SD#49: Productivity addiction, stoicism, and hindsight bias
December 18, 2022
Hi friends,
Welcome to another edition of Seven Dawns, your weekly newsletter on marketing, productivity, psychology and more.
Note – Seven Dawns will be taking a break through Christmas and New Year as we all deserve some rest after this year. I’ll speak to you all on the other side in 2023.
Our seven ideas this week:
1. (Marketing) The average change in sales after stopping advertising for one year was a 16% drop, after two unadvertised years was 25%, and after three years a 36% drop Advertising spend can be cut for many reasons. In a recession or other times of financial pressure — e.g., when resources are urgently required in other areas of the business — advertising may seem like a discretionary activity or a dispensable luxury. Because the advertising budget is typically non-fixed, it can be diverted quickly at short notice. In some cases, poor budget planning or extra spending due to seasonality (or certain high-reaching events) may run the budget dry for some time until the brand’s next allocation of funds. Ehrenberg-Bass institute did a study to determine what happens when brands stop advertising. In the first year without advertising, the mean sales index is 84, though there is wide variation around this average. The spread widens after two years without advertising, yet there is a downward trend in sales for the majority of cases. Despite the variation, the decline becomes more common and greater in magnitude as brands go longer without advertising. After four years without advertising, there are no cases with higher-than-base level sales. A small number of brands also reported higher sales in the first year or two without advertising than previously when they were advertising. Most of these growth cases were brands that were growing already and they were quick to restart advertising. Ehrenberg-Bass Institute |
2. (Productivity) Productivity addiction is perhaps the ultimate example of false urgency running awry. It’s being unwilling—and unable—to sit with the discomfort of the present moment in our bodies, incapable of waiting until we get our next fix Western culture is run by a sense of false urgency. Work demands that we tend to our email, Slack, and calendars. Increasingly, our social lives are shifting from IRL hangouts to the online space, where we must battle against sophisticated algorithms designed to brainwash us into believing the urgency blasted in their notifications is real. Text messaging and WhatsApp culture convince us that if we don’t respond to our homies promptly, we are being inconsiderate, selfish friends. Our bodies carry all these burdens more than we realise. The complexity of our civilization demands deadlines—especially when it comes to repairing our damaged biosphere and vitriolic political climate. Our personal lives, too, benefit from a healthy insistence on self-inquiry. At the same time, I can also admit to myself that much of my life is run by urgencies that do not exist. False urgency is stress masked under the guise of responsibility. Urgency is an invention rooted in fear. Deep Fix |
3. (Philosophy) Like the Stoics, we must never expect, hope, or believe that anyone is coming to save us. Because it’s the expectation, the entitlement, the naivete that crushes us The Stockdale Paradox is the blazing determination inside Admiral James Stockdale that allowed him to believe that, despite his imprisonment and torture, he would not only survive but thrive because of his experience. There’s something similar in Meditations where Marcus Aurelius, reflecting on the plague and the wars and the troubles that beset his reign, actually says to himself, “It’s fortunate that this happened to me.” When asked who fared worst in the North Vietnamese prison camp, Stockdale singled out one group: the optimists. They were convinced they’d be rescued soon. They were convinced it was going to be over any day now. Ramit’s mortgage broker guest went one step further, he was a fantasist. He dreamt of a reality that simply didn’t exist. We cannot be so naive or excessively optimistic or wishful, as to place our fate in the hands of others. Like the Stoics, we must never expect, hope, or believe that anyone is coming to save us. Because it’s the expectation, the entitlement, the naivete that crushes us. Daily Stoic |
4. (Investing) Save like a pessimist, invest like an optimist Optimism and pessimism can coexist. If you look hard enough you’ll see them next to each other in virtually every successful company and successful career. They seem like opposites, but they work together to keep everything in balance. Save like a pessimist means you acknowledge the cold statistics of how common bad news is. It’s common at the global, national, local, business, and personal levels. Save heavily, knowing with certainty that you’ll need a cushion to deal with the next banana peel. Be a little bit paranoid, knowing the assumptions you hold today could break tomorrow, and you’ll need enough room for error to make it to the next round. More people and businesses try to solve problems than fudge success or get into trouble. Not by much. But the odds tilt ever so slightly toward long-term progress amid frequent setbacks. It’s been happening for thousands of years: millions of people solving one problem and moving on to the next, bit by bit, experiment by experiment. Since progress is cumulative (we don’t forget past innovations) but setbacks are temporary (we rebuild), the long-term odds tilt towards growth. Same thing in the economy. As long as more people try to get better than screw up, the long-term odds are in an economy’s favour. If the odds are in your favour and you can keep them in your favour for a long time, you shouldn’t just be an optimist. You should be ridiculous, full-blown, giddy optimistic. Morgan Housel |
