Author: ken

And What to Do About It

We tend to think that memories are stored in our brains just as they are in computers.  Once registered, the data are put away for safe-keeping and eventual recall.  The facts don’t change.

But neuroscientists have shown that each time we remember something, we are reconstructing the event, reassembling it from traces throughout the brain.  Psychologists have pointed out that we also suppress memories that are painful or damaging to self-esteem.  We could say that, as a result, memory is unreliable.  We could also say it is adaptive, reshaping itself to accommodate the new situations we find ourselves facing.  Either way, we have to face the fact that it is “flexible.”

For most of us that usually means we recall a rosier past than we actually had, though some of us are tormented by memories of a painful past we can’t shake and that seems to get worse every time we revisit them.  But for all of us that means an incomplete past.

Nothing brings this home better than the memories of witnesses in trials, one of the cornerstones of our legal system.  All too many people have been put behind bars on the testimony of witnesses, who when challenged by more objective data have been later proved to be misremembering.

An extreme form of this is the unsettling phenomenon of those who confess to crimes they did not commit.  According to a recent article in The New York Times, “False confessions have figured in 24 percent of the approximately 289 convictions reversed by DNA evidence.” (See, “Why Do Innocent People Confess?”)

Obviously these are not just simple matters of misremembering.  False confessions can be motivated by a desire to avoid painful interrogations, to curry favor with jailors, or the false hope of getting the nightmare over with.  But, then, all memories are motivated.  It is just a matter of degree.

These facts are sobering for those of us who tend to rely on our unreliable memories, whether we are investors trying to recall what experts have told us or just going about daily business, trying to learn from our own experience.

It makes sense to keep objective records of our decisions and our acts.  (If we use our computers for that, we can usually count on their invariant memories.)  But we usually feel it is too much trouble to record so much information, and we avoid the task.

Much pleasanter and almost just as good is talking over our decisions with someone else.  Indeed, if two or three or more people talk with each other regularly about their investment decisions — or any decision for that matter — they will not only help each other to recall their thinking more accurately, they will probably think better as well.

There is always the danger of Groupthink.  But if you encourage disagreements and challenges, you are not only likely to avoid conformity but get better results.

 

 

 

It’s Not Just Money

Conventional wisdom tells us what motivates most employees is money.  Classical economics confirms:  the bigger the salary, the more work an employer can expect to get — and better work too.

A new book challenges this, with strong evidence to back it up.  To be sure, money still works as a reward, but according to Daniel Pink in Drive: The Surprising Truth About What Motivates Us:  “Rewards can deliver a short-term boost—just as a jolt of caffeine can keep you cranking for a few more hours. But the effect wears off—and, worse, can reduce a person’s longer-term motivation to continue the project.”  But the belief in the motivating power of money has proved to be powerfully resilient.

Over the years, a number of important thinkers have questioned the power of money as the primary reward for work.  Renowned management theorists such as Douglas McGregor, Frederick Herzberg, and W. Edward Deming have all stressed the fact that workers are not like rats in a maze.  They seek more meaning in their work as well as more individual control over it.  But by and large these thinkers are remembered for their innovations and peripheral impact, not such core beliefs.  Human resource managers still focus their attention on compensation.

Then there are the dramatic success stories of companies founded on an entirely different set of beliefs, the examples of Wikipedia, Linux, Mozilla as well the concepts of “social businesses” advanced by Nobel Peace Prize winner Muhammad Yunus. “These are companies that raise capital, develop products, and sell them in an open market but do so in the service of a larger social mission.”  Their success is based on their ability to galvanize their workers’ sense of purpose rather than reward them with high salaries.

Finally, recent experimental evidence gathered by behavioral economists offers hard data.  Pink cites the work of Edward Deci and Richard Ryan at Rochester University, based on the idea that we have “three innate psychological needs—competence, autonomy, and relatedness. When those needs are satisfied, we’re motivated, productive, and happy. When they’re thwarted, our motivation, productivity, and happiness plummet.”  They call that “self-determination theory,” SDT.

[For a clever and entertaining summary of these new ideas, watch this video by RSA Animate]

Pink believes that society’s conviction about the motivating power of money has persisted because it is “easy to understand, simple to monitor, and straightforward to enforce.”   But to account for our resistance to the accumulated evidence, the explanation has to run deeper.  If it were just that “simple” and “straightforward,” our ideas would have changed in response to the evidence.

A core tenet in our market-centered ideology, the power of money has become an article of faith in our secular religion.  It is how we have come to measure the value of all things, how we know what anything is worth.

Perhaps there are other drives than those suggested by SDT, but believing in the motivating power of anything else is a little bit like challenging the power of gravity.  We might like to believe it, but we can’t quite bring ourselves to take the first step off the cliff.

 

 

Big Data Arrives

Our minds are being read and our impulses and habits analyzed and exploited without our knowing it.  According The New York Times, Target, the chain of retail stores is discerning the signs that tell a woman is pregnant so they can get a head start in selling her maternity products.  That’s just the tip of the iceberg.

Through its own data collecting, Target knows its customers ages, marital status, children, and neighborhood, credit cards, estimated salary and what Web sites they have visited.  Moreover, as noted in this week’s Sunday Magazine, any company can also “can buy data about your ethnicity, job history, the magazines you read, if you’ve ever declared bankruptcy or got divorced, the year you bought (or lost) your house, where you went to college, what kinds of topics you talk about online, whether you prefer certain brands of coffee, paper towels, cereal or applesauce, your political leanings, reading habits, charitable giving and the number of cars you own.”  And with the help of savvy analysts, they can use that data to figure out if you’re pregnant.  (See “How Companies Learn Your Secrets.”)

