The Perils Of Managed Dissatisfaction.
Edition #162
Introduction
Welcome to The ContraMind Code.
The ContraMind Code provides you with a system of principles, signals, and ideas to aid you in your pursuit of excellence.
The newsletter shares the source code through quick snapshots for a systems thinking approach to be the best in what you do.
The Code helps you reboot and reimagine your thinking by learning from the best and enables you to draw a blueprint on what it takes to get extraordinary things done. Please share your valuable thoughts and comments and start a conversation here.
Take a journey to www.contraminds.com. Listen and watch some great minds talking to us about their journey of discovery of what went into making them craftsmen of their profession to drive peak performance.
Remembering Daniel Kahneman: A Mosaic Of Memories And Lessons.
It’s been a year since the legendary Daniel Kahneman, a psychologist best known for his work on the psychology of judgment and decision-making and behavioural economics, passed away.
This article is a brilliant collection of his memories, ideas, and thoughts. You will be amazed at the sheer nature of his impact and influence on this field.
What does all this mean to you, and what can we learn from his work?
Have a desire to ask deep, meaningful questions, try to answer them rigorously, and, ultimately, get it right
Also, remember that “Right” is temporary; there is always more to learn.
The deeper you get into anything, the more you will discover - Invest hours, weeks, and years on one paper, project, or idea.
Be a skeptic about your own ideas and stress-test everything.
How many different topics can you hold an in-depth conversation and connect them to the main idea being discussed?
Never sacrifice precision for readability. Don’t allow deadlines to affect you, and time constraints can’t influence you to compromise your pursuit of perfectionism.
Learn to enjoy being wrong.
Deep learning happens when you keep changing your mind!
Practice the art of premortem. Because it legitimizes dissent and allows organizations the opportunity to consider and close potential loopholes in their plans.
Don’t take the rejection to heart—turn it into an opportunity.
Read the entire article here.
Karthik Sastry On Animal Spirits And The Economy.
Prof.Karthik Sastry, a macroeconomist, Assistant Professor of Economics and Public Affairs at Princeton University in the Department of Economics and the School for Public and International Affairs shares his insights in this conversation that personal instincts and primal urges are known to cause cycles of boom and bust. One way to gauge those emotions is through economic narratives.
Here are some of his key thoughts from this conversation:
Storytelling is central to how we interpret economic events.
How do we measure the impact of these economic events? We lack effective tools to identify these narratives, measure their contagiousness, and quantify their contribution to economic events.
Prof. Karthik discusses using Natural Language Processing(NLP) to turn words into hard data.
It has been found that companies with more optimistic narratives tend to accelerate hiring and capital investment. Strikingly, firms with optimistic narratives do not see higher stock returns or profitability in the future and also make overoptimistic forecasts to investors.
Data also supports the idea that narratives spread contagiously like viruses.
Prof. Karthik's study estimates that narratives explain about 20 per cent of fluctuations in the US business cycle since 1995. In particular, his study estimates that narratives explain about 32% of the early 2000s recession and 18% of the Great Recession of 2008–09.
Here are key conclusions from Prof.Karthik’s research:
‘What people say is highly informative about both individual attitudes and broader trends in the economy.’
‘Some narratives are more influential and contagious than others.’
‘Narratives introduced by policymakers have the potential for significant impact.’
You can also listen to this podcast on:
The Milk System: Uncovering Truths About The Dairy Industry.
One of our guests on the Contraminds Podcast, Elena Aniere, is a Network Coordinator for Slow Food International. In her LinkedIn post, she recently shared documentaries worth watching, which bring to life their vision and goal of good, clean, and fair food for all.
One of the documentaries Elena recommended was The Milk System. It was really moving, powerful, shattering many myths, beliefs, and benefits of milk ecosystems built around the world.
You can click on the above video link to watch the documentary.
The Perils Of Managed Dissatisfaction.
In last week's newsletter, one term was used to describe Blockbuster’s downfall and Netflix’s rise—‘Managed Dissatisfaction’. This behaviour showed how vital it is for companies to proactively observe customer problems and find viable solutions for them.
Let’s first understand how companies fall into the trap of ‘Managed Dissatisfaction’:
Today, automotive brands put customers under tremendous duress after purchase. They mandate after-sales service under certain conditions by overcharging on spares, scheduling unwanted service, etc. Customers know this but are left with little choice. The post-service satisfaction survey, which measures and reports satisfaction, is a good example of ‘Managed Satisfaction’ until a new competitor comes and disrupts this practice.
Take the case of the banks and financial services category. Once you become a bank customer, the pain of handling banking relationships is enormous - be it high payment transaction charges, ballooned loan repayment schedules, credit card usage fees, bank account minimum balance charges, high forex transaction fees, insurance premiums, etc. —is an example of customers ‘putting up’ with dissatisfaction as they have no alternatives. However, financial services conference rooms are filled with meetings to analyse satisfaction scores of their services. Customers move out in large numbers when there is a viable alternative. This can explain the growth of fintechs in this category.
Software and technology products face the same challenge. Let’s take the example of Google search. Search engine volume is predicted to drop by 25% by 2026! Again, because there was no alternative to Google search, though customers had been dissatisfied with search results and their quality over the last decade, Google did little until OpenAI disrupted their business.
As these are ‘fat and inefficient’ revenue sources companies earn, they get comfortable with them because they know customers have few alternatives. Company executives know these are ‘easy’ revenue sources, but since they fit their revenue forecasts and goals, they continue to pursue them until a competitor comes and disrupts this revenue stream.
How can you reduce ‘Managed Dissatisfaction’?
Behaving like a customer first rather than as somebody running a business operation is vital. It allows you to be truthful and ruthless about the ‘fat’ that accumulates due to inefficient practices, which leads to cost bloating before you know it.
Ask yourself one honest question - ‘What gives me the right to earn this revenue?’
Your teams will always push for ‘Status Quo’ because their argument will be, why fix something that is not broken but when it breaks, all hell breaks loose. Case-in-point: Look at the results on the Google search bar today with Gemini AI or how traditional automotive companies respond to the EV threat.
Don’t get into the trap of vanity metrics and measurements that push you back to your comfort zone. Don’t use a checklist, and create a tickbox of metrics that will make you happy.
Break your revenue into three parts and review it diligently. Take a hard look at each part and what you are doing about it. Dr.Vijay Govindarajan’s three-box solution is a great mental model to adopt and practice:
Manage the present - That’s your current bread-winner
Selectively forget the past - Forget what made the business successful in the past
Create the future - Create a new model
Some of the lessons we learnt from this week’s mission:
Learn to think, contemplate and be a skeptic of your own ideas.
Storytelling can be a great way to understand and interpret economic events.
Proactively observe customer problems and find viable solutions before a competitor disrupts your business.