Category: Strategy

We work with computers now – that just seems natural.

Many people have jobs that involve using a computer at some point – it’s hard to think of many occupations that don’t.

Thirty years ago – that would have been unthinkable. Fifty years ago, people would still have scoffed at the idea of individuals owning computers.

The way in which we produce work and output in the future is inevitably going to involve technology.

Which means we should ask ourselves where we might fit in?

Robots – AI – all the tech we have – are still essentially logic circuits. They do things they are programmed to do.

If we could take the knowledge inside a doctor’s head, a lawyer’s head and turn it into a series of steps that could be done by a computer using a decision tree, then we’d be able to free up some of that professional’s time.

In many offices, there is someone given the task of comparing columns of figures and picking out the ones that don’t match.

If anyone is still doing that by eye – they need to get more skills – and quickly.

We’re not going to beat robots at tasks that involve calculation or large amounts of numbers.

We will be able to automate them to perform certain tasks – from doing our accounts to managing our heating.

Many systems come with this technology increasingly built in.

NEST can warm your building when it knows you’re coming home. Landrovers warm up your car in the morning ready to go to work.

So, what does that leave humans to do?

What’s left are essentially human tasks.

Things like being creative, using our judgement, having empathy and doing critical thinking.

Some of us will also be needed to clean and maintain the robots that do all the work.

But increasingly, we’ll spend our time doing work that comes up with new and better things and helps others – especially in ageing economies.

In other words – we need to shift to providing humanity as a service.

Is there a ZOPA between the EU and the UK when it comes to a divorce settlement?

A ZOPA stands for Zone of Possible Agreement – also called a bargaining range.

In any negotiation we end up with two roles – a seller and a buyer.

The seller has a high price they want to get and the seller has a low price they would like to get.

The amount wanted by the EU has been talked about as being in the range of €100 billion.

Brexiteers in the UK, on the other hand, want to pay nothing.

A ZOPA exists if there is an overlap between the minimum a seller will take and the maximum a buyer will offer.

Refining the numbers, it appears that liabilities for the UK may be in the region of €80 billion but offsetting claims could reduce the total to €60 billion.

Europe may now want around €50 billion euros of £44 billion while the UK might be offering around £20 billion.

Both sides are tight-lipped about the actual amount.

If the buyer’s maximum price is less than the seller’s minimum – £20 billion vs £44 billion, for example, a negative ZOPA exists.

It may be possible to overcome that with other incentives – for example agreement on worker rights, acceptance of EU laws and so on – all of which come with political and legal complexities.

In the end, however, if the two parties don’t reach an amount acceptable to both, there will be no ZOPA and both will have to walk away.

The negotiations continue…

We’ve all probably been in a situation where we can’t decide between two options and someone has said to just flip a coin and let it decide.

It turns out that this may be a very good approach indeed – but not quite in the way we think.

For a long time we assumed that people were rational creatures, governed by a conscious mind that made decisions based on logic.

Relatively recent research found that we weren’t as logical as we though we were – behavioural economics showed that we acted in ways that weren’t consistent with logic.

Behavioural economics, in turn, is criticised by some because what happens in the laboratory does not always show up in the real world.

For example, altruism shows up more often than we expect in experiments, as people share when they have no need to do so – but at the same time do they only share because they are being watched in an experiment?

As we became increasingly aware of the vast number of things the brain does without any conscious intervention – useful things like breathing and digestion – some researchers also realised that our body seemed to know things before our minds caught up.

For example, if people played a card game with two sets of decks, one of which was rigged, they eventually worked out that something was wrong with one of the decks.

When researchers monitored players using methods like measuring galvanic skin response – how much they sweated – the found that their bodies seemed to figure out the wrong deck well in advance of their conscious minds catching up.

Somehow their bodies were taking in a lot more information through their senses and using all that to figure out what was going on – and reacting to their findings emotionally – raising heart rates and sweating more.

The work of Antonio Damasio, described in David Eagleman’s book Incognito: The secret lives of the brain, forms the foundation of much of this research.

Damasio, a neuroscientist, found that patients that had suffered damage to their brains and were no longer to process emotion and the kind of signals their bodies were giving them – so called somatic markers – were unable to make good choices.

In the card deck example above, they were unable to distinguish the bad decks, even after they had been told there was one.

In other words, our ability to make wise choices is fundamentally linked to the reaction our bodies have when confronted with the sensory data in front of us – and a completely rational Spock like approach will more than likely fail us.

What this means is that when we have to make a tough decision and flip a coin – instead of focusing on which side lands, we should be monitoring our body’s reaction.

If we have a sense of relief when a particular side lands or we get knotted up with tension – that is our body’s way of telling us which decision is the right one – through gut instinct.

Then, we should ignore the coin toss and go with our gut.

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.