Weekly Research and Commentary on the Future of Business and Technology.
Regret Minimization & Tomorrow’s Priorities.
Nov 8, 2022
We submitted the completed manuscript for our book on “Disrupt Disruption” last week — and finalized the final cover design. Check it out here.
Read to the end to learn why you get a lot of weirdly personal text messages from strangers lately.
Decode. Disrupt. Transform.
We recently discussed how organizations and individual leaders could apply the concept of adjacent possibilities to work with and even use uncertainty to explore new opportunities and foster innovation. Today, we consider one of the primary reasons why leaders often fail to capitalize on those adjacent possibilities – even when they see them with some clarity, and we’ll highlight a simple framework that can make exploring the possible and knowing when to dive into uncertainty a little bit easier.
Loss aversion – a cognitive bias first identified and explored in the pioneering work of Daniel Kahneman and Amos Tversky (1979) – refers to the very common human tendency to value potential losses over potential gains. Loss aversion factors into all sorts of decision-making and can create a formidable cognitive block to appropriately valuing and ultimately exploring adjacent possibilities that could flower into preferred futures.
Consider this thought experiment: It’s the mid-90s. You have a lucrative job in the American financial sector but a sense that the development and mass adoption of the internet will enable new business models with truly disruptive potential. You’re thinking of jumping in as an entrepreneur and opening an online store. How would you approach the risk of moving from the known to the unknown (from relative certainty to deep uncertainty), and how would you weigh the potential loss of stability, comfort, and security against the potential upside of exploring new possibilities?
This example might sound familiar. Jeff Bezos found himself facing the decision described above in 1994, and the results aside (his choice seems to have worked out pretty well), the simple framework he applied to the decision can help us make better sense of our own decision-making when confronting uncertainty. Bezos used what he called a regret minimization framework to clarify his thinking and counteract present bias and loss aversion. He reframed the decision as one for his future self, an 80-year-old Jeff Bezos who had minimized his regrets in life, and he asked whether Future Bezos would be more likely to regret making a move and failing or not making a move to explore the emerging possibility of the online bookstore. In his own telling, the decision became “incredibly easy.”
Does this mean we should all dive into the uncertainty of emerging technologies, assuming we’ll resurface at the helm of the next Amazon? Probably not. But it does suggest that we have effective tools for reframing decisions to counteract certain cognitive biases and associated organizational tendencies (e.g., short-termism, the tendency to “leverage what you have,” thinking in terms of what we can afford to do rather than what we can’t afford NOT to do, etc.) and perhaps put today’s choices in better service of tomorrow’s values & priorities. (via Jeffrey)
What We Are Reading
😶🌫️ The Emotional Labor of Being a Leader Over the last few years, the demands of emotional labor performed by leaders have dramatically increased. Organizations need to recognize this critical function and often overlooked requirement of their leaders’ role as evidence now proves just how much impact this has on a team’s performance. Jane ⇢ Read
👮 Security Cameras Make Us Feel Safe, but Are They Worth the Invasion? A sense of safety from your at-home surveillance camera, but at what cost? New ordinances, like the San Francisco camera access legislation, allow police to request access to live footage of your security camera. Mafe ⇢ Read
🥽 Ways to think about a metaverse Carefully unpacking what exactly people actually mean (anything? everything? nothing?) when they talk about “the metaverse” shows just how difficult it is to envision a future paradigm shift in technology accurately. Jeffrey ⇢ Read
🍏 Jony Ive on Life After Apple Revisiting the role Ive played at Apple and is now playing in various involvements is inspiring in its own right. But one unexpected takeaway from the feature is the role of words and writers in ‘sketching’ out new ideas. Julian ⇢ Read
🌐 How the Metaverse Could Change Work There are still many questions about what the metaverse actually is and could be. The author highlights four suggested ways on how it could change work, including new immersive forms of team collaboration and the emergence of new digital, AI-enabled colleagues. Pedro ⇢ Read
🌖 In the Event of Moon Disaster First, watch this short movie for its entertainment value. Then watch it to see how far we have come with deep fakes. And then think about what this means for the future. Pascal ⇢ Read
🧨 Disrupt Disruption: In our latest episode, we chat with Barak Berkowitz, former Director Operations and Strategy Director at MIT Media Lab (and a long, storied career in Silicon Valley). It is a fascinating conversation about all things innovation and disruption. Listen here.
Radically yours, take good care, friend!
— Pascal, Mafe, Vivian, Pedro and the three Js (Jane, Jeffrey, and Julian)
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