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Farsighted: How We Make The Decisions That Matter The Most - Steven Johnson
Review by Ron Immink
We don’t spend much time considering how we make decisions. Particularly about our own future (or that of your company). It appears that 95% of our decisions are made for us by our subconscious and our programming from our youth.
Move away from instinct
Particular hard choices demand that we train the mind to override the snap judgments of System 1 thinking, that we keep our mind open to new possibilities, starting with the possibility that our instinctive response to a situation is quite likely the wrong one.
For all the biases and intuitive leaps of System 1, one of the hallmarks of human intelligence is the long-term decision-making of System 2: our ability to make short-term sacrifices in the service of more distant goals, the planning and forward-thinking of Homo prospectus. To make the right decision, you have to figure out how to structure the decision properly, which is itself an important skill. However; “One thing a person cannot do, no matter how rigorous his analysis or heroic his imagination,” the Nobel laureate Thomas Schelling once observed, “is to draw up a list of things that would never occur to him.”
Don’t trust experts
Why would our brains devote so many resources to something as innocuous and seemingly unproductive as daydreaming? They were three times more likely to be thinking about future events than about past events. We are not very good at it. Particularly experts. Most were no better than the figurative dart-throwing chimp. Interesting finding; the more media exposure you had, the less valuable your predictions were likely to be.
The critical factor is thinking style. Curiosity is crucial. People attuned to a wide range of potential sources, willing to admit uncertainty, not devoted to an overarching theory—turned out to be significantly better at predicting future events than the more single-minded experts. For the long view, you need to draw on multiple sources for clues; dabblers and hobbyists outperform unified thinkers. Successful forecasters as a group were much more likely to be open to experience.
It is difficult
Most organisations seem to be using the same decision process as a hormone-crazed teenager. We now understand that farsighted decisions are challenging for many different reasons.
They involve multiple interacting variables
They demand thinking that covers a full spectrum of different experiences and scales
They force us to predict the future with varying levels of certainty.
They often feature conflicting objectives or potentially useful options that are not visible at first glance.
And they are vulnerable to the distortions introduced by individual “System 1” thinking, and by the failings of groupthink.
Decisions are made up of two distinct phases, sometimes called divergence and consensus phases. In a divergence phase, the key objective is to get as many perspectives and variables on the table as possible through exploratory exercises designed to reveal new possibilities. In the consensus phase, the open-ended exploration of new possibilities reverses course, and the group begins to narrow down its options, seeking agreement on the correct path.
There are a number of primary factors that contribute to the challenge of farsighted decision-making:
Complex decisions require full-spectrum analysis.
Complex decisions force us to predict the future. Most decisions, big or small, are fundamentally predictions about the future.
Complex decisions involve varying levels of uncertainty.
Complex decisions often involve conflicting objectives.
Complex decisions harbour undiscovered options.
Complex decisions are prone to System 1 failings.
Complex decisions are vulnerable to failures of collective intelligence.
Deliberative decisions involve three steps, designed specifically to overcome the unique challenges of a hard choice:
We build an accurate, full-spectrum map of all the variables and the potential paths available to us;
We make predictions about where all those different paths might lead us, given the variables at play;
We reach a decision on a path by weighing the various outcomes against our overarching objectives.
The author uses a number of examples to illustrate how difficult difficult decisions are, the defence of Long Island by George Washington, weather forecasting and capturing Bin Laden. Here are the lessons:
Mapping is not the same as deciding. Mapping is the point in the decision process where divergence and diversity are key. The challenge of mapping is getting outside our intuitive sense of the situation in front of us. Part of the art of mapping a complex decision is creating a full-spectrum portrait of all the variables that might influence your choice. But part of that mapping process is also coming up with new choices.
There is wisdom in building an accurate mental map of the system you are trying to navigate, but there is also a crucial kind of wisdom in identifying the blank spots on the map, the places where you don’t have clarity, either because you don’t have the right set of stakeholders.
Our minds naturally gravitate to narrowband interpretations, compressing the full spectrum down into one dominant slice. Cognitive scientists sometimes call this anchoring.
Well-functioning groups need to take advantage of cognitively peripheral people. The most important element is the diversity of perspectives you assemble. The very act of diversifying the group clearly improves its decision-making abilities.
