Category Archives: Behavior & Psychology

The Future of the Workplace

I noticed a post a few weeks back that said many companies are abandoning their sprawling suburban campuses and are moving back to the city. I found this interesting, because where we work, like so many things in our lives, seems to be in the midst of disruption.

Frederick_Winslow_Taylor_crop

Frederick Winslow Taylor

 

The psychology of the workplace is now a thing. It never used to be. In fact, my youngest daughter is focusing on exactly that as she pursues her post-grad thesis. In the Frederick Winslow Taylor induced hangover that most of corporate America has been trying to get over in the past several decades, workers were considered machinery. Which was a step forward. Prior to that, they were considered grist for the mill. At least Taylor recognized that well maintained machinery worked better than neglected machinery.

But there have been a significant number of studies looking at how the psychology of the individual contributes to the corporate bottom line. And some interesting paradoxes are emerging. Many of these deal with the nature of the workplace.

We used to think of all workplaces as factories. They were built where land was relatively cheap. This led to the whole concept of the suburban campus. But we spend a lot of time at work. We should be happy there. And our work life should not be out of sync with the rest of our lives. So being exiled to the corporate hinterlands of Blandeville, Connecticut or Nondescript, New Jersey may not fit very well with our life plans anymore. We want workplaces that are close to where we choose to live. We want an integrated work-life balance, not an artificially divided one.

The location of our office isn’t the only thing being disrupted. Should we even go to the office at all? Telecommuting has been explored as a viable option by a number of companies.

When I was CEO of my own company we tried our own telecommuting experiment. The rationale is pretty compelling: if you just need a computer and a connection to work, why bear the expense of all the trappings of a formal office? Additionally, it allowed us to recruit in cities where we didn’t have an office. Finally, there was little doubt the majority of our telecommuting employees were happier with the new arrangement.

For us as employers, however, the results were mixed. When our company was acquired, the new owners ended the telecommuting experiment. It was not a popular decision with our employees. I initially fought against it, but eventually, I came around and supported the requirement to share a physical space. This was a few years before Marissa Mayer brought the same hammer down on the telecommuting employees of Yahoo. The infamous memo was sent at Mayer’s behest by Yahoo’s Head of HR, Jackie Reses on February 22, 2013. Here is an excerpt that provides context for the decision:

“That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home.”

We found the same thing. While employees loved telecommuting and were generally disciplined in ensuring we got full value from them, we missed the collaboration and creativity that comes from chance encounters and serendipitous discussions. One could make a strong argument that telecommuting might be more efficient in terms of productivity, but an increasing number of studies show that effectiveness is often sacrificed.

Like most things in the sphere of human behavior, I think the disruption of the workplace is subject to the pendulum effect. The starting point was the faceless beige cubicle satirized in Dilbert. As this started to change, we swung too far over to the other side, embracing the geographically unlimited possibilities of a connected workplace. But we found that something was sacrificed in the transition. The best answer likely falls somewhere between these two extremes.

I have talked before about the research done by MIT’s Alex “Sandy” Pentland. He found that the most effective teams have two distinct phases they go through – exploration and engagement. Innovation and creativity comes from exploration. Productivity comes from engagement. I suspect that telecommuting might work well for engagement. But exploration requires some type of common ground – literally. For example, Pentland found something as simple as all employees taking coffee breaks at the same time lead to a significant increase in team effectiveness.

However the workplace may evolve in the future, I believe we’re learning that some essential element of teamwork still requires us being in the same place at the same time, or, as John F. Kennedy once said, “breathing the same air.”

 

 

 

Disruption 101

We Online Spinners are talking a lot about disruption. Dave Morgan has been talking about disruption in the Advertising and Marketing Technology space. I’ve been looking at disruption in other areas, including academia. Cory Treffiletti, Kaila Colbin, Maarten Albarda have all looked at various aspects of disruption. A quick look back at the past few months’ Spin columns show that well over half of them deal with disruption in one way or another.

Maybe it’s time we did a primer on the idea of disruption.

