Insights #4: September 2018

Key insights from my most interesting reading in August

1 – What Silicon Valley Won’t Admit About Technology and Progress

Writing in Aeon, researcher and author Edward Tenner considers the demands of developing transformative innovations, and the ability of the current business climate to do so.

Looking at transformative innovations of the 19th and 20th centuries, such as air travel and antibiotics,  he observes that most took years or even decades to be developed and adopted, particularly if lacking an obvious military or public health application. In addition, they typically required some form of government support, investor patience and the consolidation of ideas and efforts from numerous parties to form industries. For instance, household electricity was common in some industrialised parts of the US by 1921, but until the development of large-scale manufacturing processes in 1926 lightbulbs took 30 seconds to produce by skilled glassblowers, with mass electrification outside of major urban centres taking almost 50 years.

Tenner writes ‘what these and other triumphs of 19th- and 20th-century technological progress share is not a sudden dividend from a scientific insight. Rather they all took painstaking, risky, indirect routes to fruition. Most illustrate what the German-born economist Albert O Hirschman called the ‘hiding hand’, the paradox that if many innovators could foresee what they would have to endure, they would not start, but once committed, they find ways to realise their goals.’

In contrast, digital start-ups are far easier to scale and achieve dominance within a given sector. However, while they are often profitable, they tend to represent what Clayton Christensen and Derek Van Bever of Harvard Business School term ‘process innovations’ (facilitating or improving existing industries, for example Uber making it easier to travel by taxi) rather than ‘market-creating innovations’. This presents a number of issues:

  • They have a questionable ability to create broad-based prosperity.
  • Any positive impacts can be negated by social problems generated as side-effects, such as the vast quantities of waste associated with packaging for e-commerce.
  • They may act to divert resources away from more transformative innovations. It may be that the success of tech firms such as Apple in attracting capital, rather than an exhaustion of opportunities, is a more important factor in what many consider to be a slowing rate of human innovation.

Tenner suggests that in addressing this concern ‘the first goal should be to study more systematically all those ideas that the technology press has identified as transformative, and to offer better incentives (for example, prizes and preferential tax treatment) for socially beneficial hard technology. What good are self-driving cars if our roads – for want of more durable materials and paving techniques – are filled with potholes that they still can’t detect?’

 

2 – For some platforms network effects are no match for local know-how

Writing in the Harvard Business Review, author and IMD business school professor Howard Yu looks at how companies can win against larger competitors in the platform economy, in which network effects are inherently important.

Particularly where platforms are not purely digital (for instance Uber), local differences mean that leaders in one market cannot guarantee product market fit when entering new territories, making it possible for companies with superior local knowledge to compete successfully. This dynamic can be enhanced by the reticence of some platform providers to tailor their offering to local markets when prioritising growth, given that configuration constrains scalability.

For instance, Grab overcame Uber in SE Asia by offering:

  • customer service in all major local dialects
  • cash payment, recognising lower credit card penetration and drivers’ needs for daily income
  • an ability to set pick-up locations to nearby bus stops rather than home addresses
  • forwarding of driver registration / route to family members, masking of user phone numbers and access to driver criminal records in order to alleviate safety concerns.
  • a motorbike service in locations with high levels of congestion.

Alternatively, developing a wider range of services that strengthen customer relationships can enhance platform growth and defensibility.

 

3 – The Falsification Mindset: How to Change Your Own Mind

Blogger  Mike Sturm examines philosopher Karl Popper’s approach to guarding against confirmation bias, the mechanism, driven by a desire for ‘intellectual safety and certainty’,  through which new information is interpreted in a manner that reinforces current beliefs.

In recognition of the ease with which this can happen and danger of doing so, Popper developed the idea of  falsificationism,  which dictates that a scientific belief system or theory must acknowledge that it may be wrong, outline the evidence that would confirm this and seek out that evidence.

Sturm suggests that ‘having to understand what would prove you wrong forces you to do 3 important things:

  • clarify what your actual belief is
  • confront the possibility that you could be wrong
  • tacitly commit to changing your mind under some specific conditions’

Alongside avoiding biases, such an approach may engender clearer thinking through forcing the assessment of existing knowledge and the evidence underpinning it, while also boosting receptiveness to new ideas and thus creativity / intellectual growth.

