A guy named James Webb Young, a copywriter from the 1940s, laid out a five-step process of idea generation that holds water today.
1. You gather as much information on the problem as you can. You read, you underline stuff, you ask questions, you visit the factory.
2. You sit down and actively attack the problem.
3. You drop the whole thing and go do something else while your subconscious mind works on the problem.
4 . “Eureka!”
5. You figure out how to implement your idea.
Naive realism suggests an answer: they do. It calls to mind a famous line of George Carlin’s: “Have you ever noticed that everyone driving slower than you is an idiot, and anyone going faster is a maniac?”
The worst-performing clubs were built on affective ties and primarily social; the best-performing clubs had limited social connections and were focused on increasing returns. Dissent was far more frequent in the high-performing clubs. The low performers usually had unanimous votes, with little open debate. Harrington found that the votes in low-performing groups were “cast to build social cohesion rather than make the best financial decision.” In short conformity resulted in significantly lower returns.
Take what happened when Coney Island visitors encountered entrepreneur Nathan Handwerker’s new food stand. When he went into business in 1916, the Polish immigrant decided to undercut the competition. Everyone else was charging 10 cents for the classic Coney Island meal — the hot dog — so Handwerker priced the dogs he made from his wife’s old recipe at a mere five cents. Despite the fact that Handwerker’s hot dogs were every bit as delicious as the competition’s (and were made from real beef), he attracted almost no customers. Visitors to Coney Island viewed these mysterious half-priced hot dogs as inferior and wondered what cheap, substandard ingredients went into the recipe. It didn’t help when Handwerker offered free pickles or free root beer to hot dog buyers. Sales remained flat and, if anything, giving away freebies only further cemented the value attribution.
It wasn’t until Handwerker came up with a clever new ploy that his hot dogs really started selling. He recruited doctors from a nearby hospital to stand by his shop eating his hot dogs while wearing their white coats and stethoscopes. Because people place a high value on physicians, customers figured if doctors were eating there, the food had to be good. So they soon started buying from Handwerker, and his “Nathan’s Famous Hot Dogs” took off. It makes you wonder just how many times we miss out on something worthwhile because of our preconceptions about its value.
Some people, and businesses generally, love having lots of people rushing around.
It makes them feel productive.
Regardless of what they are doing, all the frenetic activity suggests that much helpful work is being done.
People even say sometimes that they like the buzz.
But it’s a bit like a goalkeeper diving to save a penalty.
He might be just as effective staying exactly where he is.
So movement doesn’t necessarily mean progress.
Don’t confuse the two.
Paul Seward runs an NGA in Kenya called Farm Input Promotions (FIPS-Africa), dedicated to increasing the productivity of the local smallholder farmers, many of whom have just a quarter-acre of land. Seward discovered that if you paint the chicks blue, the eagles and hawks don’t realize what they are, and don’t try to eat them. The biodegradable paint washes off in ten weeks, by which time the chicks have enough yard-smarts to run for cover when they see a shadow overhead.
Because the farmers are losing fewer chicks to birds of prey, it is now more worthwhile for them to inoculate the young birds against disease. Through both of these measures, they have gone from a survival rate of 20 percent to close to 85 percent. Because the farmers have more chickens, they are eating more chickens themselves — and better nutrition means a healthier family. And because it is now a better business, more people are taking up chicken farming. Oh, and the idea has created an entirely new profession: chicken painters, who charge three Kenyan shillings to paint each chick. A fascinating example of the cumulative benefits of a simple idea across an entire ecosystem.
One day, Korzybski offered to share a packet of biscuits, which were wrapped in plain paper, with the font row of his lecture audience. ‘Nice biscuit, don’t you think?’ said Korzybski, while the students tucked in happily. Then he tore the white paper and revealed the original wrapper – on it was a picture of a dog’s head and the words ‘Dog Cookies’. Two students began to retch, while the rest put their hands in front of their mouths or in some cases ran out of the lecture hall to the toilet. ‘You see,’ Korzybski said, ‘I have just demonstrated that people don’t just eat food, but also words, and that the taste of the former is often outdone by the taste of the latter.’
Sailing across the Aegean Sea he was captured by Sicilian pirates.
They demanded a ransom: 20 talents of silver.
(That’s about 620kg worth about $600k.)
Caesar told them they were being ridiculous.
He couldn’t possibly allow himself to be ransomed so cheaply.
The pirates hesitated, the were confused.
Caesar insisted the ransom must be more than doubled to 50 talents of silver.
