health and thought “There’s got to be a better way to do this.”
Evernote Podcast Interview: Tiago Forte`s Approach to...
Tiago forte is a recognised productivity guru and has a lot of thought provoking good-sense ideas on how to increase one’s productivity especially regarding knowledge work. He’s an advocate of Dave Allen’s “Getting Things Done” (GTD) methodology and talks about the idea of “intermediate packet delivery” that is to say making sure there is a clear output from each block of knowledge work (could be as small as an agenda for a meeting, or a single tweet) but the key is not breaking a train of thought and forcing yourself to try and pick up again mid-train later.
Pensions & Investment
ror20case20study20-20chan-408719-1.jpg
In an indication of how thinking in the industry has developed, Punter Southall have also used long-term ALM modelling incorporating allowance for sponsor default to model what they term (slightly less optimistically than LGIM)  “Risk of Ruin” (RoR).Takeway – in this case study they provide an example of how RoR analysis helps the trustees to focus on the most important issue in the case of an action that decreases the scheme’s covenant, in this case pursuing security rather than negotiating for a cash infusion or de-risking.
LGIM Investment Strategies for Covenant Risk
Using long term ALM analysis focused on the Expected Proportion of Benefits Met (“EPBM”) under scenarios where the corporate sponsor defaults, LGIM draw some interesting and actionable conclusions for investment strategy choices in response to changes in sponsor covenant. It particularly highlights a tipping point as a sponsor falls below BBB rated. Takeaway – depending on covenant strength scheme may want more return-seeking assets to maximise proportion of pensions expected to be paid.Caveat – this analysis doesn’t appear to take into account the PPF, this is a key debate with regulatory guidance continuing to stipulate that trustees shouldn’t take this into account.
RAFI Asset Allocation Interactive
Been loving playing with RAFI’s new tool, one for all you investment geeks out there. Broadly it looks to illustrate the properties of various asset-side portfolios, assessing the long-term expected returns, and risk-adjusted returns.Takeaway – we’re in a world of lower returns and most portfolio are unlikely to deliver the sort of real returns we’ve seen in the past. We need to be realistic about outcomes, however diversification and risk management still matter
Books …
" Inside the Nudge Unit | The Behavioural Insights Team
For anyone who has ever pondered how to phrase an email to encourage people to do something, these insights from inside the UK Government’s Behavioural Insights Team (also known as the “nudge unit”) are fascinating. Halpern describes the EAST (Easy, Attractive, Social, Timely) principles for designing nudges and explains how the wording of a letter increased tax revenues by billions of pounds.
Work Rules!: a new book of insights from Google`s Laszlo Bock...
Laszlo Bock (ex-SVP of people management at Google) lifts the lid on the real stories behind some of the people management innovations that have made google such a success. It’s a must for anyone who has ever thought hard about how to motivate high performing teams. My highlights:Tap into the power of intrinsic (vs extrinsic) motivation by empowering employees and giving them purpose. This helps motivate employees, and increases both well-being and productivityIt was great to see the honesty that he puts out there – refreshing to read that everyone at google hates performance reviews but no-one can agree on a better system!Frequent surveying of views, data gathering and clear KPIs are key to making “self managed teams” work bestThe design of many of our institutions, including most companies are “command-and-control” hierarchies inherited from the 20th (or even 19th) century manual work era where the prevailing view was that individuals needed strict rules imposed upon them. They aren’t appropriate for knowledge work and they restrict productivity by reducing intrinsic motivation
TV series …..
Black Mirror (TV Series 2011- )
How did I not see this years ago? Darkly dystopian but utterly compelling. Created by Charlie Brooker. With Daniel Westwood, Hannah John-Kamen, Beatrice Robertson-Jones, Daniel Kaluuya. A television anthology series that shows the dark side of life and technology.
Other Books
Behind Closed Doors
Utterly terrfiying, gripping
created in Publicate

Books – The Checklist Manifesto

A mixture of task & communication checks help manage the problem of proliferating complexity in the modern word – that’s the relatively simple premise of Atul Gawande‘s short, but excellent book on checklists – The Checklist Manifesto.

The book is driven mainly from a medical context, that being the author’s background, and centred around the astounding data from a study supported by the World Health Organisation into the power of checklists. Although the context is broadened to be applicable to many facets of modern life-  examples and applications are also cited from construction, aviation and even finance. The humble checklist can dramatically improve baseline performance – perhaps more so than even the best new drugs or surgical technologies.

Gawande draws a key distinction between two types of error: (1) errors of ignorance (where we don’t know enough) and (2) errors of ineptitude (failing to correctly apply what we do know. Most of the failures in the modern world are of the second kind.

What were the key insights?

