This week, we are reposting our episode about building intuition.
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I was recently talking with a friend about the process for dealing with customer service calls at a food service delivery app company. When you get on one of these apps to order food from a local company, what are your expectations? What would lead you to call the customer service department of the app?
Let me tell you something about myself before we go any further into this discussion. I personally have never used one of these apps. Now, you’ve probably formed all kinds of ideas about me in your head because of this admission. I’m ok with that. Before these apps came into the mainstream, I rarely ever ordered carry out. It just isn’t a habit I have. I either cook at home or go out to a restaurant to eat. I don’t and never have, ordered carry out. It just doesn’t fit my lifestyle. So, when the apps came along, I just never had a reason to use them.
So, back to my conversation with my friend. She works for one of these app companies and had called me because they were having some growing pains in their customer service department. I had asked her to give me some examples of reasons people call them for support. She said, “well maybe they get their order and the drink is missing.”
Ok – now hold on a second.
I was totally confused. Why would you call a software company about a missing drink in your order rather than calling the restaurant?
This is a concept that makes absolutely no sense to me. The software company has developed an app that facilitates a connection between you and a local restaurant. That software company, and its customer service people could literally be located anywhere in the country – in the world. You’ve ordered from a local restaurant. Presumably within around 10 miles of your house assuming you want your food to still be warm when it gets to you. They forget to send your drink. They are local, and responsible for messing up your order. But, instead of calling them, you call the app. I really can’t get my mind wrapped around that logic.
I wonder how many people called the phone company back in the day before the internet when the only way to get food delivered to your home was by telephone. Hello? AT&T? Yes, I’ve just called and ordered a pizza and now that its been delivered, I see that it is missing black olives.
Today’s episode is about the false conclusion effect. You see, the fact that this makes no sense to me is irrelevant. Obviously, a lot of people think about this differently than I do, or else my friend wouldn’t be getting these calls. A lot of people obviously think that it is the software company’s job to fix the missing drink problem. They’ve reached a different conclusion than I have. The false conclusion effect says that we tend to believe the world at large shares our beliefs and point of view more than they actually do. We tend to use our own perspective as a proxy for the likely perspective of others.
The false conclusion effect is pervasive in companies. Not because of any bad management or nefarious intentions, but because of good old fashion human nature. We are just naturally included to think that other think the way we do and if we don’t exercise some self-control, we can really miss important inputs into our process. Why is self control important here? Because it takes self control to set aside our perceptions in order to look at things from other perspectives.
Once I became aware of this idea that other people come to the conclusion that the correct course of action when a drink is missing from your order is to call the software company, I needed to shift my perspective. This was an eye opener for me. I was immediately faced with the fact that I don’t have the only world view on how these things work. There are two primary reactions that we have when we are faced with the false conclusion effect. We can either reappraise or we can suppress.
Reappraisal means that we reconsider our approach given the new perspective we have. If you get fired from your job, reappraisal is at work if you tell yourself it was a horrible job anyway and you are now free to go do what you want to do with your life. We know from scientific brain studies that reappraisal engages the region of the brain responsible for self control. But, more importantly, it is engaged early in the episode.
The other possible reaction to being faced with a new perspective is suppression. Suppression is when you control your facial expressions, tone of voice, and body language so that others can’t tell what you are thinking inside. Suppression will make it look to others like you aren’t distressed, but your mind is substantially more distracted because of the energy you are putting into maintaining your calm exterior. People are not going to enjoy being with you while you are in this state, and it is more likely that you will forget portions of the event. The self-control region of the brain is engaged later in the event when you are in suppression mode.
Why is reappraisal & suppression important to understand? Because we trust people with self control more than we trust people without it. Trust is the foundation of social interactions. And, without it, you can not be successful in your career – or life. In the book Social, Why Our Brains Are Wired to Connect by Matthew Lieberman, he says “self control is the price of admission to society.”
We’ve talked a lot about how self control is an important part of self awareness on this podcast. Emotional Intelligence requires us to understand how we interact with society. Understanding this concept of the false consensus effect – and more importantly, recognizing when we are in its grasp - is important in allowing us to recognize our biases with society.
Having a bias doesn’t make you a a bad person. My bias toward thinking that it is logical to call the restaurant rather than the software company when my drink is missing doesn’t make me a bad person. We all have biases. Recognizing that this is true and then managing your response to it is what leads to improvement.
Once I was able to recognize this other point of view, I was able to incorporate it into my understanding of the issue being faced and provide a better suggestion for solving the problem. Any solution I gave without this expanded world view would have been inadequate.
This is why it is important to get a lot of varying inputs into your process. Talk to others about their experiences. Dig deeper into their thoughts. Ask a lot of questions. But always with the understanding that you are a victim of the false conclusion effect – we all are. Becoming aware of this alone is making you better at your job.
Episode 39: Self Control
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If you want to be recognized as an employee who positively contributes to your organization, one of the things you need to understand about your company is the basic financial metrics that drive it. But, that is only one reason to familiarize yourself with the finances.
By understanding the financial metrics that drive your company, you will have better insight into the reason decisions get made the way they do and potentially even be better able to look into the future and anticipate change that may be coming.
To some extent a company’s culture is driven by the finances that underlay the business. For example, does your company make its revenue by selling something that is relatively low priced to many, many people? Or, does your company sell something relatively high priced and rely on only a few sales per year?
In the first case, you have something like Walmart. Millions of small transactions per year to millions of different customers each year. Compare that to something like an architecture firm that specializes in building airports. High price tag, and I imagine only 1 or 2 customers per year even come available.
All of the underlying decisions, strategies, and processes for these two organizations stem from how they make their revenue. So, if you want to understand your company better, you need to understand where the revenue comes from.
This applies to the cost side of your business as well. What makes up the cost structure of your business? Do you have costs associated with raw materials? How volatile are the costs of those materials? Or, are the majority of the costs related to labor? For example, software companies and professional services organizations have very little costs outside of the people who work there. If you work for an accounting firm and revenue decreases by 25%, the only real way to get savings to offset the lost of revenue is by letting people go.
The last thing I want cover in this episode is margin. Margin is defined as revenue minus costs. You can think of it as profit.
Understanding the margin that your company achieves will also help you better understand the drivers of your business. There isn’t 1 answer about what a good margin is. For example, grocery stores operate on a 1-2% margin, and that is considered good. Professional Services organizations operate on a 30% (ish) percent margin.
By understanding the level of margin, you better understand the size of the tightrope your leadership team is walking when they make financial decisions.
Investigate your company’s financials. Get familiar with the drivers of your revenue and costs. Understand the landscape that makes up the financial health of your company. Understand how it impacts you. Understand how it impacts your leadership team and the decisions they are faced with.
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Intuition: the ability to understand something immediately, without the need for conscious reasoning.
In business, it is more standard to rely on analysis than intuition.
Intuition is a skill that can be built. You can learn to adjust your behavior to a set of cues in a manner that is more successful. As a matter of fact, there is even a term for it: Recognition Primed Decision.
A situation generates clues. You recognize a pattern in those clues and activate action scripts that affect the situation.
In order to build your intuition at work. You can improve your intuition by learning this process:
1. Identify the decisions that are part of your job.
· What makes those decisions difficult
· What are common errors
· How does someone with more experience than you make decisions
2. Practice making decisions in context
· Think back to a situation you were in—what were the cues you picked up on and what did you miss?
3. Practice with a co-worker who was in the situation with you to see what they picked up on that you didn’t
4. Analyze your decision steps to identify what you would do differently next time
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