Saturday, October 10, 2020

Change Management on a Cultural Scale



Some thoughts on Change –  From an interview by Peter de Jager of Technobility:

Cultural Studies & Analysis principals Margaret King and Jamie O’Boyle field his expert questions on change—as a cultural concept.  Hear the entire September 2020 power-point interview at https://1drv.ms/v/s!AndfYpyVsX3z2QpXKH9h9v9MHoWJ.  Here is a summary of the high points.


1.   What is CS&A, and what does it do? – Our research group tracks and studies group choices over time to identify consistent patterns of behavior that reveal how people think, make decisions, and act--to find value in products, services, concepts, and ideas.

 2.    Why study behavior rather than just ask people what they want?  - Because people cannot tell you what they want with any degree of accuracy, but those same people recognize what they want when they see it with 100% accuracy.  So what people tell you they want is unverified testimony. It’s basically a guess. If something better comes along, then everything changes. But since they don’t know that something better exists until they see it, they can’t tell you about it in advance. The buy decisions are made below our conscious horizon. Then our brain invents a story to validate that decision. So what people habitually do becomes reliable evidence of underlying beliefs that drive our decisions. Without examining the evidence of consistent patterns of behavior to compare to the verbal testimony, you are working without the critical information to make informed strategy, planning, and tactical decisions.

3.      You say “what people habitually do,” but what happens when the context or the environment changes?  What happens when circumstances change? Don’t people intuitively resist change?  - People change all the time – we grow and age, for instance, and our wants and needs change with that process. What we have problems with are sudden changes, and even more so, changes that are forced upon us. That’s why change management is so important. Change managers are like guides who lead expeditions through unknown territory. They may never have been in that particular wilderness before, but they know how to survive in the wilderness in principle – they know what a pitfall looks like.  They know what a safe haven looks like. They know what resources like water look like. It may be a rough slog, but they’ll get you through it.

4.     What is change in terms of culture?  - It’s the main mechanism by which culture occurs, by adjusting to changed circumstances, evolving alongside new needs, altering our reality by means of new visions of the present and future.   Cultural change is a constant, either fast or slow, and in fact is what creates culture.  That makes it hard to study; it doesn’t stand still for anyone.

 5.  What does that say about human activity at any one time?  - We spend a lot of our time and attention on “adaptation energy,“ adapting everything we do to changing conditions, even micro-changes like who’s at home and who’s not, travel, study, socialization.  Where we put our attention is dictated quite a lot by what is going to happen tonight, tomorrow, next week, next year, and so on. We don’t do nearly as much long-term thinking because things might change, and (our attitude says) then all that long-term planning will be for nothing. 

 6.    What do you do with this kind of knowledge?  - Understand what the human cultural motivators are that are driving our collective thinking, values, and behaviors.  We’re in a forced state of change now, which makes it harder to predict or plan what we’re doing – no one even knows six months out how the pandemic will shake out in all fields of endeavor beyond health – the economy, foreign relations, education, entertainment, work, and recreation.  Nothing is going to return to pre-COVID normal.

 7.    Can you give an example of this ongoing crisis mode, our brains on sudden and anxious change? – The question is; how do we get through this event – working with depression, anxiety, apprehension, uncertainty.  Especially uncertainty.  Our brains don’t like it.  We can’t plan.  It’s mental and emotional limbo.  Without a time frame we can count on, our accustomed sense of what’s real suffers week after week as the timeline stretches out indefinitely.  We can deal with continuous, steady change.  We can’t deal well with change that is sudden, discontinuous, unconnected and unexpected.  Uncertainty sounds like the main problem we have with change.  – It is, because if we can’t chart forward movement, therefore how do we identify opportunity in what’s going on now to survive and thrive?  How will my social resources change?  These are “CIS” questions – “Can I Still--”  (do X)?  What we need are intelligible ways of connecting our past and present to our sense of what kind of future we need to start living--now. 

8.    What are we able to be certain of, then?  - Lots of things, how we develop from child to adult – we see this as progress which is welcome, expected, and planned-for.  It’s evolution.  Even aging has a gradual, expected character – which we know how to deal with because it is so familiar and incremental.  We are all adapting to our life stages --- except for middle-age crisis, which does throw people, because it isn’t consciously planned-for behavior. It’s about our subconscious comparing where we are to where we expected to be. Our brain does this in about twenty-year cycles. If we are pretty much where we expected to be, no problem. If there is a disconnect between where we expected to be and where we are, this is the set-up for a mid-life crisis.

