Being different matters. Differentiation matters to those who care about the differentiation. So while you try to differentiate your product, service or yourself, think about who are you doing it to, and what you are doing it for.
Take for example a food product. The farmer may care about the sourcing of that ingredients: is it fresh, how was it transported, where was it grown and with what? The TCM doctor may care about whether it is heaty or cooling, whether it is suitable for the old or young. The parent may be concerned if it’s good for the teeth of their child. The foodie may care abouts its taste. The food critic about the variety of textures. And the list goes on. Who are you selling the food to? And that will define what distinguishes you.
The same can be applied even to a Renewable Energy project. The impact investor may care about how much local labour was used to do the project. The sustainability investor would be concerned if the environment, social and governance matters were properly dealt with. The bankers will be concerned about the numbers. An engineer may want to know whether you used micro-inverters. Equipment manufacturers may ask what is the brand of the solar panels or wind turbine.
For most other people, they are just wondering if the lights can remain on when they switch to renewable energy. Especially if they don’t care about climate change.
In Clayton Christensen’s “How will you measure your life”, he keeps his final idea about life to a warning about marginal thinking. It was surprising because he was a business school professor and trained in Economics. One of the gifts of the subject of Economics is actually the ability to think in terms of marginal costs. And this marginal thinking allows us to achieve great optimisation.
The warning that Clayton was sounding is really about over-optimisation in a context and environment that is ever changing. And because the context and actions of others are going to change and influence your flow of cost and benefits, thinking marginally can cause you to miss the big picture and fail to take the right pre-emptive actions. You will fail to realise the cost of not investing in something new and disruptive.
His application to life is equally surprising. It was to issues of moral and integrity. And I think his idea is important because so many of us have begin to think of cost-benefit analysis exactly in the marginal way prescribed by economics textbooks that we no longer leave room for discussion of values and morals. The economic principle of marginal thinking assumes that the costs and benefits assessed are independent of the context and unlike to change any of the future costs and benefits. Either that, or the dynamic element of time do not exist in the decision-making framework here.
Clayton encourages us to understand the full costs of our seemingly one-off deviations from our values and principles. Because when we perform cost-benefit analysis and think that the once off deviance would be worthwhile, we do not realise how the deviation changes us as a person, our identity and relationship to our principles.
At every juncture of the spectrum of resources, we will find excuses not to fail. When we have little, we think failure is fatal. When we have a bit more, taking risk is a bit reckless. Then when we have even more, it can seem there is no need to take as much risks. And the story goes on.
It has more to do with culture than resources or incentives. In Singapore, we see incentives applied by government to enterprises who venture abroad, start businesses, invest in new things. The idea is that by partaking in some of the risks, people can take more of it. And that assumes you’re not changing the fundamental risk aversion of people. But you might just be doing that. The culture can start telling a story that entrepreneurship is not worth it without incentives. And worst, you can have armies of entrepreneurs focused on navigating bureacracy than the perils of the market, in search of grants than of market opportunities.
We can tell a different story about risk-taking. When you have little or nothing, there’s nothing to lose. When you have a bit more, it should not be so hard to make it back when you lose it. And when you have more resources, there is more cushion to fail. As a society, if we can grow to be tolerant of failure, of seeing the beauty of learning and growing from failure, we can be in a better cultural environment.
What do you take with you when you graduate from school? Do you take with you your certs and grades or do you take with you the friendships, the social skills, cognitive and problem solving capabilities? That was a trick question because you get to take all of those with you.
But for many of us, we choose to take only part of the suite of gifts that education and schooling grants us. And we inevitably choose the “practical” and simplest gift to take away – our paper qualifications and our grades. Because that is a clear signal and what we’ve been indoctrinated to work for in school.
We can choose to be different. And we can make the future a better one for our children by making sure they make the choice to take the right gifts away when they graduate. Because what you ultimately need in life would be almost everything that the system can give you.