If you add up all the unstructured data coming through the “Internet of Things,” the sensors imbedded throughout our world, not to mention tweets, Facebook postings, Google searches, etc. etc. there is an extraordinary mass of data to be sifted though and analyzed.

“It’s a revolution,” says the director of Harvard’s Institute for Quantitative Social Science, adding, “the march of quantification, made possible by enormous new sources of data, will sweep through academia, business, and government. There is no area that is going to be untouched.”

That sounds exciting.  It’s also frightening.

It’s useful in economic forecasting, as the Times noted two weeks ago: “research has shown that trends in increasing or decreasing volumes of housing-related search queries in Google are a more accurate predictor of house sales in the next quarter than the forecasts of real estate economists.”  It’s also being used in forecasting electoral politics, even swings in stock markets.  (See,  “The Age of Big Data”)

Last fall, the Times reported on how a research arm of an intelligence agency (Iarpa) and the Defense Department (Darpa) are looking into predicting “political crises, revolutions and other forms of social and economic instability.”  They will routinely and automatically scan data from “Web search queries, blog entries, Internet traffic flow, financial market indicators, traffic webcams and changes in Wikipedia entries.” (See, “Government Aims to Build a Data Eye in the Sky.”)

If this makes you uneasy, join the crowd.  As a follow up to last Sunday’s article on Target, the company came down hard on the researcher who had talked to the Time’s reporter.  He commented: “Target intervened, and [he] stopped returning my phone calls.”

No doubt Target doesn’t want to be seen snooping into people’s private lives — though that is exactly what they are doing.  But so is virtually everyone else.  The government is beginning to worry about invasions of privacy, and some limits will be imposed.  Manufacturers are considering installing a “Do Not Track” button on computers and phones.  (See, “Behind the Cover Story: How Much Does Target Know?”)

But, it looks as though the battle has already been lost.  You can’t stop a revolution.

 

FOSTERING CREATIVITY

 

Information and Insight

Steve Jobs hated Power Point.  He’d break into the smoothly crafted slide presentations with fancy graphics and force the presenter to speak to him directly.

No doubt he chafed under someone else’s control, but he had a point.  If a person is forced to speak his own words, he gives a more reliable sense of the validity of his ideas.  He also makes a connection with the person he is speaking to, and out of that connection new ideas can flow.

In an age where digital media drive more and more of our communications and actions, it is useful to be reminded of some basic facts about the mind. The reason ascetics searching for god retreated to deserts and mountaintops was that minds seldom work well in a vacuum.  Other minds are too much of a stimulus, and that can be a distraction if you want to escape the world.

But if you want to stay in it and change it, you need the interaction with other minds to refine your ideas and come up with new and better ones.  If you want to create a new product or figure out which investment advisor to choose, the personal connection makes a big difference.

You could think of it in terms of bandwidth, the amount of data that can be squeezed into the channels of communication.  Telephones and televisions have sufficient bandwidth to convey an amazing amount of information.  They can make it seem as if the other person is actually present.  Powerful computers can do even better.  But person to person has virtually no inherent limitation beyond the capacity of each person’s mind to give and receive.  And it’s not just the words, the conscious message that is being sent.  It’s the emotions behind the words, the tone of voice, the body language, the gestures and eye contact that tell so much about what that message implies.  Without that our minds are deprived of the information that enables them to trust that the communication is authentic — or to be engaged and respond fully.

You could also think about it as the difference between perusing a musical score and attending a performance.  Watching musicians play gives you so much more information about the meaning of the music, more even than listening to a CD.  To be sure, concert audiences can be distracting with their coughs, whispered conversations, and restless movements.  But the problem, then, is that they stand between you and the musicians.  With a CD you don’t have the annoyances, but then you don’t have the connection.

When Jobs was working on the design for the Pixar headquarters, according to his biographer, Walter Isaacson, he wanted only two sets of lavatories.  He believed that if people got up and walked around they would interact more, and in the process they would discover what others were doing and thinking.  He was convinced that would raise the level of creativity in the company.  And, despite some grumbling about the inconvenience, the people who worked there came to agree.

Sometimes we don’t need so much information.  But if we want to push ourselves beyond what we already know, we need the contact.

 

How to Be a Successful CEO

In all the attention given to Facebook’s public offering, it has been repeatedly emphasized that Mark Zuckerberg will retain complete control.  The public can buy stock but it won’t be able to vote him out.  The youngest CEO of such a large company, he arouses speculation and worry about his ability to assume such responsibility.  Can he handle it?

That misses the point.  Few CEO’s operate by themselves.  There is always a team that manages collaboratively at the helm of any large enterprise.  Zuckerberg’s job is not so much to manage the company as to put together the team the company needs to think about what is required for it to survive and thrive.  They will debate, disagree and usually arrive at a consensus on policy

To be sure, Zuckerberg has the major responsibility in putting together the team and making sure it works well, but that’s not the same thing as sitting in his office and strategizing by himself.  And so far it seems as if he has made some very good choices about his team members and has managed to work well with them.

Big companies are too complex for any one mind to encompass.  The problems and dilemmas they face are too varied for anything but a multifaceted and multi-talented team to figure out.  The boss will have the final word.  Somebody has to have that job.  That doesn’t mean he does all the thinking.

But it does seem important that the boss really care about the company and deeply value what it stands for.  If the business becomes just another way of making money, he is sure to undermine the mission and fail.

This is particularly true for start-ups.  After all, in the beginning they are merely dreams and promises.  The entrepreneur has to galvanize others with his vision — and that won’t work if all he aims to achieve is a lucrative buy-out.