 9.      What is our problem with change, then? – As humans, we view changes – even positive changes – in terms of their potential for loss, not gain. We always look at new ventures first in terms of what we have to lose – it’s called loss aversion and we all have it to varying degrees.  Starting a business is risk-loaded, and many people aren’t prepared for what’s required to be an entrepreneur, and incorrectly think that if they are innovators, they can also run the show.  Role confusion is part of anticipating things as they are going to develop because we also exaggerate our own sense of competence around new circumstances.

10.   What’s an example for business?  - When a business moves, or merges, or mounts a major initiative, they may think it’s enough to mandate change.  It rarely is. This is because change is not just a move or merger or new software – it’s a human dynamic, running on human factors, like loss aversion.  Loss of status, loss of a role or even a job, and the one humans really hate-- loss of competence. That’s a function of being out of touch with things (as in the current crisis) because it isn’t clear what the new rules are, or how people relate to each other under those rules.  That’s why change management is such an important discipline, and it goes far beyond the processes or technology of a new operating system.  People need to reexamine an entire range of things to pay closer attention to, re-assess, and re-evaluate.  But they must be able to understand any detail in terms of the big picture, which means new themes and demands.

 11.   This is the reason we are adaptable as a species?  - Yes, and that adaptability has to be more than individual – it must include strategies we can deploy in groups with a changed reward system under new ways of getting things done.   It’s called AQ (Adaptability Quotient), but it goes beyond your abilities or mine to be flexible and take risks for the future.  It requires a skill set that must be internalized, shared, and managed as an effective new thinking style.

 12.    What’s the current big question about change?  We think it is this:  “Can we think about the future while at the same time undergoing unexpected broadband change in the present?”  That’s the current challenge – it’s difficult to think about getting through school, promoting your career, even just doing the work you are used to doing, while at the same time having a vague, but unsettled, speculative idea to imagine what the world is going to be like even a few months away. 

Saturday, September 26, 2020

Life-Time Value and Sudden-Death Sales Syndrome

“Customer centricity can allow your organization to make far more money from your most valuable customers who will buy from you more often and spend more when they do buy from you.”   --Peter Fader, Marketing Professor, Wharton School

 

Customer Lifetime Value (CLV) is a concept that describes the total worth of a business customer over the life of the relationship.  According to an article in Harvard Business Review (Jan/Feb 2010) CLV is the basis for marketing geared to serving the customer as opposed to selling brands and products. This approach is developing as the core concept for business long-term health and valuation (along with competitive industry equity). 

CLV makes a 180-degree shift: from quarterly profits on sales to focus on long-term customer metrics, limiting spending to acquire new customers by placing a premium on the existing customer.  Customer profitability (CP) measures the past profit; CLV looks forward to the future value that results from active cultivation and deep knowledge. In this scheme, the relationship is lifetime, not short-term, calling for a bird’s-eye view of every transaction as having effects not just in the present but into the far future. 

Case Study: Health Club Memberships.  For nearly 20 years I’ve belonged to the Bellevue Sporting Club, the premier health club in Center City Philadelphia.  It carries a hefty monthly pricetag, which I’m always trying to work around by shopping some less expensive options around town.   But pool and indoor track are hard to find downtown, which are the main club attractions.  When I heard that the pool is now narrowing use to three lanes and requiring timed reservations for swimming, I thought this was my signal to leave—after two decades.  (For the Sporting Club, this represents over $30 K in membership and monthly fees.)  I decided to disenroll.

I entered the sales office and spoke with two young sales agents, explaining that the pool core of value to me now seemed too unwieldy for my schedule.  I was sorry to withdraw my long-term membership, but it looked as if I wouldn’t be getting much pool use (the track would be collateral damage because it could be replaced elsewhere, at least 80%, by a treadmill).  Without missing a beat, the girls cheerfully explained how I could easily quit online (no in-person apologies needed!) and handed me a multi-step instruction card.  Could I just sign something, now that I was here in person? I asked.  Not really.  Perhaps I’d like to go up to the business office, maybe get some help there.  Were they really saying goodbye to a long-time loyal member so easily?  Clearly they wanted to close my case in order to get back to bigger things—like signing up brand-new members. 

