Sunday, June 21, 2020

Adaptability Quotient (AQ): The new leading intelligence?




 “The measure of intelligence is the ability to change.” 
- Albert Einstein


I.    Adaptability

Adaptability Quotient, or AQ, is the measurable study of the most basic of our human talents: the ability to change on purpose.  Adaptability is a form of intelligence with increasing importance for work and recruitment in times of unprecedented change; AQ is the intelligence scale that can measure, test, and improve aptitude and skills.  It asks not how much people know, but how well they manipulate information, including ability to unlearn what is no longer productive.  It infuses exploration into thinking and work, asking, in business competition, “What might kill you next?”

It is the key to evolution described by Darwin, who focused on adaptability to changing environments as more important to species survival than strength or intelligence, as in “adapt or die.”   Evolutionary biologist Daniel Lieberman describes responsiveness to change as part of human cultural evolution, beyond physical anthropology.  Culture is the sum of ideas and practices passed on between human generations, being the baseline—a received value system—for creative problem-solving and innovation. Collective intelligence is not static but evolutionary, and personal intelligence likewise morphs to carry us across the adult development chart from birth.
  
Forbes’ “Adapt or Die” (2013) whitepaper defines AQ as: “the ability to adjust course, product, service, and strategy in response to unanticipated changes in the market.” While the Forbes definition is  business-orientated, Martin, Nejad, Colmar, and Liem in their article "Adaptability: How Students' Responses to Uncertainty and Novelty Predict Their Academic and Non-Academic Outcomes” (2013) defined AQ more broadly as “the capacity to adjust one’s thoughts and behaviors in order to effectively respond to uncertainty, new information, or changed circumstances."

According to Harvard Business Review, adaptability is “The new competitive advantage for the 21st century.” (2011)   In Fast Company in 2018, Natalie Fratto reported that “adaptability quotient will soon become the primary predictor of success [in business, exceeding] general intelligence (IQ) and emotional intelligence (EQ – Goleman’s term).” 

Stuart Parkin (2010) defines AQ as the ability to perceive when change is occurring, ability to come to terms with new demands--and then to identify opportunities to seize on--not just for survival but leveraging new circumstances to thrive.  Parkin uses the example of Moore’s Law from computing as a model of constant innovation needed to assess and meet ongoing change. When we change successfully, the reward of neurochemicals to the brain gives us the motivation to pursue creative solutions to what stresses us out. The World Health Organization calls stress “the number-one health epidemic of the 21st century.” Much of stress is, full circle, the outcome of trying to adapt to change under the constraints of uncertainty, which blocks our decision-making confidence.

Stress is the mental-health problem that fast emerges when efficacy fails us; as in the crisis we experience, either personal or world-wide, when things don’t go as planned – the Covid crisis is now our Crisis #1.  It has caused a confidence rift in our individual sense of competence, extending out to local, national, and world systems, while forcing all of these to be rapidly re-assessed and adapted.  A visible instance is the business case of restaurants either converting to take-out or opting to close completely, a decision between quite different business models.  Parking-lot dining al fresco is a third adaptation.

In 2012, in HR Magazine, Jo Ayoubi set out AQ as a skill-set predisposition to:
1)     Quickly appreciate when change is happening
2)     Test and experiment early and often, beyond products and services, to examine business models, process, and strategies [as systems]
3)     Manage stakeholders and relationships, especially within multinationals
4)     Motivate and lead in rapidly changing environments

The whole question of adaptability will be getting a global workaround in the coming months and years, because major changes are more about adaptability than conventional “best practices” that can be known, measured, and evaluated by historical precedent or status quo.  This will be a new ball game.   Including the meaning of competence for customer service systems as they adjust to new measures of efficacy for the customer experience based on flexibility and based around the need for just-in-time information.
 
For individuals, adaptability creates a new dimension for applying and measuring intelligence under the “press” of rapid change and novel circumstances.  This pressure may raise awareness that agile expert systems are more necessary than ever for effective problem solving, and consumers of everything from coffee to higher education might feel relieved of their ongoing need to think they can handle problems using just their own resources and wits.

II.    Disruption
Off-plan problem-solving is essential to dealing with disruptions, unplanned-for change versus long-term planning outcomes.  Human beings respond first to fear rather than rationality, because that’s the way the mind responds to any urgent need for changed behavior.  This happens when weak signals (that something is wrong and needs fixing) become stronger and harder to ignore (something must be done now). 
AQ is a mental practice that people take up not because they want to, but when forced to by extraordinary events.  It is a form of off-plan thinking, the route the crew of Apollo 13 had to follow when their oxygen tank blew up on the way to the moon in 1970.  Anytime the rules change mid-game is when we are forced to reset our approach to the hierarchy of ideas—what is most important, what is urgent or less urgent, and possibly the very nature of our mission.  For Apollo, it meant re-imagining the mission from the original moon landing to returning to earth.
Likewise, in AQ testing, subjects are asked to imagine disaster scenarios in which their main income stream dries up suddenly, or a climate change cuts off customers (Fratto).  “What if” questions introduce these or a like unprecedented disruption that interrupts the comfort of previous learning to impose a totally different knowledge set as the next database of operations.  The leading questions then become:

How well can you manipulate new information?  How quickly can you pivot to let go of old assumptions that are no longer reliable, but actually mislead your thinking in irrelevant directions?  How good is your ability to learn from failure and experiment with options almost 
instantly? 

An applied answer is the difference between how Blockbuster and Netflix looked at the market for movie rentals, or Kodak versus IBM in going digital with imaging.  Carol Dweck’s work on the Growth Mindset has proven the value of looking at neuroplasticity as a constantly developing process, rather than intelligence as a static state of mind.
   
