44th Edition — December 8, 2019
We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly.Dan Ariely, Predictably Irrational, Revised and Expanded Edition
1. Owning Screw-Ups
Early in my career, I made a $1,000,000 error in judgment which is indelibly etched into the deepest crevices of my memory like white on rice or ugly on an ape. I’ll never forget that moment in time. Rather, time will never let me forget that moment, that decision.
With the tail between my legs, I told my CFO and Sr. VP – Finance the next day how I was wrong, why I was wrong, and the consequences of my decision. A funny thing happened. He started defending me. He wasn’t letting me do a very good job of apologizing.
Today, as a consultant, I still fess up to my mistakes ASAP. It hurts, but it’s healthy.
Dr. Henry Jay Przybylo once used the wrong syringe when he anesthetized a young patient. The child’s health was never at risk. The surgery would run longer, but he had to tell the surgeon immediately. He did. In his personal narrative, Counting Backwards: A Doctor’s Notes on Anesthesia, the surgeon was visibly upset but said nothing. Still, Dr. Przybylo learned and grew from that experience.
Bonus Bookmark: Why don’t professionals and leaders own mistakes? Fear? Insecurity? A culture that promotes unhealthy behaviors? Lack of humility? Unless you are the captain of the Exxon Valdez, you won’t get fired as many of our mistakes are errors in judgment or acts of omission (not doing something we should have). We all make mistakes. We grow as a result of making them. Plus, there is something cleansing that’s hard to explain when you own them.
2. The Funny Side of Behavioral Economics
As a reader of many books, I don’t like saying, “You should read this or that.” We all have different reading tastes. However, I’m breaking my unwritten rule of making a reading suggestion. The science of behavioral economics is still in its infancy and Daniel Kahneman has made this science both interesting and accessible through his book Thinking, Fast and Slow.
Accordingly, I recommend all financial leaders read at least one book on behavioral economics and make it count. If you have not read Kahneman’s book, start with Dan Ariely’s book Predictably Irrational.
I swear, some of his experiments would be great skits on Saturday Night Live. Some of his insights through various thought experiments include:
- relativity plays a key role in our buying decisions
- arbitrary coherence and self herding replace supply and demand economics
- the cost of zero is big, really big for buyers
- social norms and market norms yield different behavioral decisions
- precommitments are one solution procrastination
- we over-value things we own and under-value items we don’t own
The world of big data has possibly meant the hiring of a few data scientists in your company. In the next couple of years, I’m betting every marketing and sales department will have at least one behavioral economist as a team member.
Bonus Bookmark – every financial leader quarterbacking the buying or selling of a company needs to read chapter 8, The High Price of Ownership which provides applicable and practical insights on the endowment effect.
3. Book Lists
Who doesn’t love a great book list, especially the ones where CEOs provide recommendations. Here are some favorite 2019 titles of rising stars as told to Fortune a few weeks ago:
- The CEO of Zillow Group – Mindset by Carol Dweck
- Former CEO of Intel – The Martian by Andy Weir
- CEO of Libra Group – Man’s Search for Meaning by Viktor Frankl
- Former CMO of P&G – The Road to Character by David Brooks
- CEO of Udemy – The Hard Thing About Hard Things
I especially like this list which includes 18 selections because there are only a few business books listed. These business leaders are reading widely where the depth of the material is mind shifting.
4. Managing a Waffle House and the 70:20:10 Rule
Even the WSJ knows a thing or two about writing catchy headlines. If you subscribed, would you have clicked on, “If you can manage a Waffle House, You Can Manage Anything?” I did – great article.
Managers have to work fast, fill shifts when their cooks could be in jail, read P&Ls, and adapt to enduring long shifts days on end.
This article got me to thinking about the concept of mastery as I’m a staunch believer in the 70:20:10 Learning Rule which goes something like this:
- 70% of our learning comes from experiences
- 20% of our learning comes from social learning
- (only) 10% of our learning comes from formal learning
Yet, many of the leadership and training programs many of us experience tend to focus on the 10%, formal learning. My theory is that Waffle House managers are learning and growing in their business skills because mastery is being achieved in the 70% category (learning through experiences).
5. I’ll See Your $5 and Raise you $5 More
“Hey dad, did you see Molly’s Game?”
Drew asked that question during a flight we were making to Phoenix last week. He knew I loved the book and was curious about the movie. I told him Aaron Sorkin nailed it on the screenplay and that the script stayed close to the book. I also told him who I thought Player X was because Molly Bloom does not hold back on the name in her narrative memoir about running high-stakes poker games.
I stumbled upon Molly’s Game in early January and it’s easily one of my favorite books of 2019. As a business person, I probably observe too much of life through merchant norms. Regardless, I learned that high-stakes poker games require great marketing, sales, accounting, banking, and great customer experiences. Building and growing a poker game business is not much different from the enterprises we work in.
Molly has experienced trauma and hardship in her life, so I don’t want to trivialize that part of her writing. Still, the book is interesting, engaging, and entertaining as I had a hard time putting it down.
Bonus Bookmark – As 2019 draws to a close, I’ll be sharing a few of my favorite books of the year. Next week, I’ll be commenting on Tara Westover’s, Educated.
Thank You For Reading
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Take care and have a great week. Always be learning.