Every single year, a proportion of the graduating cohort of Singaporeans join public service. It’s no wonder because they mostly hire only Singaporeans. It was strange then when as a public servant, I was helping the Singapore companies find Singaporeans to fill their headcounts and meet their talent requirements. It was difficult; the quality of labour available to be hired off the market wasn’t really there.
And then I thought about the people within the service and whether they’d be able to fit the requirements of these companies and be satisfied with the remuneration. Sometimes so, and I then wonder why we are still in public service. Often it was about serving the public, working for the higher goal and mission. It could also be just some kind of Messiah complex.
Either way, the great resignation tsunami is hitting our shores and there is no turning back. The burn-out, being always on and on the hook, responsible for some public complaints, angst against the establishment: these are all wearing our people out. Perhaps then, it’s time for a change.
Market competition drives improvements and with service, there’s always room for some kind of improvement. And the ability to charge people for such improvements is perhaps the main challenge for these firms. Personally, I think the ability to serve well in F&B to generate loyal, recurrent customers who are always in the area is quite valuable. Nevermind whether you’re operating a chain store or not.
The other day, I was at 79 Robinson Road’s Fun Toast outlet. I ordered a set with a drink and a sandwich to go. The coffee was ready in about 2-3 minutes upon ordering and I was holding on to it while waiting for my sandwich which took another 7 minutes. By the time I arrived in my office to drink my coffee with my sandwich, the coffee was pretty lukewarm.
If they had been thoughtful – and such takeaway orders should be extremely common – they’d wait for the sandwich to be ready before preparing the drink. Especially since they’d know better than anyone else how long it takes to make the sandwich. But they don’t want to take ownership of this problem of coffee turning cool, nor the risk of forgetting your drink order when the food is ready. The result is poor service. Or at least unthoughtful service.
You can be sure I won’t be going back there anytime soon though my office is nearby. Would I pay just a little more for the thoughtfulness? Probably for the drink, yes.
A metric is a good way to hold one accountable for certain outcome. And if you want to set some common indicators of performance that people can agree on, then you can get on with focusing on achieving some degree of the outcome.
The challenge again is Goodhart’s Law where setting a particular measure as a target for certain outcomes make the measure become a poor one. This tends to be rather pronounced in economics, whether you’re thinking about GDP, interest rates (specific ones like LIBOR), even CPI for inflation and so on.
When businesses are measured on their success by profit metric, we forget that they are there to serve the community, to provide goods and services people need and demand for, to improve people’s lives and give them more choices. Those are the outcomes we want. The ability to generate profits merely allows them to continue generating good outcomes.
Likewise, we want to make money to be able to support our families, our (reasonable) lifestyles and maybe free up more time for leisure. But when money becomes tied to your identity, like the way profits have been tied to the identity of businesses, then your ability to provide for your family cease being a good measure of what you’re trying to achieve in life.
We need to focus on the outcomes and ditch the metric when the time for that comes.
Is work about needs, or wants? When there are needs to be met through employment income, and yet there seems to be no job vacancies or employment available, what exactly is happening? Can the system actually cover the needs of these unemployed whilst they reskill, upskill and eventually find a place for their labour?
Or what about the future where leisure reigns over work and because production is mostly a result of capital being put to work without labour, the society can afford to just adopt a universal basic income system to sustain everyone and free them to discover what kind of work or contribution they can make to the world that would be worthwhile?
Our market economy has transformed the lives of mankind because it has freed humans to focus on a narrower scope of labour in order to provide for oneself, rather than suffer inefficiencies in having to produce, food, drinks, clothes and other material comforts or amusement, the market helps us all collaborate and provide for one another.
But in the course of trying to provide for one another, distribution of the valuable resources or output can be rather skewed without any malice or ill intent, even if allocation is efficient. So the day when capital is responsible for the bulk of meeting most needs, labour needs to identify needs to serve in the market. If there isn’t, if we as humans collectively declare our contentment then we can start looking at just helping one another contribute to the future we want to build.