Distilled lessons, ideas and wisdom from the past month
1: On the relationship between money, emotional wellbeing and life evaluation
2: Tips for having more effective meetings
3: The techniques that populist politicians use to win elections
4: Wisdom on building companies and managing people from a leading investor and entrepreneur
5: Essential advice on growing a company from the world’s leading startup incubator
6: How to overcome the challenges of selling new products
7: The importance and difficulties of recognising our intellectual limitations
8: A range of perspectives, from practical to philosophical, on making important decisions
9: Tips on how to learn new skills quickly
10: 12 ways to make Google searches more accurate and effective
This 2010 Princeton University study, conducted by Nobel Laureates Daniel Kahneman and Angus Deaton, provides some interesting insights into the ‘does money make you happier?’ debate. The research sought to investigate the impact of earnings on two distinct but often-conflated aspects of subjective wellbeing:
- Emotional wellbeing, which ‘refers to the emotional quality of an individual’s everyday experience—the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant.’ (Also known as hedonic wellbeing.)
- Life evaluation, which ‘refers to the thoughts that people have about their life when they think about it’.
Their analysis of more than 450,000 responses to a daily survey of US citizens found that:
- ‘Income and education are more closely related to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of daily emotions.’
- Both emotional wellbeing and life evaluation rise with income, but emotional wellbeing shows no further increase beyond an annual income of around $75,000.
- Below this level, on average, the emotional pain associated with challenges such as divorce, ill health and loneliness are exacerbated, and positive influences (such as weekends) are less emotionally beneficial.
Overall, they conclude that ‘high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.’
The authors suggest that beyond the $75,000 threshold, additional income no longer increases the ability of people to access more of the things that boost their emotional wellbeing, such as spending time with loved ones, avoiding disease and enjoying leisure. Moreover, as people earn more, their ability to purchase more positive experiences may be offset by some downsides. For instance, studies suggest that people with high incomes experience a reduction in their ability to savour small pleasures.
As Kahneman and Deaton note, ‘this observation underscores the importance of the distinction between the judgments individuals make when they think about their life and the feelings that they experience as they live it. As might be expected, the former is sensitive to socioeconomic status, whereas the latter is sensitive to circumstances that evoke positive and negative emotions, such as spending time with others and caring for a sick relative.’
2: How to Hold Effective meetings
‘One either meets or one works. One cannot do both at the same time.’
– Peter Drucker
Meetings consume a huge amount of the working day for many people and there is no shortage of advice on how to approach them. Some managers suggest that attendees should remain standing to encourage meetings to be as short as possible, while banning the use of devices may help to boost engagement. Another approach gaining popularity is to allow people to leave a meeting if it becomes clear that they have nothing to add. As Tesla and SpaceX founder Elon Musk notes ‘It is not rude to leave, it is rude to make someone stay and waste their time’.
Writing in the Financial Times, Michael Skapinker outlines his approach to running effective meetings:
- Call a meeting only if it is intended to address a specific question, and capable of producing an answer to that question. General catch-ups and announcements can be done via email or WhatsApp.
- Only those that can help to answer the question should be invited. This may mean involving non-obvious people and excluding senior staff.
- At the meeting, pose the question and let other people speak. Encourage those that are quiet to contribute.
- Once everyone has given their input, provide a balanced summary of the main ideas (people want to know they have been heard). Make a decision (based on whatever decision-making approach is used within the organisation e.g. voting or consensus) and decide on what actions need to be taken and by whom.
- Agree how progress will be reported (this does not need to be through another meeting).
He also suggests that a periodic review should be undertaken to determine the amount of time that staff are spending in meetings. Management guru Peter Drucker suggested that if anyone is spending more than 25% of their time in meetings it is symptomatic of ‘time-wasting malorganisation’.
In a related article in the Harvard Business Review, author Paul Axtell cites research that suggests that the most productive meetings involve just five to eight people. Beyond this point, he argues, the quality of conversation diminishes because:
- There is not enough time for everyone to participate meaningfully in the conversation.
- Rich back and forth debate is replaced by shallow comments.
