Time, to start the deep thinking

Check items of this list. Team relocated to home. Wifi sorted. 100th zoom call. Virtual drinks. Decisions, decisions, decisions, as I've discovered in conversation with multiple CEO’s and business owner in the last week, team leaders everywhere, heads of division, department it's all action. We have shared ideas, dilemas and discussion. We’ve repriorised our workflows (here's our Monday board),

made tough calls on staffing, spend, attempted to project revenues, looked at new ways of doing business and in many cases launched streams of new work appropriate for our times. We’ve had conversations about business continuity with key customers, clients, stakeholders and other departments.

Whether we realise it or not, all of us have also been having a long, deep think. What I love about reading is it puts things into your mind even as it takes your mind off other stuff. I was gripped whilst reading founder of Blackstone Stephen Schwarzman’s astonishing story of his career this week.

Page after page of stories sharing how, by looking harder, thinking deeper and evaluating things differently there are opportunities everywhere. At one-point Schwarzman describes a deal he was doing with Goldman Sachs and their different approach to risk, compared to his own feelings.

“We found they had a different view of the risks of this deal. Goldman wanted to bid as low as possible to avoid overpaying. For me the biggest risk was not offering enough and missing out on a tremendous opportunity”  

What's Good About This Problem?

Being cooped up at home is a great opportunity. None of us can afford the luxury of missing this. Covid is a one in a generation opportunity to think. And think deeply. Many of us are familiar with the Israeli Psychologist Daniel Kahnaman’s great book “Think Fast Think Slow”.

As a cognitive scientist myself his research on behavioural economics and both cognitive and social psychology are powerful and inspiring. Covid provides us a chance to sit and allow our “System 2” brains, the deeper, slower, more deliberate and more logical brain to process, mull, seek other perspectives, and iterate working models and hypothesis.

Covid also helps us overcome one of our most powerful bias in our deep thinking, our loss aversion for which Kanneman’s studies are so famous. Loss aversion is a term used in cognitive psychology and decision theory for our illogical tendency to prefer avoiding losses to acquiring equivalent gains. Loss aversion implies that the person who loses $100 will lose more satisfaction than the satisfaction gained by another who receives a $100 windfall. In the last few weeks we have lost certainty, our freedom, 30% or more of the value of our stock, for some of us our job, our home, our business. We have lost any sense of short-term certainty. As such many of us perversely are in a situation where, whilst we now have less, we also have less to lose. As an example, loss aversion stops us moving on from jobs or careers we hate, but if we have lost a job, now we are somehow liberated from that, despite the obvious downsides.

My prediction is that this situation may encourage the world to rediscover the value of savings. In times of scarcity it is a biological instinct to gather and preserve resources. In covid we have seen that with both toilet paper, food and for organisations, cash. In a downturn business get very precious about risking cash, and as such both cut costs, but also are less prepared to risk cash. Anyone fancy buying stocks right now? I mean, logically, if the market just lost 30% there must be some amazing bargains out there, ready to come roaring back. But that instinct means we will likely rather have our cash in the bank, and do our investing down the track once the world seems more stable.

Back to the deep thinking.

For much of my early career I used this question to build confidence when coaching executives and encourage bold imagination.

“What would you do if you knew you could not fail?”. Right now, I would make a massive bet, on the right kind of company, at a bargain price. I would launch a new product that played well to our post consumer, newly frivolous, uncertain time. I would hire some of the brilliant people across different sectors laid off or unemployed for no good reason. I would change my team or my job to make it as productive as possible, and refuse to go back to old ways of working. I would consider carefully how to do the most good for the prosperity of the economy and business. We are suddenly realising very quickly that we need good businesses. We will need to time our risk taking such that we don’t run out of resources. It’s going to be an exciting time.

Logic in Disruption

The UK is in great shape for disruption. We’ve had years of uncertainty. We are used to it. Battle hardened. We only just staggered across the finishing line. One of the things that massively frustrated me through the Brexit process was the illogical arguments on all sides. I spent months doing a logicians facebook thread on the inconsistencies of the arguments, attempting to promote logical thinking. (I got many many private messages thanking me, many rounds of trolling, and when i took the odd day off, complaints for lack of service! What can you expect from a philosopher! ) In the words of Kipling’s poem “If”, to “keep your head when all around are losing theirs”. I tried.