(Around 1550kg worth about $1.5 million.)
Now the pirated didn’t know what to make of this.
Normally their captives tried to escape as cheaply as possible.
They didn’t understand what was going on.
But if he said he would double the ransom, why argue?
They let Caesar’s men go back to Rome to raise the money.
And in Rome, in his absence, Caesar suddenly became very famous.
No one had ever been ransomed for such a vast sum before.
He must be very special, he must be very important/
That ransom demand put Julius Caesar on the political map.
He had just invented the Veblen effect.
There is no such thing as a new idea. It is impossible. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope. We give them a turn and they make new and curious combinations. We keep on turning and making new combinations indefinitely; but they are the same old pieces of coloured glass that have been in use through all the ages.
Consider Gosplan, the agency charged with central economic planning for the Soviet Union for most of the twentieth century. Their plans often involved setting economy-wide target amounts for commodities (wheat, tires, etc.), which broke down into production targets for specific facilities. In 1990, economist Robert Heilbroner described some of the complications with this system in “After Communism,” published in The New Yorker.
For many years, targets were given in physical terms — so many yards of cloth or tons of nails — but this lead to obvious difficulties. If cloth was reqarded by the yard, it was woven loosely to make the yarn yield more yards. If the output of nails was determined by their number, factories produced huge numbers of pin like nails; if by weight, smaller numbers of very heavy nails. The satiric magazine Krokodil once ran a cartoon of a factory manager proudly displaying his record output, a sing gigantic nail suspended from a crane.
Goodhart’s law summarizes the issue: When a measure becomes a target, it ceases to be a good measure.
Only 1.5 percent of the purchase price goes directly into your agent’s pocket.
So on the sale of your $300,000 house, her personal take of the $18,000 commission is $4,500… Not bad, you say. But what if the house was actually worth more than $300,000? What if, with a little more effort and patience and a few more newspaper ads, she could have sold it for $310,000? After the commission, that puts an additional $9,400 in your pocket. But the agent’s additional share — her personal 1.5 percent of the extra $10,000 — is a mere $150…
It turns out that a real-estate agent keeps her own home on the market an average of ten days longer and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she encourages you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and to make them fast. Why not? Her share of a better offer — $150 — is too puny an incentive to encourage her to do otherwise.
Information is not processed neutrally. We are swayed by contextual cues.
Jeremy Bullmore, former Creative Director and Chairman of JWT in London, notes that this affects not just headlines, but advertising too:
A small ad reading “Ex-governess seeks occasional evening work” would go largely unremarked in the chaste personal columns of ‘The Lady’. Exactly the same words in the window of a King’s Cross newsagent would prompt different expectations.
When our bathroom scale delivers bad news, we hop off and then on again, just to make sure we didn’t misread the display or put too much pressure on one foot. When our scale delivers good news, we smile and head for the shower. By uncritically accepting evidence when it pleases us, and insisting on more when it doesn’t, we subtly tip the scales in our favor.
You might assume that a milkshake’s job is to be a special treat to cap off a meal. While it is true that many parents offer shakes as an after-dinner family treat, this restaurant learned that almost half of their shake customers were using them for a different job — to make their long morning commutes more interesting. People felt their trips were more enjoyable as they sipped milkshakes while moving through traffic.
Doing two jobs at once sounds great, but that usually means at least one job isn’t being done particularly well. In this case, parents didn’t like how long it took their kids to drink the shakes.. Yet that was one of the key features for the commuters.
The restaurant chain realized they needed two different products to do the two different jobs well. They decided to further improve the shake for the commuters by making it even thicker, adding more chunks and moving the shake machine to the front of the stores for the fast on-the-go service that commuters wanted. They then needed to market a wholly different dessert product to kids and their parents.
When you truly understand what job people are really truing to get done by using your product, then you can focus your efforts on meeting that need.
Bell’s subway performance started with Bach’s Sonatas and Partitas for Unaccompanied Violin, on of the most challenging piece ever composed for the instrument. Over the next forty-three minutes the concert continued, but on that January morning there was no thunderous applause. There were no cameras flashing. Here was one of the best musicians in the world playing in the subway station for free, but no one seemed to care. Of the 1,097 people who walked by, hardly anyone stopped. One man listened for a few minutes, a couple of kids stared and one woman, who happened to recognise the violinist gaped in disbelief.
