Author: MIKE

Supported by Greenhaven Road Capital, finding value off the beaten path.

 

This post was part of a week of posts about Rory Sutherland. I learned many things, but broadly Sutherland speaks about four big ideas; creative thinking is hard but worth it, rationality is the wrong model, framing and choice architecture change decisions, and butterfly effects are easiest using psychology. There’s also a Rory’s reads post.

Ready?

Sutherland is searching for butterflies. This is what marketing is. Add value through intangible means. Small inputs, large effects.

“One of the brilliant things to look for in marketing is disproportionality, how very very small things have a huge effect.”

“That’s the glorious thing about marketing. You can create glorious delight and memorability and distinction with utterly trivial levels of expenditure.”

“Intangible value is a very fine substitute for limited resources in the creation of things.”

Think of the hamburger, says Sutherland. Start with the meat and add a bun. That’s one kind of burger. Then add lettuce, and tomato, Heinz 57 and a french fried potato, a big kosher pickle and a cold draft beer and that’s paradise. The ground beef is central and each additional part is a complementary good. Advertising is a complementary good too.

“Instead of thinking, ‘how can I persuade people to buy my product.’ — ask instead ‘what’s the equivalent of lettuce, ketchup, and bun?’.”

Here’s where Sutherland says to look for these opportunities.

“What we need to do as marketers is either look for things that are objectively similar but subjectively different…or things which are subjectively similar but objectively different.”

Too often we prefer large sweeping gestures because we think that’s what works.

“If you’re a guy at the UN with a budget of two-hundred million it is beneath your dignity, it’s insignificant, it doesn’t satisfy you own self-love to say – ‘The solution to poverty is free lentils.’ You always look for a big grandstanding heroic thing.”

As we saw in the ‘Irrational’ people section, it’s a mistake to think linearly. Big inputs do not equal big outputs. Sutherland says that the Eurostar is an example of this mistake. Engineers and politicians wanted to change a three-hour train ride to a two-hour thirty-minute train ride. That’s a sixteen percent improvement!

But at what cost? Instead of making it faster what if they made it more enjoyable? But that’s hard to measure. People like spreadsheet math, however as Sutherland says, “there is no aircraft as fast as a sleeper train.”

Building more doesn’t always help either. You’ve probably seen this in your commute. There’s a road that’s busy, too busy. Someone decides to widen it. Work begins. Barrels sprout. Bulldozers arrive. Temporarily congestion is worse. ‘That’s fine,’ you think to yourself. ‘Once the work is done things will be so much better.’ Months later the last equipment is removed and traffic is not so much better. Why? You can’t build your way out of congestion. Make something easier to do and more people will do it.

“So my tip for the day is this: spend just as much time working on how you can reduce consumer transaction costs as you do trying to reduce manufacturing costs.”

Another small effort to large effect is speed cameras versus ticketing cameras. The cameras that take pictures of car license plates, record the data, and send out a ticket are an order of magnitude more expensive to install and maintain than the ones that display “Your Speed Is…” We should ask if spending ten times as much is bringing back ten times the results.

In a talk for WIRED Health, Rory gave advice for how small changes can lead to people being a lot healthier. Start, with the name of thing. Sutherland said that if you want people not to go to the A/E for small things change the name of the A/E (which stands for Accidents and Emergencies).  “What you call things affects how people behave…Because if you create a name for something we automatically assume it’s a norm.” This worked for designated drivers, says Sutherland. Once that term was introduced on television sitcoms it joined the lexicon.

Another medical example is multicolored pills. Filled but unfinished antibiotic prescriptions are troublesome. Rory thinks that these prescriptions should be filled in two colors. Then pharmacists can tell people, ‘finish the eighteen blue ones and then take the six red ones.’

“The likelihood that people will get to the end is much greater when there is a milestone somewhere in the middle.”

Sutherland calls these butterfly effects MONO ideas –  Minimalist Oblique Non-Obvious interventions.

“Minor irritations are really worth focussing on because unlike things like health care, they’re relatively cheap to solve and the difference they make to the quality of life may be enormous.”

These are not obvious, so to find them you need to look in different places.

“Test strange things and when they succeed you know something nobody else does and that’s what’s really valuable in business.”

And this area of thinking is fertile.

“It’s hard to make an airplane ten times faster but you can make a hotel ten times cooler than another hotel for a fraction of the price.”

And butterfly effects are easier now than ever before thanks to the computer in your pocket. This is key because timing matters too. Sutherland says, imagine you have the option to drive or take the train. The decision point isn’t once the car is packed, the decision point is well before that. Once people are packed in a car the inertia to make it a car journey is too great.

“In fact, if you have kids and have already packed the car up with seven tons of shit the decision is already made for you.”

What if instead, you make the decision earlier. “Then the asymmetry doesn’t apply…By using technology to change the place that decision gets made you will fundamentally change the decisions that people make.”  

The best billboards, says Sutherland, are ones that change. In one talk he shows a billboard advertising travel and points out that it changes throughout the day and the year. During afternoon rush hour it notes that the train doesn’t stop. Around the holidays it reminds you to visit your mum. Different messages with different means at different moments change momentums.

Here’s another example you’ve seen, please shower before swimming. My local YMCA has this sign on the pool deck. Whereas this sign should be in the locker room. On the pool deck, I think, well I’m about to get wet anyway I’ll just jump in. While in the locker room I think, well I’m about to get wet anyway, I’ll just rinse off first. Putting messages at the wrong place, says Sutherland, “is a disaster.”

 

Thanks for reading, tomorrow, a surprise.

Supported by Greenhaven Road Capital, finding value off the beaten path.

This post was part of a week of posts about Rory Sutherland. I learned many things, but broadly Sutherland speaks about four big ideas; creative thinking is hard but worth it, rationality is the wrong model, framing and choice architecture change decisions, and butterfly effects are easiest using psychology. There’s also a Rory’s reads post.

Ready?

The way choices are presented to people influences the choices they make.

“The power of reframing things cannot be overstated.”

“The interface fundamentally determines the behavior.”

“If you make making a decision really difficult people do two things. They either decide really badly or they don’t do anything at all.”

“The idea that we value things objectively, free of the context and expectation which we bring to them is completely wrong.”

What does that look like? Rory says to imagine a restaurant with great food but that’s had a sewage backup. No matter how good the food, you aren’t eating there tonight. Even if the maitre d offered half off, you’d back off.