In the business office, Bridget proved more helpful. First, she asked what the problem was—something Sales didn’t really seem to care about.  That was easy; the pool.    She pointed out that the lane shrinkage and reservations to swim laps were temporary, imposed only as COVID measures.  At some point, pool life would return to normal.  The freeze I requested when the club closed down in mid-March could be extended to January (I hadn’t even thought to request such an extension).  Here was the Business office more aware and proactive in customer retention than the sales team downstairs.  The three-month grace period allows me more time to re-think leaving and preserves my CLV – all to the club’s benefit.  Why didn’t the gang in Sales do the same—assure me that the pool program was only provisional?  Did Sales even probe to see why I wanted to leave—or care?  Did they do any math, realizing it is five to seven times more costly to recruit a new member than to retain and cultivate those already on the rolls?

A health club is a great example of an experience-based offering that benefits members for life.  The club is just the stage set shell of space and equipment; none of this has any value without the energy supplied by the user.  But blocks like COVID can interrupt lifetime value unless companies appreciate their threat—and appropriate interventions--to the User Experience equation.

These quitting points are known and predictable.  Health clubs are well aware that New Year’s resolutions last about six weeks, then wind down as the expected progress isn’t rewarded in any quick progress toward goals. Far less than half of all members even appear regularly. Currently, for many, the nonstarter is masking up while exercising; for others, suspended showers or even towel service.  Still more just don’t welcome the viral risks of shared water or locker rooms. 

In the Sporting Club case, this customer didn’t want to quit the club—she just wanted someone to discover how to stay enrolled, and keep those payments coming in.  In this case, the Accounting office showed a superior grasp of the long-term benefits of customer retention.  They apparently know where the money comes from.   

Plenty of companies pay lip service to a customer-centric culture, but their behavior shows their ongoing dedication to sales rather than service, and marketing those products versus cultivating their buyers.  Social media has revolutionized interactive (not one-way) communications.  This is a dynamic that deserves a totally revised orientation to the purpose of business—to create value for its customers. This is the root of success for IBM (B2B), American Express, and Nokia (with its Beta Labs in Asia) in understanding and serving customer needs as they evolve by paying close attention to the plentiful interactions that contain plenty of intelligence – when you know how to read them.

 

 

Saturday, August 8, 2020

Innovation and Consumer Values [Entrepreneurial Value-Raising]

 


“Creativity involves breaking out of established patterns in order to look at things in a different way.”   -- Edward de Bono

 

Innovation is the engine of entrepreneurship.  It is also more than a technical term.  Defined in consumer terms, innovation can be defined as “changing the value and satisfaction obtained from resources by the consumer” (Peter Drucker, Innovation and Entrepreneurship, 1984, p. 33).  Innovation is the process of creating new technologies and putting them to economic use.  Jean-Baptiste Say, the French economist who first coined the term Entrepreneur around 1800, defined it: “The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.”  Innovation is a matter of exploring and recognizing where the higher-productivity arenas are in order to do this, typically by (but not limited to) inventing and instigating new technology or applications.

This does not imply high-tech solutions:  It can be low to no-tech at all.   It can be a concept of a symbolic environment (the theme park), a new way of symbolizing relationships (jewelry), or a new approach to working (remotely, on virtual teams, by zoom).  Such solutions are not always immediately recognized.  Among the unanticipated innovations that were at first totally dismissed by the public are the plow, the umbrella, automobiles, the electric light bulb, telephones, cell phones, space travel, mosquitos as the carriers of malaria, anesthesia for surgery, personal computers, and the theory that the earth is round. 

The creation of a new value source can come about just by “combining existing resources in a new and more productive configuration” (Drucker, p. 34).   The information age has created an entire economy devoted to entrepreneurship from about 1980, in the midst of a giant recession.  The technique was the application of knowledge to human work – both high and low-tech.  The term for this applied knowledge is techne—making or doing.  As the father of 20th century management theory, Drucker calls this the dynamic disequilibrium that informs all aspects of society.  Creativity works as a major destabilizer that, despite its heavy fallout of problems we weren’t ready to deal with, is the new basis of economic expansion driven by managed creativity.  This is the thought movement which took hold under that label around the same time in the late 70s, as the engine of entrepreneurship. 

