Subtraction’s Value

One way to think of a decision is to think of the ‘right’ answer. This has limits. ‘Right’ answers exist within conditional assumptions, and mostly in the mathematics and moral fields. Should I be honest with my partner? has a ‘right’ answer. What’s the optimal distance my 2017 Subaru Outback should follow this other vehicle given these LIDAR, radar, sonar, sonic readings? has a ‘right’ answer. Note, I have no idea how adaptive cruise control works but it is the best automotive technology of the last decade.

‘Right’ answers are limited because of all the conditionals. Self-driving cars are one example. It’s a math heavy domain, the cost and availability of technology (read: number collecting and computing) has fallen, and we’ve never had as many smart-focused-people or as many save-our-collective-butt-companies, and yet it feels slow. Why is self-driving so slow? The conditions! Snow, rain, city, country, semis, motorcycles, bright lights, night lights, desserts, animals, forests, and not least of all: other drivers.

To get the ‘right’ answer to a question like: should the car warn the driver and begin automatic braking? the system needs a pretty tight window of conditions. So if the ‘right’ answer is difficult to come by is there a better option? There might be.

Rory Sutherland’s work comes up a lot here because Rory Sutherland’s work brings up an important idea. Sutherland loves marketing because marketing deals with psychology which is a lot easier to change than the objective thing. Package delivery is an example. Tracking numbers, emails that note your package is on its way, and estimated delivery dates all deliver psychological value. Contrast this with getting a package faster: logistical value, which has a very real cost. It’s not that better package tracking is better than faster package delivery but that it delivers more value than it costs. It’s the same idea of Michael Lewis’ Moneyball: what’s highly (or somewhat) valuable yet costs very little? Sutherland’s tool is psychology. Lewis highlights math. Let’s add another: subtraction.

“It’s an easy problem for a dad to fix, I grabbed a block to add to the shorter column but Ezra had removed a block from the shorter problem. Ezra is normally a horrible subtractor but he plays a lot of Legos and this was an instance where he stumbled upon subtraction.” – Leidy Klotz

Leidy knew how to fix his son’s Lego bridge. Add a block here —>. But Ezra had an idea too. Take a block away here —>.

Whether a situation’s ‘right’ answer is to add or remove is irrelevant – for now. What’s a better car: a Toyota or a Lexus? The question is which costs more?
It’s easy to add. We have a tendency to add. But adding probably costs more and when it’s a costlier implementation but only a marginally better outcome then the better choice might be to subtract.

March 2, 2022 update:

Inverting Punting Questions

Typical analytic situation have three potentials for improvement (or, competition).

  1. Better data, think motion tracking in football or hockey.
  2. Better models, think the shift from batting average to on-base-percentage.
  3. Better people, think the 1980’s shift when Edward Thorpe began competing with other Ph.D.

However, the largest potential gain in analytics (at least sports, circa 2020) is the implementation. It’s no use coming up with a good idea if you can’t get it into the portfolio.

Richard Sherman and Chris Collinsworth offer a stopgap solution. Talking about the Pittsburgh Steelers decision to punt on fourth and one from the forty-six, “If you’re the Cleveland Browns you’re definitely relieved,” said Sherman, “shoot you only needed a yard, you can fall for a yard on most defenses.”

This idea has been around a long time in sports, Bill Simmons has spoken about it often on his podcast; what does my opponent fear the most? I’ll do that.

Some NFL teams have solved the implementation obstruction with a direct line from the analytics department to the coach. Teams slower to adopt and adapt can take the idea of inversion and just ask one of their coaches. It would be great to see a head coach ask his defensive coordinator if the offense should stay on the field, or indeed if they should punt.

Note, I listened to Thorpe’s A Man for All Markets and while long, it was good particularly because it was read by him!

Book Review: Schtick to Business

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Peter McGraw and Shane Mauss joined up to write Schtick to Business, a pop-science-pop-culture look at the ways comedians can force business people to see things with fresh eyes. While most books should be blog posts, this one felt about right.

McGraw, and it’s mostly McGraw’s voice, focuses on the idea that business is mostly hunting, then harvesting. Businesses exist to find areas of need (hunt) and then serve customers over those needs (harvest). Business owners are collar-shirt-wearing truffle hunters.

Typically, and where comedians excel, is in the hunting part. It’s finding the Zero to One ideas that make the difficult act of business slightly easier. McGraw writes that you won’t be funnier after reading the book, but “I want you to think funny. That is, I want you to start thinking differently.”

When we say that people aren’t creative, we’re saying that we err towards confirmation bias, myopia, and narrow thinking. We will always do education a certain way because that’s the way we do eduction. Well, until something happens (see: a quarantine education).

Part-of-the-reason creativity is missing is career risk. McGraw’s solution to this is shitstorming. It’s brainstorming, but inverted. Instead of coming up with good ideas, a group comes up with bad ones. This isn’t necessarily a waste of time because sometimes bad ideas can lead to good ideas. Sometimes changing one part of a bad idea, is a great idea.

For example, how does an investment advisor in a medium-size town get more clients? Her weaknesses include lack of resources in staffing, lack of high-income-residents, lack of marketing resources, lack of continuing education opportunities, and so on.

However, those same drawbacks can be advantages. Chuck Akre likes being in a small town with one stoplight. Investors want LPs that stick with them. Inverting the question leads us to avenues of advantage. Jokes are a kind of inversion.

“My mom has learned everything from Martha Stewart, about cooking, and cleaning, and withholding affection.” Nikki Glaser

Comedians see the world differently and it’s why we’ve looked at so many of them; Judd Apatow, Jenna Fischer, and Penn Jillette for example.

Once a comedian hunts down a new idea they need to harvest it and McGraw gives tools and tips for that but it’s mostly just boils down to ‘work really hard and maybe get lucky.’ That’s business.

Words mean competition. Once there is a category like ‘theme-park-vacation’ or ‘miles-per-gallon’ every Tom, Dick, and Sally can compete on that feature. Making it salient means consumer will compare on it—even if it doesn’t really matter to their decision making.

When stand up stand-up comedians work on their set; writing observations, testing jokes, and refining material they are hunting innovation. They are looking for something new. It’s creative.

Then, for a very brief time, for a very fortunate few, they get to harvest and share their ‘set’. Comedy, Luisa Diez told McGraw on his podcast, is the fastest art form. Comedians are inspired, share, then a joke expire. Comedy is the fruit fly of the hunt to harvest dichotomy.

Business owners have a longer cadence, but they can learn from comedians. Some will be inspired from McGraw’s book. Most will laugh. I did.