The Wrath of Sunk Cost Bias

On Wednesday’s we usually do a short-distance fast pace run.

We woke up at 5:00 am and it was drizzling. It was cold and dark.

I told my wife, we better skip running today.

Madhu said, what’s the point of waking up at 5:00 am?

C’mon, don’t be lazy let us get ready.

I reluctantly started getting ready, watched the drizzle getting a little intense.

Now we were both falling for the sunk cost bias. We had already invested the time and effort into this.

We hit the road at 5:25 am.

As I started my watch, I had no GPS signal. Thanks to the big dark clouds right above me.

After a few minutes, I got the signal. We started off. The drizzle was showing some signs of receding.

After 2km or so, it started drizzling again. After 2.5k it was pouring. We stopped under a tree.

Now we were arguing.

See I told you to skip, you don’t listen to me or my predictions!

After a few minutes, no luck. We headed home. Sat in the verandah and watched the rain. Madhu cursed it. I was frustrated too but I was reflecting on the fact that I was so damn right.

We decided to buy running jackets. The following day we headed to Decathalon. We not only bought the jackets but random paraphernalia which was not even needed.

The next day it was time for a long run. Madhu was all prepared and anticipated rain so that she could wear the new waterproof jacket. I wasn’t so sure if it was going to rain.

I decided not to wear the jacket. If it doesn’t rain, the humidity will kill me, I thought.

4km, 6km, 8km, no rain.

The sun was up now. I could only imagine what Madhu was thinking and feeling now.

10km, 11km no rain.

I finished my run at 12k. Saw Madhu walking towards home. She was not wearing the jacket. Obviously, she did not enjoy the run.

We walked home joked and laughed about the whole episode.

We (especially Madhu) had fallen prey to the sunk cost fallacy.

Running goal is a trivial matter but sunk cost fallacy has the tendency to do much worse.

Individuals commit the sunk cost fallacy when they continue a behavior or endeavor as a result of previously invested resources (time, money, or effort)

I bet you must have gone through similar episodes in your life.

Sometimes it is just ok to quit and write off your losses. 🙂

#bias #perspective #decisionmaking #choices #lifeadvice

I wrote an email to Jack Welch

Back in 2014, my boss told me to draft an email to Jack Welch (you read it right). I never dared to ask why we are even doing this. I thought why would Jack Welch or his team even read this email and reply.

But Jack’s team replied:

“With Mr. Welch’s current schedule, a trip quite this far, unfortunately, doesn’t look feasible for this fall. To give you some general information, Mr. Welch has a two date guarantee for international appearances, with each appearance at an honorarium of $150,000 (a total of $300,000) plus private plane expenses, one suite, and one standard room at the hotel of his choice, security, ground transportation and meals for two.”

It was not a surprise or shock.

Why did we even write to him in the first place?

Were we stupid? Maybe.

In hindsight, was my boss aiming for the stars, in the hope of finding a moon? Who knows?

Back then, “Make in India” had different traction altogether. The attempt was to invite such luminaries to deliver a speech on digital transformation in manufacturing in India. The plan was to give it good media coverage and launch a program for the manufacturing group under that media Buzz.

The underlying belief was that sometimes some people are more accessible than you think they are.

We not only wrote to Jack Welch but also reached out to Seth Godin, Clayton Christensen, and some Harvard professors. Every time we received a very warm reply. Some kindly declined and some quoted obscene amounts.

The result? We consolidated the findings and reported them to the management. There were discussions around budget and approach. One thing led to another. Eventually, we settled for some IIM Professors.

Was it a big success? Not really. However, the event started moving things. It gave us the required momentum to progress. We were comfortable inviting people and conducting events.

Cost of trying and failing in digital world is too small. It is worth taking that moonshot.

Organizational Culture Doesn’t matter?

Last week, I connected with a close friend after a while.

After the usual gup-shup, the conversation somehow steered towards workplace culture.

He recently changed his job and given the circumstances, joined the company remotely.

I asked, how is the culture of your new company?

He said, it doesn’t matter, I have no clue about the culture. But do you know what is more important? The culture of a team.

He went on to describe his boss and his colleagues, the team dynamics, and routines.

After the conversation, I reflected a bit.

Why we are so obsessed with organizational culture?