- Information-sharing and catch-ups distract from addressing higher priority issues.
- People become more guarded and less candid.
- Tough topics and decisions are not put on the agenda, then are dealt with off-line instead.
This can lead to a negative cycle through which people begin to question the efficacy of meetings, stop preparing for them, engage less when they are in them and ignore follow-ups.
Axtell suggests that meeting organisers should initially invite the people whose inability to attend would lead to the meeting being cancelled and then add only those that can add or gain value through attending. This usually means people with the most knowledge of the given topic, those likely to be key to implementing decisions or directly impacted by them, and anyone who may learn from participation. Such criteria should be communicated clearly within the organisation.
He also suggests a number of principles that should be adopted when implementing this policy:
- Extend permission for people to ask to be included. Err on granting permission if people present a solid reason for attending.
- Extend permission for people to decline to attend. Let people know that you trust them to make the right choices about how they spend their time (although they must still contribute or adhere to decisions made if required).
- In every meeting, make sure someone takes minutes for people who are not in attendance.
Larger meetings can be useful, Axtell concedes, but these should be the exception rather than the rule.
Writing in the Financial Times, Simon Kuper reviews Giuliano Da Empoli’s ‘Les ingénieurs du chaos’, which looks at the key strategies (pioneered by the late rightwing American political campaign manager Arthur Finkelstein) employed by populist politicians:
- In contrast to traditional parties, which communicate using evasive language, compete for the centre, are led by career politicians and shy away from selling a vision, populists have ’embraced the 21st Century’. Trump in particular realised that election campaigns are now, in effect, mediocre reality shows ‘produced by dilettantes and populated by sad personalities without lives’.
- Populist political parties have been quick to leverage social media. As with reality TV, this rewards engagement and makes the electorate feel more like participants than spectators. Social media also allows parties to experiment and refine messaging, quickly abandoning what doesn’t work and running with what does, while amassing huge amounts of data on their supporters. They can thus target groups with personalised messaging that is largely hidden from the outside world.
- Campaigning is separated from governance, and leaders are chosen for their ability to drive engagement (thus many come from the entertainment industry). Evoking anger is a quick route to engagement, so extreme calls to action are favoured over reasoned arguments.
- Picking the right enemy is hugely important. Kuper notes that ‘the populist script says: no matter how placid and safe your country might seem, this enemy intends to destroy your way of life or even kill you.‘
- The extremists that populists inevitably attract are never disavowed as they are the strongest supporters and make the politicians themselves look relatively moderate.
Increasingly, traditional parties appear to be deploying these techniques. ‘To some degree, we are all populists now.’
4: The Hard Thing About Hard Things
In The Hard Things About Hard Things, entrepreneur and investor Ben Horowitz outlines a wealth of advice on growing a business, particularly in relation to managing people throughout the process. Some of the highlights include:
- ‘It is a mistake to hire for lack of weakness rather than for strengths in the required areas.’
- ‘Nothing will accelerate your company’s development like hiring someone who has experience building a very similar company at larger scale.’
- It is highly important to establish a performance management or employee feedback process as ‘people rarely improve weakness they are unaware of.’
- ‘Smart people do not want to work for people who do not have their interests in mind and in heart.’
- ‘Treat leavers fairly, otherwise those that stay will not trust you.’
- ‘A lot of people only pay attention to indicators of good news.’
- ‘Perhaps the most important thing that I learned as an entrepreneur was to focus on what I needed to get right and stop worrying about all the things that I did wrong or might do wrong.’
- ‘Focus on the road, not the wall…if you focus on the wall you will drive right into it. If you focus on the road, you will follow the road.’
- ‘The most important difference between big and small companies is the amount of time running versus creating. A desire to do more creating is the right reason to want to join [a startup].’
- ‘In life, everybody faces choices between doing what’s popular, easy, and wrong versus doing what’s lonely, difficult, and right.’
