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Moral hazard and inhumanity

25 October, by Seth Godin[ —]

One bit of economic reasoning says, "If there are no consequences, people will make bad choices."

Don't let big banks get bailouts, because if we do, bankers will take bigger risks.

So, make sure that the dentist is expensive (and painful) because that will encourage people to brush their teeth.

And don't make it too easy to collect on fire insurance, or people will be careless with matches.

Insurers call these behaviors 'moral hazards.' (And some call them 'morale hazards' fyi). In specific instances, people will make choices that cause harm to themselves and to society because they don't fear the consequences.

Without a doubt, this makes sense for organizations.

But the instances are more specific than you might guess. For example, awareness of the certainty of lung cancer forty years later doesn't do much to keep teens from smoking. The long-term consequences didn't matter—it was a tax on cigarettes that made the biggest difference.

And telling a mentally ill homeless person that he 'deserves' to live on the street because of bad choices along the way isn't doing anything for him, or to those that might be forced into his situation down the road.

Waiting for an employee to screw up so we can fire her seems a convoluted way to set a standard for the rest of the team.

Too often, we get confused about what people deserve vs. what they get. We use our instinctual, Calvinist understanding of moral hazard as an excuse to teach people a lesson, to callously embrace an efficient market. But of course, the market isn't efficient at all. It unevenly distributes rewards to people based on luck, and allows those with an early head start to amplify that lead with less and less effort.

It turns out that building homes for homeless people is a great way to cut homelessness overall. Poverty doesn't usually respond to moral hazard approaches.

Life's risky and it's played for keeps. We all benefit from a safety net.


On being irritated

25 October, by Seth Godin[ —]

Irritation is a privilege.

It's the least useful emotion, one that we never seek out.

People in true distress are never irritated. Someone who is hungry or drowning or fleeing doesn't become irritated.

And of course, irritation rarely helps us get what we need.

Irritation clouds our judgment, frustrates our relationships and gets our priorities all wrong.

Irritation tries to persuade us that it's justified, but it merely pushes us away from what we actually need.

In order to be irritated, we need to believe we're not getting something we deserve. But of course, that expectation is the cause of the irritation. We can choose to lose the expectation, embracing the fact that we're lucky enough to feel it, and then get back to work doing something generous instead.

It turns out that irritation is a privilege and irritation is a choice.


Hardware is sexy, but it's software that matters

23 October, by Seth Godin[ —]

You can make software if you choose to.

Not just the expected version of software that runs on a computer, but the metaphorical idea of rules and algorithms designed to solve problems and connect people...

Apple started as a hardware company with the Apple II. Soon in, they realized that while hardware is required, it's software that changes the world.

For years, the Mac was merely a container for Mac software. It was the software that enabled the work we created, it was software that shifted our relationship with computers and ultimately each other.

Over the last five years, Apple has lost the thread and chosen to become a hardware company again. Despite their huge profits and large staff, we're confronted with (a partial list):

  • Automator, a buggy piece of software with no support, and because it's free, no competitors.
  • Keynote, a presentation program that hasn't been improved in years.
  • IOS 10, which replaces useful with pretty.
  • iTunes, which is now years behind useful tools like Roon.
  • No significant steps forward in word processing, spreadsheets, video editing, file sharing, internet tools, conferencing, etc. Apple contributed mightily to a software revolution a decade ago, but they've stopped. Think about how many leaps forward Slack, Dropbox, Zapier and others have made in popular software over the last few decades. But it requires a significant commitment to keep it moving forward. It means upending the status quo and creating something new. 

Some simple principles:

  • Software can change faster than hardware, which means that in changing markets, bet on software.
  • It's tempting to treat the user interface as a piece of fashion, some bling, a sort of jewelry. It's not. It's the way your user controls the tool you build. Change it when it stops working, not when you're bored with it. Every time you change the interface, you better have a really good reason.
  • Hardware always gets cheaper. If you can't win that race, don't run it.
  • Getting users is far more expensive than keeping users, which means that investing in keeping users is the smartest way to maintain your position and then grow.
  • Software can create connection, and connection is the engine of our future economy. 

This is more than a rant about Apple. Any company that makes or uses software has a wide-open opportunity to dramatically change the way we engage. Hardware, on the other hand, often closes more doors than it opens.

If you can, make software. And bring enough value (through efficiency, power and connection) to the marketplace of your choosing that it will have trouble being productive or happy without you.


Beating yourself up

22 October, by Seth Godin[ —]

This odd behavior mostly shows up when others are criticizing us, disappointed or angry about something we did. Odd because it's so useless.

In those moments, there are already plenty of other people beating you up. Save yourself the trouble.

The rest of the time, when things are going well, it's foolish to stop and engage in self-criticism. It makes more sense to encourage yourself, to bootstrap your way to even more of a ruckus.

So, the moments left to beat yourself up = zero.



Pet peeves

21 October, by Seth Godin[ —]

Peeves make lousy pets.

They're difficult to care for, they eat a lot, and they don't clean up after themselves.


Making a new decision based on new information

20 October, by Seth Godin[ —]

This is more difficult than it sounds.

To some people, it means admitting you were wrong.

(But of course, you weren't wrong. You made a decision based on one set of facts, but now you're aware of something new.)

To some people, sunk costs are a real emotional hot button, and walking away from investments of time, of money, and mostly, of commitment, is difficult.

(But of course, ignoring sunk costs is a key to smart decision making).

And, to some people, the peer pressure of sticking with the group that you joined when you first made a decision is enough to overwhelm your desire to make a better decision. "What will I tell my friends?"

