Pro/rel enables competing ‘schools of thoughts’

This is a great podcast discussion between Gary Kleiban and Kephern Fuller during the 2022 World Cup, but covering a lot of ground about soccer in the U.S. and around the world.

Really good points at 47 minutes in about competing schools of thought. We don’t have that in soccer in the U.S.

We don’t have a way for competing ideas to be tested and trialed against each other. This goes for players, positions, tactics and coaches.

We tend to have one school of thought about these things all the way up the chain.

One example they mention that our school of thought considers a good midfielder to be what they call “a destroyer,” which is a very athletic player who can run all day, win 50/50s and tackle the ball off opposing players.

We tend to favor those, at all levels, over midfielders they call “creators.” Creators have a better touch on the ball, are creative in creating scoring chances. Creators are more like point guards in basketball. They also do things that aren’t that obvious to the casual observer that tilts the advantage in their team’s favor.

I’ve witnessed the affection of the destroyers at all levels, too. A destroyer winning tackles gets “ohs and ahs”, while a creator pressuring the play toward a 1v1 mismatch in favor of our team doesn’t get noticed.

A destroyer getting beat on a tackle when he’s the last man and then making a recovery run and committing a ‘professional’ foul is a ‘smart play.’ Never mind, he made a bad percentage calculation in going in for the tackle in that situation in the first place.

On the other hand, a creator that consistently makes pinpoint passes resulting good scoring chances are written off, if even noticed. I can see it on the faces of the casual observer and coaches alike, “lucky pass” or “anyone can pass the ball.” I wondered how many ‘lucky passes’ it takes to get someone to consider that maybe there’s more to it. Turns out, folks, including coaches, can stay stuck in their biases even with large amounts of counter evidence. And, when that player happens to make one mistake (as all players will do), that is used to write off all the good they have done.

Fuller had something similar on the previous podcast he made with Gary. He said that it’s not that he thinks he has all the answers. He would not have picked Erling Haaland, for example, when he was younger because he doesn’t fit the prototypical model of what he thought of as a striker.

But, that’s why it’s good to allow for competing schools of thought, because someone else can disagree with Fuller and give Haaland a shot and prove to everyone that maybe they ought to reconsider what they think of as a striker.

But, folks like Haaland or even Messi may have had a tough time getting attention in the U.S. because they do not fit our predominant and largely uncontested school of thought.

I know that’s hard for folks to understand. In their simple world, the ‘cream rises to the top.’ They don’t understand how deeply biases can run to keep that from happening.

I heard fairly recently the school of thought that wrote Haaland off as just a “tap in specialist.” The first question I posed when I heard this was, well where are the other tap in specialists that score so much? They should be a dime a dozen if tapping it in is all it takes.

And, I’ll personally put that one to bed. I attended Haaland’s first game with Man City, in the exhibition match in Green Bay. I sat behind the goal where Man City was warming up. I love being close to those world class players because I get a really good sense of the quality of their touch. I remember thinking how good of touch De Bruyne, Grelish and Foden had in the warmups and then Haaland touched the ball and I could see he was a notch better and was shocked that you could be even better than the best.

So, how does pro/rel enable competing school of thoughts? By putting more of those schools of thought to the test on the field, rather than where they take place now, in the politics of soccer.

Thanks for reading.

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Arnold Kling on EconTalk talks innovation in bureaucracies

In this EconTalk appearance, Kling explains why he thinks it’s rational for bureaucracies of large companies to poo-poo new ideas:

“…if you’re in middle management and you propose some very potentially spectacular project for your company, you’re going to have to sit in meetings. And, they are going to be 10 people in the room, and if one of them says, ‘This won’t fly,’ that’s it. You’re done. And, that’s actually rational from the corporation’s point of view, because as a middle manager, you have very little skin in the game. Suppose your project is going to cost $20 million; the upside is $500 million or a billion dollars worth of value. You’re not going to get very much of that upside.

On the other hand, if the corporation loses the $20 million, you’re going to lose zero of the downside.

So, you don’t have much skin in the game when you’re playing with the corporation’s money. And so, a corporation that doesn’t set up a bureaucracy that’s skeptical of ideas that come from middle management is just going to end up throwing money at lots of projects that it can’t–that don’t turn out well, and it just squanders its money.”

I’ve worked in large companies for some decades, in a variety of innovation cultures and I don’t find this explanation compelling.

In my view, Kling makes the same mistake as companies with large bureaucracies, he thinks too big. In his example, he assumes the only way to try an idea is with a big investment.

Bureaucratic cultures make this mistake because they presume success based on how an idea sounds to leadership, build to scale and optimize, before they even know if it is something customers want.