Leading startup incubator Y-Combinator presents its ‘most important, most transformative advice for startups’. Key tips include:
- Launch your product as soon as possible, as this is the only way to fully understand customer problems and know whether your proposed solution addresses these. As long as a sufficient ‘quantum of utility’ is present, it is better to launch a mediocre product and then iterate based on feedback than wait to ‘perfect’ the proposition in isolation.
- After launch, initially do things that don’t scale. Premature scaling usually means that time and effort may be wasted building the technology and processes required to support a large business based on flawed assumptions, which can be hugely damaging. Scaling-up without finding a proper product / market fit leads to poor retention and financial losses – ‘growth is the result of a great product not the precursor’. It is better to firstly take time to develop a deep understanding of customers and work out what really needs to be built.
- Look for ’90 / 10 solutions’ i.e. those that accomplish 90% of objectives with 10% of the work. A 90% solution to a real problem that is available immediately is preferable to a 100% solution that takes years to build.
- Obsessively focus on speaking to customers and developing the product based on this. This is a cycle that should be maintained indefinitely. Many founders make the mistake of getting distracted by conferences, meetings and press.
- Choose customers wisely. It is critical that startups ‘fire’ customers that cost more than they deliver in revenue or learning. It is better to have fewer customers with a pressing need than many with a mild annoyance.
- Founders are biased towards doing more whereas in most cases they should aim to do fewer things very well. There will be a near-infinite list of tasks to be done and so founders should prioritise those that directly impact the most important metrics. For instance, if struggling to gain traction, it can be tempting to add new features to address other problems but it is normally more important to instead focus on developing a better understanding of the most acute problem.
- Major problems are part of any startup journey and founders should not be dismayed when they appear.
- It can be easy for startups to focus on the competition, but this is normally a bad idea. While competitive dynamics will eventually become important, it is unlikely to be the case in the first year or two – ‘startup companies always die of suicide not murder’.
- Raise money as quickly as possible to avoid distraction.
- A high valuation applied during a funding round does not translate to success or probability of success.
- Any money raised does not belong to founders – they have a fiduciary duty to spend it only to improve the company.
- Growing a startup is a stressful process so it is essential that those involved take regular breaks, relax and exercise.
- Maintain open and regular communication between founders. ‘It turns out most companies fail fast because founders fall out. The relationships with your cofounders matter more than you think and open, honest communications between founders makes future debacles much less likely.’
In an interview with Harvard Business Review, Thomas Steenburgh, a marketing professor at the University of Virginia Darden School of Business, observes that companies often mistakenly expect new products or innovations to sell themselves. This belief can be fed by initial enthusiasm from sales staff, who like new products as it gives them something new to show or talk about but may not appreciate the different approach to selling required.
‘Buyers make buying decisions for two reasons. They have a problem that they want to solve at their company [or] they have some professional objectives…to grow in their careers’
When selling a new product, a salesperson in effect becomes an agent of change and must help the buying organisation to adapt to be able to do so. This requires a much more intense sales process, involving more face-to-face meetings (which are costly and time-consuming) and engagement with cross-functional teams, which adds complexity.
Steenburgh provides the following advice on how to address these challenges:
- Sales people must be given time to adapt to and learn about selling new products. This should be reflected in sales targets and compensation structures, as returns will take much longer to materialise relative to product line extensions, where the sales process is well understood.
- Companies should provide more support and allow for more trial and error in the approach that is taken. They should also start thinking about how something will be sold form early on in the product design phase.
- Research suggests that salespeople that initially invest time to develop a deep understanding of the dynamics of a new product (e.g. changes in the buying centre, perceptions among customers, the challenges they may face in understanding or buying the new product and the shift in power dynamics that it might entail) tend to be more successful in the long term. They may even spend more time dealing with such issues than conveying the product features and benefits, and may require additional training to do so.
- Sales staff must develop a deep understanding of market dynamics, particularly in fast-evolving sectors, and be comfortable having conversations with clients that potentially know more than they do.
- For new products, a separate sales teams may be required. Without this, sales staff will tend to concentrate on deals that can be realised in the short term, creating problems when a technology or product becomes obsolete.
