May 8th, 2020
Innovation and Encouragement
“Skillful pilots gain their reputation from storms and tempest.”—Epicurus.
We may not be able to control our current circumstances, but we can control our thinking, our actions and our use of innovation. First, however, we need to keep a reasonable outlook by looking to the near past.
We have been challenged with difficulties many times over the years in our industry. In the last 40 years, we have gone through five trying economic times:
1979-80: nearly 11% unemployment with six negative GDP quarters and mortgages at 18% with 550,000 homes built;
1990: 8% unemployment with two quarters of negative GDP and 9.5% mortgages with 600,000 homes built;
2001: 6.5% unemployment with three quarters of negative GDP and 7% mortgages with 1.1 million homes built;
2008: 10.1% unemployment with five quarters of negative GDP (one quarter at -8.5%) and 4.5% mortgages with 500,000 homes built; and, lastly
2020: when short-term estimates are calling for 15+% unemployment, but low mortgage rates and strong home demand.
The industry has always been resilient during these times and very few well-run companies fail. Amid these conditions, the best companies focus on improvement and innovation. By finding innovative ways to build products safely, by creating product innovations and by creating innovative ways to deliver value—the best companies increase their value amid adversity.
The same approach is what I suggest for us as individuals. We are strong now and can get stronger by innovating our thinking!
Our core thinking “bias” is built up over time, and by our experiences, and with some effort we can discover some of these built in and hidden thought processes. During this time of isolation and with less time spent commuting, we can dig into these biases. Our judgements of others, our judgements that guide our decisions and our judgment of crisis are created through these biases. In the next few blogs we will discuss the main areas to focus on. I reference the “Thinking Shop. org” for their approach, including:
“Anchoring: The first thing you judge influences your judgment of all that follows.”
Our minds are associative and seek automatically to find connections. If you find the first idea presented to you to be poor, it is likely you will judge the next few ideas to be poor, too. If you judge that same presenter’s first idea as good, or even great, you are very likely to appreciate all of the ideas that follow. Think back to some good and some poor presentations and judge your own thinking. If you find that you use “Anchoring,” work to understand this tendency and fight it. Force yourself to keep an open mind and reserve your judgements. We do the same anchoring with people. If we like the first impressions we field from an individual, we tend to increase our like for them. Work to improve this anchoring trend and be “centered.”
“Sunk cost fallacy: You irrationally cling to things and ideas you have already invested in.“
When we have sunk money, time and emotion into a project or person, it hurts us to let them go. We tend to put good money after bad. We have a natural tendency to view our past decisions as all good and we try to reinforce that idea. Sometimes, an internal insecurity is strong enough to cause fear of failure, which causes us to double down on believing old decisions were great. Ponder on this concept by reviewing your history of backing sunk cost projects and reevaluate some questionable investments.
“Confirmation bias: You search for ways to justify your current beliefs.”
We all know people who are immediately on the defensive concerning every proposed change, and we all have various tendencies to do this. This also applies to innovation ideas. To be the best innovator, you must fight the tendency to revert to old beliefs about “just the way things are done here.” We should look for the reasons old beliefs are wrong and how they are based on older circumstances. “Don’t fool yourself as you are the easiest person to fool,” said Richard Feynman.
The best innovators are also the best and clearest thinkers. Examine your hidden biases, resolve to improve on them and become that great innovator!
We will review more of the 24 biases in our next blogs. For now, be safe and Keep Innovating!