I’ve also worked in more productive innovation cultures. They use a simple way to avoid blowing $20 million on a new idea: They spend much less to try out ideas on small scales to see if there’s something to it, like how start-ups do. They call these proof of concepts and pilots. They creatively find ways to try new ideas for sometimes as little as a few hundred dollars to get an initial read on whether the idea has merit.

Kling makes a fair point about skin-in-the-game, but I think there is room for creativity there, too. I once accidentally improved an innovation productivity around promotions by asking field managers if they would want to prove out their promotion ideas on their own budgets.

I say “accidentally,” because that was not my intention. My intention was to slow down an overflow of ideas from them that our bureaucratic culture couldn’t handle and were mostly ideas that had already been tried and failed.

I figured when I asked managers to prove their ideas on their own budget, that might make them put their money where their mouth was. It worked and cut that idea flow by 90%, because they now had the incentive to do the breakeven math to see how much more business their idea would need to bring in to cover the costs of the promotion. Most could see right away that they would be lucky to recoup a fraction of the cost.

But, it also had the unintended consequence of giving them a path around the organization’s red tape and try some new ideas at low costs. So, while fewer ideas were flowing, more ideas were being tried on small scales and some turned out to be big winners that were scaled to the full business. Those ideas would have never been tried if it were up to the bureaucracy to approve and sadly, after I left, it was never understood how and where those ideas came from and the culture went back to the way it was before.

In this case, managers still didn’t have much direct financial skin in the game, but it put enough reputational and job risk in their court to change the way they viewed this activity.

Rather than believing bureaucracies serve a purpose to prevent the organization from taking big risks, I just see bureaucracies as what will likely cause the demise of the business when they do not allow innovation to occur at a rate to keep up with competitors and substitutes.

Key marker of an innovative culture

How easy is it to try a new idea?

In innovative cultures, it’s really easy.

In not-so-innovative cultures, it’s not. These cultures have a lot reasons not to try new things. These reasons come from cultural problems that would need to be addressed for the company to become more innovative.

When I worked in innovative cultures, trying new ideas was natural. New ideas were encouraged and rewarded. The first question when a new idea was brought up was usually, “How can we prove that out?” It wasn’t even thought to dismiss the idea until it was tried out.

Often, when we explored ideas, we ended up learning even more that led to more ideas. Think of these as pivots. Pivots often had better odds because they were based on real world feedback gained from the initial exploratory missions.

This is why I call this the discovery culture.

In one example, we went into a project aiming to improve price transparency.

Through our exploration we discovered it was about 5x more powerful to remind customers what was included in the fee. We discovered this by accident. We had extra white space on the marketing materials and in one trial we filled it with a bullet point list of what was included in the fee as a throw-away.

But, we unexpectedly learned there were 2-3 items on the list that customers did not know were included, did not expect them to be included and knowing they were included changed their value perception for the better.

When I’ve worked in less innovative cultures, new ideas were met with resistance. Instead of asking how we can prove it out, people reflexively tell you why they think it won’t work, which was usually based on their own opinions. It wasn’t even thought that we should try the idea before dismissing it.

The result was that few new ideas were tried.

Not only do these cultures give up the gains from these ideas, but they miss out on discovering the pivots, too, like when we discovered that simply reminding customers what was included in their fee was valuable.

When investing in individual companies, I look for clues to how easy it is to try new ideas there.

A key reason I think it’s hard to beat index funds is that it spreads your bets on new ideas across many more companies and the companies that make it into the indexes are above average in trying new things.

Thoughts on some recent podcasts: Quitting, Education, Inflation and Whiskey-making

On EconTalk and People I Mostly Admire, Annie Duke makes the case that we make too much of quitting and tend to reward grit to much. I agree. But I wonder if some of the baggage against quitting is a Chesterton’s fence. Maybe some good things we get are a results of some folks sticking it out or being pushed into the corner to come up with something.

Host of People I Mostly Admire has a good story about helping his son quit soccer, which is quite different than what I typically see in the soccer community where kids are encouraged to stick with it for so many reasons other than whether the kid likes it or not.

In this EconTalk episode, Roland Fryer talks education reform. I loved hearing about his inventiveness on conducting studies for low costs, like buying pizzas for kids who read. He found that incentives parents of studious kids give to their kids actually work. He tried to put that to work in schools and was disappointed that he couldn’t get adoption.

I wondered, if it works so well, why not try to get parents, rather than school districts, to adopt these policies. It might not be universal adoption, but I think he could get adoption that could make a difference because I think there are a lot of parents that could benefit from learning about these policies.

I also liked the example he gave that when he paid kids more to study one subject, he saw their grades in other subjects suffer. Demand transfer. A kid only has so much time, after all.

