Why we need to challenge conventional wisdom

SWIM AGAINST THE TIDE

Here’s the thing that I’ve long argued: The solutions to our problems are often counterintuitive. The right course of action can be the exact opposite of what we initially thought. The best answer or explanation can challenge our gut instinct and require us to embrace that which does not come naturally as it defies our deductive rationality. This is the case in the realms of science.

Science constantly questions our instinctive understanding of the world. As Galileo demonstrated centuries ago, the truths about the physical universe are often contradictory. We experience the Earth as flat even though we know it’s round. Similarly, we see the Sun “rise” and “set” each day, even though we know it stays in its position at the centre of our solar system.

In business, it takes a brave leader to make truly game-changing decisions that go against conventional wisdom. Henry Ford did just that by doubling the wages of his workers to attract and retain the talent he needed. His new class of worker was able to afford the very product his company was producing. This expanded the overall market for the Model T and triggered a consumer revolution which helped create the wealthiest nation on Earth.

Like the Industrial Revolution, the current Digital Revolution boasts many thinkers who have challenged the status quo, including the founders of Google. They made the radical choice to give away their products for free and this has made them fabulously rich. Google does not charge Internet users for using its search engine and other services. Rather, it generates the bulk of its massive billions in revenue from selling advertising space via Google Ads.

Google could not attract advertisers without readers – and it needs lots of them. The more readers it attracts, the greater the interest generated from advertisers. Google lures users, collects their data, and then sells access to eager advertisers across the planet. The more Google knows about an individual, the better it can target ads and therefore the more it can charge for ad space.

Of course, unconventional solutions are not limited to the business world. Take the aged care clinic in Duesseldorf, Germany which faced a serious problem. Some elderly patients with dementia frequently “escaped” from the hospital during episodes of agitation from memory loss. They would walk a block or so, board the first bus which came by, and invariably become lost.

Attempts to stop the patients leaving the medical facility resulted in ugly confrontations. So, instead of locking the doors to keep patients in, they opened the doors and allowed patients to flee to a fake bus stop built right on the hospital’s doorstep. The patient would eventually calm down, accept that no buses were running that day, and peacefully return to the hospital.

A more controversial example of upside-down thinking is drug addiction. Treating heroin addicts by giving them heroin might seem incongruous, yet trials in Switzerland show that administering heroin in supervised clinics can produce better results than conventional methadone treatments.

If you frame the drug problem as a medical dependency, and not a criminal offence, users will be helped by trained nurses rather than arrested by burly policemen. Yes, it does seem absurd to provide addicts with free synthetic drugs, complimentary needle kits, and safe injecting locations, but it does work in reducing dependency.

[Please allow me to insert a parenthetical note here. The recent decision by the NSW government not to decriminalise the low-level use of illicit drugs is extremely disappointing. This was the key recommendation of a landmark inquiry into ice, which handed down its findings more than two years ago. The inquiry slammed the criminalisation of drug users as a “profound flaw” in the NSW justice system.

The inquiry was conducted by Professor Dan Howard who labelled the justice system as “tired” and “lacking in imagination”. Professor Howard was damning of the state’s approach to drug addiction and concluded that the “war on drugs” was an outdated mindset and that criminalising use and possession stigmatised people.]

How an economy works can also seem illogical as we witnessed during the Global Financial Crisis (GFC). Governments around the world used fiscal stimulus packages to encourage counterintuitive behaviour from their citizens. The GFC caused households to cut back on discretionary expenditure. In response, the Australian government pumped $10.4 billion into the pockets of Australian consumers to counter an economic phenomenon called the paradox of thrift.

During a recession, our natural tendency is to save and this triggers a cause-and-effect spiral to decreased economic activity. When we all start saving our money, the result is reduced consumer spending. This, in turn, causes aggregate demand to fall and this, in turn again, results in a decline in total income. And when income falls, people have less to spend.

So, as contradictory as it sounds, individual savings makes us collectively poor. This paradox of thrift represents a form of prisoner’s dilemma as saving might appear beneficial at an individual level but it’s actually detrimental to the population overall. One person’s spending is another person’s income!

As a society, we need to take a more holistic approach to issues by focussing on “we” rather than “me”. Our narrow self-interest must give way to the optimum outcome for all parties. This, of course, runs counter to our primal “every-man-for himself” attitude and can be seen in all walks of life.

The mere threat of a fuel strike immediately causes panic buying with queues of angry motorists rushing to service stations to top up their tanks. Similarly, panic buying occurs when there are rumours of grocery shortages, driving shoppers to fill their trolleys and clear supermarket shelves.

As we have recently seen, pandemics are associated with the panic buying of groceries and other supplies like toilet paper. Such behaviour is precipitated by an anxious minority of shoppers and creates a snowball effect which elicits fear contagion among other shoppers causing them to also stockpile.

Scampering to purchase petrol before rationing begins or hoarding groceries prior to stocks being depleted are, at an individual level, seemingly sensible things to do. Such behaviour, however, is self-defeating at a societal level as everyone is worse off when individuals – acting in self-interest – cause a buying stampede.

Life has taught me that many things are counterintuitive. I know that international trade creates more jobs than it destroys. I know that government debt is a good thing in times of weak economic growth. I know that embracing capitalism is the best way to beat poverty in developing nations. And I know that the biggest risk in life is not taking any risks.

When it comes to human interactions, there are also many counterintuitive life lessons such as:

• the little things are the big things in relationships;
• the more you admit your shortcomings, the more people will like you;
• the more you try and control someone, the further they will slip from your grasp; and
• we are at our tallest when we stoop to help another.

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Our natural instinct is to play it safe when making decisions and solving problems. Yet turning long-held beliefs on their head can lead to alternative insights and new thinking if you are prepared to zig where others zag. Such breakthrough thinking led to the development of a telephone that isn’t just for making calls. Now, where would we be without our smartphones?

Let’s all think the unthinkable.

Regards

Paul J. Thomas
Chief Executive Officer
Ductus Consulting