I recently enjoyed reading Think Twice: Harnessing the Power of Counterintuition by Michael Mauboussin. It made for a nice counterbalance to Michael Gladwell's Blink, which I had read previously and which makes some fairly different arguments on the power of intuition. The biggest lesson is that both have their place, and wisdom comes into play in distinguishing which is relevant when.
The book's introduction mentions some famous examples of really smart people getting duped by relying on their intuition. Stephen Greenspan wrote an entire book on gullibility; Alan Greenspan lost money in Madoff's scheme; the LTCM geniuses "failed;" the Columbia disaster occurred despite early warnings; the banks in Iceland collapsed. Smart people can make really big mistakes! The author's three step approach to deal with this is as follows:
The author also outlines three major areas of mistakes:
Ch. 1: The Outside View
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One of the most fun speakers we had in Riordan's Leadership class was Marty Albertson, the former CEO of Guitar Center. His talk focused on the use of creativity in leadership (creativity being the parallel to music). He started his career as a record producer and studio engineer in the Haight-Ashbury district of SF. He thought he could be creative in art but actually found he was most creative in managing people.
He has a passion for collecting famous guitars, and in class, he showed us Eric Clapton's Blackie guitar (above) worth $2 million. He turned this passion of his into a business opportunity for Guitar Center, which at his suggestion created 25 knockoffs of the guitar and sold each for $50,000. They sold all 25 knockoffs in 10 minutes. (They got Clapton's permission beforehand and gave some of the proceeds to his favorite charity.) This was an example of creativity in marketing. Some of his modus operandi:
He went through 5 sales of the company, bought out 3 partners, experienced 2 LBOs, went public, went private, and now considering going public again. Wow! After they bought out the first founder's widow, they levered the business too much (frothy times), and JPMorgan Private Equity became the owner. He realized that they were smart people but never ran anything, and most seemed too analytical and unable to make decisions without backup analysis. Now, the current PE owner is Bain Capital (since they went private). He believed that really big decisions must be made with the gut. He thinks testing and analysis has its use but most of the time is inconclusive. For each issue, he decides, "is it a 1 or a 10 in importance?" Then, even if he's passionate about one way or the other, he can decide if it's worth the time and energy to fight about it. Keys to customer service: low turnover of staff (went from 100% to 50% turnover on the sales floor) and keeping policies as simple as you can. They now have 40% market share and consider their culture the key to their success. He closed by posing an interesting problem of negotiation to the class: a customer offering to sell their vintage guitar at way below market to them. For used/vintage guitars, the only difference in valuation is due to age (like a step function). After the class struggled to come up with a good answer, he explained that their philosophy is to earn people's trust and tell the truth, paying the customer way more than they initially asked for. That sort of philosophy definitely left an impression on me. A book I recently finished reading (which was similar in many ways to the HR course I was taking at the time) is Click: The Magic of Instant Connections by Ori and Rom Brafman. I really enjoyed the stories that were at the center of each chapter, and I learned a lot of non-intuitive things about how to create environments that allow people to click and form closer connections. Below are my biggest takeaways from each chapter.
Ch. 1: Finding Magic
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