5. (Psychology) Hindsight Bias is a common tendency for you to perceive past events as being more predictable than they were Have you ever thought: “I knew it all along”? If you have, then you’ve been influenced by Hindsight Bias. Hindsight Bias is a common tendency for you to perceive past events as being more predictable than they were. Obviously, Bitcoin was going to hit an all-time high. Obviously, Bitcoin was going to come crashing down. In hindsight, both outcomes can look inevitable. The far differing opinions show just how fragile our predictions for the future are. For example, it’s easy to look back and say that it was inevitable that Amazon was going to be as big as it currently is. Today Amazon is the poster child for smart business growth. But if you were a shareholder from 1997 to 2007, you were probably considering selling off your shares in the unprofitable, cash-burning startup. Hindsight Bias is a type of memory distortion: new information received after the fact influences how you remember the actual event. Researchers have found that individuals—including your buyers—selectively recall information that reinforces what they already know to be true. So how can we apply this right now to sell more? Answer buyer objections upfront. Before customers click that big ol’ buy button, they must believe that success is possible. Many people try a variety of solutions to solve a problem without finding success. If they’ve tried something and failed before, their Hindsight Bias may lead them to assume failure is inevitable and they’ll be reluctant to invest again. |
6. (Marketing) We live in a time where presence, salience and even the briefest burst of attention are the highest marketing priority. With so many voices shouting at once, getting anyone to hear even a sentence is a valuable achievement A couple of weeks ago an ad from Belvedere went viral. We live in a world obsessed with outcomes. At school, we’re encouraged to climb an artificial leaderboard that reflects our test scores. At work, performance is based on reaching specific targets, sometimes known as OKRs for “Objectives and Key Results.” In this goal-based society, success is defined by how our peers evaluate our track record. Kyūdō, the Japanese martial art of archery, offers an alternative philosophy where aims matter more than goals, and where success is the process itself. In life like in archery, the goal is the target we want to achieve, while the aim is the course we set to reach that target. A goal fixates on the finish line, while an aim considers the trajectory. When we focus on our aims, the process becomes the goal. And we’re more likely to reach our goal when we become fully aware of our aim. This is the essence of the way of the bow. As James Clear puts it: “It is not the target that matters. It is not the finish line that matters. It is the way we approach the goal that matters. Everything is aiming.” Letting go of outcomes doesn’t mean abandoning your ambitions. Instead, focusing on your aims is a mindset shift that allows you to break free of the arrival fallacy so you can zero in on your output. When we focus on our aims rather than our end goals, we learn how to design a daily life where the process itself is so fulfilling that it doesn’t matter whether we ever reach a hypothetical finish line. Success is enjoying the process. Ness Labs |
7. (Psychology) It is not the target that matters. It is not the finish line that matters. It is the way we approach the goal that matters. Everything is aiming If you don’t understand how the stock market works, it’s a simple task for financial advisors to pitch you an overly complex investment fund. If you don’t know what to look for, it’s easy to assume that complexity is important to outperform. The advisor will likely trot out a bunch of statistics about how well the fund has done in the past and reassure you that they aren’t going to give you some boring old index fund. The message is clear: “if you invest with me, you’ll outperform.” A 2017 paper titled “Use of Leverage, Short Sales, and Options by Mutual Funds” found that investment funds that use risky, complex tactics like leverage (debt) and trading options lead to bad outcomes for investors. Often, advisors will use complexity to justify their higher fees. We’ve been told, “you get what you pay for” so many times throughout our life that many of us have come to view the terms “expensive” and “quality” as interchangeable. While that might be true when you’re buying a pair of winter boots, it couldn’t be further from the truth when it comes to investment products. Research from Morningstar has shown that investment fees are the best predictor of the performance of an investment fund. The lower the investment fees, the higher the expected returns. Making of a Millionaire |
Fun things to click on:
How to wave to other motorists on a rural road. A visual reminder of what you can and can’t control. This year the Earth will surpass the 8 billion person mark. This is a cool visualisation to see how the population is distributed by country.
Thanks for reading! If you have any learnings you’d like to share with me, or disagree with any of the ones above then do drop me a message.
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Speak soon,
Tom