Risk tolerance on April 1

The financial portfolios you chose are often based on your risk tolerance. You won't select something, even with the potential of great rewards, because the associated risk is something you are unwilling to take on. Same deal on behavioral or communication decisions in my book.

So, with conservative/balanced/aggressive as our low to high risk tolerance meter, my portfolio includes

- Buying lottery tickets (balanced)
- Scoring a parking space at the front of the store (aggressive)
- April fools jokes in company publications (VERY conservative)

Feedback is a gift

A few years ago, a leader I admire, upon hearing a stinging criticism leveled against him, remarked, “This is one of those situations where I need to remember that ‘feedback is a gift.’” Framing the receipt of negative feedback as an asymmetrically beneficial economic transaction struck me as both counter-intuitive and highly compelling. Since then, I have shared this idea with many of the other leaders with whom I’ve worked. In particular, I’ve suggested that they try a technique that I’ve used with success: When hearing uncomfortable information, remain dispassionate and avoid becoming defensive by repeating silently the mantra “Feedback is a gift…feedback is a gift…feedback is a gift…”

As silly as this practice might sound, the emerging field of neuroeconomics lends support to it. According to an article in the current issue of Business Week, people too often act against their own self interests when they process information…

…[n]ot in the prefrontal cortex, where people rationally weigh pros and cons, but deep inside, where powerful emotions arise. Brain scans show that when people feel they're being treated unfairly, a small area called the anterior insula lights up, engendering the same disgust that people get from, say, smelling a skunk. That overwhelms the deliberations of the prefrontal cortex. With primitive brain functions so powerful, it's no wonder that economic transactions often go awry.

The inference? The “feedback is a gift” mantra works by maintaining the synthesis of negative feedback within the prefrontal cortex (where you can act on it rationally), and prevents the anterior insula from taking over (and producing instinctual defensiveness).

Jeff G.

Communications and the Laffer Curve

Professor Art Laffer developed the concept of the Laffer Curve . The Laffer curve illustrates that as you move from a tax rate of 0% to 100%, tax revenue initially increases, but will then decline at some point once the tax rate reaches a level where it chases out the incentive to work harder to increase income. The curve ends with tax rates at 100%, no one bothers to work, and tax revenue is zilch. Oh happy day.

I think the Communication Laffer Curve runs the same path. Instead of tax rates, you have the volume of communications -- instead of revenues you have understanding. Communicate nothing, you get no understanding. Communicate everything, you get no understanding. Communicate somewhere in the middle, you maximize understanding. Not helpful, but interesting.

More on scarcity

Thanks to Jeff G. for the following insightful and lucid post regarding the earlier "Scarcity Rocks" post (don't get used to this lucid thing)...

Peggy is right, to a point. Your proposal places an artificial constraint on the “email market.” But all but the most radical of free-market economists acknowledge the need for interventions to correct for “market inefficiencies.” As you described it, the prime inefficiency in the “email market” is that there is no scarcity, no tension “between supply and demand.” Economists commonly refer to this problem as the “tragedy of the commons”—a term that has its roots in shepherding.

In a situation where a number of pastoralists keep their flocks on a limited area of common land it pays each flock owner to increase his or her flock as much as possible. The advantages to the owner of the sheep of an increase in one animal would far outweigh the effect to him or her of a relatively slight degradation to the pasture caused by that animal.

The logic is therefore remorseless: each owner will maximise their herd to the greatest extent and no - one individual will suffer in proportion to his or her increased advantage. However, eventually the population will face ruin and the whole social structure of people and animals will crash.

This is a hot topic today in the field of environmental protection. Free marketers have been (correctly) complaining for years that conventional approaches to environmental regulations are socialistic and (like most socialistic solutions) have lots of negative unintended consequences. They advocate for creating markets for trading “pollution credits.” Similar to your email model, this approach involves establishing a limit on the amount of a particular pollulant that can be emitted in a specific area. This artificial cap on emissions creates scarcity and produces incentives for industry to reduce the amount of pollution it produces. You can read more about free-market approaches to environmental protection here. Your email proposal is very much analogous. Email overload is a problem in most large organizations—and it is very much a “tragedy of the commons.” Your approach would address the issue, not by centrally regulating who can send what to whom and when, but by creating a tension between supply and demand. It’s something that even a libertarian like me can love.

Scarcity rocks

I have advanced this idea to several people and it is usually dismissed quicker than most American Idol contestants.

We all complain about too much e-mail. The cure is simple and based on the principle of scarcity.

Since there is no consequence to the sender if they launch 1 or 1,000 e-mails, and send them to 1 or 1,000 different recipients.. they fire away, and away, and away.

I recommend that everyone is given a weekly quota of e-mail to introduce the prioritization that occurs when your resources are not unlimited.

Let's say I had 100 as my weekly quota. I could chose to send 1 e-mail to 100 people or 100 e-mails to different individuals... but when I am out - I am out. The best part of this approach is that I am forced to really evaluate how important it is to me to send 50 of my closest friends a picture of a cat in a sombrero.

This could introduce other neat market elements, like "e-mail eBay" where I could sell of some of my excess weekly e-mails to the communication challenged.

Any other approach requires you to depend on the judgement of others - and we all know we are smart, but those dang "others" just never seem to get it.

101 - A thought provoking 8 minutes

Marketing meets personalization meets technology meets media meets Star Wars in this 8 minute mini-movie. Well worth the time.

The Communication Marketplace

I view blogs as the best example so far of "free market" communications. It is all about supply and demand - with a little survival of the fittest tossed in for good measure.

Blogs that gain market share (readers) thrive, those that don't eventually become boarded up electronic husks of vague notions that you drive by when you end up in the wrong neighborhood.

To me, this is a good thing. While many continue to seek out the holy grail of objectively measuring the value of communications, success in the marketplace is not an all together bad proxy.

But the market is not infallible. Remember, the market is the place where Ashlee Simpson out sells Alice Cooper.