 

4 – What is Wrong with Modern Times – and How to Regain Wisdom

UK-based organisation The School of Life, which was established to promote emotional intelligence, outlines eight philosophical and psychological problems caused by modern life:

Perfectibility: modernity has created a sense that all difficulties can be eliminated. As a result, people no longer view problems and challenges as simply an inherent part of life, focus on these to a greater extent and therefore feel less happy.

Optimism: society seemingly values optimism and cheeriness, viewing it as the best way to achieve goals and win the affection of others. However, this creates more shock, anger and disappointment when things do not go to plan, and may hinder the development of connections with other people as, the authors write, ‘our most profound reality is that we all have deep zones of worry, regret, inadequacy and shame that we long to see reflected in others and cannot when the mood must be sunny.’

Individualism: A reticence to define ourselves as part of traditionally important groups such as a religion, nation or family has resulted in an individualistic philosophy underpinned by a tendency to define ourselves by the work we do. This results in an unstable existence in which ‘we are a sacking, a profit downgrade or a retirement away from losing an established sense of self. Equally, we may be transformed by a promotion, a newspaper profile or a flotation. Our identities are caught in a turbulent oscillation between hope and fear.’ Within a market economy, this leads to constant competition with others in order to preserve status, and may diminish the perceived value of anything outside of work.

Exceptionalism: the prevailing belief in the potential of anyone to excel and change the world creates unrealistic expectations when the reality is that most people are, by definition, average in most areas of their life. As a result, we ‘end up despising the actual conditions of our lives, hate ourselves for not having done more, bitterly envy those who have triumphed and neglect to appreciate the qualities of what and who is actually to hand.’

Meritocracy: ‘A society that thinks of itself as meritocratic converts poverty from a condition of honourable, if painful, bad-luck into evidence of personal incompetence. The burden of failure rises exponentially.’

Anthropocentrism: the tendency to view human beings as of central importance (as opposed to, for instance, a god or nature) has removed the consolation of viewing everyday problems as insignificant in the grand scheme of things. We are ‘tormented by a stupefyingly heavy sense of our own importance in a nevertheless wholly indifferent, random and unequal universe’, and consumed by feelings of envy and inadequacy.

Romanticism: modernity emphasises the centrality of  romantic love in unlocking happiness and meaning in life, creating unrealistic expectations and ‘extensive new ways of feeling dissatisfied, disappointed and ashamed around ourselves and our partners. It has made us a good deal more lonely – and notably less able to love.’

Novelty: ‘Modern societies assign immense prestige to whatever happens to be new. ‘Progress’ and ‘innovation’ are central terms of praise; to be ‘old-fashioned’ or ‘out of date’ is little short of a disaster…We conflate the recent with the significant.’ However, while this focus is intended to fill ourselves with excitement and connection, it often results in a feeling of superficiality, hollowness and distraction.

The authors suggest that such problems can be countered through:

  • accepting the inherent imperfections of ourselves, as well as the frustrations and tragedies of life
  • cultivating gratitude
  • acknowledging the role of chance in success and failure
  • maintaining perspective

 

5 – How to Be a Smart Consumer of Social Science Research

Writing in the Harvard Business Review, Eva Vivalt of the Australian National University outlines a number of approaches to assessing the findings of academic studies in the social sciences, which can be influenced by numerous factors such as chance errors or researcher bias. Advice includes:

  • Do not rely on a single study, but rather meta-analyses or systematic reviews. Where few studies have been conducted, look for other sources of evidence that do not rely on the same information. She writes ‘research has found that people are subject to “correlation neglect,” so that when multiple experts or news outlets base their reports on the same study, people incorrectly treat those sources as independent and end up over-weighting that study’s results.’
  • Look at sample size when determining credibility. Results of studies involving small samples are more likely to be thrown by chance or may not be replicable at larger scale, in part because they tend to focus on samples likely to yield the biggest effect while they are unlikely to generate wider feedback loops such as regulator or competitor responses.
  • Check for peculiarities in the sample, context and implementation that could affect the results.
  • Look for the presence of a clear causal mechanism that is constant across settings. Vivalt advises ‘ if there is a convincing reason that we might expect to see the results that a study has found, or if there is a strong theoretical reason that we might expect a particular result to generalize, that should lead us to trust the results more.’
  • Results that sounds too good to be true probably are. She writes ‘this might sound like a cliché, but it’s based on a principle from Bayesian statistics: Stranger claims should require stronger evidence in order to change one’s beliefs, or “priors.” If we take our priors seriously — and there is reason to believe that, on average, humans are pretty good at making many kinds of predictions — then results that seem improbable actually are less likely to be true. In other words, holding constant the significance of a result or the power of a study, the probability of a “false positive” or “false negative” report varies with how likely we thought it to be true before hearing the new evidence.’
  • Avoid being overconfident when making assessments.

 

6 – Focus on what’s important, not just urgent

Writing in the Guardian, Oliver Burkeman provides a reminder of the intuitive but often-ignored Eisenhower Matrix in which tasks are categorised as either important or not important, and urgent or not urgent.

He writes ‘Life’s primary challenge is to make time for the important stuff that isn’t urgent, even though it doesn’t feel pressing, while avoiding the urgent stuff that isn’t important, even though it does feel pressing.’ However, while failing to prioritise importance over urgency can result in a ‘life filled up with trivialities’, it easy to do as:

  • Urgent tasks tend to be easier, offer immediate payoffs and weigh in the mind more.
  • Knowledge of the tendency to prioritise urgency is insufficient in itself to address it, ‘because the knowing is intellectual, whereas urgency is an emotional or even bodily matter: you act from a twinge of discomfort, a clench in the stomach, a racing heart.’

Burkeman advises that the best remedy is to:

  • ‘practise consciously distrusting those feelings: to learn to treat the sense of urgency as a sign something probably isn’t the best use of your time.’
  • become comfortable with small failures or negative outcomes in unimportant tasks in order to create time and focus for the things that do matter.

 

7 – Management: what to do when your team grows

Writing in the FT, Janina Conboye looks at techniques and approaches that managers can adopt when the number of people that they are required to oversee increases significantly. Observations and tips include:

  • Management techniques that work for small teams do not necessarily scale (e.g. lengthy one-to-one catch-ups).
  • Be prepared for relationships with people to become less like friendships.
  • Be prepared for some people to dislike you – you cannot keep everyone happy but should make sure everything is fair.
  • Be prepared to delegate more. It may help to create sub-teams and appoint leaders of each.
  • Set clear goals for individuals and the team, and establish a purpose.
  • Establish and take into account how team members like to be led.
  • If taking over leadership of an existing team, spend time to understand its dynamics before making changes.
  • Seek appropriate leadership training or spend time shadowing someone that manages a similar team, which is likely to provide more insights than a standard mentor relationship.

 

8 – Why drink is the secret to humanity’s success

Writing in the Financial Times, Robin Dunbar, professor of Evolutionary Psychology at Oxford University,  discusses the role that alcohol has played in human evolution.

Drinking alcohol has been part of human society for more than 8,000 years.  Through the release of endorphins that it causes, it may be one of the most effective activities (in moderation) for building and maintaining friendships, which has been key to evolutionary success through the protection it provides against both internal (e.g. loneliness) and external stresses.

Dunbar notes that ‘one of the biggest surprises of the last decade or so has been the torrent of publications showing that our happiness, health and susceptibility to disease — even our speed of recovery from surgery and how long we live — are all influenced by the number of friends we have.’ As an example, a meta-analysis of 148 studies of heart attack patients conducted by Julianne Holt-Lunstad found that number of friendships was the greatest predictor of survival beyond 12 months, more significant than giving up smoking, level of exercise or diet.

Interestingly, research suggests that the positive effects of social drinking are more pronounced at night, perhaps stemming from mastery of fire, which 400,000 years ago enabled societies to concentrate on economically important activities during daylight hours and shift social activities to evenings.

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For more of the same, see  Monthly Insights June or Monthly Insights July.