Friday, March 13, 2009

The Key to Valued Action

Note: Wrote this for a business blog last year. Andy Grove's "Reign in the Chaos" article made me think it time to recall and republish. -ndh

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Since action is what creates value, what are the factors that lead to action? For all the behavioral and market study on the subject, it seems, we still don't agree. Here are some of the many expert opinions:

1.) Response to Pain

One view suggests that action depends on whether or not a problem is too large to comprehend, and whether or not there is real pain to motivate one to do something about it.

Tom Lowe, who studies mass responses to mass communication, says that once we are of the opinion that a situation is of a scale beyond our control, we stop in our tracks. Like a pointing dog paralyzed on a scent, we can't move until something else gives. In other words, even if we can imagine pain, we won't prevent it. It is not until we experience pain that we are motivated to move, and then our movements are often rash and instinctive.

One might suggest then, that this is really a discussion about how many ways we can do nothing or at least very little.

2.) Response to Risk

Dr. Peter Sandman, who works with public health officials, proposes that action connected to risk is driven by the simple formula

Risk = Hazard + Outrage.

... which leads to his idea that “When hazard is high and outrage is low, people under react; and when hazard is low, and outrage is high, they overreact”.

A few years ago, while evaluating the North American electric generator market for a client, we applied Dr. Sandman's formula to explain sales that had a clear negative economic value but still occurred, and accounted for a significant percent of the market that could only be explained in emotional terms.

Markets have a way of removing emotionally driven actions after a time.

This still doesn't explain motivation, or drive to act.

3.) Survival

Maslow's oft-cited hierarchy of needs suggests that if you are fed and warm, and if have a support group and some self-confidence, only then you are in a position to attack and solve problems. It's an old idea that doesn't hold up to scrutiny: What explains when people solve the problems of hunger and cold? Surely the Inuit didn't depend on a well-fed, well-educated consultant to help them decide upon ice as a building block for a warm home. Or better, what inspires entrepreneurship, and all of its inherent risks to self? Why would someone bet a career on an unproven idea? What explains the existence of creativity and problem solving in both urgent and non-urgent situations? Have we evolved these behaviors?

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Hmmmm. Obviously, not all decisions and subsequent actions are rote, in response to pain or fear, incorrectly proportioned or tied to the survival instinct. What else is there? Why do some teams always seem to be moving forward?

Action FrameworkWonder and wanderlust

Sometimes simple inquisitiveness -- the need to know -- drives us, and in the process of learning, we create. The chief characteristic of action-oriented companies is that they allow this to happen. They build cultures and systems that value probing and listening. They make room for trial and error in both their processes, and on their balance sheets. They look for people who are interested and willing to explore.

In times of unpredictable change, or when negative news is all we hear, it is important to remember that value comes from our desire to sort through problems and do something about them.

In both urgent and non-urgent situations, creative problem solving comes from understanding and associated confidence. Lacking that, we either speculate or grasp for straws.

The foundation for profitable action is understanding that doing is the natural consequence of thinking. If we take time to think, chances are we'll act.

- Nicholas Hayes

Monday, March 9, 2009

Rebooting into Safe Mode

Who hasn’t been talking about cutting back lately?

Sharp declines in confidence and spending are rippling through nearly every area of the economy, though there are some recent winners: Walmart, Autozone and Netflix, who all report higher sales and earnings. From these we can draw some basic behavioral conclusions: Americans are watching every dollar, fixing not replacing cars and we’re staying home.

We’ve rebooted. Into safe mode. You know, like Windows safe mode; that place that your PC takes you when it’s been compromised by some Godforsaken spam attachment. In safe mode, you can’t do much of anything: no wireless, no hi-res monitor, no media or email, no multi-tasking. Just a barren desktop waiting for someone to resolve the underlying issues.

There are two ways to look at this.

1.) My first response is to bitch about why there has to be a safe mode to begin with. If they (we) hadn’t turned the operating system (the banking system) into a monster, then safe mode wouldn’t be necessary.

2.) Then I breathe deeply and admit that, yes, I’m in safe mode. We all are, whether the programmers (banks and borrowers) screwed up or not. So what’s next?
  • First, I take stock: Do I have all my files? (Are my family and friends still here?) Yes, mostly.
  • What did I do to compound the situation? Which freeware was it? (Did I borrow too much? Did I ignore the risks?) Uh-huh
  • Can I contain the damages? (What’s important? What can I control?) That’s clear.
  • Now, what can I do to correct and prevent the problem? (How can I save more? How can I waste less? Who can help me? Who can I help? What votes do I regret? How will I vote in the future?) That’s clear too.
The question isn’t if will we reboot into normal mode again. The question is: “What is normal?” Folks, normal isn’t Walmart, Autozone and Netflix.

Normal is buying from people we know. Normal is sharing rides and neighborhoods. Normal is playing cards, or reading or going outside. That is how it was for thousands of years, and it is the way it will be again. It is only when we stopped doing these things that we skidded out of control.

Looks like either we’re going to be in Safe Mode for a while, or we’re going to start acting like humans again: cooperating, sharing and making sustainable choices. Operating systems can’t do what humans do; we can simplify, and it's always better when we do.

- Nicholas Hayes