Disruption is what happens when something stable becomes unstable. That’s kind of a “duh..obviously” statement, but there are some very important concepts lurking in there.

When an environment is stable, it allows for the development of extensive but fragile ecosystems. In a corporate sense, this allows for the development of very complicated supply chains, with several “value niches” emerging along that chain. The more complicated the chain, the higher the potential for profit. Each link adds another level of complication, allowing for someone to be squeezing a little more profit from the end consumer.

In addition to extensive ecosystems, stable environments also allow some members of those ecosystems to achieve significant scale. Things are predictable and this allows organizations to grow, embed processes and systems, thereby improving efficiency and profitability. Often, one organization can establish itself at several levels along the supply chain, maximizing its profit potential.

In our physical world, stability is generally a by-product of friction. The higher the degree of friction – or what economist Ronald Coase called “transactional costs” – the more stable the market becomes. Barriers to entry are higher. Competitive factors are dampened. Capital becomes the main predictor of success.

Then – everything changes. We get hit with instability.

In our current case, we got hit with a double whammy: The disruption we’re experiencing is caused by the removal of friction. Technology is reducing transactional costs in a huge swath of industries.

Technology is an interesting catalyst. We think that technology changes behaviors. I don’t believe so. I think technology enables behaviors to change, in that it allows its users to do something they already wanted to do, but couldn’t because of some obstacle. It allows for an attractive alternative that didn’t previously exist. That technology is usually offered to the broadest base of users available and this triggers the disruption, which starts from the ground up. Typically, technology also removes the friction that enables those delicate hierarchal supply chains to form and flourish.

When the disruption begins and the incumbent ecosystem is threatened, the first casualties are the most fragile members of that ecosystem. These are usually the smaller niche players that rely on the bigger hosts that make up the ecosystem. The bigger hosts can survive longer and often swallow up the first casualties in an attempt to shore up their defenses. They will also often make a half-hearted attempt to respond to the disruption by adopting the technology and going after the disruptors. This never works. Disruption is not in their genetic make up. Their priority is always protecting the status quo, because that’s where their profit lies.

As disruption forever alters the environment, eventually the previous ecosystem withers and dies. A new (temporary) stability emerges – along with a new ecosystem – built on the foundation of the previous disruption and the entire cycle starts again.

The Collateral Damage of Disruption

Not all the stories of disruption are of the “David vs. Goliath” variety. Sometimes they are more of the “David vs. Goliath vs. Innocent Bystanders” ilk.

Stewart Wills reminded me of this last week when I was writing about Alexandra Elbakyan and the Elsevier vs. Sci-Hub case. It’s easy to take aim at Elsevier. After all, they’re a very big 4.2 billion dollar target. It’s just too easy to demonize them. But they’re not the only academic publisher in the world.

“Siding with this particular self-styled “Robin Hood” may seem like a no-brainer (and a good, easy-to-tell story), but everyone seems so interested in focusing on big bad Elsevier that they miss a lot of important other affected parties in the picture.”

Wills pointed me to a posting from Caldera Publishing Solutions, a consulting firm that caters to smaller academic publishers. This post refutes my statement of last week that Elsevier is the only one being harmed by the actions of pirates like Elbakyan. In fact, there is an extended chain of bystanders that threaten to be washed away by the tsunami of disruption that’s bearing down on the academic world. For example, there are “dozens and dozens” of society journals who use huge publishers like Elsevier as a clearinghouse. Behind much of the research in the Sci-Hub library, you’ll find non-profit societies, which means that this is “less of a story of Robin Hood robbing from the town’s greedy sheriff, and more a story of Robin Hood stealing from the town’s hospitals and charities.”

The post draws an analogy to a disruptive wave that first broke 17 years ago now: Napster and illegal file sharing. Given that we now have close to two decades of hindsight in this particular case, it might be useful to do a post-mortem on Napster’s impact on the music industry.

I’m not sure if you happened to watch the Grammys, but if you did, you saw Neil Portnow, president of the National Academy of Recording Arts and Sciences, deliver a plea against streaming music services. The problem, said Mr. Portnow, is these services have commoditized music to the degree that royalties amount to fractions of a cent for each play of a song. That may be fine if you’re Rihanna or Sam Smith, but not great if you’re a struggling independent artist.