In business, where AQ is a developing industry, 90% of HR decision makers identify AQ as the top trait to deal with change and uncertainty, as the shelf-life of skills shrinks by 35% every 3 years, job changing accelerates to every 4.2 years, and workers hold 9-plus jobs over their worklife, within  3, 4, 5 and more careers.  On a wider scale, for the S&P 500 index, the average company tenure was 33 years in the early 20th century, while now that time is cut by almost two-thirds to just 12. 

Adaptability is what has made us the leading species on earth.  However, it is not our naturally desired state.  We are drawn to rely on established doctrine and standardized ways of looking at problems and potential solutions--the legacy of culture.  These sources reflect deeply held beliefs about the way things should work, assumptions about what our values should be, and which alternatives fit and don’t fit our values and long-term purposes.

Questioning our own assumptions is not something we like doing.  It goes against our presumption that we can trust our own thinking (see briefing on Overestimating Judgment).  So not everyone is going to be ready to adapt, and even fewer to innovate (the adaptor/innovator scale developed by Michael Kirton as KAI).  Radical change happens under great stress, the very circumstance when we most seek to maintain the status quo as a form of societal security.
 
AQ questions (Executive Agenda, Nov. 13, 2019): Typical AQ questions, rated on a scale of 1-5 (practiced rarely to routinely):

1.      I can readily imagine new uses for old ideas.
2.      My failures present opportunities for innovation.
3.      I like to experiment with new ideas.
4.      I am able to shift gears with minimal complaints or issues.
5.      I challenge myself to question what I presume to know.
6.      My core ideas are clear to me and others.


Thursday, May 14, 2020

Overestimating Judgment



“Courage is willingness to take the risk once you know the odds. Optimistic overconfidence means you are taking the risk because you don't know the odds. It's a big difference.”
--Daniel Kahneman, psychologist and economist

What we think we know may not be so, obscuring the real problem.

From the The Washington Post, March 10, 2020: When Coronavirus Is Growing Exponentially, Everything Looks Fine Until It Doesn’t.  There’s an old brain teaser that goes like this: You have a pond of a certain size, and upon that pond, a single lily pad. This particular species of lily pad reproduces once a day, so that on day two, you have two lily pads. On day three, you have four, and so on. Now the teaser. “If it takes the lily pads 48 days to cover the pond completely, how long will it take for the pond to be covered halfway?” The answer is 47 days. Moreover, at day 40, you’ll barely know the lily pads are there. (Megan McArdle, 3/10/2020)

In answering the lily-pad question, many people (over half) choose day 24.  They divide the time frame in half as if this is a linear equation, when it’s actually an exponential one.  The same mental failure happens when people calculate simple interest as compound interest, or vice-versa.  The correct answer shows the danger in mis-framing the problem by the wrong operating assumption.  What is needed is the outside expert to challenge the operating assumption, “I can’t fix this problem because of X,” when the fix resides with Y, a separate but related aspect, instead.

Robert A. Burton, MD writes in On Being Certain (2008): 

Anyone who’s been frustrated with a difficult math problem has appreciated the delicious moment of relief when an incomprehensible equation suddenly makes sense.  We “see the light.” This aha! is a notification from a subterranean portion of our mind, an involuntary all-clear signal that we have grasped the heart of a problem.  It isn’t just that we can solve the problem; we also ”know” that we understand it (p. 3).

Finding the answer to a problem, especially a difficult and prolonged one, has all the earmarks of the rewards our brain gives us as endorphins, the shared mechanism of drugs, sex, and food.  It is the opposite process to Getting Lost (which we have documented before in this blog).  But its achievement is blocked by the overconfidence that most clients exhibit in keeping their problems going.  The process automatically stays on track because the techniques and assumptions being applied are not helping or clarifying the situation—obscuring its solution.

J. Edward Russo and Paul J. H. Schoemaker, in their book on decision-making judgment errors (Decision Traps, 1994), cite the majority of business managers’ choosing the wrong cause of death (the second choice) in three pairs of options:  Lung cancer v. car accidents, emphysema v. homicide, tuberculosis v. fire.  In their example, it is the “availability bias” that drives the majority choosing the more volatile and dramatic option.  This is the human tendency to make judgments based not on rational fact-finding but on what comes most easily to mind.  Which is the dramatic content featured most frequently by media coverage.

Such judgment errors are part of “confirmation bias,” the mind’s searching out and focusing only on evidence that supports a preexisting belief.  Emskoff and Mitroff (at the Wharton School) studied strategy formation at dozens of companies to discover that their researchers were seeking out only evidence to support already formulated strategies.  Why is this important?  It helps explain why problems continue to remain unsolved and why research conducted in the same bias channel can’t lead to any new or helpful insights, as long as it’s conducted along the same line of assumptions.

In the current health crisis, determining the real risks of the Covid virus to human life requires expert ability to identify actual behavior in order to predict where it’s going and when the lockdown can be relaxed or ended.  The above lily-pad-pond story has been cited as an example of viral growth that’s hard to wrap our more intuitive linear minds around. 

In his classic 1988 manual Innumeracy: Mathematical illiteracy and Its Consequences, John Allen Paulos, professor of mathematics  at Temple University, pointed to such mental errors in pseudoscience, parapsychology, newspaper psychics, stock-market filtering scams, and the voter count in the Y2K presidential election.
   
"The fast-thinking and gut feelings usually dominate," says Paul Slovic, professor of psychology at the University of Oregon and author of several books on risk perception and behavioral sciences. "This is because it's natural and easy, and most of the time we trust our intuitions to give us good guidance in our daily lives.”  Until this intuition fails us when we encounter problems that don’t yield to our usual problem-solving judgments—which is why we need to examine how we approach difficult or complex issues, and why consumer problem-solving requires expert input.