We can frame good things in bad ways to change behavior. Two Australian radio personalities convinced Ed Sheeran to help them with a bit. The plan was to offer a peep show – starring Sheeran. One guy would hawk the show on the sidewalk, the other would take the money and guide people to their seats for the thirty-second peep.

It took them two hours to get anyone interested. Sutherland said, “It doesn’t matter how good your product is if your marketing is terrible.” An ‘Ed Sheeran peep’ is great for a radio stunt but horrible for fans.

Another example of good and bad framing is dietary guidelines. Successful diets prioritize easy, not logical, decisions.

“If you’re a dietary advisor or nutritionist the logical thing to say is ‘this is your caloric intake for the day and you should stick to that.’ That’s a very difficult thing to do because it requires you to invoke System Two to eat meals that are smaller than the one you want to eat.

“It’s tiring, cognitively difficult and requires a huge amount of self-policing. If you just say ‘Don’t eat carbohydrates.’ Once a week you go to a shop and don’t buy carbohydrates. You need no extra self-control because there aren’t any carbohydrates in the house.”

Forget about counting units says Sutherland. It’s not hard to do but it’s hard to start. Make it easier, and don’t count at all. “When it’s abstinence you can’t con yourself.” And how are you supposed to count how much you’ve drunk when “you’re already a bit pissed”?

Rory likes the work that Richard Thaler and Cass Sunstein wrote about in Nudge. For people that get worked up about ‘being told what to do.’

“Nudging can be nothing more than the act of painting white lines in the middle of the road or painting a pattern in a car park so that people all park in a way which allows more cars to fit into a given space.

“You know, as an absolutely purist libertarian, I could get really angry and say, ‘I hate car parking lines because they interfere with my right to park at the diagonal.’ But you’d have to be a fairly deranged libertarian purist to take that view, to protest against the lines in car parks.”

Thaler and Sunstein address this in their book. Everything has some design, why not be thoughtful about it. Sutherland suggests designs for people’s psychology.

“If you look at the world of physical design—I drove you here today and I steered the car with my hands; every single car I know, including Formula 1 cars, has a steering wheel. Now, our hands didn’t evolve to steer cars. What we do very sensibly is we design cars in such a way as some evolved equipment that we have is quite good at steering, which is why nobody’s attempting to devise an interface where you steer your car with your nose.”

“What fascinates me is that when we design physical things, no one’s so dumb as to design a car that you steer with your little toe. When we design programs and government policies and things, we commit that error all the time. And the reason we commit the error is because, first of all, nearly all the decisions where we attempt to predict or understand human behavior are based on, as I said, this broken pair of binoculars. One lens is neoclassical economic theory and the idea of perfect rationality, perfect information, perfect trust. That’s obviously wrong.”

How do people actually make decisions? In businesses they use spreadsheets. We buy fat toasters rather than consider bread slicers. We often satisfice and rationalize even more. Those are the things to consider. Focusing matters too.

As Sutherland observed about being on the airplane that unloaded to a bus, focusing matters. Danny Kahneman said this to Sutherland:

“Nothing in life is as important as you think it is while you’re thinking about it. So just thinking about anything makes it look bigger.”

Sutherland rephrased it this way.

“If you can change people’s focus, attention, and their status currencies so they derive more pleasure from what already exists, rather than from what has to be created to sate their demands, you can essentially increase wealth without increasing consumption.”

Think about this. If we change the way people look at a situation it changes how they feel about it. What does it take to change the way people look at a situation? Almost nothing! Just words.

Four words will sometimes be all you need. When Sutherland helped a company figure out why people didn’t renew their subscriptions, they found that four words increased renewals by thirty percent. “Most people like you…” This design is called choice architecture.

“In many cases instead of persuasion, you want to ask ‘How could we change the situation to make it easier for people to do what we want them to do'”

“When you want to change behavior, try to change the environment rather than try to persuade people.”

“I think the first role of marketing is to make a decision easy to make. And that means clarity of choice and lack of anxiety.”

Sutherland says that we are blind to the path-dependent nature of decision-making. How did you decide on your last meal? Often we choose ‘how’ not ‘what’. Stay in or go out? Cook or be fed? Fast or slow? Those are the initial questions, not, Italian or Greek.

The same is true for buying houses says Sutherland.

“When we buy a property, the order in which we look at things matters. Location is the highest priority. Next, In the UK, it might be the number of bedrooms it has (in the US, it might be the floor area, by square footage). We might then look at the size of the garden, a few other features, and whether it has a pool. But architecture generally comes pretty low down the list. We only look at architectural aesthetics when we’ve got down to a final selection of four or five.”

Rory recalled a business example of this too.

“Here’s a really interesting thing, a lot of people at Ogilvy, senior people at Ogilvy…used to say: ‘look, Amazon’s a really successful online book seller, but once Barnes & Noble get serious about selling books online, people are going to choose Barnes & Noble.’

“Quite a few intelligent people said this, and I always remember thinking that they were wrong. What those people weren’t realising was path dependency, which is about how I want a book or I hear about a book or someone mentions a book or I read about a book or I think about a book or my course professor tells me I need a book.

“The next decision is which channel I should buy it in — shall I go to a shop or shall I go online? And then the third decision is, in that channel, which branch shall I go to? Now, within the bookshop channel, Barnes & Noble were strong, but once you’ve made the decision that you’re buying that book online the strongest brand in the online channel was Amazon.”

Amazon still benefits from this path dependent thinking. If I want to buy something online, I check Amazon rather than if my local WalMart could deliver it cheaper, quicker, or both.

Another example – one that Sutherland dislikes – is the the placebo choice. ‘Red or white?’ wine is a placebo choice. You feel like you’re getting to make a choice but really you aren’t. This fundamental human quirk even works on toddlers. Never give a child infinite choice. Give them placebo choice instead.

This works because people prefer to adapt rather than work. Besides the Placebo Choice here are some other choice designs.

• People tend to choose the middle of three options. “There are huge, huge comparative forces in how we actually exercise judgment.”
• People tend to do what others also do. “Making something seem like a social norm massively decreases the stigma of doing it yourself.”
• People tend to believe complicated things do more. “Because it’s complicated we think it’s really good.”

The way people see a situation affects what people believe and how they will act.

“The context, the medium, and the interface within which a decision is taken may have a far greater effect on the decision we make than the long-term consequences of the decision.”

This can be incredibly helpful. Good framing has butterfly effects.

 

Thanks for reading, one more set of notes tomorrow.

 

Supported by Greenhaven Road Capital, finding value off the beaten path.