The connection between diversity and improvements in the collective IQ of a group has been demonstrated by hundreds of experiments over the past few decades.
Diverse groups make smarter decisions.
Introducing expert roles turns out to be a particularly effective technique in addressing the challenges of full-spectrum thinking because in many cases, the different bands or layers of the full-spectrum perspective correspond to different fields of expertise.
You can enhance the diversity of an existing group—without bringing in outsiders—simply by designating “expert roles” to each of the participants based on the knowledge they happen to bring to the discussion.
Sometimes the easiest way to be wrong is to be certain you are right. There is the fatal disease of overconfidence that plagues so many complex decisions.
Recognizing and separating these different forms of uncertainty is an essential step in building an accurate map of a hard choice. Because some element of the situation is fundamentally unknowable. Such as:
indeterminacy in theoretical terms
Search for contradictory evidence—evidence that might undermine the interpretation around which the group was slowly coalescing—turned out, in the end, to generate evidence that made that interpretation even stronger. Either way, the exercise forces you to see the situation with more clarity, to detect the whorls of the fingerprint with greater accuracy.
Challenging assumptions, seeking out contradictory evidence, ranking certainty levels—all these strategies serve the divergent stage of the decision process well, helping to expand the map, propose new explanations, and introduce new variables.
Amazon’s Jeff Bezos famously adheres to a “70% rule” in making decisions that involve uncertainty: instead of waiting for total confidence in a choice—a confidence that may never arrive, given the nature of bounded rationality—Bezos pulls the trigger on decisions once he has reduced his uncertainty level to 30%.
The military has a long history of deploying what conventionally are called red teams: a kind of systematic version of devil’s advocacy where a group inside the organisation is assigned the role of emulating an enemy’s behaviour are. You can think of a red team as a kind of hybrid of war games and scenario plans.
The difference with strategies like premortems and red teams lies in the formal nature of the process: giving people a specific task and identity to role-play. It’s not enough to ask someone, “Can you think of any way this plan might fail?” Premortems and red teams force you to take on a new perspective or consider an alternate narrative, that might not easily come to mind in a few minutes of casual devil’s advocacy.
If you do find yourself stuck with a single path decision, Chip and Dan Heath suggest an intriguing—and somewhat counter intuitive—thought experiment to get outside that limited perspective: deliberately reduce your options. If your organisation seems to have settled into the comfortable assumption that Path A is the only route available to them, then imagine a world where Path A is roadblocked.
Simulations make us better decision-makers because simulations make us better at predicting future events, even when the system we are trying to model contains thousands or millions of variables.
There does seem to be genuine merit in using games to trigger new ideas and explore the possibility space of a particularly challenging decision.
You can apply moral algebra. Linear value modelling is employed widely in making astute planning decisions
Interestingly, one of the key tools we have had in training our minds to make this momentous choice has been storytelling—science fiction, to be precise, which turns out to play a role in some of our mass decisions equivalent to the role scenario planning plays in our group decisions. For at least a century, science fiction has served to anticipate the future.
But almost every decision can be productively rehearsed with another, even more, ancient form of escapism: storytelling. Scenario planning is a narrative art, first and foremost. The three-part structure turns out to be a common refrain in scenario planning: you build one model where things get better, one where they get worse, and one where they get weird. Scenario planning is genuinely not intended to be consulted for an accurate forecast of future events. Instead, it primes you to resist the “fallacy of extrapolation.” It is, at heart, a kind of informed storytelling, and of course, storytelling is something we instinctively do anytime we are contemplating a big decision.
It is not an accident that so many of these tools and strategies that help us wrestle with complex decisions revolve around storytelling. Our appetite for fictional narrative is not just the result of cultural invention, but instead has deep roots in the evolutionary history of the human brain.
Stories exercise and rehearse that faculty for juggling different frames of truth, in part because they themselves occupy a complicated position on the map of truth and falsehood, and in part because stories often involve us observing other (fictional) beings going through their own juggling act.
Stories serve a function, not unlike the ensemble forecasts of modern meteorology.
By telling one another stories, we free ourselves from the bottleneck of an individual life. Stories mean we “are no longer limited by the slow and unreliable flow of actual experience. Instead, we can immerse ourselves in the comparatively rapid flow of vicarious, orchestrated, imagined, or fictional experience.