Well, here’s a checklist –

Checklist

Books – The Undoing Project

My beachside reading on the recent winter trip to Australia was the excellent “The Undoing Project” by Michael Lewis.
Obviously when it comes to Michael Lewis expectations are high, both for the quality of the writing and depth of the research behind it. This is no exception. Some of the specific elements are familiar but Lewis does  great job of weaving the intellectual content of the Kahneman/Tversky collaboration into a compelling story about their lives and the contemporary history of the time. Which are plenty interesting in their own right. I’d say the only negative points would be an oddly-placed chapter at the start which rehashes many of the ideas from MoneyBall (it was interesting, just seemed oddly placed relative to the rest of the book) and the slight lack of compete chronological sense of order that comes with the style of hopping around and pursuing digressions. It probably makes the book more readable, to be honest, but I found myself having to go back and review sections to get the full Kahneman/Tversky timeline over the years straight in my mind.
Some of the key behavioural science insights of Kahneman and Tversky that Lewis covers and articulates so well include the following.
Kahneman and Tversky understood that the errors the mind made offered you at least a partial insight into the mechanism behind decision making. A bit like optical illusions offering an insight into the workings of vision.
“Features of similarity” Comparing two objects: the mind tends to make a  list of features, count up and compare the features that two objects have in common, in particular one object with reference to the other. for example Tel Aviv is frequently thought to be like NYC but NYC is not thought to be like Tel Aviv. NYC has more noticeable features than Tel Aviv. An absence of a feature is also a feature. “Similarity increases with the addition of common features, or the absence of distinctive features.
Transitivity in decision making. transitivity violated if someone picks tea over coffee, coffee over hot chocolate and then turns around and picks hot chocolate over tea. The features of similarity model helps explain why people will violate transitivity in this way. The context in which a choice is presented affects the choice. When presented with a choice people aren’t assessing each object on a linear scale and evaluating relative to some representative model of ideality, they are essentially counting up features they notice. but the context in which a choice is presented can have a big effect on the features that are noticeable. for examples two Americans meeting in NY vs meeting in Togo. “The similarity of objects is modified by the way in which they are classified”.
First heuristic – representativeness. When people make judgements they compare whatever they are judging to some model in their minds. How closely do the approaching clouds represent my mental model of a storm? How closely does Jeremy Lin represent my model of an NBA basketball player? It’s why players with Man Boobs don’t get selected in the NBA. It’s not that the rule of thumb is always wrong – in many ways it can work quite well. But when it does go wrong it does so in systematic ways.
Second heuristuc – availability. the more easily you can recall a scenario to mind the more “available” it is, and the more probably we find it to be. For example words starting with K vs words with K as the third letter. Again can often work well. But not in situations where misleading examples come easily to mind.
People predict by making up stories
People predict very little and explain everything
People live under uncertainty whether they like it or not
People believe they can tell the future if they work hard enough
People accept any explanation as long as it fits the facts
The handwriting was on the wall, it was just the ink that was invisible.
Man is a deterministic device thrown into a probabilistic universe
Theory of regret – emotion linked to “coming close and failing”. it skewed decisions where people are faced between a sure thing and a gamble. regret is associated with acts that modify the status quo. The pain is greater when a bad decision led to a modification of the status quo vs one that led to a retention of the status quo. Regret is closely linked to responsibility – the more control you felt you had.
Anticipation of regret is actually as powerful as regret itself. We look at a decision and anticipate the regret we might feel. Often we do not experience actual regret as it is too difficult to be sure of the counterfactual.
This all contravened expected utility theory  (which was a central part of some economic models of how individuals made decisions). Expected utility theory wasn’t just wrong, it couldn’t defend against contradictions. The Allais paradox was a good example that violated utility theory. it basically had two examples framed at different probability levels but with the same utility tradeoff underlying both of them, people chose differently depending on the framing of medium odds vs long odds.
A greater sensitivity to negative outcomes – a heightened sensitivity to pain was helpful for survival. A happy species endowed with infinite appreciation of pleasures and low sensitivity to pain would probably not survive the evolutionary battle.
Prospect theory – people approach risk very differently when it comes to losses rather than gains. risk seeking in the domain of losses and risk averse in the domain of gains. people respond to changes rather than absolute levels. but changes vs some reference point, some representation of the status quo. In experiments this is usually clearly definable, in the real world, not so much.
People also do not respond to probability in a straightforward manner. people will pay dearly for certainty. But they will treat a 90% probability as less likely than that (they do not treat a 90 chance as nine times more likely than a 10 chance). When it comes to small probabilities they do not treat a 4% chance as twice as likely than a 2% chance. if you tell someone one in a billion they treat it more like one in ten thousand – and worry too much about it (and pay more than they ought to rid themselves of that worry).
One consequence of prospect theory is that you should be able to alter the way people approach risk (risk seeking vs risk averse) by presenting problems framed in terms of losses rather than framed in terms of gains.
The endowment effect (Thaler) – people attach a strange amount of extra value to what they own (compared to what they don’t). they fail to make logical trades and switches.
The Undoing Project. The title itself refers to a theory similar to regret: counterfactual emotions, the feelings that spurred peoples’ minds to spin alternative realities. The intensity of emotions of “unrealized reality” were proportional to two things: the desirability of the alternative, and the possibility of the alternative.
Experiences that led to regret and frustration were not always easy to undo. Frustrated people needed to undo some feature of their environment, whereas regretful people needed to undo their own actions. but the basic rules of undoing are the same, they require a more or less plausible path to an alternative state. Imgination wasn’t a flight with limitless possibilities, rather it’s a tool for making sense of a world of unlimited possibilities by limiting them. The imagination obeyed ruled: the rules of undoing. The more items that were required to undo the less likely the mind would undo them. “the more consequences an event has the larger the change that is involved in eliminating the event.” also, an event becomes gradually less changeable the more it recedes in time.