This post was part of a week of posts about Rory Sutherland. I learned many things, but broadly Sutherland speaks about four big ideas; creative thinking is hard but worth it, rationality is the wrong model, framing and choice architecture change decisions, and butterfly effects are easiest using psychology. There’s also a Rory’s reads post.

Ready?

If you liked the Be Different post, you’ll love this one.

Drinking the spreadsheet Kool-Aid leads to causality hallucinations. Life isn’t cause and effect and even if it were we may not pay attention. If we were homo-economicus then a change in the weather would lead to a change in the wardrobe. Plummeting stocks would lead to buying, not selling. We may think we are, but we are not homo economicus.

Homo economicus is the ‘species’ invented by Nobel Prize winner Richard Thaler. It’s the person at the perfect weight, with the optimal savings, and one who strides gaily and daily for their ten thousand steps. This species is the one that not only thinks that time is money but disagrees with Rory about longer but more enjoyable train rides because they know how much productivity is lost. Rory kindly disagrees.

“What you have to realize is that most human behavior doesn’t follow physical laws.”

“Marketing is the science of knowing what economists are wrong about.”

“Consumer capitalism is like the Galapagos Islands for understanding human behavior.”

We must move past standard economic theory and physics precision. Spreadsheet cells don’t have elbow room.

“That does not mean that changing human behavior does not involve science. What it means is it’s a different kind of science. It’s less like physics and more like climatology.”

We need to study something different rather than study nothing at all. Sutherland compares psychology to technology. Thought is code. The rational agent model implies that code is buggy – but it is what it is.

One example from – another Nobel Prize winner – Daniel Kahneman is ease of remembering. What people do, says Kahneman, is that we equate recall with accuracy. If asked about the value of international trade deals, your opinion will mostly be based off what comes to mind. The worker who lost his job will have on point of view. The person with no relation to the company another.

Rare is the person who will say ‘I don’t know.’ Why is that? Internal trade is a huge issue. It’s an idea that circles the world like a spool of thread around a globe. It’s complicated, but we don’t say that. Instead, we take the easy way out and believe that what comes to mind is the answer. Kahneman has an acronym for this idea; WYSIATS. What you see is all there is.

This system isn’t good or bad – it just is. When Gerd Gigerenzer asked German students to identify which city is larger, Detroit or Milwaukee, they largely guessed correctly. Americans did not. “I recognize that” is a good heuristic, writes Gigerenzer. That’s our code.

Sutherland wants people to understand that. In one talk he said, “My first very simple and important point to make is; psychology is technology…As you get better understanding these properties, technology gets better.” People are complicated. Here’s how.

Satisficing and maximizing. We tend to choose good enough results.

“Most real-life decisions aren’t like archery; aim for the ten, if you just miss you get a nine, if you miss that you get an eight. Most real-life decisions are more like darts. If you aren’t very good at darts aim for the southwest corner of the board. You won’t get a triple twenty but you won’t get a one or a five. The average score is better. This is called satisficing.”

Satisficing is good enough and it’s a helpful decision-making strategy.

“We are descended from people – whatever their other faults – who avoided making really really shitty choices…People pay a premium for brands not because they think Brand B is better than Brand A but because they’re more certain it’s good. It’s less likely to be terrible. It’s insurance against disappointment.”

When we buy brands we buy assurance. During the early days of mp3 players, there were as many devices as options for illegally downloading music for the device. It was great, but I couldn’t understand why Apple products were so popular. There was no logical reason for it. Apple wasn’t the behemoth they are now but their brand was still strong. The iPod satisficed.

“The idea is that when you make decisions in an uncertain setting, you have to care about not only the expected outcome, but also the possible variance. We’ll pay a premium not only for ‘better,’ but for ‘less likely to be terrible.’ That seems to be an important thing to understand when analyzing decision making.”

I recognize this as an iPhone owner. There are (probably) better phones than the one in my pocket, but I don’t want to take the time to learn a new operating system and research brands in an attempt to maximize my experience. I’ll satisfice instead.

Here’s another. Why is Airbnb a billion dollar company but no one talks about Craigslist rooms? It wasn’t always this way. During their early days, the Airbnb founders wrote a script to post rentals on Craigslist too. At some point Airbnb became “less likely to be terrible” than Craigslist listings.

“Once you understand the perfectly sensible evolutionary instinct to satisfice, then the preference for brands is not irrational at all: I will pay a premium as a form of insurance for the reduced likelihood that this product is appalling.”

Satisficing and maximizing are domain dependent. My wife maximizes family vacation plans while she satisfices family dinner plans. I’ll maximize my writing but satisfice the online hosting.

“If you are an expert in a field, you are a maximiser. Your car is Teutonic. You listen to relatively obscure Indie music. You wear niche clothes brands, like those funny jeans with a wiggle on them. You eat at restaurants you have learned about through recommendation or reviews. And go on holiday somewhere other than Spain, France or the USA. The maximiser seeks to find the very best of everything, and uses his consumption choices to define himself or herself apart from other people.”

Great brands are built around satisficers.

“To be great you need a few rich folks and a few poor folks; a few oldies and some young people. Nike’s extension of their brand belief to all sexes and ages is not a cop-out. It is proof of the brand’s greatness. As Andy Warhol said of Coca-Cola: ‘The great thing about Coke is that the president of the US drinks the same Coke as the bum on the street.’”

“Is Red Bull an energy drink or a mixer? What is the user-imagery of Amazon? Who is the typical Google user? What makes Google better? The fact that we cannot answer these questions simply would typically be considered a flaw.”

We use clues for decision making. They can be internal – I recognize that. They can be external – let’s follow the crowd. They can be aspiring – I’ll maximize. They can be avoiding – I’ll satisfice. Sutherland’s goal is to get people to think in these terms.

Rationalizing.

Satisficing and maximizing is not how most people see themselves. We’re wiser, less whimsical. This is the story we tell ourselves. In his conversation with Rory, Danny Kahneman said:

“When you need information that you don’t have you usually aren’t aware that you need it. If you have partial information about something you will make the best story possible out of the information you have. And your confidence will be determined by the coherence of that story.”

What Kahneman has found in research, Sutherland has found in people’s minds and mouths. Take toothpaste for example:

“Why do we prefer stripy toothpaste? When you think about it, once you put the toothpaste in your mouth, you mix it all up. Why does it need to be stripy?

“The strangest thing on the web is, there are hundreds of articles saying how they make the stripes in toothpaste but there’s no article saying why. All those materials, the red, and the blue, and the white get mixed up in your mouth. It’s completely pointless.