Psychologists and cognitive scientists refer to this ability to imagine the subjective life of other people as having a “theory of mind.” That empathy, that knack for peering into another person’s mind and imagining how some theoretical event might feel, is almost by definition one of the most important virtues in making complex decisions. This is the reason why reading novels turns out to enhance our decision-making skills. Many studies have confirmed that a lifelong habit of reading literary fiction correlates strongly with an enhanced theory of mind skills. But no form rivals the novel’s ability to project us into the interior landscape of other minds.
The future of decision making
Perhaps it is time that we took some of the lessons we have learned from small-group decision-making and applied them to the realm of mass decisions. That is not as unlikely as it sounds. After all, the rise of the Internet has enabled us to reinvent the way we communicate multiple times in my lifetime alone: from email to blogs to Facebook status updates. Why shouldn’t we take this opportunity to reinvent our decision-making tools as well?
How do you move more from system I thinking to system II thinking, or at least improve the quality of system II thinking? Decision making as a profession, maybe even something that should be taught at schools. The course itself would be a case study in the power of diverse perspectives. But beyond the multidisciplinary sweep, students would learn a series of techniques that they could then apply to their own lives and careers: how to build a full-spectrum map of a complex decision; how to design a scenario plan and a premortem; how to build a values model and Bad Events Table. They’d learn to seek out undiscovered options and to avoid the tendency to fall back into narrowband assessments.
The other case for bringing decision-making into the classroom is that it provides a valuable bridge between the sciences and the humanities. We have a few challenges ahead.
Unlearn - Barry O'Reilly
Review by Ron Immin
But without the right mindset, that is not going to work. What got you here, won’t get you there. Highly effective leaders are constantly searching for inspiration and for new ideas. But before any real breakthroughs can happen, we need to step away from the old models, mindsets, and behaviours that are limiting our potential and current performance.
The way to think differently is to act differently. You must unlearn what you have learned. The main reason for the Romans becoming masters of the world was that having fought successively against all peoples, they always gave up their own practices as soon as they found better ones. Exceptional leaders have discovered it’s not how smart they are, how much they know, how long they have been in an industry, or what they have learned. It’s the ability to recognise when to unlearn and when to let go of past success and their outdated thinking and behaviours, and innovate
Training and development does not work
Most training and development efforts in businesses today routinely fail to hit the mark. Harvard Business Review article points out that American businesses spend a tremendous amount of money on employee training and education. In 2015, this number was estimated to be approximately $160 billion in the United States and $356 billion globally.
This first step in the cycle of unlearning requires courage, self-awareness, and humility to accept that your own beliefs, mindsets, or behaviours are limiting your potential and current performance and that you must consciously move away from them. Unlearning is an act of vulnerability—of leaving behind the certainty of what you know and opening yourself up to uncertainty.
Status-quo leadership is no longer an option (applying the same models and methods everywhere you go). Leaders believe they simply need to tell people to think differently, and they will act differently. This is a fallacy that must be unlearned. You have to learn by doing. With time, focus, and permission to be bold. The single most important action of any leader is to model the behaviours you wish to see others exhibit in the organisation.
The best leaders don’t have all the answers; they ask better questions. The best leaders try stuff. Black box thinking! Best leaders think big, start small (small investment + small risk + small build), and create a safe environment to fail. No PowerPoint or promises with only words to back it up. Only results of actions with feedback. Relearning is a process of experimentation to try new behaviours and take in new data, new information, and new perspectives.
The best leaders know where they want to go. By identifying the aspiration or outcome you wish to achieve, paired with the deliberate practice to get there and starting with small steps (starting is the keyword here), you can start to move toward your desired state and achieve extraordinary results.
Creating atomic habits
Leadership is about storytelling. Tell stories of what success might look like if they solved the challenge they decided to tackle. Ask people to visualise or tell themselves the story of what it would look like six months, a year, or three years after they solved that challenge. Visualising and telling stories of success in the future is a great way to unlearn your thinking and create a bold vision and definition of that success. The powerful part of telling stories is that we start to describe the behaviours that we, our people and our customers would be exhibiting if we have indeed unlearned.
You put numbers on everything
For instance, if you wish to leave work feeling accomplished, quantify it. How often would it be happening? Hopefully, not just once. How about four out of five days a week, or even better, 80% of the time? Using rates and ratios makes our measure of success more actionable and accountable over time.