A 2007 study by Sorensen investigated the impact of appearing in the NY Times bestseller list. He tracked the success of books that should have been included on the basis of their actual sales, but — because of time lags an accidental omissions — weren’t, and compared them to this that did make it on to the list. He found a dramatic effect: just being on the list led to an increase in sales of 13-14 per cent on average, and a 57 per cent increase in sales for first-time authors.
There is a parallel in the behaviour of bees, which do not make the most of the system they have evolved to collect nectar and pollen. Although they have an efficient way of communicating about the direction of reliable food sources, the waggle dance, a significant proportion of the hive seems to ignore it altogether and journeys off at random. In the short term, the hive would be better off if all bees slavishly followed the waggle dance, and for a time this random behaviour baffled scientists, who wondered why 20 million years of bee evolution had not enforced a greater level of behavioural compliance. However, what they discovered was fascinating: with out these rogue bees, the hive would get stuck in what complexity theorists call ‘a local maximum’; they would be so efficient at collection food from known sources that, once these existing sources of food dried up, they wouldn’t know where to go next and the hive would starve to death. So the rogue bees are, in a sense, they hive’s research and development function, and their inefficiency pays off handsomely when they discover afresh source of food. It is precisely because they do not concentrate exclusively on short-term efficiency that bees have survived so many million years.
If you optimise something in one direction, you may be creating a weakness somewhere else.
Transavia’s brilliant idea was to create a snack packaging that doubled as an aeroplane ticket to a low-cost destination. A €35 packet of crisps would buy you a one-way ticket from France to Barcelona, a €40 bag of gummy bears would take you to Lisbon, or a €40 cereal bar would get you to Dublin. Simply walk into your local Carrefour supermarket, buy the snack, and then enter the code found inside the packaging to redeem your ticket and choose your outbound flight.
In fact, the fun in gamification may crowd out important motives by changing how people see the experience entirely. In the late 1990s, economists Uri Gneezy and Aldo Rustichini tried to discourage parents from showing up late to collect their children from ten Israeli day care centers. The rational ecomomic approach is to punish people when they’re doing the wrong thing, so some of the day care centers began fining parents who showed up late. At the end of each month, their day care bills reflected these fines — an attempt to dissuade them from showing up late the following month. In fact, the fines had the opposite effect. Parents at the day cate centers with fines showed up late more often than did parents at the day care center without fines. The problem, Gneezy and Rusitchini explained, was that the fines crowded out the motive to do the right thing. Parents felt bad coming late — until coming late became a matter of money. Then, instead of feeling bad, they saw coming late as an economic decision. The intrinsic motive to do good — to show up on time — was crowded out by the extrinsic motive to show up late in exchange for the fair price.
When Howard Shultz created Starbucks, he was as intuitive businessman as Salvador Assael. He worked diligently to separate Starbucks from other coffee shops, not through price but through ambiance. Accordingly, he designed Starbucks from the very beginning to feel like a continental coffeehouse.
The early shops were fragrant with the small of roasted beans (and better-quality roasted beans than those at Dunkin’ Donuts). They sold fancy French coffee presses. The showcases presented alluring snacks — almond croissants, biscotti, raspberry custard pastries, and others. Whereas Dunkin’ Donuts had small, medium, and large coffees. Starbucks offered Short, Tall, Grande, and Venti, as well as drinks with high-pedigree names like Caffe Americano, Caffe Misto, Macchiato, and Frappuccino. Starbucks did everything in its power, in other words, to make the experience feel different — so different that we would not use the prices at Dunkin’ Donuts as an anchor, but instead would be open to the new anchor that Starbucks was preparing for us. And that, to a great extent, is how Starbucks succeeded.
With this in mind, in early 2000 the board of trustees of Ursinus College adopted a proposal designed to increase applications that at first might seem counterintuitive: The board raised tuition nearly 20 percent. The policy flew in the face of conventional economic theory, by which a drop in price is the surest way to increased demand. Unconventional or not, it worked: Applications soared. The strategy has been employed with equal success by a number of other colleges, including Bryn Mawr, Notre Dame, and Rice.
Although it is not what standard economic theory would recommend, it’s easy to see why raising tuition would increase the number of applicants. Parents want to send their kids to high-quality, prestigious schools. But academic quality and prestige are hard to assess, and so they use price as an indicator of quality. If it costs a lot, they tell themselves, it must be good.
The French aviator and author Antoine de Saint-Exupery once offered a definition of engineering elegance: “A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away.” A designer of simple ideas should aspire to the same goal: knowing how much can be wrung out of an idea before it begins to lose its essence.