Four Things I Learnt at Work in 2016

  1. Hack your own productivity, figure out what works for you 
As “knowledge workers” we all carry out a wide variety of different cognitive tasks each day: some are repetitive, some are simple but require a high degree of accuracy, some are creative while others involve problem solving or co-ordination of others. Some involve significant willpower while others may not.
Finding individual ways to maximise our own productivity can be hugely helpful – I firmly believe that the productivity of knowledge workers can easily vary by a factor of 4 or 5 times depending on various factors and circumstances, and some of these are quite simple to understand and change.
Things like choosing which tasks to take on at different points in the day, selecting the appropriate space to work in (working from home being great for some tasks, bad for others), harnessing and using your willpower most effectively and balancing requirements to meet and consult with others with working individually. Creating focus on what’s important (rather than simply urgent), and avoiding cognitive switching.

I was influenced in a lot of this thinking by Charles Duhigg‘s excellent book Smarter, Faster better which I discussed in more detail here. Mitesh Sheth also wrote up this excellent list of productivity hacks, which I contributed to.

2. Approach the world as it is, not as you’d like it to be

2016 was a year of surprises and shocks at a macro political level. Some of the events that took place challenged the world views of people – including myself. The result of the EU referendum left many people – myself included-  feeling more than a little frustrated and angry.

One positive I take from this is the opportunity it presents to acquire really valuable wisdom and experience – for those people open enough to be able to move past the frustration and approach the world as it is.
The reality is, disruptive events will create both opportunities and challenges. Spending time fighting the way the world is probably isn’t the best use of precious resources of mental energy and focus.

3. Understand the Building Blocks of Change

Changing habits at work is hard. Rolling out new systems and processes and changing old ones. It’s so vital to keep operating efficiently, but the extra burden to individuals of change in the short term will also be resisted.

This great blog by Mckinsey helped me greatly in my understanding of the 4 key requirements for workplace change:

  1. An understand of why change is necessary
  2. The capability to make the change
  3. The alignment of incentives and rewards
  4. Role modelling by senior and influential individuals
There is a lot of overlap here with takeaways of books such as Nudge and Inside the Nudge Unit. All fascinating and really powerful stuff if you can find ways to implement day to day. It feels like behavioural insights are rightly having more and more impact on policy & decisions across organisations as knowledge and appreciation of the field grows. Great to see this happening and I look forward to more insights in 2017.mckinsey
4. Beware the Narrative Fallacy
In his great book Black Box Thinking, Matthew Syed talks a lot about narrative fallacy and dissonance – and the effects these can have on decision making, as does Michael Lewis in the equally excellent The Undoing Project.
The hearing and telling of stories is fundamental to who we are as humans. It’s hard-wired into us. It’s part of how we understand and make sense of an uncertain world. It was the way our ancient ancestors explained things to each other and kept children away from danger. We are fundamentally inclined to believe convincing stories.
But there’s a problem, far too often in today’s world stories are constructed that ascribe too great a role to intrinsic characteristics such as talent and too little to luck. Stories dwell on the one thing that worked, ignoring the many that didn’t. Stories can easily make us fall prey to the availability or representative bias, skewing our decision making systematically in unhelpful ways.

Making effective decisions therefore, involves getting beyond stories into data, asking the right questions, and seeking evidence (where it can be found). Testing theories, rejecting hypotheses, trying to assess against a counterfactual and learning as much from the trials that didn’t work as those that did.

2016 was the fifth year-end that I’ve been a part of the team at Redington. As we close one year and start a new one it’s a great opportunity to say thankyou to all my fantastic colleagues who genuinely keep life interesting and make it worth getting up for work each morning – which is what really matters, isn’t it? Here’s to a great 2017 and beyond.