"The way the virus spreads, everything is under control until it isn't — that's the nature of exponential growth," Slovic said. "Our minds think linearly, at a constant rate of growth, but this is a nonlinear process. It's a natural tendency for most of us to underestimate the speed at which an exponential process will take off, and then suddenly it overwhelms us."  https://www.msn.com/en-ca/news/other/humans-arent-wired-to-comprehend-a-pandemic-heres-why/ar-BB12oF07

So misapprehending the system in which the problem is operating is key to the breakdown in solving it.  This is the re-set needed to relocate the problem inside the correct theory or dynamic. The complexity of consumer culture is one example. Part of the anxiety of consumer problems is that they are operating within a framework the consumer cannot readily access or understand how to work with. 

This even operates in the current Covid anxiety, which works to exaggerate the severity as well as outcomes of the pandemic.  Anxiety is fed by catastrophizing in the mind when that mind is fed a steady diet of news about fresh disasters.  It also tends to grow a self-identity of helplessness and powerlessness, when in fact, Cognitive Behavior Therapy can reveal the fact that individuals under anxiety have far more power than they appear to acknowledge.

Fake intelligence is what we get when we take shortsighted shortcuts as a result of overconfidence in our judgment – believing (falsely) that these shortcuts will save us time and effort, when in fact they are costing us in bad thinking and bad conclusions.  Overconfidence results in failure to frame the problem correctly for the best solutions, keeping us from assembling the most relevant (key) information to the problem.  “The key issue isn’t getting the right facts but challenging the right assumptions” (Russo & Shoemaker, p. 76).  And the authors point out that for Americans especially, seeming confident is enough to convince others of the rightness of an answer, reinforcing “feeling sure” oneself.

Confidence checkup:
To illustrate this principle as well as to show off its weakness in the face of facts, here are five questions with numerical answers. You don’t need to know the numbers – just gauge your confidence in a range that you think includes the answer. Then, reviewing the precise answers given below, note the range difference between what you knew and what you thought you knew. Note:  Most managers missed 2-3 (40-60%) of the answers completely, making the mis-estimates average out at only a 50% chance of including the answer.  Here they are (p. 71):  Spoiler alert: answers at the end
  1. Diameter of the moon, in miles
  2. Age at which Martin Luther King died
  3. Weight of a Boeing 747 empty, in pounds
  4. Air distance in miles, London to Tokyo
  5. Deepest known point in the oceans, in feet
How did your guesses go?  Do they show overconfidence that indicate problems in other areas – life choices, grasp on reality, social estimating, math skills, or problem-solving in general?  Don’t worry – even people in charge don’t have a solid sense of their own abilities.  That’s where ability to learn systems guided by knowledge rather than judgment shows there is hope for improvement. 
The first step is in recognizing the state of the art and its consequences for human thinking and decision making; overestimation of common sense, and its consequences.


Answers:

1) The diameter of the moon is 2,160 miles

2) Martin Luther King was 39 years old when he was killed.

3) A Boeing 747 empty, weighs 390,000 lbs

4) The air distance in miles, from London to Tokyo, is 5,959 miles.

5) Deepest known point in the oceans is 36,198 feet (6.85 miles) 

Monday, April 13, 2020

Anxiety Looks Like This



“The mind that is anxious about future events is miserable.” – Seneca


The current isolation-in-place lifestyle in response to Covid-19 has created a siege mentality, fueled by an “uncertain future” mentality. More recently, Tyler Cowen declared in Bloomberg.com, “The very worst scenario is that the coronavirus itself becomes our main entertainment.  It could become an ongoing horror show that drives us crazy.”

But anxiety is an emotional response to anticipated danger; its mind lives in the imagined future more than the turbulent present.  Anxiety is a destabilizing emotion, especially as shared in large groups.  It produces paralysis and indecision (an outcome of loss aversion), along with social withdrawal and dread of new information, which is seen as distressing in advance and disruptive rather than saving and securing, part of better knowledge that can be used to face and solve the problem.  Being anxious affects human ability to learn and integrate new information, welcome or unwelcome.
 
For problem solving, the anxiety around things going wrong translates to fear of the future, loss of confidence in people, things, systems, and past experience and its meaning.  Anxious consumers suffer from lack of self-confidence and efficacy, buyer’s remorse, and decision-making stall-outs because things going wrong force the questions “How did this happen?” and “What was my role in making it happen?”  Unclear responsibility results from this general confusion of causes and effects, especially when the problem frame hasn’t yet been totally determined.
 
Anxiety therapy
Anxiety therapy resets and reduces the anxiety-producing fuzziness by 1) investigating how the problem came about and 2) clarifying how it can be resolved.  The clarity brought to the table by the therapist is the work that the anxious sufferers themselves can’t manage.  Even those very competent operators who have good histories of dealing with heavy issues overestimate their capabilities based on the assumption that they can handle anything.  As their anxiety level increases to the point where they finally do meet their match, they realize there are too many data points and too entwined to untangle.  But it is often late in the game before the breakpoint in anxiety arrives.  Still, many of us still think we should be able to handle our own issues. It seems luxurious and indulgent to ask for help (especially for men).

There should be an anxiety stress test, even a simple one, that can be self-scored.  Here is mine:

Self-analysis questions (self-scoring, yes or no, total over half): 
1) Can’t sleep?  Does your sleep revolve around bouts of anxious rumination?
2) Does your mind return again and again to your issue, all day and in your dreams?
3) Have you tried to solve it yourself, with few or mixed results? 
4) Is this anxiety getting in the way of your life and work, creating blocks to action?
5) Do you often wish this would just go away?
6) Do you discuss with others, hoping they will have an answer to cut through the clutter?
7) Is there a sense of danger or dread around this issue, a feeling that it might cause losses in health, mobility, housing, wealth, work, future opportunities, or social relations?  (Loss security = what I have today, I’ll have tomorrow)?  [Definitely yes!]

