Purposeful Organisations

If you shared my last post you might be the next Larry Page

By June 26, 2017 3 Comments

A bold statement, but hear me out…

Last week I proposed that my network could help make a very significant improvement to maths literacy standards in South Africa by simply sharing a post, which in LinkedIn would have required two clicks.

So what has this got to do with Larry Page?

Well I may have neglected 😉 to mention that you would have to take a decision before actioning the two clicks and that taking decisions is in fact not actually simple or easy at all.

But why is that?  The request after all was pretty innocuous and from a cost/benefit perspective it should have been a no brainer.  i.e. I have been asked by a person on LinkedIn (a trust based network for professionals), to do something which requires almost no effort (share) and although I’m unsure whether this will make a difference, there could be a massive upside for the kids with no obvious negative consequences.

CLICK, CLICK and move on right?

But that’s not how we make decisions is it?  We don’t behave like economists would like, because emotions drive our decision making, not some logical assessment of the risks and rewards.

So it’s no surprise that the actual number of shares as a percentage of views was low as I did not create the necessary emotional impetus, for you to take a decision to act.

Antonio Damasio is recognised as identifying this fact, when in the 1990’s he noticed that an emotionally impaired patient of his was unable to make good decisions, despite having a high IQ and demonstrating a high degree of rational thought.  His subject was more likely to make the wrong decision or take no decision at all.

The ‘click click’ post supports my view that the effort required to adjust our emotional inertia to a state where we ‘decide to act’ is actually substantial, even when we are not emotionally impaired, the action required was small and the potential benefits of the action are significant.

Another example of this comes from asking why some countries have significantly higher percentages of registered organ donors than others?  Turns out how you ask for permission is a major determinant and perhaps even the main determinant.

Countries where you are asked to opt-out (“click here if you do not wish to donate”) have more donors than in countries where you are asked to opt-in (“click here if you wish to donate”).  Put another way, the majority of people in both cases choose to take a ‘no decision’, decision.  The majority of us cannot decide to click the box even though again the benefits are huge and the cost is low.

 Not being aware of this emotional decision bias, is not only disastrous for sharing LinkedIn posts and patients who require kidneys, it can be existential for organisations.

Consider Blockbusters…….

In the year 2000 they had the opportunity to buy Netflix.  At this point in time, Blockbusters were massive (~$5bill annual revenue) and could have purchased Netflix for $50mill (an insignificant 1% of that years revenue).  Netflix offered a new business model which offered an unknown but potentially large upside, for limited risk.  But it was easier to take a “no decision, decision” and therefore do nothing.  The decision makers emotional inertia was to powerful for them to break and take what should have been a 2 click decision.

This negativity towards taking action decisions, even where the risks are low and rewards are potentially high, is I would argue exacerbated in the majority of organisations.

 In 2005 Google did not make the same mistake.  Larry Page bought Android, a start up which as late as 2004 were still building an operating system for digital cameras (was Kodak still around then?).  Anyway,  Google took a 2 click decision and reportedly paid $50mill for something that now powers ~80% off all the smartphones that were sold during the period July to September 2016.

So what do I want to highlight from all of this?

Firstly, for most of us, taking a decision to do something new is hard,  even where the action required is relatively easy and the potential risks are negligible compared to the potential benefits.

Secondly, most organisations unwittingly exacerbate this by both actively and passively creating environments that prevent their colleagues from quickly taking these types of ‘click click’ decisions.  History continues to give us ample evidence that this can be existential in impact.

Thirdly, Larry Page is just one example of a leader who has built an incredibly successful organisation by encouraging his teams to experiment and make multiple small bets.  I suspect he would have shared the Click Maths post of last week.

So can we as individuals and organisations become more like the Larry Page’s and Google’s of the world?  Absolutely…….and it builds from just one word…..

Next week I’ll continue this theme of how organisations can foster a more innovative decision making culture.  For now, please feel free to like, share, critique, question or comment (especially if you have examples that support or contradict this article).

Colin currently works for Absa and is CxO at The Equinox Innovation centre based in Sandton, South Africa.  

He specialises in helping organisational leadership teams think and execute differently so they thrive in an exponential world.  If you want to get in contact click here or message him via LinkedIn.

Citations

1. The original Click Maths post – link

2. 3.5 min interview with Antonio Damasio – link

3. Blockbusters & netflix – The New Yorker – link

4. Netflix – CNET – link

5. Android – business insider – link

6. Marketoonist – link

Colin

Author Colin

The business models that made organisations successful are now becoming their biggest threat in an exponential world. I help incumbents understand these threats and more importantly the changes they need to take to survive and thrive the 4th industrial revolution.

More posts by Colin

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