Lead by example
Always remember, the best way to create new behaviours—for yourself and for your organisation—is to demonstrate them yourself and show people you are committed to improving how you work, how your systems work, and how everyone could work.
Starting small, even smaller than you think
The key reason for starting small is to make people feel successful as quickly as possible and to enable them to see the result of their new behaviour as they progress toward their larger aspiration or outcome. The path to success is to break down the aspiration into small, specific behaviours using a method called “Tiny Habits”. Behaviour happens when three things come together: motivation, ability, and a prompt. Doing something small can have a systemic-level impact and network effect, making something magical happen in the organisation.
As you experience breakthroughs and free ourselves of your existing mental models and methods, you learn to let go of the past to achieve extraordinary results. Your breakthroughs provide the opportunity to reflect on the lessons we have learned from relearning and provide the springboard for tackling bigger and more audacious challenges ahead of us.
Professional athletes have long known the power of using feedback and reflection to improve their performance and achieve breakthroughs. After breakthrough, the cycle starts all over again as leaders deliberately practice unlearning, building muscle memory to push forward with new initiatives, new innovations, new ideas, and new systems of operating.
In the majority of organisations, being busy is systemic, and often for perverse reasons. You breakthrough by stepping back and reflecting on exactly what it is you are doing and the results your effort is yielding. “Did you do the tasks?” and then move on to the next one, and the next. It’s much harder to take the time to find out if the task you did actually impacted the outcomes that you were trying to achieve. Outcomes matter more than outputs.
Measure your outcomes over output
Strive to gather feedback in real-time to discover rapidly how your efforts have been received, thus optimising your adaptions and next actions in minutes, hours, and days rather than weeks, months, and years as might be the case with traditional approaches.
Declare a hypothesis for improvement that will address the challenge you’re facing
Define outcome-based measures of success before starting experiments, and then hold yourself accountable for them.
Recognise that the only true failure is the failure to learn, so learn fast.
The key is deliberate practice, which demands explicit focus, reflection, and taking on more challenging tasks to keep improving and progressing toward extraordinary results. That is why the people who push ahead are the ones who are constantly trying to find their knowledge thresholds, their skills thresholds, and taking one step beyond that.
Da Vinci didn’t have a to-do list; he had a to-discover list. The reason the biggest, most successful companies in the world are all technology companies is because they’ve built platforms that allow them to discover exactly how their customers interact with them and to more deeply understand their customers’ behaviours. Today’s most innovative and successful companies run thousands of experiments each year.
In 2011, Amazon had the ability to deploy software every 11.6 seconds, which means the company could discover something new every 11.6 seconds.
CEOs, executives, and managers who hold onto legacy thinking and outmoded methods such as command and control—telling people what to do and exactly how to do it— are not only micromanaging through control systems designed by themselves and for themselves, they are also limiting the potential of the entire organisation. They forget what it is to problem-solve for themselves, and they embrace disempowerment to the point that having to think for themselves sparks fear. This learned helplessness halts extraordinary breakthroughs. When no decisions are made at the edges of the organisation—where the information is richest, the context most current, and the employees closest to customers, the organisation grinds to a halt.
The majority of managers have risen to their current positions based on their competency to know what to do when to do it, and always having the answer or solution at hand rather than helping others discover the answers and solutions. The end result of this very common situation is the Peter Principle, where managers rise to their highest level of incompetence and battle to stay there for fear of being found out.
A worker’s role is not to think, just do. Yes, this leadership conditioning and behaviour still prevails in the majority of twenty-first-century organisations—and is still taught, modelled, and learned. Leadership is about making other people successful by helping them discover the answers for themselves and guiding them along the way. Real leadership is leaving a team, an initiative, or a business—whatever situation you decide to tackle—in a better state than when you started, with new skills, capabilities, and knowledge to cope with the road ahead, even after you’re long gone. Leaving a legacy.
The myth of military command and control
Great leadership consists of clearly defining purpose, intent, and the outcomes to be achieved, and then creating systems that allow people to figure out for themselves (by way of experimentation) the best ways to achieve those desired outcomes. The army relinquished command and control by its leaders in the nineteenth century, after the Napoleonic wars. They replaced it with mission intent. Leaders describe their intent—communicating the purpose of the orders, along with the key outcome to be achieved—and then trust their people closest to the situation, who have the richest information, to make decisions aligned with achieving that outcome. That is why I think you can learn so much from the military.