Evidence for the success of this strategy has been found outside the domain of advertising as well. Consider an example of its use in law: in a study conducted by behavioural scientist Kip Williams and colleagues, when jurors heard a lawyer mention a weakness in his own case before the opposing attorney mentioned it, they rated him as more trustworthy and were more favourable to his overall case in their verdicts because of that perceived honesty. Additionally, anyone who is considering a career change may be interested to learn that a recruitment study found that applicants whose curriculum vitae contained only wholly positive references were invited to fewer interviews than those whose curriculum vitae first highlighted a weakness or slight limitation before going on to describe positive characteristics.
Business, technology and, to a great extent, government have spent the last several decades engaged in an unrelenting quest for measurable gains in efficiency. However, what they have never asked, is whether people like efficiency as much as economic theory believes they do. Tje ‘doorman fallacy’, as I call it, is what happens when your strategy becomes synonymous with cost-saving and efficiency; first you define a hotel doorman’s role as ‘opening the door’, then you replace his role with an automatic door-opening mechanism.
The problem arises because opening the door is only the notional role of a doorman; his other, less definable sources of value lie in a multiplicity of other functions, in addition to door-opening: taxi-hailing, security, vagrant discouragement, customer recognition, as well as in signalling the status of the hotel. The doorman may actually increase what you can charge for a night’s stay in your hotel.
When every function of a business is looked at from the same narrow economic standpoint, the same game is applied endlessly. Define something narrowly, automate or streamline it — or remove it entirely — then regard the savings as profit.
After my first lecture, Binmore offered a version of the “low stakes” critique. He said that if he were running a supermarket, he would want to consult my research because, for inexpensive purchases, the things I studied might possibly matter. But if he were running an automobile dealership, my research would be of little relevance. At high stakes people would get stuff right.
The next day I presented what I now call the “Binmore continuum” in his honor. I wrote a list of products on the blackboard that varied from left to right based on frequency of purchase. On the left I started with cafeteria lunch (daily), then milk and bread (twice a week), and so forth up to sweaters, cars, and homes, career choices, and spouses (no more than two or three per lifetime for most of us). Notice the trend. We do small stuff often enough to learn to get it right, but when it comes to choosing a home, a mortgage , or a job, we don’t get much practise or opportunities to learn. And when it comes to saving for retirement, barring reincarnations we do that exactly once. So Binmore had it backward. Because learning takes practice, we are more likely to get things right at small stakes than at large stakes. This means critics have to decide which argument they want to apply. If learning is crucial, then as the stakes go up, decision-making quality is likely to go down.
Hunting for a guaranteed formula for success is a fool’s errand. As Phil Rosenzweig, Professor of Strategy and International Business at IMD wrote in The Halo Effect:
“Anyone who claims to have found laws of business physics either understands little about business, little about physics or little about both.”
It is natural — reflexive even — to see the causes of human action in the character and disposition of those doing the acting. But as George Eliot noted at the end of Middlemarch, “There is no creature whose inward being is so strong that it is not greatly determined by what lies outside it.”
Yale researcher Eric Havelock studies tales that have been passed down by word of mouth, such as the Iliad and the Odyssey. He notes that these tales are charachterized by lots of concrete actions, with few abstractions. Why? The ancient Greeks certainty had no problem with abstraction — this was the society that produced Plate and Aristotle, after all. Havelock believes that the stories evolved away from abstraction over time. When they were passed along from generation to generation, the more memorable concrete details survived and the abstractions evaporated.
I visited a very high-powered consultant friend with hundreds of degrees and a CV to die for.
Yet his desk was littered with Post-it notes.
I asked him what he was doing. He said he was solving a problem by writing down the key themes on separate notes, then simply grouping and rearranging them until he saw a pattern emerge.
My first reaction was that this was a hopelessly analogue and ‘scattergun’ way of working — until I had a go myself.
I’ve never looked back.
Sticky ideas have to carry their own credentials. We need ways to help people test our ideas for themselves — a “try before you buy” philosophy for the world of ideas. When we’re trying to build a case for something, most of us instinctively grasp for hard numbers. But in many cases this is exactly the wrong approach. In the sole U.S presidential debate in 1980 between Ronald Reagan and Jimmy Carter, Reagan could have cited innumerable statistics demonstrating the sluggishness of the economy. Instead, he asked a simple question that allowed voters to test for themselves: “Before you vote, ask yourself if you are better off today than you were four years ago.”