“Why do you do it? Something about the human brain just thinks if there are three different colors, it’s easier to believe that that toothpaste is doing three different things: banishes plaque, freshens breath, eliminates cavities. Because there are three colors, I find it easier to believe that this thing is doing three totally different things.”

That’s one way we rationalize. Google, Sutherland thinks, does another. Because they began offering a single search bar on a simple web page, people assumed they were better at search.

“People believe something that only does one thing is better at that one thing than something that does that thing and something else. It’s called goal dilution.”

In his presentations, Sutherland often includes these lyrics from Bob Dylan’s Brownsville Girl.

We can rationalize almost anything – and have done so for hundreds of years. Benjamin Franklin praised our reasonability, “since it enables one to find or make a reason for everything one has a mind to do.” Kahneman took this thinking, researched it, and wrote a book about how we think fast and slow. He told Sutherland.

“If I say two plus two a number comes to mind. You didn’t ask for it, it just came. The capital of France, a word comes to mind. If I say a nasty word like ‘crime’ you have an emotion. You didn’t ask for it, nothing deliberate, it just happens.

…

“Most beliefs come from childhood but we build arguments. We pretend that we got to our conclusions from arguments when in many cases it isn’t true.”

Sutherland also likes the quote from George Loewenstein, “just as we have a sex drive and a food drive, we have a sense-making drive.” Academic researchers (and business marketers) study (and exploit) this gap. They know it’s there because if you change small things a behavior changes.

Here’s an example. Once upon a time, there was a very nice hotel. To celebrate the season, the hotel commissioned an ice sculpture for their lobby. It would be the cherry on the sundae of a great stay. Only things didn’t work that way.

What really mattered for the guests was check-in. If guests had a great check-in experience; a short line, kind staff, ready room – then they rated their entire stay as better. The music sounded better, the room was cleaner, the ice sculpture was more beautiful. However, if the check-in experience was bad then the entire trip was shit.

“Everything we judge is based on our prior expectation…the idea that there is just this thing called ‘Utility’ which is produced in a factory and is completely disassociated from the context in which the thing is consumed is not happening.”

“The price of things is not an absolute. We don’t have an internal measure of pleasure against which we measure our expenditure – it’s completely relative.”

We rationalize. If check-in is disorganized then the room can’t be that nice. Stories color in details and smell of certainty. This is part of the reason Uber succeeded. The app created a chance for stories (and certainty).

“The nature of a wait is not just dependent on its numerical quality – it’s duration – but the level of uncertainty you experience during that wait…The human brain doesn’t care so much about duration as about certainty…Uber let us make stories about where our cab was.

“What makes Uber different is that when you phone for a taxi, in between that phone call and the taxi arriving, you enter the Twilight Zone of uncertainty. ‘Where is he? Why isn’t he here yet? They said five minutes. I can’t see him. Maybe he’s outside. Should we go outside and have a look? What if he’s left?’

“With Uber you watch the cab approach in real time on your map. And you go ‘Oh, look, he’s stuck at those traffic lights. I’ll make myself a cup of tea while I’m waiting.’ And you’re both happier, you make better use of the time but you’re also vastly less stressed in that period. Now, simply knowing that is really, really important. We don’t like uncertainty.”

Jason Calacanis agrees. He said that live maps is why Uber worked and previously similar services didn’t.

Companies with cheaper products need to account for this storytelling. One of our simple-and-useful-but-not-perfect heuristics is that expensive is better. That’s not always true. Sutherland jokes that a king of yore would give you half his land for a flat screen television. Things get better and cheaper. Homo-economicus celebrates this. We do not. Instead, we think:

“There must be something wrong here. Even though that product seems better, if it’s cheaper that must mean it’s shit in some dimensions I don’t currently understand.”

“Marketing is much more complicated than people realize. It’s not only justifying a higher price but it may also be about de-stigmatizing a lower price.”

Sutherland praises the way low-cost airlines have approached this. They fill in the story for us. It’s cheaper because there’s less.

Look at this Southwest Airlines advertisement. The “no-hidden-fee zone” is the explanation for the price. The implication is that the other airlines are more expensive because they have hidden fees whereas Southwest is upfront about it. They tell you a story.

This isn’t just about dollars, it’s about sense too. Sutherland recalls taking a flight and, rather than unloading at the gate, they unload via stairs and take a bus into the terminal.

“Every single passenger on a plane, in those conditions, generally goes, ‘Aw shit. I’ve been shortchanged here. I kind of paid you for that service. The least you can do is at least connect me to a proper gate with a tube. Now you just dump me on the tarmac and putting me on a bloody bus.’ Partly because ‘bus’ automatically creates the assumption of second best-ness in our mind.”

However, Sutherland had an insightful pilot. After announcing the change, he said that the bus would take the passengers straight to the passport control so they wouldn’t have to walk far with their bags.

“Hold on. That’s always true isn’t it? When you get a bus, it takes you right next to passport control so you don’t have to schlep passed 700 yards of duty-free shops in order to actually get to your luggage and then get to the arrival zone.”

The facts are the same but the rationalizing is what makes an experience great – or not.

“Here’s a case where you can take something that’s bad, redirect our attention to the good bit of it, and we now think it’s good.”

One other example is the Nespresso machine. How do people rationalize using this machine?

“Objectively they are insanely expensive. If you had to buy Nespresso coffee in a jar like Nescafe, per equivalent dosage of caffeine, a jar of Nespresso would cost about sixty pounds. You’d look at that on the shelf and you’d go, ‘That’s insane!’ I could buy Nescafe for only five or six euros.

“But it doesn’t come in a jar. It comes in little a pod. So the frame of reference isn’t Nescafe, it’s a coffee shop. You think, ‘In the coffee shop I’d be paying one pound twenty. This little pod cost me twenty-eight cents. This machine is practically making me money!’ Our perception of things is relative. What you compare something to matters much more than whether the thing is expensive or not.”

We aren’t rational but we don’t need to be. Rules of thumb work for a lot of things. For other decisions, we satisfice to avoid downsides and rationalize after the fact. Producers can use this information to help people tell themselves these stories. This is done by framing (coming tomorrow).

Thanks for reading.

 

 

Supported by Greenhaven Road Capital, finding value off the beaten path.

This post was part of a week of posts about Rory Sutherland. I learned many things, but broadly Sutherland speaks about four big ideas; creative thinking is hard but worth it, rationality is the wrong model, framing and choice architecture change decisions, and butterfly effects are easiest using psychology. There’s also a Rory’s reads post.

Ready?

Be Illogical.