That is why we have Erwin van Beek, ex-special forces, do a 4-hour leadership session at “Fearless entrepreneurship”. Leaders should have the confidence that their team is capable of making good decisions for themselves. Clarity is the responsibility of leadership. Clear mission intent. With a number.
Go to the fringes
High-performance individuals and companies create systems that allow the people closest to the richest sources of information to have the authority to make decisions because they have the most context of the situation and the competence of skills required for how best to take action. Read “Employees first, customers second“.
Stop making decisions yourself and let other people make decisions. It’s not about the leader solving the problem. It’s about coaching the employee to improve their capability and competency of doing the work, so they can better solve problems. The question for leaders is how they can move decision making to the appropriate individual and have the confidence necessary to delegate authority.
Engage with customers
For the majority of companies, engaging customers, and obtaining their feedback comprises the last step in the product journey. After we have spent significant time and money. We must unlearn the way we engage, collaborate, and create with our customers, and relearn how to interact, leverage, and connect with them to discover new innovations and breakthroughs together. Today’s most effective leaders wholeheartedly embrace the idea of removing the friction in how they communicate with customers, so they are able to solicit and receive a steady, raw feed of unsanitised information and data that is true, accurate, and as close to real-time as possible.
You need to incorporate the feedback of all your customers—both internal and external—to understand how the business is working, how the products and services you’re delivering are working, and how both can be improved. Most leaders’ default conditioning is to build or maintain layers of supervisors and managers, which creates communication handover points. These handover points always lead to slow decision making, poor collaboration, and loss of context as what’s actually happening in the organisation gets lost in the message. The best way to get actionable information is to ask your customers, putting yourself in their shoes to understand what’s really happening. Read ‘The moment of clarity“.
The days of the CEO being a scary person, locked behind the door on the twenty-first floor, who had all the answers, are rapidly coming to a close. The answers to your questions aren’t in your office; they’re outside in the world, where people are using your products and services. If you really want to understand what’s going on, you’ve got to go to the source, and you’ve got to be willing to listen.
When you truly innovate, build the future, and courageously face down uncertainty, what happens is that complex, unpredictable, and unintended consequences occur. When you build hierarchies of knowledge or silos, and information doesn’t travel across the company, organisational learning does not occur. To prevent this, you have to train, reflect on results, and have conversations that remind people what happens when things go bad. To help its employees remember, each year NASA conducts what it calls a Day of Remembrance
Netflix conducts game days where, unbeknownst to the teams, parts of the company’s live production systems are randomly shut down, and their products and services start breaking. Intentionally disabling computers in Netflix’s production environment became such a habit within the company that they built a piece of software called Chaos Monkey to randomly and automatically trigger system failures to test how their systems and teams responded to outages.
Leaders in most organisations today are massively incentivised to do what they’ve always done and squeeze a little bit more out of the existing system, versus taking a risk and unlearning what has delivered past success. Existing incentive structures are one of the biggest inhibitors for driving innovation in any organisation. It’s time to unlearn individual pay-for-performance incentives and relearn to create the conditions for authentic motivation, courageous behaviours, and exploring risky initiatives in a controlled manner to get the breakthroughs to achieve extraordinary results.
If people don’t understand or are not clear on the intent of the company, they can never move toward it. “Powerful” explains that the litmus test was being able to stop any of the company’s employees, at any level of the company, in a break room or elevator and ask them this question: “What are the five most important things the company’s working on for the next six months?” If they couldn’t reel them off one, two, three, four, five, ideally using the same words used in communications to the staff, then the Netflix leadership was failing to do its job, not the individual.
People want to have a sense of contributing to the greater good—of their organisations, their communities, and the world at large. In cases where employees have clarity of purpose in their work, alignment on how their efforts contribute to achieving it and appreciation for their efforts are enough to prompt the desired behaviours, and no incentives are needed.
For Jeff Bezos, at Amazon, it’s always Day One
When employees move past Day One, they become complacent and fearful, relying more on the comfort of the status quo instead of constantly seeking new frontiers and courageously leaning into the discomfort of the unknown. The former is the pathway to organisational decline and death. The latter is the pathway to greatness.
