Author: David Greenwood

💎 On the danger of taking answers to surveys at face value

to discount with WEIRD logic. “We can ask a consumer what’s most important for them when they pick out an insurance policy, and people will give us the standard answers: it’s the cost, the expected return, the service, that people are friendly, and all of that,” Glottrup said. “But when we pose the second line of questioning-what did you pay in costs last year, what was your return, when was the last time you actually used our service? – people will go blank. They will have no answer [so] these things simply cannot be the reason.”

Excerpt from: Anthro-Vision: How Anthropology Can Explain Business and Life by Gillian Tett

💎 The law of least effort

A general “law of least effort “applies to cognitive as well as physical exertion. The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action. … Laziness is built deep into our nature.

Excerpt from: Friction: The Untapped Force That Can Be Your Most Powerful Advantage by Roger Dooley

💎 It’s as if the less we know, the more we try and dress things up in complicated sounding terms

Another of the wise men whose voice appears in these pages, the physicist Richard Feynman, once remarked that many fields have a tendency for pomposity, to make things seem deep and pro­ found. It’s as if the less we know, the more we try to dress things up with complicated-sounding terms. We do this in countless fields, from sociology to philosophy to history to economics – and it’s def­initely the case in business. I suspect that the dreariness in so much business writing often stems from wanting to sound as though we have all the answers, and from a corresponding unwillingness to recognize the limits of what we know. Regarding a particularly self­ important philosopher, Feynman observed:

It isn’t the philosophy that gets me, it’s the pomposity. If they’d just laugh at themselves! If they’d just say, “I think it’s like this, but von Leipzig thought it was like that, and he has a good shot at it, too”.

Excerpt from: The Halo Effect: How Managers let Themselves be Deceived by Phil Rosenzweig

💎 Interesting test in Estonia to reduce speeding

Time is money. That, at least, is the principle behind an innovative scheme being tested in Estonia to deal with dangerous driving. During trials that began in 2019, anyone caught speeding along the road between Tallinn and the town of Rapla was stopped and given a choice. They could pay a fine, as usual, or take a ‘timeout’ instead – waiting going when stopped. In other words, they could pay the fine in time rather than money.

The aim of the experiment was to see how drivers perceive speeding, and whether loss of time might be a stronger deterrent than loss of money. The project is a collaboration between Estonia’s Home Office and the police force, and is part of a program designed to encourage innovation in public services. Government teams propose a problem they would like to solve – such as traffic accidents caused by irresponsible driving – and work under the guidance of an innovation unit. Teams are expected to do all fieldwork and interviews themselves.

Excerpt from: Unconventional Wisdom: Adventures in the Surprisingly True by Tom Standage

💎 Interesting reframing of how much Spotify pay musicians

If we take the UK’s most listened-to radio show- BBC Radio 2’s Breakfast Show – then the songwriter can expect the Performing Right Society for Music expect Phonographic Performance Limited (PPL) to collect roughly £60. Stare at a royalty statement which lists £150 for a spin alongside £0.005 for a stream and you can understand the fear of letting go of the old wine.

But the economics don’t support that fear. A ‘spin’ on BBC Radio 2’s Breakfast Show will reach 8 million people; you need therefore to divide the £150 by the 8 million pairs of ears to get a comparative unit value per listener, and this results in £0.00002 – which is less than half a percent of the £ 0.005 that you would get from one unique person on a streaming service. What’s more, this is not an either/or comparison as those who listen to it on the radio may be more inclined to stream it on Spotify. To bring this calculation full circle, had those 8 million listeners streamed the song on Spotify (which is not beyond the realms of possibility), a cheque of £40,000 would be paid across to the artist and songwriter – not £150.  ‘Not too shabby’ as some Americans like to say.

Excerpt from: Tarzan Economics: Eight Principles for Pivoting through Disruption by Will Page

💎 How testing in unnatural environments backfires

If you’ve ever wondered why every poster and every trailer and every TV spot looks exactly the same, it’s because of testing. It’s because anything interesting scores poorly and gets kicked out Now I’ve tried to argue that the methodology of this testing doesn’t work. If you take a poster or a trailer and you show it to somebody in isolation, that’s not really an accurate reflection of whether it’s working because we don’t see them in isolation, we see them in groups. We see a trailer in the middle of five other trailers, we see a poster in the middle of eight other posters, and I’ve tried to argue that maybe the thing that’s making it distinctive and score poorly actually would stick out if you presented it to these people the way the real world presents it. And I’ve never won that argument.

Excerpt from: Life Moves Pretty Fast: The Lessons We Learned from Eighties Movies (and Why We Don’t Learn Them from Movies Any More) by Hadley Freeman

💎 How Hitchcock drummed up interest in Psycho by making it harder to watch

In the first few decades of cinema, patrons would buy a ticket that granted general admission to the theatre. Several features would be playing on a loop, and you could choose whichever you fancied. You might enter halfway through the main movie, watch it until the end, see the cartoons and the newsreel and then start from the beginning to catch what you’d missed. It functioned rather like a big public television. Then, in 1960, a director decreed that no one would be permitted to enter screenings once his new film had begun: the integrity of the viewing experience was paramount. The film was Psycho and Alfred Hitchcock’s edict – part artistic statement, part marketing ploy – placed new emphasis on plot twists in the final act. (He also asked critics not to discuss those key details.)