Anxiety answers

          “Do what you can, with what you’ve got, where you are.” 
                         -        Theodore Roosevelt


Over 18% the US population, 40 million, at some time in life will be ruled by an anxious mind. Anxiety disorders, often accompanied by depression, are the most common mental illness in the nation. Although highly treatable, these disorders leave over a third of sufferers without treatment.  This is typically resolved by medication, but more effectively long-term by working through with realistic applied thinking.  Cognitive practice is an avenue to resolving basic life issues, including the negative effects of anxiety in causing people to question their own effectiveness (efficacy).  


The world is now subject to a universal anxiety episode. The current “CVX” (“The Covid-19 Experience”) compounds anxious thinking and behavior as an aggravated public health crisis with an indeterminate end-point.   Social distancing has suspended our evolved cooperation and socialization instincts so important to mental health.  This crisis is indeed different from previous wide-scale sudden change because 1) it isn’t localized or containable to one city, state, or country; 2) its effects are rolling, rather than one-time, creating ongoing change waves difficult to track or anticipate; 3) it disrupts all manner of expectation, planning, and process as discontinuities and unanticipated consequences mount; 4) the scale is unquestionably global and networked at every level in every domain of human activity.  This means that for every change that happens, dozens more are released in an exploding multiplier effect.

As a form of fear, anxiety is a common outcome of uncertainty, “normal because the future is unpredictable, unknowable, and uncontrollable.” Psychologist Joe Minden’s new book Show Your Anxiety Who’s Boss (March 2020) reviews the reasons for anxiety and proposes solutions directly related to the work of solution-finding for the current health crisis as well as the many life systems we must be able to negotiate.
 
Fear v. rational control
Minden begins by defining anxiety as a set of negative “reactions that appear when we don’t want or need them,” creating an internal battle for control between rational behavior and fear.  Our tendency to become anxious in the face of difficult, prolonged, or uncertain problems resistant to solving “is best countered by taking action by logical thinking and purpose.”  A subset of our common fear response when confronted with confusion and uncertainty (risks we can’t control well), anxiety is contagious in groups and self-reinforcing in individuals – as in the current climate of unease, distress, and low-level panic of CVX.  It’s a strange kind of dispersed group experience because the source of its destructive effect is many interlinked systems that affect everyone everywhere.  Unlike other localized disasters, there is no moving away from this one because it’s everywhere you want to be.

Like the flu virus, anxiety doesn’t go away but can be worked with—by social interventions as well as by individual ability to re-think and reframe it--in Minden’s terms, cognitive behavioral techniques.  Navigating difficult terrain can be done by identifying effective behaviors, making plans to get started, then working through problems.  These commonsense principles, as simple as they sound, are not easy.  Which is why they are offered as part of working through anxiety with useful ready-to-use tools by therapists.  But these are difficult to set up and follow because anxiety’s effect is to overstate risks and undervalue ability.

Minden comments on highly functioning anxiety patients who try to “overcontrol” the disorder, discovering that they can’t control or “solve” this mindset, only find ways of working with it by discovering meaning and purpose based on problem solving.  “Many who struggle with anxiety are used to being high-functioning problem solvers who successfully go through life by identifying obstacles and taking steps to eliminate them.”  But anxiety “doesn’t buckle when you try to respond with similarly crafty solutions.”  The counter-productive outcomes to giving in to anxiety are avoiding challenges, leaving important tasks incomplete, taking on distractions at work to feel busy, and ineffective coping strategies.
 
Anxiety tries to keep us safe by distancing from danger.  But it doesn’t serve us well in avoiding problems that have grown to become obstacles to productive effort.  What is needed is a way to navigate by breaking down problems into solvable frames and sequences that can, with expert advice, be addressed for solutions.  Even more important is this approach now, in a climate of free-floating anxiety that envelopes everything. As George M. Leader put it in his Sapiens article (3.30.20), “The coming months will be a test of humanity’s deeply rooted cooperation tendencies….But can we entirely override our long-programmed interactive cooperation and replace it with distance cooperation?”

Friday, March 27, 2020

Facing Change around a Force Majeure



“The only sense that is common in the long run, is the sense of change—and
we all instinctively avoid it.”  -- author E.B. White

Force Majeure:  Extreme circumstances that prevent fulfilling expectations and contracts

Change
Change at its best is what we want to do when we choose it – when the outcomes are seen as positive and productive.  Whereas when change is forced on us, as with the pandemic we are now coping with, we are resistant and fearful.  Change taps into our fear of uncertainty as circumstances shift hour to hour.  As closings step up and markets worsen, independence and autonomy are challenged in the US as nowhere else, because Americans hold autonomy as our ultimate right--and loss aversion sets in.

No matter how autonomous we think we are, there is nothing like a universal health crisis to make socialists of us all.  When groupthink is unavoidable, we can adapt — for awhile.  So what is the tolerable timeframe for the world’s largest quarantine effort ever?  Since the scale of this effort is first-time, and enforcement has been inconsistent, no one really can tell.  Britain tried to limit it by age to 70-plus, but the prime minister was persuaded that this wasn’t going to be enough.  The whole Indian nation, however, at 1.3 billion, was considered manageable.  In the US, closing down Disneyland can be considered the watershed response. 

Cultural aspects
Which is why it is time, after some weeks of this worldwide endurance test, to consider the cultural dimensions of change, especially the forced kind.  “Sheltering at home” has a comforting sound – but this looming crisis has made such a policy feel more like a relaxed house arrest.  The intimidating safety measures everywhere have forced brutally complex decisions to be made on fast-shifting platforms.  Emergent problems—many third or fourth-level side effects—have yet to clarify just which changes will morph accustomed ways of living into a different system altogether for reevaluating assessments and choices, both private and public.  

The mental effort to grapple with these decisions in the fallout of lockdown will stand as the foremost momentous moment of change so far for this century.  For openers, among the issues forced by “medical law” are human rights to assembly and against restraint of trade, and more generally, weighing the value of prevention as calculated against the infection and death toll of the disease.

