The value of finance teams
Posted: June 3, 2011 at 8:06 am in management ~ Permalink

When I was considering whether to take a job in Google’s finance department, a successful entrepreneur friend of mine told me I was making a mistake. He felt that designers and engineers added value to the world by creating new products, but the only thing finance people did was to say no. Given the pride I had taken over the years in creating valuable products like the CellKey system, I wondered whether I was making the right choice.

After a couple years here at Google, I agree with my friend that there are far too many people within corporate finance departments that are beancounters. Their only goal is to make sure the sums add up and that the processes are being painstakingly followed. Anything that disrupts their routine is fought with every fiber of their being. I made a mistake last fall that meant that Google had to pay out invoices faster than net 30 terms, and I spent weeks begging the team in accounts payable to vary their process this one time. Other finance teams have frustrated me by sticking resolutely to their quarterly plans even when the environment had shifted since those plans were made.

That being said, good finance people provide a level of clarity and objective vision to the executives. Finance takes a separate look from outside the product domain to review revenue and cost trajectories, as my team at Google does for the Revenue Force team. Our CFO, Patrick Pichette, asks every product leader what they’re going to get done next quarter and what resources they’ll need to get there, and then he follows up the following quarter by evaluating their success on achieving those goals with those resources. By having that outside check, it forces product teams to re-evaluate their own success every quarter rather than trying to launch at all costs.

Finance can also help the executives make decisions across product lines. Product people often want to invest in all the cool ideas they have and won’t prioritize to make the hard tradeoffs, because it’s like choosing one’s favorite child. The finance team can provide a framework to the execs for valuing the different product initiatives for the company to help the execs make those tradeoffs at the corporate level. This doesn’t necessarily mean making decisions purely based on profits – corporate objectives might include other metrics like user adoption, as is the case for Google products like Chrome and Android. But having a consistent framework makes it easier to compare products across the company.

Evaluating the business model for a product is also part of finance’s responsibility. Even if a product is technically excellent, the business model surrounding it may not be successful (e.g. Signature going bankrupt despite the CellKey instrument being on the path towards success, or Google Wave). Good finance people understand the product vision and the potential market, but can tie those lofty goals back to the prosaic P&L statement, and provide a viewpoint on whether the assumptions embedded in that model make sense and are achieving corporate objectives.

Lastly, great finance people can change the way executives think by giving them a new way to frame their businesses. Because the finance team is looking at things from a different perspective, they can provide insights that the executive team might be missing. It means going beyond the numbers to provide strategic insight that changes the priorities of the executives. I’ve been fortunate enough to see my manager do this a few times with the Google execs, and the value of providing that new perspective is huge.

This vision of a good finance person is actually well aligned with the value I provide as a generalist, connecting different perspectives and providing new viewpoints based on integrating those perspectives together. So while I agree with my friend that product people are creating value in a more concrete way, I believe that finance people can create value through changing the way the rest of the company thinks about the business. We’ll see if I can start changing the way product people think about their counterparts in finance.

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Action despite uncertainty
Posted: June 2, 2011 at 6:53 am in management ~ Permalink

Scott Berkun just posted about situations in life where good data is impossible, which reminded me of a quote I’ve been meaning to share.

I once went to a talk by Bob Sutton where he cited a quote by Andy Grove, CEO of Intel:

“I think it is very important for you to do two things: act on your temporary conviction as if it was a real conviction; and when you realize that you are wrong, correct course very quickly.

Investment decisions or personnel decisions and prioritization don’t wait for the picture to be clarified. You have to make them when you have to make them. You take your shots and clean up the bad ones later.

(So you have to keep your own spirits up even though you well understand that you don’t know what you’re doing)”

I think this is one of the hardest things to learn as I progress in the business world – many situations I’m asked to handle are novel, because routine decisions are handled by bureaucracy in the form of established processes or at a more junior level. Taking action when I know I don’t have enough data requires a leap of faith that I’m best positioned to make a decision anyway.