The problem with the plea is the same tactical error the Academy has made since the first such sermon, delivered by then president Michael Greene at the 2002 Grammies – it was delivered in the wrong church. It’s very hard to feel sorry for the music industry when the most obvious examples – the artists in the audience – are all multi-millionaires drowning under the weight of their own bling. Portnow might be right when he says music may no longer be a viable career, but it’s hard to swallow that message when delivered in the midst of such excess.

But did Napster, and the subsequent removal of friction from the music industry, truly wreak the damage that NARAS keeps warning us about? The fact is, we now have access to far more music than we did in 1990. We can discover new music more readily. Artists can now self produce and distribute. They can even use Songkick to launch their own tours, or Kickstarter to fund a new album. Will they all get rich? No. But they have a better chance than they did two decades ago, when the only path to stardom led directly through the big (and cutthroat) business of music publishing. Napster, and its technological descendants, did what disruption is supposed to do. They cleaned up the market, creating direction connections between the producers and the consumers.

As Stewart Wills reminded me, there are unintended consequences of disruption. One of them is that when the supply chain begins to be violently shaken from below, as was the case with the music industry, the earliest victims are typically small and fragile members of the ecosystem that depend on a bigger host. These tend to either fall of or become absorbed into the more robust survivors. That’s why you don’t find many corner record stores any more.

But then again, good blacksmiths or door-to-door milkmen are also damned hard to find.

 

 

 

Is Amazon Creating a Personalized Store?

There was a brief Amazon-related flurry of speculation last week. Apparently, according to a podcast posted by Wharton, Amazon is planning on opening 300 to 400 bricks and mortar stores.

That’s right. Stores – actual buildings – with stuff in them.

What’s more, this has been “on the books” at Amazon for a while. Amazon CEO Jeff Bezos was asked by Charlie Rose in 2012 if they would every open physical stores. Bezos replied, ““We would love to, but only if we can have a truly differentiated idea,” he said. “We want to do something that is uniquely Amazon. We haven’t found it yet, but if we can find that idea … we would love to open physical stores.”

With that background, the speculation makes sense. If Amazon is pulling the trigger, they must have “found the idea.” So what might that idea be?

Amazon does have a test store in their own backyard of Seattle. What they have chosen to do there, in a footprint about the tenth of the size of the former Barnes and Noble store that was there, is present a “highly curated” store that caters to “local interests.”

Most of the speculation about the new Amazon experiment in “back-to-the-future” retail centers around potential new supply chain management technology or payment methods. But there was one quote from Amanda Nicholson, professor of retail practice at Syracuse University’s Whitman School of Management, that caught my attention; “she said that space represents ‘a test’ to see if Amazon can create ‘a new kind of experience’ using data analytics about customers’ preferences.”

This becomes interesting if we spend some time thinking about the purchase journey we typically take. What Amazon had done online brilliantly is remove friction from two steps in that journey: filtering options and conducting the actual transaction. For certain kinds of purchases, this is all we need. If we’re buying a product that doesn’t rely on tactile feedback, like a digital file or a book, Amazon has connected all the dots required to take us from awareness to purchase.

But that certainly doesn’t represent all potential purchases. That could be the reason that online purchases only represent 9% of all retail. There are many products that require an “experience” between the filtering of options available to us and the actual purchase. These things still require the human “touch” – literally. Up to now, Amazon has remained emotionally distant from these types of purchases. But perhaps a new type of retail location could change that.

Let me give you an example. If you’re a cyclist (like me) you probably have a favorite bike shop. Bike stores are not simply retail outlets. They are temples of bike worship. Bike shops are usually an independent business run by people who love to talk about their favorite rides, the latest bikes or pretty much anything to do with cycling. Going to a bike store is an experience.

But Trek, one of the largest bike manufacturers in the world, also recognized the efficiency of the online model. In 2015, they announced the introduction of Trek Connect, their attempt to find a happy middle ground between practical efficiency and emotional experience. Through Trek Connect, you can configure and order your bike online, but pick it up and have it serviced at your local bike shop.