Action is everything
As Jeff Bezos says, “There is no Day Two—every day is Day One”. Unlearning does not lead with words; it leads with action. People do not change their mental models of the world by speaking about it; they need to experience the change to believe, feel, and see evidence of it. If you always prioritise incredible personal growth, impact, and paradigm-shifting experiences, success will gravitate toward you as if you were a magnet. So, choose not to be mediocre. Choose a life of greatness sat work, at home, in your community, and in the world.
Loonshots - Safi Bahcall
“Loonshots” is a very different book about innovation and organisational design. Closer to Taleb and “Antifragile” than “Creative construction“. Also reminds me of “The day after tomorrow“. Solid, fluid and superfluid as key concepts to manage your innovation portfolio.
Particularly superfluid is difficult. Those are the loonshots you need, but loonshots by their nature are completely and utterly unpredictable. However, the most important breakthroughs come from loonshots, widely dismissed ideas whose champions are often written off as crazy. Without loonshots companies (and empires) will eventually die.
Loonshots shares the lessons and learning of how to manage innovation from a loonshot perspective. It as with startups and biology, you need lots of weird ideas, and there is no way of predicting which ones will succeed. It is all to do with phase transition. Organisations work in the same way and when you start to understand why teams suddenly turn, you can start to control those transitions. The same way as temperature controls the boiling and freezing of water. Solid, fluid, superfluid.
Think of the water molecules in the tub as a platoon of cadets running randomly around a practice field. When the temperature drops below freezing, it’s as if a drill sergeant blew a whistle and the cadets suddenly snapped into formation. The rigid order of the solid repels the hammer. The chaotic disorder of the liquid lets it slip through. Systems snap when the tide turns in a microscopic tug-of-war. Binding forces try to lock water molecules into rigid formation. Entropy, the tendency of systems to become more disordered, encourages those molecules to roam. As temperature decreases, binding forces get stronger and entropy forces get weaker. When the strengths of those two forces cross, the system snaps. Water freezes.
All phase transitions are the result of two competing forces, like the tug-of-war between binding and entropy in water. When people organise into a team, a company, or any kind of group with a mission they also create two competing forces, two forms of incentives. We can think of the two competing incentives, loosely, as stake and rank. When groups are small, for example, everyone’s stake in the outcome of the group project is high. The perks of rank, job titles or the increase in salary from being promoted, are small compared to those high stakes. As teams and companies grow larger, the stakes in outcome decrease while the perks of rank increase. When the two cross, the system snaps. Incentives begin encouraging behaviour no one wants.
The bad news is that phase transitions are inevitable. All liquids freeze. No group can do both at the same time, because no system can be in two phases at the same time. One molecule can’t transform solid ice into liquid water by yelling at its neighbours to loosen up a little. When the density exceeds a critical threshold, the system will flip from the smooth-flow to the jammed-flow state.
Identifying control parameters is the key to changing when systems will snap: when solids will melt, when traffic will jam, or when teams will begin rejecting loonshots. As the temperature of water falls, molecules vibrate more slowly until they reach a critical temperature, at which point their binding energy exceeds their entropy, and they crystallise into the rigid order of ice. That’s the liquid-to-solid phase transition.
Live on the edge
To nurturing loonshots, you need to live on the edge of a phase transition: the unique conditions under which two phases can coexist. Engineering serendipity, create the opportunity and space to explore the bizarre and creating a dynamic equilibrium between loose and structure. The magic is in the network, a shared purpose and the loose connections.
Do not undertake a program unless the goal is manifestly important and its achievement nearly impossible
If anything is worth doing, it’s worth doing to excess.
Shelter radical ideas
There is a need for separating and sheltering radical ideas—the need for a department of loonshots run by loons, free to explore the bizarre. Where failure is accepted and expected. The breakthroughs that change the course of science, business, and history, fail many times before they succeed. Sometimes they survive through the force of exceptional skill and personality. Sometimes they survive through sheer chance. In other words, the breakthroughs that change our world are born from the marriage of genius and serendipity.