As social primates, we are built to connect to each other in group life and community.  We found out long ago that solitary confinement is a grim punishment.  In 1829 Philadelphia’s Eastern State Penitentiary introduced solitary confinement rather than packing prisoners into mass cells, as was the historic custom. The theory was that the solitary penitent (hence “penitentiary”) would use solitude to think about the error of his ways and repent.  Far from being cured, however, prisoners went mad in their forced isolation.

As Americans,we aren’t used to limits to our freedom.  When we seek out private time, it’s because it’s our idea, not the government’s.  Not since the Spanish flu pandemic of 1918 has anything like the current quarantine even been attempted, making 2020 the world’s broadest experiment in mass behavior.  These mandates make anti-smoking campaign and seat-belt laws look like ineffectual prodding.  In its sheer scope and broad-band effects, this is the perfect “AQ test” – Adaptability Quotient – Harvard Business Review’s term for the “new competitive advantage” of adaptability to change needed to thrive in a fast-changing environment. 

Following the view of the future by William Gibson, the science fiction writer, as already here, change is not evenly distributed.

It’s a science fiction scenario. If Susan Sontag were still alive, she would add the viral lifestyle to her “imagination of disaster” scenarios as our latest toxic action chain.  In the 21st century, fear and panic took over as a microscopic lifeform emerged, killing first Chinese, then Italians, then New Yorkers—any and all others it could.  It forced friends and family apart, ended religious congregation, tanked the stock market, erased businesses and jobs.  This is no alien invader .  This is more like a home invasion from a virulent strain of the flu right here on earth, disrupting every aspect of life as we know it. 

Humans had to decide how to manage the trade-offs between the unintended consequences of prevention efforts and a devastating percentage of deaths following contact. In H. G. Wells’ classic science fiction novel The War of the Worlds (1897) it was not military might that defeated the invading Martians in their fearsome war machines.  Instead the final defense was tiny earthly microbes, to which humans had developed herd immunity over centuries.

In today’s scenario, we are the Martians.  

White Squirrel
This magnitude of change is therefore not so much an exotic black swan, but the more domestic backyard squirrel – a white one that can’t be trapped or easily killed, a metaphor by our business-school colleague Bill Costa at New Hampshire’s Franklin Pierce University.  As the uncertainty sinks in deeper, even your own home, center of comfort and reassurance, starts to look somehow alien, as if it could any moment fade away.  The image of the future begins to loosen and float uneasily as dozens of scenarios – mostly unsettling—edge in to fill the space of stability and habit.  So much change in the course of days and weeks, rather than years or decades, is mentally and emotionally devastating, and will continue to twist any semblance of normalcy.  Rarely has humanity been so put upon to examine basic operating assumptions, concepts, and practices no one had to think about pre-2020. 

We don’t mind change itself—we just don’t want change forced upon us. We resist problems arriving too fast, too many, too fear-driven, and too global.  Attending a school far from home, getting married, moving to a new home, a new job or career…always appear with a level of stress, but they are also experienced as upward moves that meet our goals.  Positive changes involve choices that enable our dreams and talents, keeping us in control so that we can handle the outcomes.  But negative changes driven by fear, uncertainty, and doubt are net losses.  They leave us unable to determine what has changed and what has not, what is temporary and what permanent, about the new normal.
 
Aftermath
The aftermath: most long-term implications are across the board and won’t be apparent for months or years to come, the perfect storm of uncertainty and loss aversion for making policy, or deciding to buy or sell a house, finish college, or even travel.  The viral crisis is the perfect object lesson in change with thousands of data points – not the result of disease itself but caused by the massive effort to anticipate and modify its occurrence.  In its destructive high tide, it raises terrible questions about the cost of prevention to the lives of billions versus letting the disease take its course and cause distress for millions, then death for 10% of that number.   Without the ability to analyze a vast number of variables—many of them interactive—no rational decision-making is feasible.  When everything stabilizes, there will be plenty of work in sorting through the options to even know what ways of thinking and acting will still be functional, and which will dry up, never to emerge again.

Perhaps we can begin to ask a series of “CIS” questions, short for “Can I still …” Stay with my 2019 plans? Take a new job?  Retire?  Change careers?  Continue with my start-up campaign?  Have children?  Move, remodel, or rent my house?  Count on which things to be different, and which to stay more or less the same?  Have a future anything like the one I could count on – up to now?  Understand how my entire circle of relationships might have regrouped because of the epidemic’s fallout?  And, of course, prepare for the next issue of pandemic.  

The knock-off decision-making crisis will be based on how many options will require deep analysis, and which can be made as we make 90% of choices: by cultural (shared-values) intuition.  This will require a new mindset anchored to the continuity of cultural ideals, while following a new trajectory shaped by the most widespread health crisis in history.

Sunday, February 23, 2020

Loss Aversion


Psychologists long thought that people were risk-averse, which is pretty ridiculous in historical hindsight, since taking risks is what put us on the top of the food chain. On the other hand, we are loss averse.

We will go to great lengths to avoid a loss, far more than we will work to gain something.  This is the reason people hold on to their poorly performing stocks and sell off their well-performing stocks. It’s the same motivation – you don’t sell your poorly performing stocks because you hope they will go up and avoid a loss. You do sell your well-performing stocks if they go up quickly--to avoid a loss in case they go down again.  Professional investors don’t do this, but they make a lot of money on those who do.

Every year there are approximately 60 million patients on Medicare. Every year during the months of October to December, everyone with a Medicare plan has a chance to pick a new health insurance provider.  This sounds like a good thing—choice is one of our rights as Americans to make our own futures.  However, the reality is not that simple. 

