Author: Karthik Suresh

When we assume, Oscar Wilde wrote, we make an ass out of u and me.

Much of the time we’re not sure what option to take.

Whether its something simple, like changing the order in which we do things in the morning or a more complex situation, like deciding to move to a different country or go back to University for a graduate degree, we still don’t know how things will turn out.

With organisations – we face the same problems when trying to get a new customer to work with us, pick a supplier or decide in which projects we should invest company money.

So, how do we make a decision in these circumstances?

Some people decide, on the basis of their experience, that a particular course of action is appropriate. Then, they take things personally.

Questioning that approach is the same as questioning their competence or experience – which makes it difficult to have a discussion about the range of options.

This leads us down a binary decision path – either we do what is suggested or we don’t, and we might succeed or we might not.

The thing is that often the options are not really binary – there are more things we could do, if we were open to them.

Take the moving to a different country choice, for example. It’s different having a holiday in a country to moving there permanently.

It might be wise to try a longer holiday, see if there is a way to experience it for a three-month period, or spend some time asking people that have already done a similar move about their experiences.

These are pilots – experiments and research that try and test and validate our assumptions.

Ideally, pilots should be something quick, easy and cheap that we can try out and see whether an idea is worth doing and investing more time, effort and money in.

This happens all the time with new television programmes – a pilot episode is shot to test with audiences – and how they react may make the difference between getting funding to create a series or having to go back and start again.

Good pilots are designed, however, with one clear thing in mind.

They limit the downside, while leaving the upside uncapped.

This is what Nassim Taleb calls optionality in his book Antifragile.

Adherence to this principle, according to Monish Pabrai in The Dhandho Investor, is what has made a particular Indian community, the Gujaratis, so successful in the United States – owning tens of billions of dollars worth of assets.

Dhandho is a word that means “endeavours that create business” and it is based around a low risk-high return strategy that is all about “Heads I win; tails I don’t lose much”.

Taking a more well-known example – it’s what Richard Branson did when he set up his airline in 1984. He leased a single used Boeing 747-200 on condition he could hand it back after a year.

His downside was limited to a year of operating the plane and he knew that he could get money back for it if things went south.

Virgin Atlantic now operates 39 planes and turns over more than £2.5 billion a year with nearly 9,000 employees.

The opposite of an assumption, perhaps, is not a certainty but a pilot.

Why do some people and companies inspire loyalty and dedication from employees and customers? What’s different about them?

Simon Sinek argues in a TED talk that has been watched over 35 million times that it’s because such companies have a pattern of thinking that is inside out.

Many of us can easily say what we do.

That’s our profession, our job, our position in a family – we might be doctors, consultants, accountants, husbands, wives, parents and so on.

In particular, when it comes to work – we can point to the roles we have as what we do.

We also usually know how we do things.

We may have some extent of control and autonomy over the work we do and so design how we work, or we operate in a way set out by someone else.

In either case, we still know how to do something.

Where many of us struggle is in explaining why we do something.

Why are we in this particular profession? Why are we in a particular relationship?

Are we there because it’s something we truly believe in or is it just something we have ended up doing?

Many people make the mistake of thinking that companies exist to make a profit.

That’s wrong – companies make a profit by creating value for customers – profits are a result of good work and not the motivation for good work.

Sinek argues that if we know why we do something – if we have a sense of purpose and belief and mission – then others are more likely to buy into that than there are to buy into any particular product that we try to sell.

Take Apple, for example. Apple was infused by a zen-like focus by Steve Jobs on creating products that could change the world.

Jobs said nearly 40 years ago that “We’re gambling on our vision, and we would rather do that than make “me too” products. Let some other companies do that. For us, it’s always the next dream.”

That vision turned Apple into one of the most uniquely successful companies in history.

Again, from Jobs “you can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. Because believing that the dots will connect down the road will give you the confidence to follow your heart even when it leads you off the well-worn path and that will make all the difference.”

Interestingly – the why is not something that we can logically justify – it’s something that we need to believe in.

It is a matter of faith and and trust – a feeling of having a higher purpose – and perhaps it’s not surprising that people that radiate a sense of purpose and mission inspire us more.