Create a loonshot structure
There is a pervasive myth of the genius-entrepreneur who builds a long-lasting empire on the back of his ideas and inventions. Rather than champion any individual loonshot, the secret is to create an outstanding structure for nurturing many loonshots. Rather than focus on being a visionary innovator, be a careful gardener. Getting the touch and balance right requires a gentle helping hand to overcome internal barriers, the hand of a gardener rather than the staff of a Moses. The tips (not that dissimilar to “Zone to win“):
Separate the phases
The goal of phase separation is to create a loonshot nursery. The nursery protects those embryonic projects. It allows caregivers to design a sheltered environment where those projects can grow, flourish, and shed their warts. Tailor the tools to the phase
Love your artists and soldiers equally
Surviving those journeys requires passionate, intensely committed people—with very different skills and values. Artists and soldiers. Manage the transfer, not the technology. Manage the balance between loonshots and franchises—between scientists exploring the bizarre and soldiers assembling munitions; between the blue-sky research of Bell Labs and the daily grind of telephone operations. Rather than dive deep into one or the other, focus on the transfer between the two. Intervene when the balance breaks down. Keeping the forces in balance is so difficult because loonshots and franchises follow such different paths.
Beware the False Fail
False Fail—a result mistakenly attributed to the loonshot but actually a flaw in the test. We will see the False Fail over and over, both in science and in business. There are many reasons projects can die: funding dwindles, a competitor wins, the market changes, a key person leaves. But the False Fail is common to loonshots. Skill in investigating failure not only separates good scientists from great scientists but also good businessmen from great businessmen.
Create project champions
Fragile projects need strong hands. Great project champions are much more than promoters. They are bilingual specialists, fluent in both artist-speak and soldier-speak, who can bring the two sides together.
Listen to the Suck with Curiosity
Listening to the Suck with Curiosity (LSC), overcome the urge to defend and dismiss when attacked LSC means not only listening for the Suck and acknowledging receipt but also probing beneath the surface, with genuine curiosity, why something isn’t working, why people are not buying. It’s hard to hear that no one likes your baby. It’s even harder to keep asking why.
Ferocious attention to detail
Ferocious attention to scientific detail, or artistic vision or engineering design, is one tool, tailored to the phase, that motivates excellence among scientists, artists, or any type of creative.
Beware of the Moses trap
When ideas advance only at the pleasure of a holy leader—rather than the balanced exchange of ideas and feedback between soldiers in the field and creatives at the bench selecting loonshots on merit—that is exactly when teams and companies get trapped.
The types of loonshots
There are two types: P and S.
- With P-type loonshots, people say, “There’s no way that could ever work” or “There’s no way that will ever catch on.” And then it does.
- With S-type loonshots, people say, “There’s no way that could ever make money.” And then it does.
- Deaths from P-type loonshots tend to be quick and dramatic. A flashy new technology appears (streaming video), it quickly displaces what came before (rentals), champions emerge (Netflix, Amazon), and the old guard crumbles (Blockbuster).
- Deaths from S-type loonshots tend to be more gradual and less obvious. It took three decades for Walmart to dominate retail and variety stores to fade away. S-type loonshots are so difficult to spot and understand, even in hindsight, because they are so often masked by the complex behaviours of buyers, sellers, and markets.
The book covers mindset, and there the book reminds me of “The algorithmic leader“.The difference between a system mindset and outcome mindset. Teams with an outcome mindset, analyse why a project or strategy failed. Teams with a system mindset, probe the decision-making process behind a failure. How did we arrive at that decision? System mindset means carefully examining the quality of decisions, not just the quality of outcomes. Which is why probing wins, critically, is as important, if not more so, as probing losses. Failing to analyse wins can reinforce a bad process or strategy. Always ask how the decision-making process can be improved
Examples of randomness
The book is full of examples and what it illustrates is the sheer randomness, the messiness, the serendipity of breakthrough ideas and companies. Bell lab, Genentech, Pixar, Star Wars, James Bond, IKEA but it also points out one organisation that has been at the forefront of many breakthroughs, which is DARPA. Since 1958, this one two-hundred-person research group, deep inside a massive organisation, has spun out the internet, GPS, carbon nanotubes, synthetic biology, pilotless aircraft (drones), mechanical elephants, the Siri assistant in iPhones, and more. Never underestimate the importance of government on innovation and technology development.
Lessons from DARPA
The DARPA’s principles are elevated autonomy and visibility; a focus on the best external rather than internal
- DARPA is run like a loose collection of small startups, with no career ladder. Their employee badges are printed with an expiration date.