This is a perfect example of “information asymmetry,” in which of the parties involved, the providers have overwhelming advantage in understanding how the system works in practice. The consumer doesn’t understand the limits of their policy until they become a reality.  (Because the “Evidence of Coverage” is a document written by lawyers, for lawyers, in the healthcare industry.)
The customer has the impossible task of reviewing and comparing and choosing one out of dozens of plans across specialties, none of which they truly understand. There is the additional gotcha of unforeseen illness (such as cancer) or injury.  As Barry Schwartz puts it on his book The Paradox of Choice (2004), “Bottom line – the options we consider usually suffer from comparisons with other options.”  Why?  Because we focus on what we will be giving up far more than on what we will gain. 

So each year, millions face the choice of 1) keeping their existing supplementary insurance company; or 2) switching to a different insurance provider who they hope may provide the same or better benefits.  This process can consume hundreds of hours, further complicated by the legalize difficult even for professionals to understand. Customer service is lengthy and agents can be uncertain about how things work.  Even when it appears that one can get a better plan (without an actionable definition of what “better” means), the quality of this decision will be unclear--until there’s a medical need.

Loss aversion is immediately apparent in this dilemma.  To switch, the consumer needs assurance that it makes more sense to switch than to stay put, and that the complexity cost to execute the switch is not a loss.  Things get even more complex when there have been issues with the current plan – would a new plan be any better, or just the same, or even worse?  Plans change their Evidence of Coverage every year (even on minor points), so that the consumer contract is in annual flux.  Loss aversion becomes uncertainty avoidance when it is just too much aggravation to enter the switching process.  Health insurance is one of most highly technical areas of consumer choice, combining medical science with the law, both highly trained – with pricing consequences in the hundreds of thousands of dollars.  And whatever the gain, it must be balanced off at twice the perceived loss for making a change in order for its value to be felt.

The bottom line is this:  Rather than risk a loss outcome, customers will take a passive loss (by inaction) by failing to make changes to their insurance provider—even when they are having significant problems. (Rather the devil you know than one you don’t.)  And dental insurance is even more difficult to gauge as a good or bad product, along with pet insurance, burial insurance, cancer and accident coverage, and long-term care, which never permeated more than a quarter of the market.  A plan that offered kidnap insurance, complete with ex-FBI agents, went out of business because no parent could calculate the odds versus the cost with any confidence. The Medicare consumer needs assurance that it makes more sense to switch than to stay put, and that the complexity cost (along with just the hours required) to execute the switch is not a net loss. 
Loss aversion logic also explains why people stay in bad relationships, bad jobs, and poor-prospect careers, explaining interpersonal conflict, poverty, and underachievement in general.  It explains why people hang onto under-performing stocks and sell their performers.  Why do people not take good advice that might free them from these behaviors?  Because following advice requires giving up behaviors and situations that are perceived as normal, and the energy and organization required are disruptive changes seen as a net loss. 

In other words, if you have to choose between two or more options, each with a potential for loss, when there is no significant advantage among them, most people will do nothing.

College
A second interesting example of loss aversion is the big-ticket purchase of college education, second-only in scale to a home purchase.  College is one of the most poorly defined decisions, along with other key life choices: car, career, and spouse.  For the college decision, the investment in college, once a no-brainer since graduates make twice the income of nongraduates, has become problematic as school costs have risen by a factor of 14 since the late 1970s.  At the same time, the return on investment –the wealth premium—has dropped from 247% in the 1930s to 42% in 2019 (wealth assets—Fed Reserve study), which figures in the student debt crisis as a national economic issue.  Degree inflation, in which the basic work-ready degree has raised the bar from high school to college, adds to consumer pressure to find more affordable channels.  These loss factors make the college decision far more problematic and uncertain than for previous generations.  To add to the complexity, there are more school types today than ever, including the for-profit sector. 

The two-car dilemma
Another case study of loss aversion is the two-car example. You are looking to buy a new car and you visit dealerships to narrow it down to two. Each one has different features you would like to have, neither has all of them, but these are the two cars you’ve narrowed your search to.
In other words, each car has something you would like to have – in your mind they have equal value, and you need a car, so you have to pick one. They are both cars you like, so you choose one.
You like the one you chose. But you also liked the other car - so you spend the next few weeks wondering if you should have chosen the other car. because when you make a choice, you gain one car but you lose the other – and we respond more to avoiding loss than we do to gain.  All of which sets us up for buyer’s remorse in any big-ticket purchase decision. 

So for business, your thinking as well as marketing should focus on avoiding a loss as well as gaining something.

Tuesday, January 21, 2020

Symbolic Thinking: The Mindset of Culture


 In Prehistoric Art and Civilization (1998), Denis Vialou summarizes the history of mankind:

More than two million years ago, Homo habilis invented the tool.  Next, Homo erectus made use of fire; then Homo sapiens conquered the world.  In just a few millennia, in the era we call the Palaeolithic, human beings, walking upright and with tools in each hand, imposed a new knowledge and a new way of life on the world.

Human inventiveness began with the discovery of tools 1.76 million years ago from the first knapped hand ax, fire 400 millennia ago, the invention of language at least 200,000 years ago, artistic expression, and written language only 5,000 years ago.  From these long-ago origins came computing and artificial intelligence, the moon landing, and exploration of other solar systems and a Mars mission in the wings.  In fact, all technology includes the very first inventions from the ancient world and prehistory, including the stringent mental exercise of mathematics, and were basic to all the applied science of the 20th and 21st centuries and their advances in bioscience, genetics, computing, the global space program, and others based on Big Data.  Symbols are a type of tool that keeps on developing the mindset as ideas multiply and find expression in problem solving.

Indispensable to all these stunning achievements is the longest-running of them all: the aggregate development of culture by thousands of human generations whose lifetimes worked nonstop to improve and adapt the myriad ways in which we can think, behave, and make decisions, both as collective minds in groups and as solo individuals working out the problems of the universe as well as our next cup of coffee.  The strength and plasticity of culture, as well as the human brain, makes us the world’s most adaptable and successful species—through the collective brain and creativity of humankind. 

