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Lessons Learned from Thinking on Your Feet

3/17/2011

One of my favorite classes this past quarter was called "Thinking on Your Feet." It's taught by a psychology professor and researcher who specializes in memory. We applied a lot of psychology research and different thinking techniques to solving business problems and becoming more effective "thinkers" within a business context. Below are some of my key takeaways.

Physiology

The oldest part of our brain, shared with many other animals, is the brain stem, and it's responsible for lots of automatic actions like breathing and vomiting. The next oldest is the limbic system, responsible for emotions. The very newest, and relatively much, much younger and less developed, part is the neo-cortex, which is in charge of rationality and logic. Our limbic system is much more dominant than our neo-cortex, explaining why we can so easily get caught up in our emotions.
The conventional wisdom is that we don't make new neurons, that the brain's functions are immutable, and that memory resides in just one part of brain. We learned that all of these myths are wrong. Handicapped or injured people re-purpose their brains to compensate, and memories reside throughout the brain and physically alter it as new connections are formed.
Brain fuels (good for you): choline (acetylcholine), glucose, B complex (niacine, thiamine, B12), water, and omega 3. Go, fish!
Brain drains (bad for you): aspartame (fake sugar), alcohol, caffeine, marijuana, and nicotine. No smoking!
Other things that affect brain biology and thinking ability: stress, sleep, diet, mental exercise, and physical exercise.

Environment

SMART (v1): Be Specific about your goals, Measure (not just what's easy; beware of perverse incentives; yardsticks we use bias how we interpret information and the conclusions we draw; beware of choosing yardsticks that make us look good), Seek Accuracy, Seek Relevant information, Find ways to Track progress
“The biggest problem with communication is the illusion it has occurred.” -George Bernard Shaw
SMART (v2): Sense of purpose in life (know how vs. know why), Meaningful goals, Asking And then what, Being Realistic, Situating goals within Time
Chaos can be good (especially for creativity): Start with Divergent Chaos (questioning, generating ideas), end with Convergent Chaos (funneling down into answers, truth)
“It is not the strongest in the species that survive, nor the most intelligent, but the one most responsive to change.” -Charles Darwin
Adaptive processes are often better than rigorous long-term planning: taxicabs operating in distributed fashion as opposed to centralized control. Key is to document and broadcast.

Techniques

Bring the future to the present: Experiment with different jobs, talk to mentors, get data from potential customers. (Lean start-up methodology!)
Tyranny of OR: Sometimes when faced with a binary decision, you can find ways to do both or neither. Instead of deciding between "yes" and "no," say "YO!"
Seek simplicity: Think “familiar”; think “progress, not perfection”; engage everyone; small changes add up!
Positive deviance: When seeking to make a change, identify parts of life where you're already effective and learn from those small examples. Focus on what's working as opposed to what's not working.

Emotions

Events don't cause you to "feel" anything. Your thinking and labeling causes you to feel things.
Activating Events trigger Thinking which triggers Feelings and Behaviors.
Ineffective thinking #1: Catastrophic thinking/awfulizing. This is when you hate on yourself and say your world will end if you don't perform a certain way.
Ineffective thinking #2: Absolutist thinking/shoulding/always/never. This is when you "should all over yourself" by saying you should have done this or that and that you always fail in one thing or another.
Ineffective thinking #3: Rationalization/excuses. This is when you come up with excuses for doing or not doing something or why something turned out one way which you didn't like (as opposed to facing and learning from the truth).
Constructive comebacks: Honest, emotional responses to events that acknowledge your feeling but also allow you be firm with your needs and wants and learn from the experience.
Healthy emotions: Generally people's vocabulary is very limited in the names of emotions they speak about or attribute to themselves. Finding ways to expand that and be able to be more descriptive will allow you to be more honest with others and yourself about how you feel.

Dealing with Biases

Satisficing vs. maximizing: Humans go for what's "good enough" rather than maximize and think rationally in all decisions.
Anchoring, Priming: You can be influenced a lot by suggestions in the environment, other non-related words in a discussion, and the first offer in a game or negotiation. The preliminary design of a project can greatly affect the final design. Thinking about this and finding ways to not judge things too early is important for creativity.
Hindsight bias: It's easy to understand after the fact why something happened as it did even though it was unpredictable beforehand.
Sunk costs, regret: Humans are constantly worried about the money they paid in the past and the effort they put into something, even when it's not relevant to current or future decisions. We also have greater regret for acts of commission than acts of omission.
Loss aversion: We care more about losing a sum of money than gaining the same sum.
Pre-mortem: Try to use the hindsight bias to your advantage by thinking of all the ways a project could fail beforehand; imagine yourself doing the post-mortem and brainstorming all the ways the project could fail (in order to prepare and address those when actually doing it).