This renaissance holds a positive view of change as healthy and the basis of opportunity, relocating innovation at the central reality for economic thinking.  Examples are Bell Labs, IBM, and 3M, which created 100 major new product lines at an 80% success rate by the mid-80s. Not everything worked as planned – the Segway, DuPont’s Corfam shoes, hoverboards, and Google glasses.  Yet doing something differently is the impetus behind the American university, the economic engine of technology transfer worldwide.  The re-invention of the hospital on the specialty service model and the creation of the mass market food service industry by McDonald’s are other case studies.   

These institutions, says Drucker, are at the heart of innovation by increasing the yield from resources, discovering new markets, optimizing value for the customer, and redefining the values around the customer “experience” – the latest definition of meeting customer needs and values.   This is the major transmutation of value that makes the markets creatures of what the consumer, not business, needs and wants.

Economists use a comprehensive definition of technology. When they are talking about innovation, they are not thinking just about new machines or inventions, but any new way of doing things.  This includes finding gaps in consumer demand and devising ways to fill them.  Any innovation that increases the value consumers derive from everything they buy and use – provides ways to do away with pain---of cost, time, energy, loss of use, and inconvenience—which can cause obstacles to fulfillment that are considerable and prolonged.

A few years back actor and science promoter Alan Alda hosted a three-part Nova program called “The Human Spark,” a search for what makes us uniquely human. In this exploration Alda marvels at the importance of innovation to homo sapiens in our evolution from homo erectus 1.3 million years ago as we became hunter-gatherers making tools and operating in groups by virtue of language.  From 200,000 years ago homo sapiens were the leading humans on earth, having mastered fire, then jewelry made from our ancestors’ teeth.  Jewelry was and is far more than ornamentations; it operates as a form of wearable symbolism made of bead, bone, seeds, then metals, a form of communication signaling our alliances with others living outside the immediate band or village, widening our leverage by affiliation with—theoretically—anyone and everyone on the planet. 

While Neanderthals relied on a generalized set of tools and processes (hand ax production prominently), our group surpassed these fixed methods by a steady ongoing practice of innovation and change.  The result can be seen in the cultural development of technology and social communications we now enjoy.  Our culture was developed by ongoing challenges and the change management we invented to meet those challenges, from ice age art 20,000 years ago, agriculture 10,000 years ago, to today’s information age.    

 

 

Monday, July 20, 2020

Hierarchy and Stress



“The important issue is not how much inequality there is but how much opportunity there is for individuals to get out of the bottom classes and into the top….If you have opportunity, there is a greater tolerance for inequality.”
-- Economist Milton Friedman

Opportunity

Friedman’s perspective is the American popular stance on the exchange of the egalitarian model for social mobility and the potential gains it represents.  Americans more or less constantly imagine ourselves as upwardly mobile—hence the current focus on the “fact” that we are the first generation fated to do less well than our parents.  Ambition causes us to ignore the many insults to our status at the lower end as we work our fortunes up the progress ladder.

This upward identification also explains the popularity of luxury brands in designer clothing, accessories, beauty, and housewares for a large and growing middle class—the 90% of Americans who identify this way.  That is quite a range of occupation, income, and education (the way the US government defines social categories) that all consider themselves middle of the curve.  As Americans, that’s just our start point.  Almost every decision we make is in the service of moving our status upward, or at least holding it steady against slipping downward.  That includes the career we hope to build, the money we hope to make, and the school and working experience we bring to the first two.

Hierarchy

Humans are the most hierarchical of the primates.  We live in the most complex universe of ways to be ranked by competence, esteem, resources, relationships, and power.   This is the reason that everything we engage in involves some range of unequal opportunities and rewards (Cecilia Ridgeway describes this world as a “struggle for precedence.” (2013, American Sociological Review)

Fear and aggression are not just consequences of living in difficult times or environments, but natural outcomes of the anxiety humans experience because of our hierarchies; the way we need to think about, and interact with, others. This state is based on our higher or lower relationship with them. This is why we spend most of our time in “social thinking,” trying to determine our standing, our potential standing, and the intentions of others by navigating our way through social situations, real, contingent, and imaginary.  Its extreme form is Social Anxiety Disorder, a distraught condition in which these thoughts are highly anxiety-producing.