Isn’t a team a micro-community within an organization?

Have you noticed two starkly different teams in the same function? I bet you have.

The team leads/ managers set the tone for the team culture.

It matters how well your colleagues stick to the values and expectations set within a team.

The team lead can espouse organizational values and culture within a team.

Or he/she might completely isolate the team from the good/bad influence of #workplace #culture.

Two teams are like two neighborhoods within a given locality. Each with its own set of characteristics.

And given the #WFH situation, the significance of #teamculture has become even more profound.

In that case, should we take the Glass Door reviews that describe org culture (both in a positive and negative light) with a generous pinch of salt?

What do you think?

The value of truth depends on the circumstances

A few years back, I was late for an interview.

I told the truth, I lost my way, had to take a U-turn and there was more traffic than usual.

The discussion went well.

On my way out the hiring manager wanted to give me friendly advice.

She said, Alok, it is good, to be honest, but next time you are late for an interview tell there was a flat tire or cook-up something, an excuse that is beyond your control.

*As if the unusual traffic was in my control*

At that point in time, I just shook hands and said thank you.

Obviously, it was my fault. I could have factored in the peak traffic hours.

As I was driving back, I thought, I was only 10 minutes late.

My mind was telling me, Alok, think of all the times you were on time and the interview was delayed by even 30 minutes.

But at the same time, the hiring manager had a point.

The value of truth depends on the circumstances.

A flat tire is a better excuse than the unusual traffic if you are late for an interview.

It doesn’t matter if you are telling the truth or you are lying about it. The fact is you are late. However, you can still “control” the perception. 🙂

But isn’t simple truth more convenient to tell than a well-fabricated lie?

Why so many complications?

What do you think?

#interview #hiring #ethics #dilemma

Pick your narrative carefully [Part 2]

Our happiness depends on the way we develop our life stories.

It is the narrative that matters.

Facts don’t change but the narrative keeps on changing.

Recall the story you tell during your interviews.

A failure in the past becomes a stepping stone to bigger achievements.

As we grow we slowly develop these narratives into a meaningful plot.

We also constantly update them. Revise them.

Facts don’t change. Some facts are discarded and replaced with relevant facts that matter to you.

Failed relationships are forgotten. Misadventures are chucked away. Career dips are deleted.

But all this happens in the minds of people who build positive narratives.

These narratives are called redemptive narratives (search from Dan McAdams’ research in this area.). Redemptive narratives have a progressive growth story.

To make the progressive story even better, you anticipate positive events around you.

Now, look at the flip side.

Stories that still carry the burden of failures and misfortune build a depressing narrative.

Facts don’t change. But the mind only picks facts that are toxic to the self.

Even in this case, the narratives keep on changing.

Depressing narratives pick up events of failure to build a very justifying story. Justification matters because you can’t fool yourself right?

Irrelevant failures are dropped from the plot, failures that contribute to a better story remain.

To make the depressing story even better, you anticipate depressing events.

We all are storytellers.

And the state of our mind depends on the type of stories that we weave.

Want to be happy? Build a positive and progressive narrative.

It only takes a little imagination.

#mentalhealth #stories #growth

A smart phone is all you need to start a business

Do you want to start a business? All you need is a mobile phone.

Take real estate agents, for instance, they manage their business on WhatsApp.

I have a running coach who manages all his operations through his iPhone 4.

He uses Team Link a free alternative to Zoom to train us.

He accepts payments through G-Pay.

Yesterday I learned about a founder who maxed out his 5 credit cards to manage his working capital.

I am sure you know Jose Covaco (Hoezayy) from MTV fame. In an interview, he mentioned that he uses his mobile phone to shoot and edits his videos on the phone.

Then why people obsess around websites, workstations, fancy equipment, and finance and jargon?

Because people just love doing that. People are more passionate about the “identity” of an entrepreneur than entrepreneurship.

What do you think?

Note: I was able to identify these examples because I recently finished reading ReWork, highly recommended for those who want to understand #entrepreneurship, especially the #frugal side of it.

The fall of Newspapers; don’t blame the readers

Last Sunday, I was badly searching for a newspaper in my house.

Not to read.

But to use as a disposable sheet to manage beard trimming operations.

