Weekly Question & Framework: October 25, 2024

Hello and welcome to the Curiosity Chronicle Weekly Question and Framework. In four minutes or less, I will give you one question and one framework to get you thinking going into the weekend. Without further ado, let's dive right into it. A question to reframe your situation. Does your situation need to change or just your outlook on it? I recently came across a story that I love. Two salesmen were sent by a shoe manufacturer to a rural part of India to investigate and report back on market potential. The first salesman reported back, there is no potential here nobody wears shoes. The second salesman reported back, there is massive potential here nobody wears shoes. Same situation, very different outlook. The story is a simple reminder that we can rarely control the situations we are placed in, but we can always control our outlook on those situations. From time to time, you'll be thrown into the chaos. The death of a family member or dear friend. A job loss that takes our financial situation from good to bad. Health problems that impact those closest to us. Relationship struggles with someone who once felt like our rock. A critical decision that starts to go awry. These situations are impossible to avoid. A harsh reality of life. But you are always in control of your outlook, your response to these situations. If you pause, breathe and create space, a fresh outlook may be all you need. A Framework on the Dangers of Incentives the Cobra Effect Here's a famous story on the power or danger of incentives. There were too many cobras in India. The British colonists, worried about the dangers of these venomous creatures, devised a plan to reduce the cobra population. They offered bounties for cobra heads. Some savvy locals developed a business model breed cobras, chop off their heads, turn in cobra heads, and collect bounties. The British realized what was happening and ended the policy. In response, many of the breeders simply released their now worthless cobras onto the streets, increasing the population of cobras. The British viewed cobra heads as a simple measure of cobra elimination, so attached an incentive to turn in cobra heads. The result? An incentive designed to reduce the cobra population, actually increased it. The cobra effect is an example of Goodhart's Law, which says that when a measure becomes a target, it ceases to be a good measure. Simply put, if a measure of performance becomes a stated goal, humans tend to optimize for it, regardless of any associated consequences. The measure often loses its value as a measure. This is a critical issue I cover in my first book as it relates to the cultural pressure to use money as your sole measure of success. For more on the solution, you can pre order your copy now on Amazon or@the5types of wealth.com once you internalize this framework, you see it all around you, particularly in the business world. At Wells Fargo, senior leadership of the bank viewed new account openings as an easy way to track business growth. So it gave its junior employees target account opening goals. The result? Employees opened millions of fake accounts to hit their targets and Wells Fargo was fined billions for the fraud. At Amazon, they believed employee turnover was healthy and created a culture where the bottom 10% should be scrubbed annually in order to continue to upgrade the talent level of the organization. It gave its managers a target rate for annual turnover. The result? Media articles about a hire to fire practice emerged. Managers had allegedly hired employees they planned to fire in order to meet their turnover targets. What other examples of the COBRA effect can you think of? That's all for today. I hope you enjoyed it. I hope you learned something and I hope you'll share it with others. And as always, until next time, stay curious, friends.