- Sales people also need to be selective in the customers that they engage with. New products elicit attention as people are always looking for market intelligence or inspiration, but that does not mean that they intend to buy.
‘The plague of man is boasting of his knowledge‘
– Michel de Montaigne, 16th-century French philosopher
Writing in Vox, Brian Resnick considers the importance of ‘intellectual humility’ – the recognition that the things that we ‘know’ and believe may in fact be incorrect.
‘To be intellectually humble’, he writes, ‘doesn’t mean giving up on the ideas we love and believe in. It just means we need to be thoughtful in choosing our convictions [too little conviction leads to apathy], be open to adjusting them, seek out their flaws, and never stop being curious about why we believe what we believe.’
Adopting this approach offers several potential benefits. It makes people more likely to pay attention to evidence, seek information at odds with their world view and admit when they are wrong, thus helping them to learn and converge on an accurate understanding. Intellectual humility is, after all, the basis of the scientific method.
Intellectual humility is especially important in a world in which false information proliferates and where, in many ways, society values and rewards over-confidence and arrogance more than truthfulness. In many cases, this has disastrous consequences (e.g. Enron, Theranos and Trump’s approach to climate change).
Nevertheless, fostering intellectual humility is inherently challenging. For one, most people consider their interpretations of the world to be wholly accurate (so-called ‘naive realism’), despite the fact that the human brain is hugely flawed and cannot necessarily be relied upon. For instance, recent viral memes (e.g. ‘the dress test‘) demonstrate that perceptions of the same thing can be markedly different. People, it seems, tend to conflate the effortlessness of sensory interpretation and accuracy (studies have shown that a lie that is repeated is more likely to be mistakenly remembered as true, given the quicker mental processing that familiarity allows, which can be confused with truth).
Moreover, people tend to be overconfident in their beliefs. The Dunning-Kruger effect refers to the commonly-observed psychological phenomenon through which people that are more ignorant tend to overestimate their abilities, in part because they lack the knowledge to understand their limitations. As David Dunning points out, ‘the problem with it is we see it in other people, and we don’t see it in ourselves. The first rule of the Dunning-Kruger club is you don’t know you’re a member of the Dunning-Kruger club.’ People also fail to recognise that memory is highly malleable and often completely inaccurate, and instead treat it as an objective record of fact.
Even when people do spot their errors, they often opt not to admit to them, fearing that doing so will result in them being viewed as less competent and trustworthy. While studies suggest that this is not always the case, peer and institutional support (e.g. incentives or practices, such as making all data used in scientific studies freely available) may be required to encourage such openness.
Writing in The New Yorker, Joshua Rothman notes that ‘one of the paradoxes of life is that our big decisions are often less calculated than our small ones are. We agonize over what to stream on Netflix, then let TV shows persuade us to move to New York’. In many cases, momentous decisions seem to make themselves, and in retrospect it can be difficult to clearly identify the steps that led to them.
As Steven Johnson writes in ‘Farsighted: How We Make the Decisions That Matter the Most’, decisions are typically made under ‘bounded rationality’, in other words with imperfect information, flawed understanding, constraints imposed by earlier decisions and the influence of others. Complex decisions involve conflicting objectives or options that cannot be readily compared.
You must consider which option would be most appealing today, later this year, and decades from now; which would be preferable emotionally, financially, and morally; and which is better for you, your family, and society. From this multidimensional matrix, a decision must emerge.
‘Professional deciders’ use a number of processes designed to deal with such complexity. These include:
- Splitting a problem into sub-problems and allocating these to sub-groups, which look for solutions, present their findings and iterate based on feedback until a decision has been made. This breaks up the work and forces groups with different priorities and expertise to interact, expanding the number of viewpoints considered.
- Scenario planning to imagine how decisions may unfold under different conditions.
- Simulations (e.g. military war games) that can be re-run to explore different aspects of the decision.
Modern decision science is based on the principles of seeking out diverse perspectives, challenging assumptions and taking steps to map out the variables. Essentially, it treats a decision as a value-maximising equation, through which valued factors are determined and then a decision made in such a way as to maximise the value that results.