One such argument was the terrifying fear from Remainers that UK banking (or big business in general) might leave for Frankfurt, Hong Kong, or Paris. What annoyed me the most about this, was that this argument was put forward by the same set of people who SLATED the banks over the financial crisis. Remember Fred Godwin? All bankers baaaad, they bleated. In the UK during Brexit this meant that generally left leaning “anti-capitalists” were clamouring to save the city! Where’s the logic in that! Shwarzman recognises it was terrible branding to allow the loans given to the banks to be called a “bailout”. They were straight up loans. The kind of loan you use to fund a business or an individual through a difficult time. A loan that gets repaid. With interest. This time the government has bailed out millions of workers, with actual cash not loans. It’s unprecedented and most of us are extremely grateful. It’s a staggering demonstration of compassion (even if it signals that much of the money world’s rules are simply a figment of imagination. After all, money is purely a social construct.) But even in that bailout we can see why government level support is unwieldy, and state payments often unproductive. Amongst my circle of business owners some have put their staff on part time wages, others have gone for the furlough option. It’s strikingly obvious that those on furlough are in many cases, getting paid more than their counterparts now on part time wages, whilst being banned from doing any work at all. Those on part time wages are doing more work, for less.

In this time of deep thinking we can and should recognise the vital role of commerce, both in terms of employment, capital raising, its role in international collaboration, the meaning it gives to those of us who commit wholeheartedly to our vocation. The doers, the makers, the inventors, the value creators. We can and should recognise the vital role of finance, capital, to take risks, build businesses, create value and pay taxes. We will have to overcome our hoarding instinct. We can and should recognise the vital role of government in ensuring fair rules, gathering taxes, providing important centralised services, being a lender of last resort. We have a great deal of taxation due to repay the massive borrowing happening globally to get through 3 months. The countries that recover successfully from Covid will be those that have the fastest and best economic acceleration. The biggest vision. The brightest ideas. The most motivated people, prepared to take the right kind of risks.

Homework (get it!):

With less to lose we might well be more open to new ideas and action:

·     What are we best at, and what few things are we outstanding at doing?

·     What job would we work towards if we knew we could not fail?

·     What kind of company would we work for if we had nothing to lose?

·     What big jump or pivot point is right in front of us that we can take with a leap of faith?

·     What kind of ventures would we start if the biggest risk was not doing anything at all?

·     Who would we like to collaborate with if it was guaranteed we wouldn’t face rejection?

·     What kind of study and skills would we master if we had a once in a lifetime, no risk option to set ourselves up for the next 20 years?

What resources do we have?

·     Cash

·     Time

·     Friends

·     Connections

·     Ideas

·     Values

·     Experience

·     Support

·     Imagination

·     Bravery

How can we ensure we give back?

·     Money or time to those in need

·     Jobs creation

·     Paying tax

·     Making meaning for others

·     Improving productivity

·     Inventing life changing products and services

·     Targeting efforts on ventures that contribute to the greater good

Reflection (Non PC Version)

If—

Rudyard Kipling - 1865-1936

If you can keep your head when all about you

  Are losing theirs and blaming it on you;

If you can trust yourself when all men doubt you,

  But make allowance for their doubting too;

If you can wait and not be tired by waiting,

  Or, being lied about, don’t deal in lies,

Or, being hated, don’t give way to hating,

  And yet don’t look too good, nor talk too wise;

If you can dream—and not make dreams your master;

  If you can think—and not make thoughts your aim;

If you can meet with triumph and disaster

  And treat those two impostors just the same;

If you can bear to hear the truth you’ve spoken

  Twisted by knaves to make a trap for fools,

Or watch the things you gave your life to broken,

  And stoop and build ’em up with wornout tools;

If you can make one heap of all your winnings

  And risk it on one turn of pitch-and-toss,

And lose, and start again at your beginnings

  And never breathe a word about your loss;

If you can force your heart and nerve and sinew

  To serve your turn long after they are gone,

And so hold on when there is nothing in you

  Except the Will which says to them: “Hold on”;

If you can talk with crowds and keep your virtue,

  Or walk with kings—nor lose the common touch;

If neither foes nor loving friends can hurt you;

  If all men count with you, but none too much;

If you can fill the unforgiving minute

With sixty seconds’ worth of distance run—

  Yours is the Earth and everything that’s in it,

And—which is more—you’ll be a Man, my son