I found one old newspaper that was used as a base to keep mangoes.

After trimming, I neatly folded the paper and kept it for future use.

I was surprised to realize that we produced almost 0 paper waste.

I remember back in the days when I was living with my parents there was always a big stack of old newspapers in some corner.

Once my dad consumed the news, the value of the newspaper dropped to almost 0.

It was then used to wrap food parcels, press oily pooris, and whatnot.

Back then I always used to think newspapers get their major revenue share from reader subscriptions.

I used to wonder, how come they afford to give such thick copies.

Well, now I know that advertisers paid for the newspapers.

Classifieds and big front-page ads were the bread and butter. Subscription revenue might have covered the logistics.

The news was only to grab our attention.

#Newspapers won’t go out of circulation because there are no readers.

Newspapers will go out of circulation because eventually, it will make less sense to #print #ads

Brands will reach out to people who need not be readers but just passive media consumers.

Nevertheless, newspapers will leave a huge vacuum, not in the reading space but in the utility space. 🙂

#advertising

Pathetic Product? Provide kickass customer service

Today when we came back from running, there was a big patch of spilled milk at our doorstep.

The packet had slowly leaked. Damaged due to poor handling.

After a good run in pleasant Pune weather (especially after the cyclone), this is was an ugly scene.

And this was not even the first time.

Wife in furious mode: I will call them (Supr Daily) right away and blast them.

Me (frowning): Tell them to deliver a fresh packet. I was trying to preserve a good mood. Why cry over spilled milk? *metaphorically and factually speaking*

We called customer service.

A lady on the other side started with an apology

This was followed by an apology and then some more apology

I started laughing, I can’t use your apology to make tea right?

Sir, I have already refunded the amount in your Supr daily wallet, please check

*that was fast*

After the call, my wife said, let us shift to some other delivery service. I am done with this.

I said, hold on for a minute.

What if the other new delivery agent offers a bad product and also has poor #customerservice? Or a better product with substandard customer-centricity?

Surp daily has poor delivery operations but awesome #customer service.

You can either have an awesome #product or kickass customer service. Pick one.

#customerexperience

Pick your narratives carefully

Yesterday, I was reading about how the Corona Virus was produced in a lab based in Wuhan, China.

The source was credible. It was a very long narrative, supported with facts.

Nevertheless, it was just a narrative.

The problem is that the world works on narratives.

World issues are so complex that fiction can be built using objective facts.

Sounds like a paradox?

Take Bitcoin for example.

The single narrative that is driving Bitcoin to the sky is the “fact” that Cryptocurrency is decentralized. No single organization, government, or bank controls it.

A few days back when Elon Musk sold billions of worth of Bitcoins, the Bitcoin lost 15% of its value.

Decentralized? Not anymore right?

One man can change the fate of a currency by 15%

Which narrative would you believe now?

Elections work the same way. Election campaigns sell narratives. Of course, they package facts but only in the sequence and structure that sells.

In hindsight, there is no lie.

Very few people can afford a lie.

Lying is cost-intensive and risk-intensive activity.

There is only the truth. The greater truth and the lesser truth 🙂

There are only narratives based on convenient truths.

Pick your narratives carefully.

Why the iPad doesn’t have a calculator?

Apple iPad doesn’t have a calculator.

iMac, iPhone, and Apple watch all have stock calculator apps.

There is a story behind this.

Back in 2010, Apple was only weeks away from launching the iPad.

A guy name Scott Forstall was leading iPad software development.

The iPad calculator meant for the launch was just a scaled-up version of the iPhone calculator

Just a month before the launch, when Steve Jobs saw this design and right away called Scott.

“Where is the new design for the calculator? This looks awful!!, said Steve

Scott replied, what new design? we are shipping this design

Steve said, No, pull it. We can’t ship that. Redesign the calculator or ship the iPad without it.

With only a few days left for the launch, Apple decided to launch the iPad without the calculator.

The rest is history.

iPad users have to rely on third-party calculators.

In an interview, one of the top executives of Apple reasoned that

“We want to do it when we want to do it really really well”

Great to see #appleinc lives by that value.

But isn’t it #counterintuitive?

Do it well or don’t do it at all?

Please leave comments.

#productdesign #customerexperience