Rory Sutherland wants you to think different. No, that’s a slogan. Hmm, Rory Sutherland wants you to think in new ways. No, that’s not right either. Rory Sutherland wants you to be illogical. Yes, that’s the sweet spot. How so?

Think about Coca-Cola, says Sutherland. Here you have this one-hundred plus year old company that’s weathered World Wars, Cola Wars, and sugar wars. It’s the best brand in the world. It has Warren Buffett’s stamp of approval. Here’s the challenge, how do you defeat Coca-Cola?

A logical answer looks like this. Coke’s cheap so you’d need to be cheaper. It also tastes good, so your cola would need to taste better. There’s also distribution, diet flavors, and other decisions. Unfortunately for you, none of these things will work says Sutherland. There’s only one drink that’s bumped Coca-Cola from its stand of domination – Red Bull.

“Genuinely, Red Bull makes no rational sense whatsoever. Nobody likes the taste very much. When you research it, people hate the taste. It costs a lot of money. It comes in a tiny can.”

Logically an off taste shouldn’t help – but it does. We associate it as having something extra. It’s why we want our cleaners to smell slightly repugnant.

“If it smells a bit crap to me it must be a bastard to the fly.”

That’s why irrationality makes sense. You can’t make Coca-Cola better than Coca-Cola. You have to be different. But weird ideas don’t get much support.

“When solving problems we are biased toward certain solutions and against other ones.”

Part of this stems from our reliance on what Rory calls “a dangerous technology” – the spreadsheet. This innovation corroborated calculation. It’s “given disproportionate power to anybody who can actually contrive a metric that is numerically expressible. The problem with that is that not all things that matter to people are numerically expressible in the first place.”

Spreadsheets to adults are like blankets to children. They comfort us against what we fear – being wrong or monsters in closets. We may be wrong but at least we were rational and precise.

Here’s another one, how do you make transportation better? Rory loves to rail against trains. He thinks people focus on the wrong thing. This starts with the spreadsheet infestation.

“It’s much easier to have a metric for how fast a train is versus how how comfortable it is, or how enjoyable the journey is.”

Time is an easier measure than pleasure. Yet they are not equal. A two hour flight in the middle of the last row in coach is worse than a six hour flight in first class. The same is true for train rides.

“It doesn’t matter if your journey is three hours or two and a half if it’s useful time.”

“There is no aircraft as fast as a sleeper train.”

Plus, faster has to fight physics. Tracks need laid and maintained. Engines need oil and toil. Cars need cooled as a rule. Psychology though, is pliable. Which would you prefer? A two and a half hour train ride without wifi or a three hour train ride with wifi.

Sutherland wants wifi, a seat, and table.

“What really annoys me is that they make faster trains — like the high speed link through Kent for example — but there are very few tables on those trains. If I don’t have a table then I can’t use my laptop, I can’t have a cup of coffee, I can’t have a newspaper; the whole advantage of the train has been practically eradicated.”

The answers are so obvious they’ve been memed.

Wifi – like bacon – makes everything better. That’s an easy comparison. Coming up with really different things – like Red Bull – is more difficult. We suck at figuring out opportunity cost. Sutherland was at the Royal Automobile Club to meet someone and:

“I asked him, ‘How much does it cost to join this club?’ and he said it was fifteen hundred pounds a year. I said, ‘God that’s incredibly expensive.’

“But on the other hand, as an alternative to buying a flat in London it’s about half the price of the council tax. You can stay there for eight pounds a night, it’s got a swimming pool, a Turkish bath, three restaurants, two bars, a garden and a staff of twenty.

“Nobody ever looks, do I join a flat or do I join a club because that’s a little too wide to set the comparative net.”

Netflix CEO Reed Hastings understands opportunity cost. When asked what his competition was, Hastings said “sleep.” This surprised people because “that’s a little too wide to set the comparative net.” Sutherland has another story about this, this time involving his wife.

“My wife doesn’t like this because she sent me out to buy a fat toaster and I came back with a bread slicing machine instead, on the argument that we didn’t need a fatter toaster, we needed thinner bread.”

“It’s amazing to me,” Sutherland said, “how bad at this exercise we are.” Yet this is how we get Red Bull and better trains. It’s also the antithesis of the spreadsheet.

“One of the reasons stupid, or pigheaded people do well, and when they do well they do really well, is because they are ignoring all the category norms everybody else thinks are important and they’re emphasizing something completely different.”

It’s logical to be illogical. Small ideas can have large effects. We just need to try to think this way.

“I don’t think there’s any huge amount of intelligence required to look at the world through different lenses. The difficulty lies in that you have to abandon four or five assumptions about the world simultaneously. That’s what probably makes it difficult.”

“I like to think of myself as being involved within the indecision making process…the first way to add value is to say: ‘don’t assume it’s like this, it might be like that.’”

Rory has an advantage. He’s got career capital in an industry that values creativity. Organizations typically incentive mistake avoidance over creative genius.

“It’s much easier to get fired for being illogical than unimaginative…If you pretend economists are right you’ll never get fired – but equally, you’ll never discover anything that interesting.”

Organizations, like ecosystems, reward certain behavior. A cost-benefit analysis appears thorough and thoughtful. Your boss will read it, nod, ignore the parts they fail to grasp, and say things like ‘yes yes yes.’ It may be fine, but as Sutherland wonders, did you cast your net wide enough and what do those numbers mean anyway?

“Certainly there’s a problem with numbers in that there are sophisticated things in life that we all understand perfectly well when verbally described. Should psychology be constrained by math? I mean, who has the better understanding of human behavior—Shakespeare or Eugene Fama?”

How to circumvent this? You have to, says Sutherland, “give permission for people to be a bit weird.” A good manager encourages many small, digital, experiments and takes the blame when they don’t work.

“The returns to weirdness are higher in a digital world. Therefore, we should be weirder.”

Managers can cultivate creative thinking with a better incentive structure. As Sutherland likes to say, “no one got fired for buying IBM.” Conventional failure has few repercussions. Professional sports are filled with these coaches. If people fail in unconventional ways they lose their jobs. Sutherland calls this asymmetrical reward mechanism an essential problem of organizations.

Creativity is many things, but it’s not a silver bullet. There will be bad ideas. Sutherland still has bad ideas – but they’re allowed.

“The most vital thing in an ad agency is you have a culture where it’s okay to fail or be silly. Creating a culture wherein you can still make stupid suggestions and still get promoted.”

“Give permission to test counterintuitive things,” says Sutherland. If you want new ideas, be irrational, test odd things, and cast a wide net. You’ll never know what you may catch.