However, what Amazon may be proposing is not simply about the tactile requirements of certain types of purchases. What if Amazon could create a personalized real world shopping experience?

Right now, there is a gap between our online research and filtering activity and our real world experiential activity. Typically, we shortlist our candidates, gather required information, often in the form of a page printed off from a website, and head down to the nearest retail location. There, the hand off typically leaves a lot to be desired. We have to navigate a store layout that was certainly not designed with our immediate needs in mind. We have to explain what we want to a floor clerk who seems to have at least a thousand other things they’d rather be doing. And we are not guaranteed that what we’re looking for will even be in stock.

But what if Amazon could make the transition seamless? What if they could pick up all the signals from our online activity and create a physical “experiential bubble” for us when we visited the nearest Amazon retail outlet?

Let me go back to my bike purchasing analogy in way of an example. Let’s say I need a new bike because I’m taking up triathlons. Amazon knows this because my online activity has flagged me as an aspiring triathlete. They know where I live and they have a rich data set on my other interests, which includes my favored travel destinations. Amazon could take this data and, under the pretext of my picking up my bike, create a personalized in store experience for me, including a rich selection of potential add-on sales. With Amazon’s inventory and fulfillment prowess, it would be possible to merchandise a store especially for me.

I have no idea if this is what Amazon has “in store” for the future, but the possibility is tantalizing.

It may even make me like shopping.

 

 

 

A New Way to Determine Corporate Value

Last week, I talked about the trend of “hyper” expectations and corporate valuations. Peter Fader, a marketing professor at the Wharton School, commented, “This is why we need to replace the guesswork of tech valuation with the more rigorous, valid, and operational notion of “customer-based corporate valuation.”

I had a chance to look at Professor Fader’s paper. Essentially, he proposes a new model for the valuation of subscription-based businesses based on a calculation of customer lifetime value that uses publicly available information. While interesting in it’s own right, there is a fundamental shift of thinking here that I believe should be explored further.

There are a few standard equations that are used to calculate the value of a firm. If the firm is public, essentially its value is determined by its share price. And that share price is determined by activity in the market – the activity of shareholders. And that activity is dependent on analysts who pass judgment on companies based on projected return to shareholders. At every turn, our entire system of business finance is very heavily weighted towards ownership, which makes sense in a market-based economy. Buyers and sellers determine value.

But what Fader et al are proposing brings another essential stakeholder into the equation – the customer. It’s amazing to me that all the valuation equations we use to determine the value of a corporation don’t involve any direct measure of that corporation’s customer. Sure, we include things like profit, revenue, free cash flow and none of these things would exist without customers, but we never actually attempt to determine the value of a customer. Fader starts the process with the estimation of that value. That simple paradigmatic shift yields a very different view of the world.

For example, if we are to determine the value of a company through the lifetime value of its customers; we have to look at that company in a much different way than the typical financial analyst. We have to look at things like customer loyalty, brand affinity and the likelihood that a company will gain new market share through the disruption of markets. Last week, I used Amazon as an example. Here is a company that has been tremendously disruptive. It has essentially created a new marketplace and, in the process, upended retail as we know it. One would expect this to be taken into account when trying to determine the value of Amazon.

The problem is that things like customer loyalty and brand affinity are emotions. Emotions are not things that are easily quantified. It’s much easier to measure things like quarterly earnings and discounted free cash flow. Most of these things depend on using the past to predict the future. They also rely on the firm’s ability to prognosticate. Typically, all the heavy lifting of factoring in the fuzziness of things like future customer value is left to the company. If a company misses its projections, it is penalized by the analysts, resulting in a decrease of share price.

Ultimately, the gap between how we have historically determined the value of companies and how we might in the future comes down to a matter of our ability to determine what may come to pass. We strive for perfect predictability. We want to place our bets based on solid information and analysis. But, in a disruptive marketplace, this desire for predictability may ultimately sink us. Customers will always determine the value of a company and in a marketplace where transactional and switching costs are both plunging, those customers have the ability to switch buying behaviors instantly. The old saying, “No one ever got fired for buying IBM” has not been true for at least three decades.

