Here’s the thing I’ve long argued: The solutions to our problems are often counter-intuitive. 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 and/or defies our deductive rationality.
This is certainly the case within the realms of science. 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 is 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 and the Earth rotate around it.
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 in order 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 that helped create the wealthiest nation on Earth.
It’s not just the Industrial Revolution which spawned innovative leaders. Our current Digital Revolution boasts many thinkers who 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 98% of its massive billions in revenue from selling online advertising space.
Google could not attract advertisers without readers – and it needs lots of them. The more readers it attracts, the more interest that is generated from advertisers. So, Google lures in 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 for example the nursing home which was faced with a serious problem. Some elderly patients with dementia frequently “escaped” from the nursing facility during episodes of agitation from memory loss. They would walk a block or so, board the first bus that 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, but 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, free needles and paid medical professionals, but it does work in reducing dependency.
Life has taught me that many things are counter intuitive. I know that open 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 there’s not a direct correlation between hours worked and work performed. And I know that the biggest risk in life is not taking any risks.
Our natural instinct is to play it safe when making decisions and solving problems. But turning long-held beliefs on their head can lead to alternative insights and new thinking. 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?
All food for thought!
Sincerely
John (JT)Thomas
This opinion piece is provided by John (JT) Thomas, a 48- year veteran of the financial services industry and since 1987 a specialist in commercial mortgage funds. Considered by many to be the father of the modern commercial mortgage fund sector, JT helped establish and then managed – for 17 years – what became the largest and most successful commercial mortgage fund in Australia – The Howard Mortgage Trust – with assets exceeding $3 billion. Under JT’s stewardship, investors never lost one cent of their investments and indeed, investors always received competitive monthly returns. JT was also Chair of the $40 billion mortgage trust industry sector working group.
JT has been proudly involved with Princeton for nine years and sits on both the Princeton Credit Committee and the Princeton Compliance Committee as well as being an advisor to the Princeton Board.
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