Thanks for reading.

Supported by Greenhaven Road Capital, finding value off the beaten path.

Kevin Delaney spoke with Khe Hy on Rad Awakenings about starting Quartz, NYC, and LoL.

Decentralized command. Leaders can only be doers for so long. This is a change Alex Blumberg has seen as he’s gone from hosting podcast to guiding hosts. Delaney has seen this too.

“The skill that you need to have is to be able to identify the best ideas. If you have to be the source of every idea, as a leader you’re in trouble. The skill that quickly became clear is that you need to listen, to gather information, and to help direct people to the best ideas.”

Gregg Popovich and Pete Carroll said they let players figure things out on their own. Warren Buffett gave the advice to hire well, manage little.

…

Your gear doesn’t matter. People can handcuff themselves waiting for the situation to be just right. It never will be.

“On some level resources are overrated. People often complain they can’t do stuff because they don’t have resources – but that’s often a distraction or an easy excuse…I think you find a way.”

Ryan Holiday said that people “overestimate the perfectly optimized thing.” B.J. Novak and Malcolm Gladwell use Microsoft Word for writing. There’s no magic bullet, software, or moment.

…

Experimentation. Successful businesses experiment in small ways. They realize, as Rory Sutherland has said, “One of the brilliant things to look for in marketing is disproportionality, how very very small things have a huge effect.”

“The experimenting nature of Quartz is part of the culture.” Hy

“You’re a great example of our not being sentimental about the way things have been done in the media industry.” Delaney

Quartz began as a way to be different and they’ll succeed by trying lots of small things and sticking with what works. The biggest secret of business success said Brent Beshore, “is that there is no secret. Do more of what works and less of what doesn’t.”

…

Curiosity. Curious people live better lives.

“The thing that I’ve found correlates most with success is just having ideas. When I’m interviewing people for jobs, I try and get them talking about the stuff they’re interested in. If I think that I’d be jealous that someone else published an idea in a post more than twice in a conversation, I can have a strong conviction that someone can come here and have the intellectual curiosity that will allow them to connect with readers and be successful here.”

Curiosity helps us figure things out. Marcus Lemonis said to be like an infant and just keep asking questions. Ray Dalio said curiosity is “a big motivator.” Kara Swisher said curiosity makes for better interviews.

…

Stakeholders. Another train of successful businesses is getting the right people involved. The right people are curious and allow for decentralized command. They also stick around.

“I think Quartz was able to hire the people we did because we had a real mission. The mission was to ensure that quality content thrived in our digital landscape amid questions about the advertising model…that’s powerful for the people here.”

Some people at Quartz got offers for more money and left. Others stayed. Investors know this too. The best investment plan is the one you’ll stick with. A stable investor base has let people like Wesley Gray, Meb Faber, and Jim O’Shaughnessy operate smoothly.

….

Platforms Alex Moazed wrote about our modern monopolies as platform business models. The city is a platform model.

“I found myself walking across Park Avenue to school every day and by virtue of that, having access to the great potential of New York. One of the things as a young kid in New York is you realize that just about anything is possible. You don’t always know the straight route to it but if you really want something you can see around you the birth of various things.”

Platforms – cities, social networks, connection apps – allow for interaction. These can create see it to believe it moments for inspiration.

 

Thanks for reading. I’m mikedariano.

 

 

Supported by Greenhaven Road Capital, finding value off the beaten path.

Paul Wilmott joined Barry Ritholtz on Masters in Business.

Models. All models are wrong but some are useful is the expression but Wilmott adds a twist. “Are they useful in how they control risk? Are they useful in helping you do more business? They may conflict with what the man on the street might want.”

Complexity can be marketing, as Geoffrey Miller writes about inSpent. Complexity can also be wrong. There are limits to our models and maps. The perfect map is the 1:1 map. The map as large as the world. While accurate it’s unwieldy. Map/model makers need to embrace the tradeoff from useful to descriptive.

Maybe we’re also looking at the wrong models, to begin with. “You really have to understand human nature,” said Wilmott, “before you start doing the mathematics.”

Rory Sutherland said that human psychology is the original code. Rather than design a product to be bigger, faster, larger, longer, shorter, lighter, etc – Sutherland wants people to ask, how is this perceived.

A transportation model is ‘shorter = better’. With this guidance, engineers will aim to make trips as short as possible. However, Sutherland points out, we run up against the Right Wall of physics and earn diminishing returns. What if he asks, we switch models? Rather than faster being better let’s use the model of enjoyable being better. This is harder to measure but may be more effective and efficient.

…

The Wilmott Business Model.  “My business model has always been, do something which is fun and then accidentally turn things into businesses. It’s not a greed thing, it’s an enthusiasm thing.”

Scott Galloway gave great advice on how to do it.

“The secret is to find something you’re good at, as the rewards and recognition that stem from being great at something will make you passionate about whatever “it” is.”

Charlie Munger too.

“One trick related to passion is that you are not likely to be passionate about something you do not understand.”

“The more you know about some topic, the more passionate you will get.”

Enjoyment follows skill which feels back into enjoyment.

…

Small, interesting, bets.  “Going back to the late eighties, I was doing some research with colleagues at the university and we thought, why don’t we give some courses and teach people in the city? They were phenomenally successful so we set up a business. We turned that into a book, and self-published it.”

Life advances incrementally. The direction may be clear but the path is not. Strike off and see where it leads. It could, like Wilmott, go somewhere great.

Dan Egan said, “Everyone hates draw downs except perma-bears and behavioral scientists because this is the point where I finally get to test whether stuff works.”

Judd Apatow told Joe Rogan, “With any scene, I’m always like ‘well that’s where the joke’s supposed to be, here’s my favorite, let’s get eight more and we’ll move on.”

…

How to read books.  “I’m now very impatient with books. Up until the age of thirty if I started a book I had to finish it. This was the greatest thing to happen to me – other than the birth of my children- to realize that I could just stop reading a book.”

Bill Gates said he’s choosy about starting because he’ll want to read the whole thing if he starts. I’ve given reading advice in three times; one, two, three.

…

Thanks for reading.

Supported by Greenhaven Road Capital, finding value off the beaten path.

Dan Egan spoke with Ted Seides on Capital Allocators. I can’t get enough of these behavioral economics folks. From Richard Thaler to Rory Sutherland – if you have some favorites let me know.

…

There are lots red flags when evaluating people or businesses but one green flag is the humility to acknowledge the role of luck. Egan has that.

“I think I was incredibly lucky. Like surfing, I just happened to be at the right place at the right time and be lucky. Of course, you also have to do the swimming out bit.”