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The Master Switch, by Tim Wu
Posted: March 13, 2011 at 5:12 pm in media, nonfiction ~ Permalink

Amazon link

Subtitled “The Rise and Fall of Information Empires”, Wu has no lack of ambition as he addresses how information and communication companies such as AT&T, Paramount Studios, NBC, and CBS have dominated our discourse over the past century. The title comes from a quote illustrating the perils of such domination: “At stake is not the First Amendment or the right of free speech, but exclusive custody of the master switch.” (Fred Friendly). When a single company can determine what innovations are pursued or whose message gets transmitted, it has potentially negative consequences on our society.

The book is primarily a history of the telecommunications industry in the twentieth century, as Wu examines how each new technology innovation (telephone, radio, movies, TV) arose in a spirit of changing the world, before eventually getting subsumed into a monopoly or oligopoly, created with the tacit assistance of the government, either through regulation or patent enforcement. Wu calls this “the Cycle”, and the underlying question of the book is whether the Internet will be subject to “the Cycle”, or whether this time is different. I thought that Wu had to stretch to make the case that each of these industries followed the same pattern, but it was interesting to me to read the history of each of these industries, as there was much I didn’t know.

I liked how Wu demonstrated how technology innovation was never enough to up-end an industry. Because of the nature of innovation, several independent inventors often came up with the next step at roughly the same time (e.g. Alexander Graham Bell is known as the inventor of the telephone, but Wu points out that Elisha Gray, Johann Reis and Daniel Drawbaugh also had created primitive telephones, or the various number of people who invented television). The difference in the one that we remember as the inventor is that he partnered with a business person who ruthlessly pursued the goal of creating a company based on the invention (e.g. Theodore Vail creating AT&T based on Bell’s work, or David Sarnoff creating NBC by undermining Philo Farnsworth). There is a myth of technological determinism in Silicon Valley, that the right technical innovation “naturally” becomes the dominant one, but Wu’s book shows how the right business strategy (and good timing) is also necessary.

Another good insight was the natural tendency of these telecommunications technologies to centralize because of economies of scale. Once AT&T had a set of long-distance lines in place, it was prohibitively expensive for anybody else to lay lines, so the government essentially traded AT&T a monopoly in exchange for providing universal telephone service. Once media industries realized the potential of advertising, the nationwide networks had a huge advantage in that they could spread their costs over much larger audiences. And even though AT&T was broken up into AT&T and the Baby Bells in the early 1980s, the tendency towards centralization has been demonstrated as those Baby Bells have now merged and re-merged until there are only two descendants of AT&T, the re-formed AT&T in the west, and Verizon in the east.

The centralization of these industries also deterred innovation, as the companies involved didn’t want to risk the (massive) income stream that they already had. For instance, while AT&T, and particularly Bell Labs, was the source of many great innovations including the transistor and UNIX, the company also squashed anything that might threaten telephone usage. Wu tells the story of Clarence Hickman, an AT&T engineer who created an answering machine with magnetic tape audio recording… in 1934. The technology was buried, and magnetic tape recording would only be discovered decades later. Why? Because AT&T worried that the ability to record a conversation might keep people from using the telephone and “render the telephone much less satisfactory and useful in the vast majority of cases in which it is employed”. The story of the Hush-a-Phone is also instructive, where AT&T sent dozens of lawyers after an independent inventor who dared to create a phone attachment to keep one’s conversation private. Insane in retrospect, but once a monopoly is created, its primary purpose is to perpetuate its monopoly and therefore eliminate any potential threats.

Another danger in creating such centralization is there becomes a single point at which pressure can be applied to restrict communication. For instance, I had known about the “Hays Code”, which prevailed from the 1930s to the 1950s, and ensured that only “moral” things could be shown in movies. I had always assumed that was a law or regulation. Instead, what happened was that a “Legion of Decency” threatened to boycott any theater that showed “immoral” movies. The movie industry by that point had been concentrated into the few studios that still dominate today (Paramount, Warner Brothers, Universal and Fox), and those studios had full vertical integration, owning everything from the production to the distribution to the theaters where the movies were shown. All that the “Legion of Decency” had to do to get its way was convince the CEOs of those few companies that their profits would be threatened by boycotting the theaters. So a “code” that could never be passed into law due to the First Amendment was allowed to censor the industry for three decades until the vertical integration of the movie industry was broken up such that “the studios lost control over what the theaters showed”.