Memory

A great way to remember a list of items or a group of people's names is to start with the first, then the second and the first, and continue to add on names and repeat all the other names that came before it. Through this pyramiding repetition, you can remember a large quantity of information.
Context effects: Context in which you learn something affects context in which you can remember it. Taking a test in a classroom where you learned the material, for example, turns out to produce better scores than taking it in a different room. Even the level of sobriety under which you memorize things affects which level of sobriety you're most likely to be able to recall them (matching levels of sobriety do best).
Spacing: When practicing memorization/recall, spacing out practice achieves better results than cramming.
Mental images: Create vivid, personal, animated, interactive mental images for something you need to remember to bring or do in certain locations or times.
Memory mnemonic for lists of things: peg system
Flashbulb memories are memories you have after big life events or traumatic occurrences. In these, you remember vividly your location, what you were doing, the source of the information, your emotion, and the aftermath.
False memory syndrome: Research shows it's possible to plant false memories by getting an insider to speak with the subject and plant seeds of doubt and an alternate story. This was very eerily reminiscent of Inception.
Memory and age: As you age, you're less able to time share/multi-task, and storage and retrieval slow down. However, research shows that elderly who have purpose and must remember to do something themselves (like water a plant) live considerably longer.
The availability of memory is influenced by the information's structure, recency, media attention and repetition, and emotion.

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Lessons Learned from Operations Class

3/14/2011

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Beware the bullwhip (effect)!

I enjoyed my operations class this quarter because the professor was fun and engaging, and I finally had the chance to be in a full, real class with the rest of my section.

While most of my operations classes at Stanford focused on theory, such as around production systems design and supply chain management, this was a general course on operations management -- putting into practice through cases various higher level operations analysis techniques.

A lot of this wasn't new to me, but it was nice to see it in a different context and more from the perspective of a general manager. The objective of the class was to teach us how to use operations in an organization as a competitive "weapon" and not as a burden or friction to minimize.

Below are my biggest takeaways from the course.

Companies fulfill their business strategy through operations. A company's goal is to make money, and it does this through its value proposition in one or more of the following areas: price, quality, time, and variety. The mix of these four determines the operations strategy that best aligns with the business strategy. For example, if variety and quality are key to producing some very customized product, a job shop manufacturing process with flexible, independent cells and scheduling would make sense, whereas if price and time are more important, such as in producing some commodity good, a continuous flow or assembly line process is a better fit.
Manage by the bottleneck. We studied various quantitative techniques of process analysis and read The Goal to learn that the first area of attack when aiming to improve a system is the bottleneck. An hour lost on the bottleneck is an hour lost for the entire plant, whereas an hour lost on a non-bottleneck is a mirage.
The bottleneck should be the most expensive resource. Otherwise, if the bottleneck is a cheap resource, it would be silly not to purchase additional copies of the resource until the point where it is no longer the bottleneck. We learned that at Amazon the bottleneck is an extremely large and complex sorting and box-filling robot; this is its most expensive piece of machinery, and the company does what it can to make sure it is operating at full capacity to meet demand.
Don't optimize for efficiency, but for your goal (profit). Looking at localized efficiency (like the utilizations of labor or specific machines) is what many people do, and this leads to inferior global performance. As long as the bottleneck is at maximum utilization and running at a pace that matches sales, it is irrelevant how much of your labor or other machines you're utilizing (to a certain degree). You should make decisions that maximize profit, not ones that make your plant look "efficient" in as many areas as possible.

This is a similar lesson to what I learned in my Thinking on Your Feet class this quarter, which I'll post about later: the difference between productive and effective thinking. You can be very productive and efficient in taking care of lots of tasks or brainstorming lots of ideas, but if you're just doing that to be efficient with your time rather than actively working towards a concrete goal, this is often time and energy that's wasted. This now reminds me of the w4w lesson from The 4-Hour Workweek: "work for work's sake" as opposed to work that's globally required and productive.
There are many non-manufacturing (such as service) applications for the Newsvendor model. This is a simple model we covered in class that allows you to decide how much inventory or capacity to build up in order to deal with random demand and differing underage and overage costs. I thought it was neat how we applied the model to service industries (like hotel and flight overbooking) and even to web advertising inventory planning.
The psychology of waiting lines: We read some research that presented some common findings about lines that I've definitely thought about or personally experienced before.