David Heinemeier Hansson had a good line about it:

“I retain the humility of knowing that just because I have hit a homer with Basecamp does not mean that I have some magic voodoo touch that’s going to turn everything else into gold.”

…

In school, Egan enjoyed economics or psychology – though he knew economics paid better.

“That inability to decide (on psychology or economics) about which one of those things I really wanted to focus on led me to being acceptably good at both of them.”

This is advice Leigh Drogen is giving to people who ask him: “I’m telling my interns from Wharton to go study quantitative and interpersonal skills, go study both and become the center of that.”

Scott Adams wrote a book largely about the idea of Venn diagram type skills.

…

Knowing doesn’t stop doing – but design might.

“At some level, you start to say,  how can I build systems, habits, or patterns around myself so I minimize the harmful biases?”

Daryl Morey noticed this. Coaches, scouts, and executives tended to compare one player to another player of the same race. Morey built a system where comps had to be cross-race to circumvent this tendency.

Rory Sutherland says that the sequence we make decisions in matters quite a bit. Often it’s not what you want to eat, he says, but how you want to eat. How often do we choose quality over convenience? That’s our internal choice sequence.

…

Egan also likes to experiment. In one experiment, Egan showed users the tax consequences if they confirmed a buy/sell order. For four weeks one group saw the message and a control group did not. He tallied the results and found that 70% of people changed their behavior after seeing the message.

In another experiment, they tested email and push notifications. “Everyone hates draw downs except perma-bears and behavioral scientists because this is the point where I finally get to test whether stuff works.”

During the Greek crisis, they showed customers prepared warnings.  It was a dud. “We learned that most people aren’t worried about the market.” Instead, people are thinking about meetings at work and grades at school.

Egan and his team made tweaks. During the next crisis, they alerted only people who logged in. “That pop-up notification reduced the bad behaviors by about fifteen percent and increased deposits by about ten percent. It didn’t solve the problem but it’s very easy to do and does have enough effect you can hang your hat on it.”

One small change for a medium-sized effect. That should be the gold standard. Silver bullets are for the movies. Small changes work, it’s “Poor Economics.”

This kind of stuff is “…hard to do, but it’s worth exploring,” says Egan.

…

Egan knows that it’s hard to divert people from performance chasing. Instead, they tried to direct investor’s attention elsewhere. “Taxes, costs, and investor behavior is what we tend to focus on rather than the investments themselves.” Switching attention can switch conclusions. This was something Sutherland marveled at to Shane Parrish:

“The pilot says something I’ve never heard before. Instead of saying, “I’m terribly sorry, we haven’t been able to get an air bridge, so you’ll be bused to the terminal. If you just wait while the bus draws up on the port side of the aircraft—”

No. Instead, he says, “I’ve got some bad news and I’ve got some good news. The bad news is we haven’t been able to get an air bridge because there’s a plane blocking our gate.

The good news is that the bus will take you right next to passport control, so you won’t have far to walk with your bags.’ Suddenly, I realized that actually that’s always true. When you get a bus, there’s an upside to the bus, which is you don’t have a long walk through a shopping center with your carry-on luggage in order to get to passport control and then the baggage carousel.

But because no one had brought our attention to it, we had no opportunity to derive the positive.”

Betterment has similar framings this says Egan. “We don’t show individual security returns, you can only ever see the returns of a diversified portfolio.” They also use color to show not past performance but future potentials.

…

Rapid fire takeaways (and one theory):

Focus on the MITs.  “It’s easy to get stuck on the rebalancing methodology but the marginal gains are really low. As long as you think about the tax component and you’re not letting your asset allocation get crazy, you’re fine.” And the active and passive debate is “a distraction for the vast majority of people.” Instead, focus on more important things – like saving more.

Have people commit by naming. “Putting names on things actually makes it easier for people to spend money on it.” Goal-based based investing creates stability and ownership, two behavioral nuances that lead toward certain behaviors and away from others.

Hire the right customers. “We are not where you are going to trade. We are not that fun. There are apps out there that make it fun and interesting to trade single line stocks and market time. We are wonderfully boring. I hope that we are selecting for investors.” The right stakeholders reduce friction and reduced friction means more movement.

Don’t tell customers to shut up. “The worst thing you can do when someone is freaking out is say ‘Stop! Don’t do anything. Sit still.’ You have to take that anxiety and energy and redirect it to more positive things.” This echoed what Josh Brown said too, “If you’re just telling a client, ‘Shut up I got this,’ you’re not going to be the client’s advisor for a long period of time.”

Exciting things are bad investments. “If you’re excited about what you’re investing in you should worry. If you’re doing something boring or standard you’re going to stick with it.” That sounds like something Brent Beshore would say.

Arguing well is difficult. This may be the most honest articulation I’ve heard.

“I underestimated how difficult it would be to set up systems and process such that people who have very different perspectives feel engaged, feel like they were heard, and making sure that continues so you don’t end up with an echo chamber. Diversity of perspective is not fun. You’re going to be disagreeing with people you work closely with on a regular basis. It can make for a tense workplace, but that’s the crucible that the really strong stuff comes out of.”

…

A theory of live advisors. Why would Betterment, a technology company, bring in live financial advisors? It’s a great move and here’s why. This theory is from Rory Sutherland (again), writing in The Spectator.

 

“A case in point: ever since Uber cars became established in London, I barely drive into London at all (I live just outside the M25). Previously I did so once a week. This wasn’t by choice (after all, if I wished to recreate the experience of driving in London, I could sit in a stationary car at home while stabbing my head repeatedly with a fork).

No, before Uber, I was forced to take my car into London simply because if my event overran or if the trains went funny, or if it started raining and the black cabs were all taken, or if I was in that 90 per cent of the city where black cabs don’t go, then I was irredeemably stuffed.

My car wasn’t a form of transportation, it was a fallback position.”

With Uber, Sutherland had another possibility. Option A was the planned train trip. Option B to take Uber.

“In all those 50 non-car-journeys in the last year, I used an Uber to get home only once. The other 49 journeys took place as planned by train. But I made those 49 journeys by train largely because Uber now offered me an acceptable second-best alternative.”

What if this works for Betterment too? Maybe people just want the option to talk to a person? Does Betterment think this way? I asked:

 

Thanks for reading.

 

MOAR here –> http://eepurl.com/cYiwTP

 

Supported by Greenhaven Road Capital, finding value off the beaten path.