Symbolic thinking

Our unique human ability to imagine, manufacture, and put to use symbols is an act of absolute liberation from the material world and from the present moment, allowing us to see beyond what is in front of us, backwards into the past, and forward into the rich potential of the future.  Emerging evidence from archeology is showcasing that symbolism began to emerge as part of a great cognitive revolution in the form of art (now beyond 40,000 years ago) and mathematics at 30,000.  While the flowering of mathematics in applied problem solving goes back only 500 years to the Scientific Revolution, its origins are ancient and worldwide as a symbolic language of its own that developed independently as a trained skill, from simple computation to defining infinity. 

However great the potential of abstract thinking, engineering still must fit the numbers and concepts to the human form.  The operations researcher must fit the design of space vehicles like the LEM to the dimensions of the human body and brain.  Animal traps and weapons ballistics had to fit what humans could fashion, carry, and track.   In this way, our own inventions must work for us.  Culture, as the Ur-invention, became the invisible force driving our brains, bodies, and behavior both as individuals and groups (thinking, learning, expression, and problem solving), from our first survival on the African plains to the sophistication of urban life on-earth and off.  On the Internet and in subcultures, using technological acumen and prolixity---cultural intelligence underlies and animates everything human, yet is certainly the least understood of anything humans have produced. 

Art

Culture could not begin its own invention without our species' ability to think symbolically.  This mindset began in the Paleolithic, the early phase of the Stone Age, about 2.5 million years in duration, marked by stone, wood, and bone tools, and cave art starting with the monumental act of leaving handprints created by our prehistoric relatives.  These handprints in red ochre have moved back in time from the Maltravieso cave in Spain, dated back 64,000 years and painted by a Neanderthal, well before Altimiria’s bison of 16,000 to 9,000 BCE, the “Sistine Chapel of Paleolithic Art.”  Discoveries in the Blombos cave in South Africa then moved the clock back on art-making with a 100,000-year-old pre-European animal-bone paintbrush and palettes, abalone shells for mixing red ochre paint, and sea-snail shells with holes for stringing and wearing as jewelry. 

In his article on symbolic thought (New York Times, Dec. 5, 2014), Ferris Jabr notes the significance of a simple handprint:  “The suggestion of a human hand on a cave wall, a nation’s flag, even a Rothko—each is a powerful mental heuristic designed to conjure a particular emotion, a memory, an idea.”  The elegance of symbols, Jabr says, is that they bypass the issues of changing the world in the act of changing the way we perceive it, enlarging its possibilities by acts of thought alone.  That is, by the power of ideas.

Language

Evidence of language is also moving backwards on the timescale of human evolution.  Like art and jewelry, speech is intimately involved in conceptual and imaginative thinking.  Recent research points to language development as occurring millions of years ago rather than the benchmark of just 200,000 (Sawallis et al., 2019).  Two forces, first, the reshaping of the human throat, and second, syntax, the way words work together in sequential order to convey linguistic meaning, are considered the critical events in the body and brain that make symbolic communication possible. Unfortunately, linguistic evolution, unlike physical development, doesn’t have much data to work with because soft tissue doesn’t leave fossil evidence.  But speech is not just a physical and muscular act made possible by laryngeal descent—our lowered larynx compared to other primates.  It is a mental capacity that is at once intensely social and inherently symbolic. 

Mathematics

The oldest known mathematical artifact is the Wolf Bone of Czechoslovakia, with 55 notches in two groupings, dated at 30,000 years ago; the second-oldest is the Ishango bone discovered in Zaire, dated 10,000 years earlier, with three columns of marks suggesting computation either as a tally or a calendar.  Hunter-gatherer societies used number systems, and the names for numbers can be tracked as they gradually increased in independent lexicons over time. 

The earliest mathematical texts are Egyptian and Babylonian dating to 2,000 BCE, covering arithmetic, geometry, and the Pythagorean theorem, continuing in ancient Greece.  The Greeks introduced deductive reasoning and formal proofs to conceptual thinking about math.  The Romans applied math to surveying, structural and mechanical engineering, bookkeeping, lunar and solar calendars, and the arts.  The Chinese added place value and negative numbers.  The Hindu-Arabic numeral system is in worldwide use today, coming from India in the first thousand years BCE.  From the Maya of Mexico and Central America came the most critical concept to computation – the zero, a triumph of abstract cognition. 

Wednesday, December 18, 2019

The Culture Concept


 
Deep culture undercurrents structure life in subtle but highly consistent ways that are not consciously formulated.  Like the invisible jet streams in the skies that determine the course of a storm, these currents shape our lives, yet their influence is only beginning to be identified. 
                                                                                    ---   Edward T. Hall, Beyond Culture, 1976

 
A half century ago, in Beyond Culture, anthropologist and cross-cultural researcher Edward Hall exhorted what he called the enterprise of “cultural literacy.”  Understanding that cultures were different solution sets to recurring life problems—resulting in cultural relativity--can help us to appreciate, then reconcile, the cultural distinctions causing problems on the world stage. 

Cultural Analysis, as worked up over the past three decades, is one of the outcomes of that enterprise.  How can insights from culture as an integrated thinking framework, as mind frames, not just a collection of customs and costumes, be unearthed and deployed?

How culture works – American style
As a shared pragmatic toolbar, culture condenses and clarifies decision making by supplying a subtext of shared values.  This background acts as a screening device for all sorts of decisions.  From the allocation of time and attention (who do I spend Christmas vacation with this year since my parents divorced—Mom or Dad?)  to career (If I decide on medical school, what will this career cost me in time, attention, energy, and family resources?  Should I leave my tenured teaching job to start my own consulting business?)  