A useful riff you can try:

Sure, I decided that then, when I knew what I knew then. And if the facts were still the same, my decision would be too. But the facts have changed. We've all heard them. New facts mean it's time for me to make a new decision, without regard for what I was busy doing yesterday, without concern for the people who might disagree with me. My guess is that once they realize these new facts, they're likely to make the same new decision I just did.

This decision is more important than my pride.

PS Today might be a good day to consider the altMBA. Our next session of this intense workshop is in January, and we're accepting applications right now. Every previous session has been completely full, and this one will be no exception... 



19 October, by Seth Godin[ —]

If you're sharing a cab to the airport with a stranger, what happens if he's two inches taller than you? Probably nothing. There's nothing to distract, or to cause discomfort. You make small talk.

What if he's a little shorter than you? Or left handed?

Perhaps he's not from your town, but from Depew, about twenty miles away. Probably nothing to consider...

What if he has shoulder-length red hair?

At some point, most people reach a moment of discomfort. What if he's 7 feet tall? Will you mention it? Or if he's under four feet? What if he's from a different country? Or a different race or speaking with a significant accent (or, more accurately, an accent that's different from yours)? 

For as long as we've been keeping records, human beings have been on alert for the differences that divide us. Then we fixate on those differences, amplifying them, ascribing all sorts of irrelevant behaviors to them. Until, the next thing you know, we start referring to, "those people."

It seems as though it's a lot more productive to look for something in common. Attitudes and expectations. Beliefs in the common good and forward motion. A desire to make something that matters...

Because there's always more in common than different.

[and just out, here's a bonus interview with Marie.]


You're invited to an all-day Q&A in New York in December

18 October, by Seth Godin[ —]

We've been planning this one for months...

On Saturday, December 10, I'll be running an all-day session in New York. You can find all the details and tickets by visiting this site.

I want to connect you to other people making a ruckus.

I want to create an environment where you can learn more and dream bigger.

And I'd like to do it in a way that lasts.

Forgive me for going so long without holding one of these remarkable sessions. On December 10, we're going to try to make up for lost time.

It's designed for leaders, connectors and makers. While we will talk a bit about marketing, it's mostly about making a difference, seeing opportunities and changing things around you for the better. In the past, we've had CEOs of fast-growing companies, younger contributors just starting out in their careers, and solo freelancers as well. People come from all over the world, from non-profits and from the Fortune 100 as well.

Alert readers of this blog qualify for a $45 discount using the code LeapFirst.

There are fewer than six hundred seats, and many of them are reserved for groups of two or five, so if you're interested, I hope you'll check it out soon.

Hope to see you there.



16 October, by Seth Godin[ —]

The things that break all at once aren’t really a problem. You note that they’ve broken, and then you fix them.

The challenge is corrosion. Things that slowly fade, that eventually become a hassle--it takes effort and judgment to decide when it’s time to refurbish them.

And yes, the same thing is true for relationships, customer service and all the 'soft' stuff that matters so much.


Ketchup and the third-party problem

5 October, by Seth Godin[ —]

Sir Kensington's Ketchup is better ketchup. Most adults who try it agree that it's more delicious, a better choice. Alas, Heinz has a host of significant advantages, including dominant shelf space, a Proustian relationship with our childhood and unlimited money to spend on advertising.

The thing is, you can buy Sir Kensington's any time you want to. And when you buy it, that's what you get.

You're not buying it to teach Heinz a lesson. You're buying it because that's the ketchup you want.

The marketing of Sir Kensington is simple: If you want better ketchup, buy this, you'll get it.

Elections in the US don't work this way.

I'm calling it a third-party problem because the outcome of third-party efforts don't align with the marketing (and work) that goes into them.

Ross Perot, the third-party candidate who ran against Bush and Clinton, cost Bush that election. The people who voted for Perot got Clinton, and it's pretty clear that the Republicans learned nothing from this, as the next winning candidate they nominated was... George Bush.

Ralph Nader, the third-party candidate who ran against Bush and Gore, cost Gore that election. The people who voted for Nader got Bush, and it's pretty clear that the Democrats learned nothing from this, as the next person they nominated was... John Kerry.

[Irrelevant aside: John Kerry was married to the heir of the Heinz Ketchup fortune.]

[I'm calling it a 'problem' because I have such huge respect for people who care enough and are passionate enough to support change. The problem is that since Gus Hall, and then John Anderson and then the more recent candidates, just about all the changes that third parties have tried to bring to national politics have foundered. It just isn't a useful way to market change in this country.]

If enough people spent enough time, day after day, dollar after dollar, we could fundamentally alter the historic two-party system we have in the US. But it's been shown, again and again, that the easy act of letting oneself off the hook by simply voting for a third-party candidate accomplishes nothing.

The marketing of the third-party candidate is: Teach those folks a lesson, plus, you're not on the hook for what happens. But...

No one in government is learning a lesson.

And you don't even get who you voted for.

The irony is not lost on me. A small group of voters who care a great deal are spending psychic energy on a vote that undermines the very change they seek to make. 

It's a self-defeating way of letting yourself off the hook, but of course, you're actually putting yourself on the hook, just as you do if you don't vote at all.

No candidate has earned a majority of all potential (regardless of registration) voters, not once in my lifetime. Which means that the people who don't vote, or who vote for a third-party candidate, have an enormous amount of power. Which they waste.

Yes, it's on you. Your responsibility to vote for one of two people, and to be unhappy with that conundrum if you choose. And then work to change the system, and keep working at it... 

But it's not like ketchup. With ketchup, you get what you choose. With voting, we merely get the chance to do the best we can on one particular day, and then spend years working for what we might want.

It turns out that democracy involves a lot more than voting.


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