As can be seen, Wu has concerns about “the Cycle” with respect to telecommunications and media industries. Such industries tend to centralize quickly into one or a few companies that create efficiencies by monopolizing the industry, but that same centralization also has deleterious consequences for innovation and free speech in our society. In today’s world, we face similar questions about net neutrality (whether Verizon or Comcast can decide which content goes over its wires) and openness (the openness and chaos of the Google Android system vs. the closed but polished iPhone system from Apple), and Wu hopes that we can learn from history to make better decisions today.

Wu’s proposal is to create a “Separations Principle” that would prevent the development of vertically integrated companies in these industries. “It would mean that those who develop information, those who own the network infrastructure on which it travels, and those who control the tools or venues of access must be kept apart from one another.” If each layer of the information economy was kept separate, Wu believes that the dangers of concentration would be minimized, as innovations in one layer would not be suppressed to continue the dominance in another layer. Wu defends it as being a less subjective principle than antitrust, which has been the only tool to use against such companies to this point. I’m not sure I entirely agree with his premise, but I do think some clear guidelines on what kind of integration makes sense will be useful. And since he recently took a position as a senior advisor at the Federal Trade Commission, he will have the chance to make such recommendations. It will be interesting to see what happens.

I recommend this book if you’re interested in these sorts of issues. While Wu falls short in his attempt to draw together the overarching narrative of “the Cycle”, I appreciated the chance to learn more about the history of the telecommunications and media industries in an easy-to-read form.

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Call your shot
Posted: March 3, 2011 at 10:00 am in management ~ Permalink

Babe Ruth pointing to the stands, and then hitting a home run.

Joe Namath guaranteeing a Super Bowl victory despite being an 18-point underdog, and then going out and winning it.

There’s something magical about calling your shot – telling people you’re going to do something impressive and then doing it.

Even in the workplace, the way to earn more credibility, more trust, and more freedom to do what you want without interference, is to call your shot. Tell your audience, whether it’s your managers, your team, or your investors, that you’re going to do something ambitious and then execute. Every time you call your shot and make it, you earn yourself a longer rope. If you watch the dynamics at your workplace, you’ll see this play out repeatedly.

Of course, the downside is that if you call your shot and fail, then you may lose credibility. It’s a risky ploy in that way.

But the bigger risk may be not committing to any goals at all for fear of failure. Not calling a shot means that you are subject to those around you – the freedom and credibility will go to those who take risks, while you are left behind.

Which risk do you prefer? The risk of inaction or the risk of trying something ambitious and failing? And does it change the decision to realize that trying and failing is more respected and more satisfying by far?

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Who is your audience?
Posted: February 20, 2011 at 11:29 am in management, marketing ~ Permalink

One of the broader points that I don’t know if I made clearly in my last post is that effective communication depends not only on the message you are delivering, but also on the audience which the message is targeting. In the case of writing a resume, you have to remember that you are targeting a busy hiring manager who will spend less than ten seconds in glancing at your resume before making a decision. To get the phone screen, you need to tailor your resume for that audience, rather than doing what is most convenient for you.

This idea of knowing your audience resonates in all aspects of business life. It’s difficult to design an effective communication without knowing who the recipient is. But if you know who are you speaking to and the message you want to deliver to that person, it makes it much clearer how to design that message to reach your target. For instance, when a presentation is not coming together, I am often able to help coworkers by asking who the target audience of the presentation is, and what message they want to deliver to that audience. I’ve learned from my manager to ask of each element of the presentation “So what?” – why should the audience care about what I’m presenting?

As an aside, another aspect of designing effective presentations is realizing that you need to get the audience’s attention in the first 30-60 seconds, just like with a resume. These days, every audience has their smartphones or their laptops in easy reach with lots of distracting possibilities. So your presentation has to grab their attention in the first minute, or they’ll tune you out and go catch up on email or Twitter or Facebook. Any presentation that depends on the audience paying attention for ten minutes before delivering any sort of pay-off is going to fail because the audience will have been lost. As with the resume, what you are really trying to do with a presentation is earn the right to the audience’s attention for a little while longer. Structure the presentation in such a way to deliver value to the audience throughout, or you will lose them.