- DARPA’s structure has eliminated the benefit of spending any time on politics, of trying to sound smart in meetings and put down your colleagues by highlighting the warts in their nutty loonshots so that you can curry favour and win promotions.
- DARPA managers are broadly known in their community. They are granted authority to choose their projects, negotiate contracts, manage timelines, and assign goals. The combination of visibility and autonomy creates a powerful motivating force: peer pressure.
- In DARPA recognition from peers is a form of intangible or soft equity. It can’t be measured through stock price or cash flows. But it can be just as strong a motivator, or even stronger, as both a carrot and a stick.
You won’t apply the same way to every company (most companies are not faced with problems that might be solved by a giant nuclear suppository). But every organisation can find opportunities to increase autonomy, visibility, and soft equity. Some additional tips:
Beware of the skill fit
Match employees and projects and ensure optimal skill-fit. Poor project–skill fit can also result from an overmatch: skills so far above project needs that the employee has maxed out what he or she can contribute. Employees who are not stretched by their assigned projects have little to gain from spending more time on them. How much might politics decrease and creativity improve if rewards for teams and individuals were closely and skillfully matched to genuine measures of achievement?
Watch the incentives
“Powerful” has an interesting perspective on incentives. Competitors in the battle for talent and loonshots may be using outmoded incentive systems. Bring in a specialist in the subtleties of the art—a chief incentives officer. Companies with outstanding chief incentives officers—experts who understand the complex psychology of cognitive biases, are skilled in using both tangible and intangible equity, and can spot perverse incentives—are likely to do a better job than their competitors in attracting, retaining, and motivating great people. In other words, they will create a strategic advantage.
Wider spans (15 or more direct reports per manager) encourage looser controls, greater independence, and more trial-and-error experiments. Which also leads to more failed experiments. Narrower spans (five or fewer per manager) allow tighter controls, more redundancy checks, and precise metrics. When we assemble planes we want tight controls and narrow spans. When we invent futuristic technologies for those planes, we want more experiments and wider spans.
A wide management span helps nurture loonshots: it encourages constructive feedback from peers. Peers, rather than authority.
The author makes a good point about loonshot versus disruptive. A loonshot refers to an idea or project that most scientific or business leaders think won’t work, or if it does, it won’t matter (it won’t make money). It challenges conventional wisdom. Whether a change is “disruptive” or not, on the other hand, refers to the effects of an invention on a market. Early-stage projects in rapidly evolving markets behave like a leaf in a tornado. You wouldn’t put a lot of faith in guessing where that leaf might end up. It’s easy to point to technologies that disrupted a market in hindsight, once the leaf has landed.
Embrace the crazies
Look for the innovation outliers (read “Quirky” and the “Rebel talent“. Perhaps everything that you are sure is true about your products or your business model is right, and the people telling you about some crazy idea that challenges your beliefs are wrong. But what if they aren’t? Wouldn’t you rather discover that in your own lab or pilot study, rather than read about it in a press release from one of your competitors? How much risk are you willing to take by dismissing their idea?
You want to design your teams, companies, and nations to nurture loonshots, in a way that maintains the delicate balance with your existing business, so that you avoid ending up like the Chinese and Roman Empire or most of the companies in your sector in the near future. See loonshots as insurance for day after tomorrow.
The Algorithmic Leader - Mike Walsh
How do you make decisions? I am taking a bet that you spend very little time thinking about thinking or how and why you make the decisions you make. Let alone how you can use AI to do that even better and consistent.
Once you have read “Principles“, you should be looking at your business in a different way. Before “Principles” there was “Making money is killing your business“. Your business as an engine or combination of (decision making) processes. That is why I started to read “The Algorithmic leader”. Managing and optimising your decision making as a leader, using and applying machine learning.
Algorithms are not some computational incantation that somehow bring machines to life. They are more like a recipe for baking a cake: a step-by-step process (mixing ingredients) to solve a problem The very concept of an algorithm predates the modern computer by several thousand years; it can be traced back to some of the greatest minds of the ancient world who also used algorithms to think through difficult challenges.
The book is a harder version of “The new leadership literacies“. Just add algorithmic to the skill set. Combine it with some meditation and mindfulness to make sure you stay on the right side of manipulation.