Excerpt from: Unconventional Wisdom: Adventures in the Surprisingly True by Tom Standage

💎 How economics affects culture – in the 1950s average duration of US pop songs dropped to 2:30

We’ve been here before, where the business affected the show (or the tail wagged the dog). The first iteration of the phonograph could only hold about two to three minutes of music. It is said Puccini used to deliberately write arias that could be cut into three-minute segments that could fit on one side of a 78-rpm disc, arguably making him the first ever pop writer. Elderton notes that during the late 1950s and early 1960s, the average duration of American pop songs fell to 2 minutes and 30 seconds. As the mafia owned and controlled jukeboxes across America, they insisted that a record was limited to 2 minutes 30 seconds, allowing them to boost their take-per­ machine considerably.

Excerpt from: Tarzan Economics: Eight Principles for Pivoting through Disruption by Will Page

💎 How chunking a goal can boost the likelihood it’s achieved

Consider a study I helped conduct, led by my doctoral student An­eesh Rai, which involved thousands of volunteers at a large nonprofit who had promised to work two hundred hours within a year of joining but were falling short of their pledge. Knowing that facing such a massive goal can be demotivating, my collaborators and I instead asked the volunteers to comm it to four hours each week or eight hours every two weeks-which, of course, is basically the same as two hundred hours a year. But these smaller commitments, despite amounting to the same annual pledge, yielded 8 percent more time volunteering overall than simply prompting people to make progress on a yearly commitment. (Likewise, the online financial services company Acorns has found that it’s more effective when people are asked to set aside monthly even though these amount to the same thing.) If a commitment is bite-size, it appears less daunting to us, and we’re more likely to stick to our world.

Excerpt from: How to Change: The Science of Getting from Where You Are to Where You Want to Be by Katy Milkman

💎 How adding human features to a self driving car made people trust it more

A team of researchers in the United States designed a study to determine whether more people would trust a self-driving car if it had anthropomorphic features. A hundred participants were divided into three groups and asked to sit in a highly sophisticated driving simulator. The first group, the control, were driving a ‘normal’ vehicle. The second were in a driverless vehicle but with no anthropomorphic features. The last were in the same vehicle but it was called ‘Iris’ and given a gender (notably female). A soothing voice played at different times. The participants were asked an array of questions during the course, such as ‘How much would you trust the vehicle to drive in heavy traffic?’ and ‘How confident are you about the car driving safely?’ As the researchers predicted, when participants believed Iris was behind the wheel, it significantly increased their trust in the driverless vehicle. Remarkably, after the cars got into a preprogrammed crash, those in the Iris group were less likely to blame the car for the accident.

Excerpt from: Who Can You Trust?: How Technology Brought Us Together and Why It Might Drive Us Apart by Rachel Botsman

💎 How language can shape our attitudes and behaviours

Consider an example from the insurance world. Back in the 1930s, executives at the Hartford Fire Insurance Company in Connecticut realized that warehouses which contained oil drums kept blowing up. Nobody knew why. The company asked a fire-prevention engineer named Benjamin Whorf to investigate. Although Whorf was a trained chemical engineer, he had also done research in anthropology and linguistics at Yale, with a focus on the Hopi Native American communities. So, he approached the problem with an anthropologist’s mindset: he observed warehouse workers, noting what they did and said, crying to absorb everything without prior judgment. He was particularly interested in the cultural assumptions embedded in language, since he knew these could vary. Consider seasons. In English, “season” is a noun, defined by the astronomical calendar (“summer starts on June 20,” people say). In the Hopi language and worldview “summer” is an adverb defined by heat, not the calendar (it feels “summer(y)”). Neither is better or worse; but they are different. People cannot appreciate this distinction unless they compare. Or as Whorf observed: “We always assume that the linguistic analysis made by our group reflects reality better than it does.”

This perspective solved the oil drum mystery. Whorf noticed that the workers were careful when handling oil drum marked as “full.” However, workers happily smoked in rooms that stored drums “empty.” The reason? The word “empty” in English is associated with “nothing”; it seems boring, dull, and easy to ignore. However, “empty” oil drums are actually full of flammable fumes. So, Whorf told the warehouse managers to explain the dangers of “empty” to workers and explosions stopped. Science alone could not solve the mystery. But cultural analysis-with science-could. The same principle (namely using antho-vision to see what we ignore) is equally valuable when mysterious problems erupt in modern bank trading floors, corporate mergers, or pandemics, say.

