I have been meaning to write part 2 of the post about decision making pitfalls, another post about a presentation I attended by one of the founders of hubspot.com - unfortunately, a day only has 24 hours.
I skipped classes this morning to attend the Emerging Technologies conference at MIT this morning. I was very glad I went. The keynote by Vinod Khosla seemed to start-off on a pessimistic note. He made the point that prediction has varied widely from reality in the past with respect to things like oil prices, consumer adoption of cell phones etc. When the next slide switched to alternate energy sources, I thought I had a clue as to what was coming. I was pleasantly surprised. He went on to talk about the scope and magnitude of solutions that will be required to make a dent in the energy challenge, and how any proposed solution must be inexpensive enough to be adopted by the "Chindia" market to actually make progress. He then talked about "Black Swans", disruptive technologies capable of changing the nature of the game, and how any solution that comes along must be profitable on its own merits without requiring subsidies. He went on to talk about the criteria used by Khosla ventures to make an investment, and about the companies in his portfolio. Some of the ones he mentioned are doing incredible work, can't wait to check them out!
I also attended 2 sessions of the TR35 elevator pitches and came away very impressed, as expected. I had a chance to chat with Dr. Shafi from University of Pennsylvania afterward. His story was fascinating, and his enthusiasm infectious. I was particularly awed by how the polymer simply gets absorbed into the body once its job is done - very neat. I extended an invitation to him to participate in the MIT100K competition since he mentioned he was looking for another round of funding, and he is very interested. So MIT people reading this blog, if this is something you're interested in, drop me a line, he's looking for a MIT partner with whom to enter the competition.
Wednesday, September 24, 2008
Wednesday, September 10, 2008
The hidden traps of decision making
I am reading an article from the Harvard Business Review titled "The hidden traps of decision making" for my Organizational Processes class. It provided much fodder for thought.
The first hidden trap of decision making is ANCHORING. When I read this, I couldn't help but recall my positive bias for all things made by Apple. My bias initially started from reading positive, glowing reviews about Steve Jobs and the iPod. In one case, in a friendly argument with my sister, I even passionately defended the iPod shuffle as a great MP3 player out of my desire to be consistent! Honestly though, I have to admit, it's a crappy idea. How useful is a MP3 player without a display, which will force you to listen to a random sequence of tracks? You might own it, but you can't control it, literally. But defend it, I did. I now understand I was a victim of the anchor trap. My strategy going forward, is to be aware that there exists such a trap and to stay as open minded as possible.
The second trap is STATUS QUO. I have been guilty of this so many times, that it's hard to pick just one example! I bought Cisco stock during the heydays for $65 a share. Then came the dot com bust and I watched the stock price fall steadily from $65 to the sub-$20 range, taking a big chunk of my portfolio with it. I finally sold it when it was in the teens. The reason this memory sticks with me painfully is not just the financial loss. For someone who thinks of herself as being a logical, analytical person and an engineer to boot, how can I reconcile the fact that it took me as long as it did to sell the stock? The reason I waited was because I knew I would have to do extra paperwork come tax season to report a capital loss, and I just didn't want to go to that trouble. I preferred to not disturb status quo no matter how illogical, than to take the extra 10 minutes to complete and file a schedule D IRS tax form. Now I know that kind of stupidity actually has a name.
The third trap is the SUNK COST trap. I couldn't help but smile when I read this because this time around, I was "smart" and recognized it. Just that it took too long to think of all possible alternatives and time was running out, so I resorted to the status quo trap instead! I still have the car I bought from my very first job 10 years ago. I couldn't bear to let it go for sentimental reasons. Besides, it's been a real work horse and never asked for much beyond basic maintenance in the time I've owned it. That changed 6 months ago. Last December I paid a mechanic $800 to take care of some problems. Eight months later, I was back at the mechanic's again, this time being told it's going to cost $2500 to fix the car. Fully realizing that I might be throwing good money after bad and working out conditional probabilities (I kid you not), I went ahead and had the car fixed anyway, promising myself that the next time the car needed repairs that cost more than $500, I will buy a new car. The human psyche is strange.
To be continued in the next post...