Like it or not, if we want to get a true picture of the value of a company, we’re going to have to use some guesswork. And, most importantly, we’re going to have to make sure we include customers in whatever equation we’re using.

 

Living in the Age of “Hyper”

Amazon is a disappointment.

In the fourth quarter of 2015, it made a measly $482 million profit on sales of $35.7 billion. That’s a 22% gain in revenue from a year ago, and over a 100% gain in profit. In that year, Amazon also doubled its market value to over $300 billion.

Bunch of deadbeats…

Last week, Amazon’s share price took a beating in after hours trading, dropping 15%

Serves you right, slackers…

And this all happened because despite Amazon’s healthy performance, it “didn’t meet analyst’s expectations.”

Maybe it’s time to look at those expectations.

Amazon is what those analysts call a “growth” stock. If you compare it against the rest of the Fortune 500, it might even be called a “hyper-growth” stock. It’s doubling of market value outperformed other growth stocks like Apple, which has had it’s own history of disappointment. We expect great things from anything prefaced with “hyper.

You all know what hyper means. It means “above” – as in “above” normal. In terms of growth of revenue and market value, Amazon would certainly qualify. It’s in the top few percent of all companies of the Fortune 500 in both categories.

But we expect more. We expect “hyper” performance. And it you don’t measure up, you disappoint us. It’s like kicking your kid out of the house when they come home with a straight A report card in grade 10 because they didn’t qualify for early admission to Harvard.

Here’s the thing about “hyper.” Not everything can be “hyper.” Something needs to be the opposite of hyper. Do you know what the opposite of “hyper” is? It’s “hypo.” Everyone knows what hyper means, but I bet it’s been a long time since you used “hypo” in a sentence.

hypo hyper

That’s because we’re fixated on “hyper”. But the way we use “hyper” makes it an outlier. It’s a statistical anomaly on the far right of the normal distribution curve. It doesn’t represent reality. But we think it does. We expect everything to measure up to some unrealistic measure of performance. When we start a business, we expect to be as successful as Google. When we look at our bank account, we expect it to be as big as Kanye West’s. When we buy a stock, we want it to outperform every other stock in the market.

We have over-hyped “hyper.”

This tendency is starting to impact other aspects of our lives. As we quantify more of who we are, we tend to measure ourselves against the “hyper” end of the yardstick. It’s becoming a real problem. Even our friendships are now quantified, thanks to Facebook, Twitter and Instagram. The result is that it’s now almost impossible to measure up to expectations.

We, like Amazon, are disappointing. The difference is that Amazon disappoints analysts. We disappoint ourselves.

This can be a real bummer. Tom Magliozzi, co-host of NPR’s Car Talk show, summarized the problem in five words:

“Happiness Equals Reality Minus Expectations.”

If our expectations keep moving to the “hyper” end of the scale, it will never match up to reality. We’ll never be happy. According to this blog post by Tim Urban, it’s a big problem for Generation Y. And Tim should know. He’s a 31-year-old Harvard grad who owns a couple of tutoring businesses and has started a blog that grew virally to over 300,000 subscribers.

Slacker.

 

 

 

 

We’re Informed. But Are We Thoughtful?

I’m a bit of a jerk when I write. I lock myself behind closed doors in my home office. In the summer, I retreat to the most remote reaches of the back yard. The reason? I don’t want to be interrupted with human contact. If I am interrupted, I stare daggers through the interrupter and answer in short, clipped sentences. The house has to be silent. If conditions are less than ideal, my irritation is palpable. My family knows this. The warning signal is “Dad is writing.” This can be roughly translated as “Dad is currently an asshole.” The more I try to be thoughtful, the bigger the ass I am.

I suspect Henry David Thoreau was the same.  He went even further than my own backyard exile. He camped out alone for two years in Ralph Waldo Emersen’s cabin on Walden Pond. He said things like,

“I never found a companion that was so companionable as solitude.”