On this EconTalk podcast, Devon Zuegel talks inflation in Argentina and makes it interesting. We think we have it bad. But, they adjust. I mentioned it to my Argentinean neighbor and he said, “I talked to my Dad on the phone yesterday [who still lives in Argentina]. I told him inflation is bad here at 8 and 9%. He said, ‘that’s nothing, it’s 100% here.’ Then he seemed more concerned about the weather. LOL”

As Zuegal explained, inflation isn’t so bad when you expect it. But I thought it was eye-opening that folks buy pallets of bricks to hold it value or real estate. I might be more inclined to buy a vacation cabin somewhere, if it was a not only a good place to visit, but a 10x better store of value than money.

In this EconTalk episode, Sonat Birnecker talks about moving from academia to whiskey-making. In one part she explains how tough it was to get bars to carry her products. Her competitors offered perks and money to get bars to feature their products.

At that point, I probably would have quit. They kept at it, stuck to their guns and eventually found people willing to work with them. I found that inspiring.

She also told a good story of how hard it was to get a distributor and even when she had one. I do think many new businesses greatly underestimate the value of good distribution. I believe lots of great products fail simply because they don’t do this.

Chat GPT vacation plans

Can ChatGPT plan my vacations for me? Maybe I should use a travel agent. I haven’t. But, I hate booking stuff. I’m usually fairly flexible, easy going and I do have some fairly easily programmable preferences, but I always get tripped up on comparing options that in the end don’t matter too much.

It would be nice to say, “I’d like to go to California for 4 to 8 days sometime in the late late Spring to visit Yosemite and Napa for some hiking and biking. I like these types of hotels and cars.”

Maybe I can already do this?

I feel like making the plans is the biggest barrier.

Re: Twitter reveal — It was well written

One thing that struck me about Twitter’s reveal over the weekend was how it was written.

It got to and revealed the points quickly and clearly.

So much ‘journalistic’ writing these days follows this pattern:

Click bait headline

Repeat click bait headline with a few more words as a subtitle

Popup asking for an email or subscription to a site I’ve never heard of and have only read 13 words of, so far

Setting a landscape to build back to the point of the headline, laden with biased terms and sketchy reasoning. Which gets me thinking that I’m going to have to buy into their stretches to believe the original point.

Getting back to the point of the headline, but with more words and squishier premise than the headline led you to believe.

Followed by list of ads for strange things that presumably pay the bills for the folks writing this gunk.

Another common pattern is:

Click bait headline

Click here to listen to my hour and 3 minute long podcast

How about tell me in a few sentences?

Enough with the “How Did We Do?” surveys

When I returned a rental car, recently, I received a bit too friendly service, followed by a request for a favor to rate the agent a 5 on the survey that would be sent to me shortly.

I chuckled. The agent asked why.

I said, I used to work on the other side of these surveys and they lose effectiveness when you lead the customer on how to answer.

She replied, “But that’s how we get promoted and I want a promotion!”

Fair point. The problem is the incentives her company gives her. They are managing to the wrong outputs. In this case, they are promoting people who are really good at asking for 5’s rather than people who may be really good for their business.

As a customer, I feel I’ve held up my end of the bargain when I decided to use that company and paid.

It puts me off to be made to feel I owe the company and agent more of my time to rate the experience or that I should donate my time to help them make their business better.

I’ve seen these types of surveys become infiltrate the business world like buzzwords. It’s just a foregone conclusion that they must be done.

In my experience, little benefit comes from them. When I’ve asked folks at companies I’ve worked with for examples of how these types of surveys have led to changes that resulted in significant and tangible benefits, crickets.

But, they continue with the surveys because they have become conventional business wisdom and the folks whose job it is to conduct the surveys have become vested interests protecting their turf.

Resume builders vs value builders

Bureaucracies are filled with people more interested in building their resume than building value for the company.

Resume builders are good at making it look like they are valuable, but when you step back and ask what have they contributed to make the company better that has resulted in more revenue or more efficient operations, you come up empty.

They use a lot of tricks, though, to keep people from thinking that far. Here are a few.

Check the box. These folks seek activities where they are told what to do. From this, they can create a list of actions and check the box when each action is completed and claim success. And, if those actions generate value, they can claim credit for that. If not, they can deflect and claim success for having completed tasks.

Busy schedules. These folks like to keep busy schedules. Busy makes them look valuable. But 80% of this busy-ness is vaporware.

Noise making. They will say something in all meetings that they are in. If you pay close attention, they rarely say anything of value. But, they know that’s not what’s remembered. People just remember if you said anything at al. Say something and think you were actively engaged and therefore adding value.

Empty actions. When all else fails, do something and claim credit for it. This may be better to illustrate with an example. When one manager was starting to be found out that he was adding little value, he created a training program for his associates and sold it that he was upgrading his teams skills. That diverted attention away from the questions of what value he was adding.