Abhijit Banerjee and Esther Duflo wrote an interesting book. It’s titled Poor Economics but that’s because an alternative title like People do stuff that appears stupid but is locally rationally and are influenced by their environment and wealth is important too is unwieldy. But that’s the thing, this book isn’t just about the poor or economics. Let’s see how.

…

Understand your stance.

“The position that most rich-country experts take on issues related to development aid or poverty tend to be colored by their specific worldview.”

“We have to abandon the habit of reducing the poor to cartoon characters.”

Right from the start Duflo and Banerjee write that they’re trying to find answers that work in the real world, not answers within party lines. Affiliative heuristics are helpful, but we should be aware that we’re using them.

…

To understand how accurate your worldview is you have to be there.

“This has taken us to the back alleys and villages where the poor live, asking questions, looking for answers.”

“Answering the (narrower) questions we get to understand what, if anything, is special about the poor.”

“This shift in perspective requires us to step out of the office.”

Duflo and Banerjee want to figure out – in Ray Dalio‘s words – “Basically everything is another one of those … the key to success is to identify which one of those it is.”

Being there lets you talk with your users. Jason Calacanis said this is a mistake founders make all the time. Marcus Lemonis said, “Customers are investors, they choose to give you revenue or not.” Matt Wallaert heard that kids weren’t curious enough to use Bing. Wait, thought Wallaert, kids are always curious. He went to the classroom to find the truth.

It also lets you see conditions, cultures, and context. One set of mothers Banerjee and Duflo interviewed wouldn’t take their children for vaccinations because they feared the Devil’s Eye. Huh? Those mothers believed that if their infants were exposed to the sun in the first year of their life they would suffer consequences.

Except that is, for food. Researchers were able to compensate the mothers with a small amount of food in exchange for bringing their kids for vaccinations. Cultural insights are peeling back the curtain in Oz.

“References to a certain old-fashioned sociological determinism, whether based on caste, class, or ethnicity are rife in conversations involving the poor.”

“The novelas, (Brazilian soap operas of the 1980’s) ended up projecting a very different vision of the good life than the one Brazilians were used to, with historic consequences.”

“The power of shame seems to be sufficient.”

Social norms influence people and lots of small experiments tell you how. These experiments show you small steps for big effects. This is why Rory Sutherland suggested this book. Sutherland loves the idea of doing a lot with a little. He learned this early in his direct mail days, and wrote:

“Very small changes in the design of things would suddenly have immense effects in the number of people who replied, or the nature of the response, or people’s readiness to pay—almost kind of butterfly effects.”

Get pregnant mothers and infants better food and there are huge effects. Get villagers to chlorinate their water and there are huge effects. Buy school uniforms for girls and there are huge effects. Duflo and Banerjee “…we have no magic bullets to eradicate poverty…” but they don’t need them! “Miracle drugs” like chlorine, salt, and sugar already exist. They just need to get people to use them.

Why didn’t people do things so obviously beneficial? Four  reasons:

1/ Cause and effect are difficult to link. The poor often saw “Bengali Doctors” – someone with any kind of education – who “tended to underdiagnose and over medicate.”  “They were cheap and at the very least gave the patient a sense of doing something.” Even the randomness of Voodoo has more immediate results than the effects of vaccinations which may take years.

2/ Time Inconsistency. Like all people, the “bottom billion” are hyperbolic discounters. One farmer, the duo talked to buys his seeds and fertilizer immediately after harvest. Why? “When there is money in the house, things always happen.”

3/ Complicated policies. Duflo and Banerjee like nudges (and so does the Nobel committee – Congrats Prof. Thaler!). While “governments have a way of making easy things much less easy than they should be.” Make things easy – nudge people – and they will do more of that thing.  One town did this by installing a chlorine dispenser at the town well with preportioned amounts.

4/ People aren’t  predictably irrational – they’re locally logical. “People make their choices based on what makes sense to them.” Some young girls explained to the researchers why it’s better to marry an older man while young. Rather than work in their parent’s home, they can work in their own. When those are the only two options that come to mind early marriage makes sense.

…

Stability is massively underrated.

“A good job is a steady, well-paid job, a job that allows a person the mental space needed to do all those things the middle class does well.”

It’s hard to appreciate this from “the view from our couch,” write Duflo and Banerjee. We have so many systems around us reduce our chances of cataclysmic events while “For the poor, every year feels like being in the middle of a colossal financial crisis.”  In our RWW podcast, we looked at the role of stability too.

 

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Supported by Greenhaven Road Capital, finding value off the beaten path.

This blog has a podcast with similar ideas. The most recent episodes are RWW and Cities as Systems. The first is dark, the second is (en)light(ening). Find it on iTunes, Soundcloud, or Overcast.

…

I’ve only just started Poor Economics but the introduction has a number of lessons we see frequently in business, sports, and investing but not always from two academics. The first question that arises is when to use facts and when to use stories.

Buying bed nets sound like a great idea, but Duflo and Banerjee want to know when it really is. Ray Dalio said: “Basically everything is another one of those … the key to success is to identify which one of those it is.” If he were in Africa rather than Connecticut, he may ask, ‘which one of those situations is one where free bed nets work?’ That’s what Duflo and Banerjee want to find out.

It’s not easy to answer because we’ve got baggage. Ken Burns said he didn’t put his finger on the scale for his documentary but this is hard to do. We have biases and sweet spots. Specific questions help us find oversights:

“Answering the (narrower) questions we get to understand what, if anything, is special about the poor.”

“We have to abandon the habit of reducing the poor to cartoon characters.”

“The position that most rich-country experts take on issues related to development aid or poverty tend to be colored by their specific worldview.”

This takes work. Stories are easy to digest and pass as opinions. But “The idea that everyone is entitled to his or her opinion,” said Danny Kahneman, “was a California thing – that’s not how we did things in Jerusalem.” Dalio agrees, “There’s such a bias to think that just because you have an opinion that it’s valuable.”

Yet stories are valuable. When fundraising, aid organizations know that a photo and a story of a person will raise twice as much as general facts and figures. ‘A billion people will go to bed hungry’ is more effective than ‘865 million people live on the equivalent of ninety-nine cents a day.’

The right facts will lead us to better stories.

Those facts take work to find. “This (research) has taken us to the back alleys and villages where the poor live, asking questions, looking for answers.”

“This (research) has taken us to the back alleys and villages where the poor live, asking questions, looking for answers.”

“This shift in perspective required us to step out of the office.”

Being there is the best way to get facts. Jason Calacanis said this about tech in Silicon Valley. Marcus Lemonis said it about interviewing business owners.

 

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