But Thoreau but was also a pretty thoughtful guy, who advised us that,

“As a single footstep will not make a path on the earth, so a single thought will not make a pathway in the mind. To make a deep physical path, we walk again and again. To make a deep mental path, we must think over and over the kind of thoughts we wish to dominate our lives.”

But, I ask, how can we be thoughtful when we are constantly distracted by information? Our mental lives are full of single footsteps. Even if we intend to cover the same path more than once, there are a thousand beeps, alerts, messages, prompts, pokes and flags that are beckoning us to start down a new path, in a different direction. We probably cover more ground, but I suspect we barely disturb the fallen leaves on the paths we take.

I happen to do all my reading on a tablet. I do this for three reasons; first, I always have my entire library with me and I usually have four books on the go at the same time (currently 1491, Reclaiming Conversation, Flash Boys and 50 Places to Bike Before You Die) – secondly, I like to read before I go to sleep and I don’t need to keep a light on that keeps my wife awake – and thirdly, I like to highlight passages and make notes. But there’s a trade-off I’ve had to make. I don’t read as thoughtfully as I used to. I can’t “escape” with a book anymore. I am often tempted to check email, play a quick game of 2048 or search for something on Google. Maybe the fact that my attention is always divided amongst four books is part of the problem. Or maybe it’s that I’m more attention deficit than I used to be.

There is a big difference between being informed and being thoughtful. And our connected world definitely puts the bias on the importance of information. Being connected is all about being informed. But being thoughtful requires us to remove distraction. It’s the deep paths that Thoreau was referring too. And it requires a very different mindset. Our brains are a single-purpose engine. We can either be informed or be thoughtful. We can’t be both at the same time.

090313-RatMaze

At the University of California, San Francisco, Mattiass Karlsson and Loren Frank found that rats need two very different types of cognitive activity when mastering a maze. First, when they explore a maze, certain parts of their brain are active as they’re being “informed” about their new environment. But they don’t master the maze unless they’re allowed downtime to consolidate the information into new persistent memories. Different parts of the brain are engaged, including the hippocampus. They need time to be thoughtful and create a “deep path.”

In this instance, we’re not all that different than rats. In his research, MIT’s Alex “Sandy” Pentland found that effective teams tend to cycle through two very different phases: First, they explore, gathering new information. Then, just like the thoughtful rats, they engage as a group, taking that information, digesting it and synthesizing it for future execution. Pentland found that while both are necessary, they don’t exist at the same time,

“Exploration and engagement, while both good, don’t easily coexist, because they require that the energy of team members be put to two different uses. Energy is a finite resource.”

Ironically, research is increasingly showing that are previous definitions of cognitive activity may have been off-the mark. We always assumed that “mind-wandering” or “day-dreaming” was a non-productive activity. But we’re finding out that it’s an essential part of being thoughtful. We’re actually not “wandering.” It’s just the brain’s way of synthesizing and consolidating information. We’re wearing deeper paths in the by-ways of our mind. But a constant flow of new information, delivered through digital channels, keeps us from synthesizing the information we already have. Our brain is too busy being informed to be able to make the switch to thoughtfulness. We don’t have enough cognitive energy to do both.

What price might we pay for being “informed” at the expense of being “thoughtful?” It appears that it might be significant. Technology distraction in the classroom could lower grades by close to 20 percent. And you don’t even have to be the one using the device. Just having an open screen in the vicinity might distract you enough to drop your report card from a “B” to a “C.”

Having read this, you now have two choices. You could click off to the next bit of information. Or, you could stare into space for a few minutes and be lost in your thoughts.

Chose wisely.

Luddites Unite…

Throw off the shackles of technology. Rediscover the true zen of analog pleasures!

The Hotchkisses had a tech-free Christmas holiday – mostly. The most popular activity around our home this year was adult coloring. Whodathunkit?

There were no electronic gadgets, wired home entertainment devices or addictive apps exchanged. No personal tech, no connected platforms, no internet of things (with one exception). There were small appliances, real books printed on real paper, various articles of clothing – including designer socks – and board games.