However, such an approach as been criticised for its applicability when values are unknown (i.e. decision makers are not sure what they care about) or when a shift in values may occur. The late Israeli philosopher Edna Ullmann-Margalit suggested that some major decisions (e.g. to have children) may be intended not to maximise values but to reconfigure them, so that an ‘old person’ and ‘new person’ may be identified either side of the decision. As a result, it is impossible to evaluate such decisions as rational or sound, given that this requires comparisons to be made across different value systems.
Ullmann-Margalit suggested that people ‘opt for’ rather than ‘decide’ when shifting values rather than maximising them. She suggested that the nature of ‘opting situations’ explains why people approach them more casually than less important decisions, although it is the opportunities and paths that people opt not to take (i.e. those that would have resulted in them becoming a different person with different values) that tend to haunt them.
For many big decisions, moreover, people can never fully appreciate the consequences beforehand (‘you can’t know what you’ve never experienced’), so there is no rational way to make them.
University of Chicago philosopher Agnes Callard suggests that such transformations are gradual rather than sudden and neither chosen nor automatic. She suggests instead that people ‘aspire’ to self-transformation by exploring values that they would like to one day possess. She distinguishes between aspiration and ambition – while the ambitious have a very clear link between a decision and a value, the aspirational ‘have some vague sense of its value, which you hope that some future version of yourself might properly grasp.’
Just as receiving a good education may be necessary to understand its importance, aspirants will often be unable to fully explain their motivations for changing. Until they can do so, they tend to understate their aims (e.g. an aspiring painter that explains motivation in terms of relaxation rather than something deeper).
Aspirations, however, are not without risks. They take a long time to realise and so can be interrupted, while Callard noted that to aspire ‘is to judge one’s present-day self by the standards of a future self who doesn’t yet exist’.
In an article on TED, writer Josh Kaufman outlines a four-step approach to developing a new skill in 45 minutes per day for a month:
1 – Break down a skill into its components: identify what you want to learn, break it down into manageable components, and identify the tools and skills required for each.
2 – Learn enough to know when you’re making a mistake: limit the number of resources consulted to three to five (allowing more can encourage procrastination) and start putting what you learn into practice as soon as possible.
3 – Remove any and all barriers to practice: take active steps to remove distractions. Encourage practice through ‘temptation bundling’, in which practicing the new skill is paired with something else that you find enjoyable.
4 – Practice for at least 20 hours: when learning a new skill, the initial period can be challenging and demoralising. Committing to spending 20 hours on the process should enable you to get to a point where you start to show significant progress and have built enough momentum to sustain the process.
Many people use Google daily to find the information that they require from the ever-expanding mass of the internet, but few are well-versed in the functionality of the search engine beyond the very basics. SEO specialist Joshua Hardwick outlines 42 useful search operators, including:
- “” (e.g. “Paris accommodation to rent”) – returns results including an exact match to the search term, excluding synonyms.
- OR – (e.g. Paris OR London / Paris | London) – returns results for either or both search terms.
- AND – (e.g. Paris AND London) – returns results that include both search terms.
- – (e.g. Paris museum -Louvre) – returns results excluding the ‘negative’ term.
- define (e.g. define: entrepreneur) – returns the definition of the specified word.
- filetype (e.g. Paris attractions filetype:pdf) – returns results that match a specified file type.
- site: (e.g. Louvre site:www.bbc.co.uk) – return results from the specified website only.
- intitle: / allintitle: (e.g. intitle: Paris / allintitle: Paris amazing Louvre) – returns results where the search term / all search terms are included in the title.
- stocks: (e.g. stocks:aapl) – returns the current share price of the specified company.
- AROUND(x) (e.g. apple AROUND(4) iphone) – returns results in which two search terms are located within the specified number of words of each other.
- in (e.g. $350 in GBP, 12 metres in feet) – calculates the conversion between different currencies or measurements.
Other Interesting Things
Warren Buffet Archive: the world’s largest collection of Warren Buffett speaking about business, investing, money and life.
Idea Miner: crowdsourced ideas for new products, services and innovations.
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