How do we make decisions that may influence our lives for many years in the future?

A surprisingly simple answer may be that it depends on our mindset.

According to Carol Dweck, a Professor of Psychology at Stanford University who researches motivation, what we believe about what we are capable of doing has a huge impact on the eventual outcome – and success or failure.

This starts early. Four year old children given a choice between an easy puzzle and a hard one split into two groups based on what they believed.

The children with what Dweck calls a fixed mindset stuck with the easier puzzle, telling the researchers that smart kids didn’t make mistakes.

The children with a growth mindset took the harder one, finding the easy one boring and apparently more comfortable with the idea that they might not succeed.

The point, Dweck explains in her book Mindset, is that children taught to view intelligence and creativity as innate, fixed characteristics are more likely to view setbacks as permanent.

On the other hand, children that are taught that failing at something simply means that they have not yet succeeded can go on to practice, get better and try again.

Dweck’s is one of an increasing number of scholars that work in the field of positive psychology – studying how to live better rather than the more traditional approach of studying what is wrong.

The work they do, as a result, is based on modern research techniques rather than simple motivational thinking.

A sceptic, after all, would simply argue that it’s obvious that people who think positively do better. Where is the insight in that?

It turns out, however, when you carry out brain imaging scans of people with different mindsets the brain activity of growth oriented people showed more activity in processing meaning and relationships – literally having more neuronal connections firing trying to get to an answer.

The other thing that came out from the imaging studies was that growth oriented people were focused on finding the answer while people with a fixed mindset had more brain activity in regions that dealt with their emotional responses – how they would feel about getting the answer right or wrong.

In summary, a fixed mindset believes that capabilities are innate and fixed – people are born smart, for example.

A growth mindset believes that capabilities can be improved over time – persistence and hard work can make a difference.

This matters, especially when it comes to changing outcomes for children born into deprived areas where there may be a prevailing belief that they are simply less smart than others and will never amount to anything.

Most people will be on a continuum between the two mindsets.

Knowing which one we tend towards, however, may be the first step towards explaining some of the decisions and choices we have made so far in our lives.

Recognising that we can develop a preferred mindset may open up new opportunities – things that we can yet do.

Choosing what to quit and when to quit it is more important than we sometimes realize.

So, why don’t we quit more often?

Why do we persist with a job, a relationship, growing a moustache and a myriad other activities that we should really just drop and walk away from?

According to Steven Levitt and Stephen Dubner in Think Like a Freak, there are three main reasons why we don’t quit.

First, we’re afraid to be seen as a failure.

Phrases like “Winners never quit and quitters never win” have been seared into our brains from a young age.

The second reason is the idea of sunk costs.

If we have already invested time into a career, energy into a relationship and money into projects and investments, then quitting means effectively writing off all that investment.

Having sunk all that we have into something, we’re afraid of stopping just before the big payoff.

What if we carried on for just a bit longer?

The third reason is our tendency to focus on costs now instead of opportunity costs.

If we do something now with our time, that also means that we have to give up the idea of doing something else with our time, even if that something else might be more valuable.

We have limited, scarce resources of time, money and energy.

For every unit that we spend in one place, something else needs to be abandoned.

It’s easier, however, to focus on what we need to do now than to think about what we are giving away.

For example, we’d rather buy something nice now than put the money into a pension to use in 50 years.

These three reasons are rooted in our past, present and future: what have we invested already, what do we choose to do right now and what will we look like to others in the future.

The point, Levitt and Dubner write, is that we don’t really know. We can’t run experiments that simultaneously test quitting and persisting.

Or can we?

The authors set up a site, now defunct, called Freakonomics Experiments, and asked people to put in their questions and take a decision based on a coin toss.

That mean’t half the participants would quit and half would persist.

The results were eye opening. On almost every question, the people who quit were happier 6 months later than those who didn’t.

As they write in their blog on the topic “We just came up with a basic truth, which is: when you’re not sure what to do, you should quit. This is what the data tells us: if you can’t decide, it means you should have quit already and you should quit right away.”

Perhaps the last word on this should go to W.C. Fields, who said If at first you don’t succeed, try, try again. Then quit. There’s no point in being a damn fool about it.