As I mentioned, I did give one techie gift, but with a totally practical intention. I gave everyone Tiles to keep track of the crap we keep losing with irritating regularity. Other than that, we were surprisingly low tech this year.

Look, I’m the last person in the world that could be considered a digital counter-revolutionary. I love tech. I eat, breathe and revel in stuff that causes my wife’s eyes to repeatedly roll. But this year – nada. Not once did I sit down with a Chinglish manual that told me “When the unit not work, press “C” and hold on until you hear (you should loose your hands after you hear each sound) “

This wasn’t part of any pre-ordained plan. We didn’t get together and decide to boycott tech this holiday. We were just technology fatigued.

Maybe it’s because technology is ceasing to be fun. Sometimes, it’s a real pain in the ass. It nags us. It causes us to fixate on stupid things. It beeps and blinks and points out our shortcomings. It can lull us into catatonic states for hours on end. And this year, we just said “Enough!” If I’m going to be catatonic, it’s going to be at the working end of a pencil crayon, trying to stay within the lines.

Even our holiday movie choice was anti-tech, in a weird kind of way. We, along with the rest of the world, went to see Star Wars, the Force Awakens. Yes, it’s a sci-fi movive, but no one is going to see this movie for its special effects or CGI gimcrackery. Like the best space opera entries, we want to get reacquainted with people in the story. The Force’s appeal is that it is a long-awaited (32 years!) family reunion. We want to see if Luke Skywalker got bald and fat, despite the force stirring within him.

I doubt that this is part of any sustained move away from tech. We are tech-dependent. But maybe that’s the point. It used to be that tech gadgets separated us from the herd. It made us look coolly nerdish and cutting edge. But when the whole world is wearing an iWatch, the way to assert your independence is to use a pocket watch. Or maybe a sundial.

And you know what else we discovered? Turning away from tech usually means you turn towards people. We played board games together – actual board games, with cards and dice and boards that were made of pasteboard, not integrated circuits. We were in the same room together. We actually talked to each other. It was a form of communication that – for once – didn’t involve keyboards, emojis or hashtags.

I know this was a fleeting anomaly. We’re already back to our regular tech-dependent habits, our hands nervously seeking the nearest connected device whenever we have a millisecond to spare.

But for a brief, disconnected moment, it was nice.

Welcome to the World of Wicked Problems

The World is becoming a wicked place. And not in the way you think (although that may be the case as well).

I’m referring to the explosion of wicked problems. Wicked problems are thorny, complex, dynamic problems that defy black and white solutions. These are questions that can’t be answered by yes or no – the answer always seems to be maybe. There is no linear path to solve them. You just keep going in loops, hopefully getting closer to answer but never quite arriving at one. Usually, the optimal solution to a wicked problem is “good enough – for now.”

I believe the ability to deal with wicked problems will be the single biggest factor in separating winners from losers in the future. Dealing with wicked problems requires a different tool set than the one we’ve always used in the past. It requires open, nimble minds. It requires the ability to break complexity into components that can yield individual insights, then synthesizing those insights together into a workable process. Most importantly, however, it requires a willingness to start all over again when that process is finally put in place. And you have to do that with a totally open mind; jettisoning any baggage you might be carrying from the past iteration. In short, it requires an approach I’ve referred to in the past as Bayesian Strategy.

A world full of wicked problems also requires a new kind of leadership. In the past, we wanted leaders who had all the answers. But in a world of wicked problems, there are no answers. In this world, we need leaders who understand the value of adaptability and iteration. Open minds are critical. Beliefs take a back seat to curiosity and imagination.

I’ve had a recent history of taking beliefs to task. Beliefs are cognitive short cuts we use to avoid thinking. In a fairly stable and predictable world, beliefs served a purpose. They are the intellectual equivalent of habits. If the same actions (or thoughts) always yield the same results, why bother with rational analysis? It’s a waste of energy. If we can predict what the end looks like, stopping to rationalize looks an awful lot like wavering or being indecisive.