-Unoccupied time feels longer than occupied time.
-Pre-process waits feel longer than in-process waits.
-Anxiety makes waits seem longer.
-Uncertain waits are longer than known, finite waits.
-Unexplained waits are longer than explained waits.
-Unfair waits are longer than equitable waits.
-The more valuable the service, the longer I will wait.
-Solo waiting feels longer than group waiting.

In class, we studied ways that queue waiting times can be minimized (analyzing various queue structures under Markov/Poisson/Exponential assumptions), and when they can't, there are ways to use the psychology results above to make waits "seem" shorter (providing entertainment, making the wait seem like it's an in-process wait, explaining waits, etc.).
When redesigning queue layouts, minimizing actual service time by employing better servers/employees is more effective than employing multiple servers. In other words, one server who is twice as fast is better than two servers at half the speed. I thought this was an interesting result and shows how training and staff selection can be more important than simply hiring more people.

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Lessons Learned from Negotiations Class

3/12/2011

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I took my second negotiations class ever this quarter, and it was nice to revisit some of the things I learned before, looking at them now from a new perspective. Like the first class I took at Stanford, this one centered on simulations that we performed in class and then debriefed afterwards.

The main framework we covered in class was the one from the book Getting to Yes. Below are the main points in this framework:

Focus on underlying interests, not positions. Ask many questions at the start to ascertain what people truly care about underneath and longer term. Also, there are often unsaid interests and preferences that people think might not be related to the negotiation at hand; by uncovering those, there may be ways to incorporate them and create better outcomes.
Seek integrative, not distributive, outcomes. Negotiations happen all around us, most in informal settings. In "formal" negotiations, the focus is often on one variable, like price, and the situation is viewed as a distribution of a fixed pie, a zero-sum game. We learned in this class the importance of considering multiple issues at once in a negotiation in order to reach integrative outcomes ("win-win"). From a game-theoretic perspective, these are outcomes which are Pareto efficient (helping one person without hurting another). This occurs when people have different preferences or sensitivities to various issues, such that improving one party's situation in one issue does not hurt the other.
Jointly brainstorm many options up front without criticizing. This is pretty similar to IDEO's brainstorming creativity rule of seeking quantity not quality when generating initial ideas.
BATNA: Consider your Best Alternative To A Negotiated Agreement. This will determine the bargaining zone (area of potential agreements) and give you a clear indication of when it's better to walk away from a negotiation. Money and time invested in improving your BATNA will improve your results in negotiations in more than one way.
Evaluate options according to mutually agreed upon external criteria. It's very difficult to agree to something when each person uses their own internal criteria. There are many outside criteria that the parties can brainstorm and consider valid for evaluating a deal's fairness and acceptability, and often a mix of these criteria is the best way to compromise when the two parties have pretty different interests.

The types of negotiation simulations we did in class were two-party, multi-party (fun and hectic), employment/salary, inter-cultural, organizational (partners in a business), and collective bargaining (watched a documentary on the UAW/GM Canada negotiations in the 80s). My biggest takeaways were the following:

Preparation and feedback are really important. As compared to my "real world" negotiations, I spent a lot more time preparing for the in-class simulations. I think that allowed the class exercises to proceed smoothly and for me to get more out of them. I should seek to prepare more in that way for real-life negotiations. In addition, post-negotiation feedback and constructive criticism allowed people to improve and get candid mini-evaluations weekly. I think that sort of feedback could be helpful in real life too.
Multi-party negotiations require a lot of coordination. Not only are there more interests and opinions involved, but there is the added challenge of finding commonly free time, letting everyone's voice be heard, and coordinating multiple parties' preferences. By agreeing to a system and process up front that meets these goals, that part of the headache can partially be relieved.
Every culture has a different way of negotiating. I learned that in Japanese there is no direct translation for the word "negotiation." That says many interesting things about the culture; perhaps negotiation and haggling are considered disrespectful. In addition, we surveyed research by Hofstede into different cultures' styles and compared them on several axes: power distance, masculinity, individuality, and uncertainty avoidance. Though it's impossible to fully generalize, and all individuals are certainly unique, I did enjoy being able to get a rough picture of how various cultures differ in their styles as compared to Americans.

I look forward to considering these lessons and preparing more carefully for negotiations I'm a part of in the future.

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