That is because, “the least questioned assumptions are often the most questionable,” as the nineteenth-century French physician and anthropologist Paul Broca reputedly said. It is a dangerous mistake to ignore the ideas we take for granted, be that about language, space, people…

Excerpt from: Anthro-Vision: How Anthropology Can Explain Business and Life by Gillian Tett

💎 Our tendency to underestimate the variance – or noise – in business

In a well-run insurance company, if you randomly selected two qualified underwriters or claims adjusters, how different would you expect their estimates for the same case to be? Specifically, what would be the difference between the two estimates, as a percentage of their average?

We asked numerous executives in the company for their answers, and in subsequent years, we have obtained estimates from a wide variety of people in different professions. Surprisingly, one answer is clearly more popular than all others. Most executives of the insur­ance company guessed 10% or less.  When we asked 828 CEOs and senior executives from a variety of industries how much variation they expected to find in similar expert judgments, 10% was also the median answer and the most frequent one (the second most popular was 15%). A 10% difference would mean, for instance, that one of the two underwriters set a premium of $9,500 while the other quoted $10,500. Not a negligible difference, but one that an organization can be expected to tolerate.

Our noise audit found much greater differences. By our measure. the median difference in underwriting was 55%, about five times as large as was expected by most people, including the company’s executives.

Excerpt from: Noise: A flaw in human judgement by Daniel Kahneman, Olivier Sibony and Cass R. Sunstein

💎 The four steps that lead to the quantification fallacy

The first step is to measure whatever can be easily measured. This is okay as far as it goes. The second step is to disregard that which can’t be easily measured, or to give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can’t be measured easily really isn’t important. This is blindness. The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide.

Excerpt from: Tarzan Economics: Eight Principles for Pivoting through Disruption by Will Page

💎 Putting safety before profit

the largest impact-would come not from Detroit but from Sweden. In the mid-fifties, Volvo hired an aeronautical engineer named Nils Bohlin, who had been working on emergency ejection seats at Saab’s aerospace division. Bohlin began tinkering with a piece of equipment that had been largely an oversight in most auto­mobiles up until that point: the seat belt. Many cars were sold with­ out any seat belts at all; the models that did include them offered poorly designed lap belts that offered minimal protection in the event of a crash. They were rarely worn, even by children.

Borrowing from the approach to safety restraint used by military pilots, Bohlin quickly developed what he called a three-point de­sign. The belt had to absorb g-forces on both the chest and the pelvis, minimizing soft tissue stress under impact, but at the same time it had to be simple to snap on, easy enough that a child could master it. Bohlin’s design brought together a shoulder and lap belt that buckled together in a V formation at the passenger’s side, which meant the buckle itself wouldn’t cause injuries in a collision. It was an elegant design, the basis for the seat belts that now come standard on every car manufactured anywhere in the world. An early prototype of the shoulder strap had decapitated a few crash dummies, which led to a rumor that the seat belt itself could kill you in a crash. To combat those rumors, Volvo actually hired a race-car driver to perform death-defying stunts-deliberately rolling his car at high speeds-all the time wearing Nils Bohlin’s three-point seat belt to stay safe,

By 1959, Volvo was selling cars with the three-point seat belt as a standard feature. Early data suggested that this-one addition was single-handedly reducing auto fatalities by 75 percent. Three years later, Bohlin was granted patent number US3043625A by the US Patent and Trademark Office for a “Three-point seat belt systems comprising two side lower and one side upper anchoring devices.” Recognizing the wider humanitarian benefits of the technology, Volvo chose not to enforce the patent-making Bohlin’s design freely available to all car manufacturers worldwide. The ultimate effect of Bohlin’s design was staggering. More than one million lives-many of them young ones-have been saved by the three-point seat belt. A few decades after it was awarded, the Bohlin Patent was recognized as one of the eight patents to have had “the greatest significance for the humanity” over the preceding century.

Excerpt from: Extra Life: A Short History of Living Longer by Steven Johnson

💎 People acclimatise to greater wealth meaning enough is never enough

A team led by psychologist Professor Michael Norton contacted over two thousand people whose net worth started at one million dollars and rose to an awful lot more. They were asked to rate their happiness on a ten-point scale, then say how much cash they’d need to be perfectly happy. ‘All the way up the income-wealth spectrum,’ Norton reported, ‘basically everyone says two or three times as much.’

Excerpt from: The Status Game: On Social Position and How We Use It by Will Storr

💎 The power of reframing costs in a B2B context

In the same way, in the early stages of a food delivery brand (now worth over £1bn), the proposal was to pay the restaurant directly for each meal it supplied and then to invoice them monthly for the commission on the month’s past sales. A marketing thinker pointed out that this was a mistake. “We should keep the money from each meal sold, deduct commission, and then send them a payment every month”. He or she understood that, if the restaurant saw the new business as a source of incremental revenue they would value it; if they saw it primarily as a cost, they would look for ways to avoid it. Again, in economic terms, there is no difference between the first proposal and the second, but the psychological effect on the business will be dramatically different.

Excerpt from: The Objectivity Trap by Rory Sutherland