97 - Do your thinking frames serve you well?


decision-makingleadership and org culture

Some ways of looking at the world are unhelpful. One of them is imagining the world as opposing forces in a competing frame. I win, you lose. Locked forever in perfect competition.

I grew up a millennial in a middle-class small-town public-service-beholden pre-Internet world. I was told the world was zero sum. There was a fixed pie and only so many slices. If I had to have one, I had to be hungrier than the rest. Why was the object of our hunger the same? Could I have been hungry for something else?

When you’re locked in a frame you don’t notice its boundaries. You think there’s only one way of looking at the world—your way. My questions had no answers.

Yet, I was not the only one enslaved to a zero-sum frame. In 2006, the entire world of music had become a zero-sum game. Napster had been ground to dust. But piracy was thriving. Pirate Bay had been founded three years earlier. A war was raging between music fans and record labels where one side had to lose for the other side to win.

Most of you reading this newsletter know the story of how this zero-sum situation changed into a win-win one for all parties. You know how a free and legal streaming service saved the record labels from the clutches of piracy and made more music lovers than ever by giving the world their music of choice the instant they wanted it.

There’s another fascinating story of reframing that you may not know. It’s about the secret sauce that drove Spotify’s massive success in the 2010’s.

A few years after Spotify, another Swedish startup started making a name for itself by looking at music curation through a new frame. Tunigo promised to make the perfect playlist for you, the listener, but not by genre. All Tunigo had was a set of editors who created playlists for different occasions. And what was so special about that?

Tunigo’s editors claimed to find you a song for every moment. _They made playlists for dinner with friends, for barbecuing, for running. _

This was different from the dominant frame at the time. Most playlists were split along genres. Tunigo’s were split along use cases.

In 2015 Spotify acquired Tunigo, ‘putting them on the inside, and giving them access to the actual data where they could see the number of skips per song and how the music playlists perform. They became very quickly the world’s, by far, most data-driven editorial team who could really optimize for engagement.’

Machine learning was in its nascency. Few believed that a machine could curate for humans. Yet the exact opposite happened. Spotify trained machine learning models by combining the creativity of human curation with big data. Soon, listeners were excited to go to the gym because their workout playlist made gym time fun, or to lounge by the pool because their poolside playlist was clutch.

Spotify’s story shows that if we care to look at the world with new eyes the world may just give up some hidden truths about itself. Spotify wasn’t an exception.

Here are five stories and accompanying lessons for you. Hint: The protagonists include the world’s wealthiest amateur spy, the most high-profile CEO, and a teenager staring death in the face on her first business trip overseas.

Let’s get lost.

What does the world look like through the eyes of my closest rivals?

I don’t know how your organization keeps an eye on competition but here’s how Sam Walton, the founder of Wal-Mart, did. He hopped on a bus.

Upon hearing that some Ben Franklin stores in Minnesota took an unusual swing at the checkout line, he probably got into something comfortable, bought himself a bus ticket, and made a 600-mile journey to Minnesota. This was 1954.

What did he find? Centralized checkout. Unlike most departmental stores, including Walmart, Ben Franklin had just one checkout line at the front of the store. The customer had to pay just once. If the idea behind departmental stores was that customers could make all of their purchases from one store, rather than hopping across many, it made little sense to make them open their wallets again and again as they moved from kitchen supplies to clothing to personal care.

The young Walton was sold. Back in his store in Bentonville, Arkansas, he switched to centralized checkout.

Sam Walton did not just believe in wearing the enemy’s shoes. He took a keen interest in walking a mile in them. In fact, he is known to have once said that ‘most everything I’ve done I’ve copied from someone else.’

He would spend hours wading through competitors’ stores, taking note of everything from their prices and product selection to their store layout and customer service. He would then use this information to tweak things in his own stores.

Walton made many covert trips but he was a careful spy. He did not simply copy-paste things in a manner that changed Walmart’s identity wholesale. He knew the good bits from the could-be-better bits in his business.

_Lesson: You can learn from your own failures and successes, but it’s a lot cheaper to learn from the wins and losses of your closest rivals. _

**Are all mistakes bad or can some be your get-out-of-frame-jail card? **

‘To break out of a narrow frame,’ write Dan and Chip Heath in their book Decisive, ‘we need options, and one of the most basic ways to generate new options is to find someone else who’s solved your problem.’ Sam Walton made a winning business practice out of that.

But if you believe your situation is one of its own or you cannot find another that has faced your pain and come out the other side, consider the opposite. Consider doing the opposite of what you’re doing now.

In the book Brilliant Mistakes, decision consultant and writer Paul Schoemaker, talks up a counterintuitive practice: Make deliberate mistakes.

For long, the management consultancy that Schoemaker had founded had had an unwritten policy that anyone who has ever responded to an RFP wishes for in their bones. They had decided against responding to RFPs.

The firm decided to stress-test their frame. They submitted a proposal at their regular fees without getting sucked into the desperation that is emblematic in RFPs. DSI did not just win the bid, they went on to win over a million dollars in further business.

Organizational assumptions, if left unchecked, have a habit of being elevated to the status of truth.

So, if your firm believes that customers are price-sensitive and not as much quality-conscious, falsify the assumption. Jack up your price, improve quality, and see for yourself.

-If you think investing in a team to do offline activation for your online community could be a mistake, make it. Try it for a bit and see what happens.