Being able to understand your audience well either involves empathy or experience. Empathy in the sense that it depends on being able to put yourself in the position of your audience to understand what they care about. Experience can sometimes substitute for empathy as you may have been in the position of your audience yourself (e.g. my experience as a hiring manager has made it clearer to me what other hiring managers might be looking for on a resume). Either way, though, the first step is to step away from your own knowledge and needs to think about what your audience needs to get from your communication.

This is also a key skill as a product manager – understand the target user, figure out what problems they are having and design a new product or feature to solve their problem. All too often, product managers start from a self-centered point of view and create a new product/feature based on what they can offer without thinking through what their user wants. This is particularly common in larger corporations where the product managers are often separated by many layers from dealing with actual customers or users. Meanwhile, in my time at Fog Creek, I spent enough time on the phone doing tech support and sales that the perspective of our customers was never far from my consciousness. Again, either empathy for or experience as the potential user is crucial to making the right decisions.

Developing the ability to effectively construct communications for a variety of audiences, whether the communication is in the form of a presentation, a white paper, an email, or a product requirements document, is a skill that is essential to corporate life (and, really, all of life). So before your next important communication, think about who your audience is, what they want, and how you can construct your communication in such a way as to get your message across more effectively.

P.S. It’s interesting to note how my thinking on this has evolved slightly from my post in 2009 asking what is the story, as I now realize that getting the story right involves understanding the audience. Stories are not universal – they are just one way to convey a message from me to you.

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How to write a resume
Posted: February 18, 2011 at 8:59 am in management ~ Permalink

I’ve written the same email five times in the last several months giving friends advice on how to write their resume, so I figured it was time for me to package it into a blog post that I could then just link to when needed. Assume this is my response to somebody with a few years of experience who is starting to look for a new job and looking for feedback on their resume.

The first thing to remember is that a resume is a sales brochure – the goal of a resume is to convince the HR person and hiring manager to give you a phone screen. That’s it. Your resume is not your career history or academic C.V. where you list everything you’ve ever done – its only purpose is to convince somebody to give you more time to sell them on the fact that you are the right person for the job.

Even scarier, your resume has only ten seconds to make that initial sale and convince the company person that you are a good enough fit for the position to be worth spending more time on. It may seem unfair for your career to be evaluated in ten seconds, but I’m often reviewing resumes at the end of the day, flipping through a stack and seeing if any catch my eye. I’ll review the ones that catch my eye more closely and spend as much as 30-60 seconds looking at the resume before making a decision on the phone screen. But the resume has to grab my attention in the first ten seconds, or it’s gone. I like Rands’s take on how a hiring manager scans resumes to explain the thought process.

If you only had ten seconds to sell yourself to somebody, would you try to tell them your entire life story? Of course not – you would tell them only a few key points that make you stand out and show that you’d be a great fit for the position. You should take that attitude with your resume – anything in your resume that does not contribute to the immediate goal of selling yourself to the company should be removed.

So what does that mean in practical terms? You need to make it really easy for the resume reviewer to learn what you want them to know about you in that initial ten seconds. You can help with that by only including what you want them to know and using formatting to make particular bits stand out. For instance, on my resume, I put my academic degrees at the top because seeing MIT, Stanford and Columbia generally gets people’s attention. I’ve also gotten to the point in my career where I’ve started dropping jobs that aren’t relevant to my current career track (e.g. my physics internship between undergrad and grad school).

You also need to sell yourself on the resume. This is difficult for many engineers and introverts, as bragging is not something that comes naturally to us. But this is the place to do it. Talk about how great you are, and the amazing things you’ve done. You can not expect the reviewer to spend time reading between the lines to understand your awesomeness – you have to spell it out in neon so they can get it on a quick glance.