Now, did any of his team actually get better at any of their new skills? Not really. Did their new skills help the organization in any way? No. Just more vaporware.

Buzzword and buzz phrase bingo. By mastering the current buzzwords, they create the perception that they are in the know with the latest and greatest. A recent example of this is “we’re standing up a group do address” such and such. All the resume builders seem to be going crazy ‘standing up’ groups lately. Somehow ‘standing up’ sounds better than ‘starting’. Also, it somehow keeps people from asking basic questions, like how exactly is that new group going to add value? It is just assumed it will.

I think there are a couple reasons this can persist. First, the tricks work. People are fooled into conflating the stuff above with adding value.

Second, for those who do notice the tricks, they won’t call them out because they are pulling the same tricks and also do not want to be called out.

Note on innovation: Fatal flaw

To add to my previous post, I do think it is a good practice on any project to identify and attempt to address fatal flaws and even not-so-fatal flaws.

In his book, How to Fail at Almost Everything and Still Win Big, Scott Adams says that many times if you are onto something, the signs are clear from early on. His example sticks with me: cell phones. In the early days, they were really bad, but there still was enough demand to keep it going. That is a great early signal that cell phones was onto something big.

I’ve worked on a couple of projects that similarly had early signs of success that turned out to be good predictors of what happened when we scaled.

Before we scaled, however, we “red teamed” them. While the project were big wins, it required a bunch of folks in the organization to buy into something that seemed a little crazy and against what your gut would tell you.

When we red teamed these ideas, we flew in some of the most vocal critics we knew in the organization and spent a week with them identifying their objections and work shopping ways to address them.

We didn’t try to BS them. We just tried to figure out ways we could show them how these things were winners in ways they made sense and addressed their objection.

The red team efforts turned out to be a big success because it got 96% of their peers to buy in and participate.

But there was a lot of tense discussions and a lot of setting your own biases aside to listen to what other folks thought and why they thought it, which doesn’t happen when the rah-rah culture forms around a project and doesn’t allow for such critical feedback.

It was awesome to see how those efforts paid off. When we presented the initiatives to the larger audiences, all the objections identified by the red team were raised and we were ready to address them head-on. It was like magic. You could feel the tension leave the room as the body language went from “no way in hell!” to head nods and, “okay, this sounds pretty good.”

Notes on innovation: Fatal flaws, check for demand and having the right attitude

Interesting thread here:

I've worked on a number of high-profile failures:

– Lytro lightfield cameras
– Google Glass head-mounted computer
– Google Clips automatic photographer

They all had a fatal flaw. Everyone saw the flaw. But the culture that arose in these teams purposefully ignored the flaw. 1/n

— Warren Craddock (@warren_craddock) October 10, 2022

I, too, have been a member of such teams and I have seen the danger in believing in your BS too much.

I’m not so sure about the fatal flaw hypothesis. In hindsight, it’s easy to blame failure on a factor like a fatal flaw and to credit some factor for success.

But, I don’t think either are so obvious before it hits the market.

I’m interested to know how these ideas were tested in market before launching to try to get some signal on what actual customer demand would be.

I’m sure a company like Google knows to do this, but on the same teams that I’ve seen with the rah-rah culture, I’ve also seen them avoid getting it to market until it was ready for prime time for various reasons.

Maybe they’re concerned a competitor will catch wind and beat them (which I don’t think is necessarily bad), they’ve been burned on releasing something before that wasn’t ready for prime time and felt that hurt the company’s reputation and sometimes they just assume it will be successful because it sounds like such a good idea.

It reminds me of what Barb Corcoran on Shark Tank said once.

An entrepreneur spent all his time getting the production ready so he would be ready to fulfill orders when they started rolling in, but hadn’t even tried to sell it, yet. If you watch Shark Tank, then you know the Sharks aren’t just looking to invest in great sounding ideas. They are looking for some proof points, like early sales and customer acquisition costs, to help them predict if people want the product.

Barb told him (paraphrased), You remind me of a lot of people we see here on Shark Tank that come from the corporate world. You are very smart. You know how to get the nuts and bolts of the operations of the business running really well. But, you did all of this work and forgot the most important thing: checking to see if it’s something people want.

Here are a few more thoughts:

One way for leaders to quell the rah-rah culture is to understand the odds. Most things fail.

Legend-status contestants on Naked & Afraid exemplify the attitude needed for success in a long odds game when they are trying to acquire food. They know the odds are low, which gets them through the disappointment of failure. But, they keep trying.

It’s also a good analogy for business because they only have limited calorie reserves and time so they are constantly calculating risk/reward and ROI on their food gathering efforts, trying things on small scales and spreading their bets.

I think some leaders think the key to success is simply getting everybody on board. And, maybe a lot of business success stories have been narrated in such a way to make people think that’s true.

But, it isn’t.