But predictability is becoming increasingly rare. With wicked problems, we need to be willing to tear apart our view of the world and test it for validity. We need to unpack our beliefs and be willing to sacrifice them if empirical evidence shows them to be false. We need to introduce scientific rigor into our thought process.

This comes down to the difference between complexity and complication. Sending a man to the moon and sequencing the human genome were both complicated problems. Currently, climate change would fall into the same bucket. In each case, there was a lot to be done, but we knew what we had to do. We just needed to marshall the resources to do it. We could predict what the end would look like. This was a world where we needed unwavering leadership and a belief in a commonly understood end-state. To be successful, we just had to get sh*t done.

Creating a sustainable future for advertising and publishing are both complex problems. This makes them wicked. And they’re not alone. Wicked problems are emerging everywhere: educational reform, transportation infrastructures, global economic dynamics, national security, even the future of democracy. In each area, technology and its gravitational pull on society are dealing a handful of wild cards into the deck. We have no idea what success might look like. We are trying to find answers in a whirling, emergent environment, where rules are constantly in flux.

Here, we have to take a different approach. It’s not a straight line. It’s an endless loop.

A New Definition of Order

The first time you see the University of Texas – Austin’s AIM traffic management simulator in action, you can’t believe it would work. It shows the intersection of two 12 lane, heavily trafficked roads. There are no traffic lights, no stop signs, none of the traffic control systems we’re familiar with. Yet, traffic zips through with an efficiency that’s astounding. It appears to be total chaos, but no cars have to wait more than a few seconds to get through the intersection and there’s nary a collision in site. Not even a minor fender bender.

Oh, one more thing. The model depends on there being no humans to screw things up. All the vehicles are driverless. In fact, if just one of the vehicles had a human behind the wheel, the whole system would slow dramatically. The probability of an accident would also soar.

The thing about the simulation is that there is no order – or, at least – there is no order that is apparent to the human eye. The programmers at the U of T seem to recognize this with a tongue in cheek nod to our need for rationality. This particular video clip is called “insanity.” There are other simulation videos available at the project’s website, including ones where humans drive cars at intersections controlled by stoplights. These seem much saner and controlled. They’re also much less efficient. And likely more dangerous. No simulation that includes a human factor comes even close to matching the efficiency of the 100% autonomous option.

The AIM simulation is complex, but it isn’t complicated. It’s actually quite simple. As cars approach the intersection, they signal to a central “manager” if they want to turn or go straight ahead. The manager predicts whether the vehicles path will intersect another vehicle’s predicted path. If it does, it delays the vehicle slightly until the path is clear. That’s it.

The complexity comes in trying to coordinate hundreds of these paths at any given moment. The advantage the automated solution has is that it is in communication with all the vehicles. What appears chaotic to us is actually highly connected and coordinated. It’s fluid and organic. It has a lot in common with things like beehives, ant colonies and even the rhythms of our own bodies. It may not be orderly in our rational sense, but it is natural.

Humans don’t deal very well with complexity. We can’t keep track of more than a dozen or so variables at any one time. We categorize and “chunk” data into easily managed sets that don’t overwhelm our working memory. We always try to simplify things down by imposing order. We use heuristics when things get too complex. We make gut calls and guesses. Most of the time, it works pretty well, but this system gets bogged down quickly. If we pulled the family SUV into the intersection shown in the AIM simulation, we’d probably jam on the brakes and have a minor mental meltdown as driverless cars zipped by us.

Artificial intelligence, on the other hand, loves complexity. It can juggle amounts of disparate data that humans could never dream of managing. This is not to say that computers are more powerful than humans. It’s just that they’re better at different things. It’s referred to as Moravec’s Paradox: It’s relatively easy to program a computer to do what a human finds hard, but it’s really difficult to get it to do what humans find easy. Tracking the trajectories and coordinating the flow of hundreds of autonomous cars would fall into the first category. Understanding emotions would fall into the second category.

This matters because, increasingly, technology is creating a world that is more dynamic, fluid and organic. Order, from our human perspective, will yield to efficiency. And the fact is that – in data rich environments – machines will be much better at this than humans.   Just like our perspectives on driving, our notions of order and efficiency will have to change.