Along those lines, list key accomplishments, not responsibilities. Don’t tell me that you were doing X, Y and Z – that doesn’t tell me whether you did X, Y and Z well, even if you say you “successfully” did X. Tell me how you changed things for the better. How was the company different because you were there rather than some other person? If you can quantify your accomplishments, even better – increased sales 20%, reduced downtime by 50%, whatever you can measure. As an aside, this is also useful to consider how you are approaching your current job – what are you accomplishing and can you measure it?

Make the resume specific to the job that you are applying for. Remember, the resume is a sales brochure – you want to target your sales job at your customer, the resume reviewer in this case. That may change which of your accomplishments you want to highlight in a given job, or may change what you want to emphasize with formatting on the resume. You can have a “raw materials” career history with all of your career accomplishments from which to draw, but then edit it down for this specific audience.

Include interesting extracurriculars, especially ones that show achievement. Again, the goal of a resume is to stand out from all the others ones in the stack being reviewed – extracurriculars are one way to do that. We had one candidate last year that included the fact that she had won beauty contests as a teenager – totally irrelevant for a financial analyst position, but it made her resume stand out, and we took a closer look at her actual credentials and brought her in for an interview. In my case, my San Francisco Symphony Chorus experience, which included singing at Carnegie Hall and winning a Grammy, is a nice tidbit to mention.

Keep the resume to one page – this may seem impossible once you have more than a couple jobs, but if you only list one or two key accomplishments from each job, you can do it. Remember, anything that isn’t relevant to making the sale shouldn’t be on the resume anyway. Plus I rarely read beyond the first page of a resume, so if there’s anything on the second page that you wanted me to see, you lost your chance.

I highly recommend converting your resume to a PDF before submitting (I print to a PDF file using CutePDF), just to make sure that formatting is preserved and nobody can edit your resume as it wends its way through the system.

That’s about it. Remember the key points – your resume is a sales document designed to earn you more time to sell yourself on why you’re the right fit for the job. It initially has ten seconds to stand out, and then another 30-60 seconds to convince the resume reviewer to give you a phone screen. Everything on the resume should contribute to closing that sale. If you do that, your chances of getting phone screens will go up.

P.S. I’ve uploaded the resume that got me the interview at Google if you’re interested in what I did last time I was looking for a job. I’d do things differently now, but hopefully it gives some ideas.

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Incremental steps towards uselessness
Posted: June 15, 2010 at 6:33 am in journal, people ~ Permalink

Last night, I attended the Mountain View Linchpin Meetup, inspired by Seth Godin’s blog post (speaking of which, I need to review Godin’s book Linchpin at some point). Spending an evening with a group of people following their passion inspired me to take a swing at restarting this blog yet again.

Today’s topic – the danger of the slippery slope, as represented by me having given up on following Facebook, or my RSS feeds, or Twitter, mostly.

Why?

Because there’s too much to follow in each of them. It takes too much time each day to stay “up-to-date”. And once I fall behind, it’s hopeless to catch up, and I have trouble letting the bits go, so I just give up entirely.

How did I get here?

By being tempted by the deceptive value of “just one more”. On Twitter, when I met or heard about somebody, I would look at their Twitter feed and if they looked marginally interesting, I’d start following them. And that was my mistake. I was comparing the value of following their Twitter feed to nothing – so long as I liked even a couple entries in the feed, I added it. But that doesn’t properly value my time – the time it takes to read those extra Tweets adds up. And because I have not been ruthlessly curating the people I follow, I’m not excited to skim through all the dross to find the gems that can appear in my Twitter stream.

In other words, a number of thoughtless incremental decisions have led me to a situation where the entire system has become useless.

The same was true of my RSS feeds – once it got to the point where it felt like a burden to keep up because I’d added too many low-marginal-value feeds, then I stopped checking, even though there are still several truly amazing people whose work I want to track.

I’ve noticed the same trend for me at work over the years. I’ll agree to take on a “quick” task, 10-30 minutes, because how can I turn down being helpful if it will take me less than a half hour? And yet, those “quick” tasks, in aggregate, add up to a significant burden.

What does this mean?