In answer to this last dilemma, in the US, as a center for entrepreneurship: yes, go for it—even though the ten-year success rate for new businesses is just one in three (Small Business Administration, 2019).  While this less-than-half statistic argues clearly against, the culture says do it anyway—the risk is considered worth such a noble independent effort, which is a showcase for our ultimate faith in personal genius.  The same endorsed effort drives professional sports, media celebrity, venture capital, science, music, art, and literature.   Because American culture values individuality above everything else, the entrepreneur is the American national hero, and a lifestyle model for free-market capitalism worldwide.

Besides the free market, US cultural values inform these decisions by rubrics like majority rule, a future (ahistorical) orientation, and general tolerance for risk-taking—including the failure rate, like the two-thirds majority for businesses (with a full 50% failure rate at the five-year mark).  Building in a value directive that works on autopilot across groups and centuries converts the natural stress of such decisions into a far easier-to-manage set of habitual thinking habits that don’t require constant problem-framing setups, idea-searching, or group debate.  This releases time equity for other projects that don’t operate on the basic survival or well-being ground level, but require group consensus at some level. A prime example is the US space program of the sixties, which President Kennedy exhorted the nation to push not because it was going to be easy, but for the opposite reason – because it was intrinsically hard to achieve.  This equation is in perfect alignment with US cultural values, meaning “We can do this. It’s a challenge, so we’re going for it.”   This same message, that “It will be difficult” read into a Japanese context, would be taken to mean “It’s impossible.  Don’t try it.”  In the Japanese reading, “difficult” could be projected into “failure,” which implies social disruption and possible disaster.  Americans (the space program again) accept failure as a necessary component of trying new and difficult ventures. Of course, to read the differences goes much deeper than language because it’s culture speaking.  (Lindsay McMahon, 11.17.11, Englishandculture.com). 

Beyond description
Such judgments are the bread and butter of cultural analysis, whose mandate is to deconstruct artifacts, events, behavior, and language to discover their “inner life” as value markers.  What is the most relevant information that can be de-engineered from the big data of culture?  What are the most telling clues about what people say, do, and think within their home culture, then compared to another culture?  This means determining what questions need to be asked.  This goes beyond ethnographic description in order to elicit insights to yield salient cultural intelligence we can use to understand ourselves and others in terms of core beliefs and motivators.  My favorite starting question about any cultural feature is “What is this for?  What are people trying to do and be in terms of core values through this tool, artifact, ritual, habit, or belief?” 

Useful answers depend on following a trail of clues based on posing the right question. Museum labels and consumer research aren’t often helpful here.  Culture insight requires another level of perception and evaluation.  It isn’t easy to get at, which is because cultural core value is the highest-ranking kind of knowledge to hold.   It asks not just what, or how, or who, but the million-dollar research question, which is “Why?”  Asking the Why question can lead to the alignment of practice and theory (values) that can reveal the ideals that drive culture as a motivational engine.  It explains, for example, the heavy stress that is the cost of freedom of choice in America.   This can be discerned as different in kind from the Japanese stressors as the outcome of commutarian cultures, with different causes and attempted solutions.

Cultural inclusion
Ever since Richard Hoggart at the Center for Contemporary Cultural Studies in Birmingham, England coined the term Cultural Studies in 1964 (The Uses of Literacy in 1957 was the start-up document), the influence of culture – the invisible yet irresistible force—now includes mass media and digital technology.  This inclusion extends the domain of culture, ancient to current, to become a focus of study in its own right, beyond a descriptor of foreign ways of life, extending back to antiquity (and prehistory) and into future inquiry as global and extraterrestrial human mind frames.  Going back to my own work in the field of Popular Culture, the boundaries of what culture can be have now far surpassed the older liberal-arts meaning of Culture as the elite in art, literature, architecture, music, and media, or as ethnic rites and customs in exotic environments. 

We can now regard culture as the great universal system that unites all people around their encounter with problems, potentials, and opportunities, however much the detail and description of those cultures may differ in what they advocate (their lead values).  Culture is the single most powerful force that all humans obey and have followed for at least the past 50,000 years as worldwide human migration was completed.  This historical period marks the final emergence of modern humans as evidenced by established civilized group life—jewelry, art, tools, and ritual objects.  At this point, the shape of the human vocal tract allowed for the sound range of modern speech.  Language is learned by childhood just by hearing it in one’s group, just as culture is embedded in the brain of a certain size—based on a measure of 1450 cc—ours as well as the first homo sapiens sapiens.  This leaves 95% of our common past without written language, far more recent at just 5,000 years ago.  This is important because cooperation allowed by communication is the bedrock of civilization--as Exhibit One of behavioral modernity.  Civilization marks our coming of age as cultural creatures.

Anthropologists have been at this enterprise many decades without a uniformly accepted definition for the field of studying “what makes us human—including biology, communications, and the history of humankind” (Hall, 1976).  So far cultural analysis can distill this study into a working definition of culture:

Culture is the uniquely human invention, passed on and built across generations, that works as the mind frame shared within the group, designed to solve problems across the board from individual to social goals and purposes.  Culture works to ensure survival, guarantee group cohesion, and inculcate the next generation, while self-perpetuating its own set of ideas and ideals across generations. 

James Burke’s The Knowledge Web (2000) takes apart the history of informational networks from “electronic agents to Stonehenge and back.”   As the most extensive integrated information system of them all, “enculturation” acts as a kind of instant expertise available to any and all, built up over thousands of years by millions of humans living in every environment.  This expertise is the outcome of the neural network of culture’s multiple knowledge webs, echoed in the learning activity that can now be visualized in the structures and wiring of the brain itself.  Language and mathematics, the twin basic means of encoding information, along with visual intelligence, are the leading tools of knowledge-sharing produced by culture.  It is the leading toolkit of humanity.