If only we would let ourselves be dominated

In a thoughtful post entitled “Thoughts on the Financial Crisis“, Tim O’Reilly quotes a Rilke poem:

I can tell by the way the trees beat, after
so many dull days, on my worried windowpanes
that a storm is coming…What we choose to fight is so tiny!
What fights us is so great!
If only we would let ourselves be dominated
as things do by some immense storm,
we would become strong too, and not need names.

He explained the quote like this:

There are a lot of people bloviating about the financial crisis. It’s outside of our area of expertise, so there didn’t seem to be a lot of urgency to add to the hot air. Even professional economists and financial experts disagree on where this is going. I’ve been reading a lot, and sharing the best links via my twitter feed, but frankly, I’m feeling that we’re in the middle of a wave that no one completely understands.Meanwhile, I did in fact spend my NY Web Expo talk on the idea that “I sense a storm coming” (Rilke quote), and the idea that companies and individuals need robust strategies (ones that can work even in uncertain times), with one robust strategy being to “work on stuff that matters.”

In a letter to his own employees where he elaborates on this, he passes on some great advice that we can all heeded:

Many of you have no doubt been alarmed by the developments of the last couple of weeks in financial markets……robust strategies are ones you’d adopt in good times and in bad…we probably end up with more robust strategies if we assume the worst rather than the best.

We could be in for a long, rough time in the economy. I’m not going to say otherwise.

But I also want to point out that rough times are often the best times for creativity, opportunity and change.

…And if you look at history, you see that this has always and everywhere been true. It’s not an accident that economist Joseph Schumpeter talked about the “creative destruction” inherent in capitalism. Great problems are also great opportunities for those who know how to solve them. And looking ahead, I can see great opportunities.

The energy crisis (both global warming and the oil price shock) is helping people to focus on how technology can transform the energy sector. The financial crisis has demonstrated just how out-of-whack an unregulated, proprietary, black-box approach can get. This will lead to
an emphasis on regulation, but I hope, above all, on transparency. This is of course analogous to what happened with open source software. Meanwhile, the mobile revolution will continue, regardless of the state of the economy. If it can prosper in Africa, it can prosper even in an
American downturn. And all the stuff we’re exploring with Make: new materials, new approaches to manufacturing, and the “open source” approach applied to hardware, will take us in unexpected directions.  And all of these areas can benefit from what we do best: capturing and
spreading the knowledge of innovators.

We don’t know yet how problems in the overall economy will affect our business. But what we can do now are the things we ought to be doing anyway:

  • Work on stuff that matters: Assuming that the world does go to hell in a handbasket, what would we still want to be working on? What will people need to know? (Chances are good that they need to know these things in a world where we all continue to muddle along as well.)
  • Exert visionary leadership in our markets. In tough times, people look for inspiration and vision. The big ideas we care about will still matter, perhaps even more when people are looking for a way forward. (Remember how Web 2.0 gave hope and a story line to an
    industry struggling its way out of the dotcom bust.)
  • Be prudent in what we spend money on. Get rid of the “nice to do” things, and focus on the “must do” things to accelerate them.
    These are all things we should be doing every day anyway. Sometimes, though, a crisis can provide an unexpected gift, a reminder that nobody promised us tomorrow, so we need to make what we do today count.

Book Review: Nudge by Thaler and Sunnstein

Looks like we have a Tipping Point / Made to Stick / Fooled by Randomness type instant classic here:

This year has seen a glut of books on topics in that strange area occupied awkwardly by behavioural economics, cognitive psychology, and experimental philosophy. Some fail to distinguish themselves, merely rehashing the many ways in which we aren’t perfectly rational creatures. Others, however, find an original angle to tack the last 30 years of work since Daniel Kahneman first thought “but wait, real people don’t make rational choices”. Nudge (Thaler and Sunnstein, Yale University Press, 2008) is from two leading University of Chicago economists and takes a public policy angle that has been rewarded in the bestseller lists.

The authors (who refer to each other by their last names, even in the blog that accompanies the book, an awkward affectation that makes me picture two 1950s men in suits at a work cocktail party) have coined a new term: libertarian paternalism. By this they mean that policy makers can use your brain’s decision-making shortcuts to steer you towards good behaviour while still leaving you free to choose bad. It’s opt-out public policy.

Libertarian Paternalism is a brilliant phrase because it has something for everything: libertarianism for the Small Government suit, paternalism for the Smug Liberal. Nudge has been required reading in the halls of English and US power, because it promises that you can have your cake and eat it. You can make decisions for other people, but not be hated by the people who don’t like you making decisions for other people! What’s not to love?

The book has a simple structure: first the authors walk us through our cognitive biases, the flaws in our decision-making apparatus; then they take us through different real-world scenarios such as social security, healthcare, and education; and finally they deal with objections and suggest future avenues of exploration. In each subject area, the authors suggest “nudges” (the authors endow the word with the same near-religious air that accompanies “social graph” and “RoR” in Web 2.0 circles) that will gently encourage people to do the right thing. For example, we tend to fear losing things more than we anticipate gaining things, so the authors suggest we not immediately deduct money from salaries to increase retirement savings (which would be perceived as a loss) but instead reduce future raises and put the reduction towards retirement. Then backing out would require losing the retirement saving you were doing (a loss, felt more keenly than the gain of the spending money).

[From Book Review: Nudge – O’Reilly Radar]