For me, it means I need to re-examine the choices I make. I need to realize that adding even a seemingly trivial task or input to my life can, over time, add up to quite a drag. I need to learn that unless my answer is “Hell, yeah!”, my answer should be no. I need to be stop wasting my limited energy on small things, and focus on what’s important.

Of course, that means deciding what’s important for myself, which is a whole separate problem, but let’s start by clearing out the unimportant stuff out first.

Thanks again to all the great people I met last night, and let’s see if I can stop making excuses and start writing blog posts again.

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Management Innovation Exchange
Posted: April 19, 2010 at 6:19 am in management ~ Permalink

The Management Innovation Exchange (aka MIX) looks like an interesting project. It’s a collaboration between McKinsey, London Business School and a couple companies like Dell, with the idea being to open source ideas about management. It’s unclear yet whether it will attract a critical mass of community to discuss ideas (so far, the curation looks weak), but given my long-standing interest in different management structures, I plan to stick around for a while offering up ideas. I’ve already written one post there about the challenges of communication within an organization, and plan to do a couple more this week. Check it out!

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Trade-Off, by Kevin Maney
Posted: April 12, 2010 at 6:26 pm in management, marketing, nonfiction ~ Permalink

Amazon link

Trade-Off is a book which explores a simple, but useful, way to frame the world. Kevin Maney plots products along two dimensions, fidelity and convenience, and then spends the rest of the book discussing how products end up in different places on that graph, from the “fidelity belly” to the “fidelity mirage”

Fidelity is essentially quality – what makes a product unique or an experience. Examples include luxury goods that identify the owner as a person of taste, or live rock concerts where the sheer sensory overload is unmatchable by one’s stereo.

Convenience is, well, convenience – how easy it is to get the product. This includes both physical convenience as well as cost – places like Wal-Mart aim to maximize convenience by being a one-stop shop with the lowest prices.

Maney makes a few key points:

  • There is always a trade-off between fidelity and convenience. Trying to position the same product as being the highest quality as well as the most convenient is oxymoronic (one of his interviewees quips that “A successful business is either loved or needed.”). He calls this the “fidelity mirage” where a company attempts to maximize both dimensions at the same time, which generally leads to failure in the marketplace.
  • The products that win pick a dimension to maximize and stick to it. Either they aim to be the high-end of the market, like Apple has with the iPhone, or they aim to be the commodity provider, like Wal-Mart. Being clear about where a product is positioned is essential to success.
  • Products that fail to distinguish themselves along either dimension end up in the “fidelity belly”, neither high enough quality to distinguish themselves, nor convenient enough to compensate for the perceived lack of quality.
  • One useful observation was that technology continually expands the boundaries of the “fidelity belly”. The feature that made your product unique and special a year ago will get copied by your competitors and is no longer a distinguishing characteristic – the fidelity advantage has been lost. Similarly, a supply chain innovation that enabled lower prices can also be copied, losing the convenience advantage. Companies must keep innovating to stay ahead of their competitors, and only by staying focused on one dimension can they outrace the “fidelity belly”.

That’s basically the whole book right there. He tells a bunch of stories about how companies succeed or fail framed with this viewpoint, but you get the idea.

The book was a good reminder about the importance of focus and positioning; understand where you can get a step on your competition, and then find ways to maintain or extend that lead. The same applies to personal positioning, as Maney mentions in an epilogue. All in all, it was a quick read from the library, but I can’t particularly recommend it.

P.S. Jim Collins, the Good to Great author, wrote the introduction, and had a nice paragraph explaining the value of finding new mental models as tools:

A strategic lens … does not in itself give an answer about what you should do, and not do. Rather, and much better, it forces you to engage in a powerful question, from which you derive your own insight and make your own decisions. If you engage your team in a vigorous debate stimulated by the questions that naturally arise from the ideas in these pages, you will gain deeper understanding not just of what you should be doing (or not) but, even more important, why. The power of a strategic concept lies first and foremost in giving us a lens and a stimulus for hard thinking and hard choices. The critical question is not its universal truth, but its usefulness.

