Tag Archives: reflection

Decisions, Decisions, Decisions (Part 2)

How can we improve our decision-making?

Source: Quora

Most of us live in “react-mode.” We’re like thermostats – the temperature goes up, and we try to cool things down. It gets a little chilly, and we turn up the heat. We don’t deliberate, we just do something because it makes us feel better. But reacting to circumstances doesn’t change the underlying situation. It just makes us a little more comfortable, for a little while.

One of the best ways to improve our decisions is to slow down. Think about the underlying dynamics of what’s going on. In Thinking Fast and Slow Nobel prize-winner Danny Kahnemann posits that our brains use two cognitive systems. System 1 thinking is fast, intuitive, and emotional. System 2 thinking is slow, deliberative, and logical. System 1 thinking is important for survival. When three deer jump onto the highway 50 feet in front of you, you don’t have much time to figure out what to do. You step on the brakes!

Photo: M Prinke. Source: Animalphotos.info

But usually we have time to pause and reflect. Not all decisions need patient deliberation, but a lot do. Buying deodorant doesn’t require much planning. But buying a pet does: pets are effectively family members, requiring care and attention. A new puppy or kitten can change many aspects of your life – how you travel when you get home, what kind of vehicle you need. The long-term effects can be profound.

So think about the consequences. It may be emotionally satisfying to yell at someone who cuts you off in traffic, but it’s a good idea to close your windows, first. Successful people and organizations don’t react, they act. They pause and think before they take action. The process of stopping and thinking almost always improves the quality of our responses. United Airlines CEO Oscar Munoz probably wishes he had reflected a little more before writing that first email.

Lord Acton once said that if it is not necessary to decide, then it is necessary not to decide. And if the decision can’t wait, you can at least count to ten.

Douglas R. Tengdin, CFA

Turning Play Into Work

What’s wrong with the “PlayPump”?

Source: Marginal Revolution

The “PlayPump” uses a merry-go-round to pump water, transforming children’s play into a labor-saving way to obtain an essential commodity. The driver of the idea quit his job and raised millions from celebrities like Jay-Z, Steve Case, and Bill Clinton. He received prestigious awards and began installing the pumps in Africa.

But it didn’t work out very well. In order to pump the water, the merry-go-round requires constant force. The children playing on them quickly get exhausted. The people whose labor was supposed to be saved ended up pushing the merry-go-round themselves. And the complicated device requires extensive maintenance that can’t be done in many underdeveloped situations. It would have been simpler and easier to install hand-pumps. After connecting 1000 pumps over the course of 15 years, the project folded.

The PlayPump is an illustration of the failure of good intentions. Westerners love innovative solutions to seemingly intractable problems. But it’s really important think critically about the causes we support: did they talk to the people they want to help—to find out what they think is important? Did they try the idea on a small scale, with follow-up? And have they thought about what can go wrong?

When it comes to helping people, being unreflective often means being ineffective– wasting time and money. It’s a huge mistake to judge something based on its intentions rather than its results.

Douglas R. Tengdin, CFA

Chief Investment Officer