The first hidden trap of decision making is ANCHORING. When I read this, I couldn't help but recall my positive bias for all things made by Apple. My bias initially started from reading positive, glowing reviews about Steve Jobs and the iPod. In one case, in a friendly argument with my sister, I even passionately defended the iPod shuffle as a great MP3 player out of my desire to be consistent! Honestly though, I have to admit, it's a crappy idea. How useful is a MP3 player without a display, which will force you to listen to a random sequence of tracks? You might own it, but you can't control it, literally. But defend it, I did. I now understand I was a victim of the anchor trap. My strategy going forward, is to be aware that there exists such a trap and to stay as open minded as possible.
The second trap is STATUS QUO. I have been guilty of this so many times, that it's hard to pick just one example! I bought Cisco stock during the heydays for $65 a share. Then came the dot com bust and I watched the stock price fall steadily from $65 to the sub-$20 range, taking a big chunk of my portfolio with it. I finally sold it when it was in the teens. The reason this memory sticks with me painfully is not just the financial loss. For someone who thinks of herself as being a logical, analytical person and an engineer to boot, how can I reconcile the fact that it took me as long as it did to sell the stock? The reason I waited was because I knew I would have to do extra paperwork come tax season to report a capital loss, and I just didn't want to go to that trouble. I preferred to not disturb status quo no matter how illogical, than to take the extra 10 minutes to complete and file a schedule D IRS tax form. Now I know that kind of stupidity actually has a name.
The third trap is the SUNK COST trap. I couldn't help but smile when I read this because this time around, I was "smart" and recognized it. Just that it took too long to think of all possible alternatives and time was running out, so I resorted to the status quo trap instead! I still have the car I bought from my very first job 10 years ago. I couldn't bear to let it go for sentimental reasons. Besides, it's been a real work horse and never asked for much beyond basic maintenance in the time I've owned it. That changed 6 months ago. Last December I paid a mechanic $800 to take care of some problems. Eight months later, I was back at the mechanic's again, this time being told it's going to cost $2500 to fix the car. Fully realizing that I might be throwing good money after bad and working out conditional probabilities (I kid you not), I went ahead and had the car fixed anyway, promising myself that the next time the car needed repairs that cost more than $500, I will buy a new car. The human psyche is strange.
To be continued in the next post...
Friday, September 5, 2008
To share or not to share?
What's it with people claiming to be entrepreneurs who are tight lipped and believe everyone is out to steal their ideas? It makes no sense to me and I find it downright funny. If you won't share your idea because it is so easy to duplicate, you have a serious problem with your competitive advantage. It better not be something every Tom and Jane can replicate overnight! If it is something so cool that no one else can do it, what are you worried about? Think iPod. Think of the (lack of)success of its copycats.
Tuesday, September 2, 2008
Slideshare contest winner
This slideshow was announced the winner of this year's contest. A classmate from MIT Sloan and I were brainstorming ideas to participate in this contest, but eventually ended up not entering due to time constraints. Just as well.
I was disappointed at the outcome. Comparing this year's winner to the winners from the past, there seems to be a clear and obvious pattern. Not to take away from the content of these presentations which is definitely thought provoking, the recipe seems to be as follows: throw in a bunch of statistics, eye catching visuals and short phrases, stir well, spice up with the hot topic of the day, heat and serve with a side of captivating images. Never one to cook by the book, my reaction was, well, whatever. How predictable.
How would the judges judge a presentation on a topic that does not lend itself to statistics or catchy phrases? Not every topic one needs to present on lends itself to this stock formula. When we were planning to enter the competition, we thought this would be an edifying experience. Turns out we made a wise choice with how to spend our time.
I was disappointed at the outcome. Comparing this year's winner to the winners from the past, there seems to be a clear and obvious pattern. Not to take away from the content of these presentations which is definitely thought provoking, the recipe seems to be as follows: throw in a bunch of statistics, eye catching visuals and short phrases, stir well, spice up with the hot topic of the day, heat and serve with a side of captivating images. Never one to cook by the book, my reaction was, well, whatever. How predictable.
How would the judges judge a presentation on a topic that does not lend itself to statistics or catchy phrases? Not every topic one needs to present on lends itself to this stock formula. When we were planning to enter the competition, we thought this would be an edifying experience. Turns out we made a wise choice with how to spend our time.
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