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How We Decide, by Jonah Lehrer
Posted: April 1, 2010 at 7:18 am in cognition, nonfiction ~ Permalink

Amazon link

I picked this up from the library, as yet another in the recent series of books I’ve been reading that reinforce my own biases. Overall, I liked it – I knew most of the patterns in cognition that the book describes, but it summarized them nicely with good anecdotes.

One standard model of decision-making is that we are rational beings. We examine all of our options, we think through the consequences of making a decision, we weigh the costs and benefits, and then we decide. Philosophers like Descartes think that this rational mind is what separates us from other species (“I think, therefore I am”).

Another model is that of the unconscious mind, as popularized in recent books like Sources of Power and Blink. The theory here is that our brains have evolved over millenia to have an enormous amount of processing power that is not consciously accessible, and sometimes we have to trust the “intuition” that the unconscious mind is giving us.

Lehrer’s book reviews the strengths and weaknesses of each of these cognition models to help people understand when it’s appropriate to use each model.

The rational conscious mind is limited in power – we’ve all heard the idea that we can only keep 7 information nuggets in our brain at a time. It’s a bandwidth-limited single processor (one estimate is that it processes at 20 bits/second). Its strengths are that it can logically process new situations, override our kneejerk impulses that may not be appropriate to the situation, and come up with responses that have not been tried before. Also, decisions made using the rational path are easy to explain, as they are based in logic. Its weaknesses are that it is slow and has limited capacity (check out his anecdote on self-control when trying to remember too many things), and therefore works best on well-defined problems with only a few dimensions to consider.

The unconscious brain is in many ways the opposite of the rational brain. It is a parallel processor with enormous capacity that can optimize decisions among many conflicting dimensions. It is also extremely fast – it works by training neural circuits to recognize previously seen situations and respond quickly without involving the conscious mind. When we are developing our 10,000 hours of expertise, we are building the necessary neural pathways in the unconscious brain (what Daniel Coyle says are myelin sheaths).

However, the unconscious brain does not deal well with novel situations, as it may seize on an already-trained, but inappropriate, response. It is also unreliable in situations where previously seen inputs have different outcomes because the training doesn’t work – Lehrer cites slot machines as an example of the unconscious brain desperately trying to find patterns when none exist. One final weakness is that the decisions made by the unconscious brain are difficult to explain, as they are expressed through emotions we feel and so we can’t analyze the decisions rationally.

Lehrer describes many situations when the two minds are used inappropriately. For instance, complex multivariable problems can not be answered by pure reason (Lehrer cites the example of a man who lost his emotional capacity after a brain tumor was cut out, and was completely unable to make normal life decisions). In fact, if we try to attack such problems with the rational brain, we make poorer choices because we seize on variables that are easy to explain rationally rather than considering all of the possible benefits (Lehrer cites an amusing study where undergrads had to choose a poster to take home; those that had to give a reason for choosing a poster ended up choosing posters they were less happy with compared to the ones that just chose a poster). Lehrer suggests that the best strategy when confronting a complex decision with many variables is to study it carefully to load all of the information into our unconscious brain, and then go do something else (take a walk, go for a driver) while the unconscious brain processes that information. This idea is reflected in the standard trope that the best ideas come in the shower.

However, the unconscious brain only works well in repeatable situations where it can try out different responses to the same set of inputs and encode what works into the neural pathways. In novel situations, we can’t trust our instincts and have to slow down and engage the conscious brain. Lehrer tells the story of a team fighting a forest fire when the wind shifted unexpectedly and came towards them. The leader realized the fire was going to overtake him before he could get to safety, stopped running, thought for a second, and then set his own fire to create an already burned spot, which he then stepped into so that the forest fire would go around him. Most of his team was lost because they were only listening to their emotional brains telling them to run from the fire.

I liked the book’s balance between the “Blink” theory of trust your instincts and the “Descartes” theory of following reason. Both methods of cognition have advantages and disadvantages, and the best decisions will be made by taking those strengths and weaknesses into account. In some sense, the two brains are mental tools, and it’s up to us to understand when it’s appropriate to use each tool.

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