-If you think moving to remote is not for your organization, move. And see.

Lesson: More decisions are reversible. Make deliberate mistakes to quickly and conclusively test assumptions where most others decide in uncertainty.

Is it better to be a leader or a spirited contender?

When you’re locked in a frame it’s hard to notice its boundaries or the reference points and yardsticks with which you measure yourself.

Most companies define their market too narrowly so as to suggest a higher market share and hence a more dominant position in that redefined market. Market leadership is coveted. Jack Welch was known to mandate that every business unit in GE had to be #1 or #2 in its market. Department leaders got funky. They redrew boundaries such that the mandate was met.

It was not long before Welch realized that the comfort of market leadership could stagnate businesses. So he switched to the opposite. When his department heads reported their 60 and 70 percent market shares, he asked them to redefine the market more broadly such that the share stood at no more than 10 percent of the new market. (True monopolies, however, as Peter Thiel suggests, define their market broadly and dwarf their own share so as to escape regulation. That wasn’t the case with Welch and GE.)

Lesson: No frame is permanent. Tweak it as you see fit.

Is your frame in sync with time?

When businesses fall out of step with their market, it is either because they have not adequately appraised future change or because they have stuck on to an old frame for far too long, or both.

After WWII, the US car market saw a boom. Automakers took to optimizing manufacturing operations in the hope of driving incremental efficiencies. One such optimization problem was: how many of a single car model should be made in a production run before changing over to another model?

For decades through to the 70s, US automakers continued to optimize production runs such that they got more out of each run before a laborious change-over, all the while assuming that they could not shorten changeover time. Meanwhile, Japanese automakers looked at the problem through a different frame. Toyota, for example, decided that the maximum impact on manufacturing efficiency could come from reducing changeover time. And focused its energy on quicker changeovers.

The book Decision Traps outlines the distance this frame helped close between the market-leading US automakers and the hot-on-their-heels Japanese counterparts.

In the early 1950s, their times had differed little from US automakers’. Two decades later, white US companies still used analyses that assumed changeovers took nearly an entire shift, changeovers in Japan required only a few minutes. By the mid-1980s, one Toyota plant could change models in as little as forty-four seconds.

Forty-four seconds. The US car makers were blinded by their legacy frame. For decades they failed to see the shift toward quicker changeovers. Or more likely they saw it but underestimated its impact because they had already invested huge amounts of capital and reputation into their manufacturing set-ups and accrued sunk costs.

Innovation is not the only reason behind redundant frames. Culture is another. When a 19-year-old Kat Cole led Hooters to one of its earliest international outlet openings in Buenos Aires, she found the kitchen staff up in arms. In the beef capital of the world, the franchise used ribeye (a substandard cut of meat), flat top grills (considered inferior to an open flame), and served baked beans as sides (considered poor man’s food in Argentina). The whole thing smelled of cultural blindness. The franchise had pushed through identical standards (same kitchen equipment, cut of meat, sides) in a culture that was anything but.

Where the US carmakers labored on, hoping against hope, teenaged Kat Cole took matters to the Hooters corporate office and made sure they ditched the culturally blind frame for a more culturally aware one.

Lesson: Your default frame can die a slow death or a quick one. When you’re in a slow decline, don’t let sunk costs pull you down. When you’re facing a swift demise, act without waiting for permission to fight.

**Why should you find a devil’s advocate in every buddy? **

If long-held assumptions threaten to blind us when left unquestioned, a lack of scrutiny into our own thinking frames can have us repeating mistakes.

We all need a contrarian, or two, to challenge our thinking. But a contrarian by definition will go against us. This builds up in us a disconfirmation bias against any devil’s advocate.

In her book Thinking in Bets, decision strategist and ex-poker professional Annie Duke, shares her experience with a system that helped her turn the spotlight on her thinking frames and led to career winnings north of $4 million as a poker professional.

Duke calls it the Buddy System.

‘I was lucky to have access at such an early stage in my career to this group of world-class players who became my learning pod in poker. And I was so lucky that if I wanted to engage that group about poker, I had to ask about my strategic decisions…. Because I agreed to the group’s rules of engagement, I had to learn to focus on the things I could control (my own decisions), let go of the things I couldn’t (luck), and work to be able to accurately tell the difference between the two.’

The secret sauce in Duke’s buddy system is consent. You agree to be a part of a closed group and give permission to your buddies in it to question your thinking. Your buddies sign the same social contract. The common aim is seeking the truth. By making radical honesty a group norm, Duke suggests that we turn the rules on their head.

A buddy system suggests a form of prosocial shame is at the heart of meaningful change. Most shame is destructive, as psychiatrist Anna Lembke describes. It follows a doom loop where bad habits bring about shame which induces lying, leads you to isolation, and has you sharing less and selectively with the world at large.

Instead, a buddy system transforms shame into a learning opportunity. The associated positive emotion drives you to radical honesty, instead of clamming up and holding on to your cherished and untested beliefs dearly.

Lesson: No one likes critical feedback in a group setting. Unless you make radical honesty a positive group norm. Then you’ll find members looking at feedback as a learning opportunity.

Overcoming frame blindness by reflecting upon how you see the world is a good first step. But stopping at this point means simply acknowledging that your eyesight is not 20/20. Once you _know _that the frame in which you’re operating is ineffective, you’ve got to do more. The step forward is to build a new and better frame.

That’s coming your way next week**!**

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