Stress anxiety

The psychic outcome is social anxiety resulting in negative effects on GI functioning, sleep, sex drive, and blood pressure acted on by adrenaline and cortisol.  Our large social brains are always subconsciously addressing complex social situations and transactions.  The resulting stress correlates well with our relative place in the social pecking order. What keeps this stress loop going is the difficulty of predicting what constitutes either a social threat or promise, and to what extent we can determine these are either real, likely, or projected by our own fears, doubts, and uncertainty.
 
For example, social media leads to insecurity because everyone is posing and posting their own lives as better than others.  Poverty is connected with a lower level of neuronal connectivity in the frontal cortex (inhibition control and restraint, focus, decision-making ability).  Chronic and generalized stress leading to hypertension and depression is an expression of feeling subordinate or less powerful.  Our feelings of self-efficacy—how competent and confident we are—are tied to the way we perceive our social rank. 
Social rank and dominance are directly linked to feelings of confidence, self-possession, optimism about the future, relatedness to others, and ability to navigate the social landscape.  The American values of mobility and choice are tied into a lack of connection and obligation to others—but only the positive side of that ethic, that of being free to make autonomous choices, to make up and then change our minds, and choose our associates as we see fit without loss of stability and support.
   
Neurobiologist Robert Sapolsky comments in an interview on stress in primates that “Up until 15 years ago, the most striking thing we found was that, if you're a baboon, you don't want to be low ranking, because your health is going to be lousy. But what has become far clearer, and probably took a decade's worth of data, is the recognition that protection from stress-related disease is most powerfully grounded in social connectedness, and that's far more important than rank."  (3.7.07, Stanford News)


Analog:  Alpha-companies versus Beta-consumers

Is there an operational analogy between being one-down on the social hierarchy ladder and being a consumer?  Why do consumers feel so contentious and adversarial about systems they have bought into that are pledged to “work with you” to resolve problems? Our current research with a consumer rights agency has inspired some digging into the company-consumer relationship, which has become more and more complex and difficult to navigate.
A major clue can be found within the legalese of contract language.  This is the elite code that requires a lifetime of education and experience--just to read through. Outside the legal profession, almost no one is able to accurately and with facility read the most basic contract – for example, an insurance policy for home appliances, the home warranty agreement.  These contracts specify long lists of conditions under which the policy holder is NOT covered and the policy not in force, making only the most basic statements about when coverage will be granted for repairs and replacements.  This is the start-point for policy-holders feeling incompetent, outranked, and swindled.
   
This is also how consumers learn about what they are entitled to.  It isn’t by careful preparation for the worst situations—those are too abstract and uncertain, and also too numerous, to imagine in detail or even guess at.  The way we do learn is by failing.  We make an unsuccessful claim, ending in denial of payment.  At that point our frontal brains get busy at focusing on the small print, trying to work out what happened, why and how, and what we can do about it now.
 
The real problem is this: The company holds all the cards—it is their contract, and so they will read it to their own advantage, not ours. They are the alpha party as the arbiters of what gets covered and what ends up out-of-pocket.  The consumer is quickly one-down on the social ladder and stressed by the self-esteem loss. This is why customer service is more accurately termed “customer management.”  The goal is to control and contain customer demands, not to meet them. Consumer advocates are always having to assure clients that their problems are not unique and they are not alone.
 
Consumer advocates are hired expert guns.  They take over the job to define the problem, negotiate between the parties (often from two to ten involved), and understand how to work toward a solution that defends the rights of the beta, the consumer, and still plays within the alpha rules. In this role, the advocate acts as a counter-balancing social connection, an equalizer. Its role is that of the third party coming to the table with the authority of expertise and the standing to negotiate between adversaries. This role in itself mitigates the disparity between unequals. This process acts to form a bonding alliance with the consumer-client that reduces the normal hierarchical stress symptoms while improving self-efficacy by actually enhancing the beta’s status.

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?”