“So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.”  - Franklin D. Roosevelt, Inaugural Address, March 4, 1933

It is sobering to see how closely today’s market crisis parallels the Great Depression.  Certainly there are differences and our mechanisms to deal with the crisis are greatly expanded, yet the root of the market collapse happening before our very eyes is fear.

And what is fear?

Fear is a lack of trust.  Banks do not lend to each other or to their clients because they do not trust they will be repaid.  Investors do not provide capital because they are distrustful it will be returned.  Our global, interconnected marketplace is based on trust and that trust is being severely tested.

Participants hoard their capital like squirrels as if preparing for an economic winter.

When capital is hidden away in the 21st century equivalent of the proverbial mattress: government bonds, then businesses do not expand. 

When businesses do not expand, then jobs are lost, economies contract and suffering increases.

When distrust is rampant, people are only willing to create and transact commerce with those they know. 

They turn to their tribe.  In past times, your tribe would have been members of your family and local community.

Today we have the social tools to connect with people across vast distances.  The breakdown in trust does not have to mean turning only to those close at hand.

We must build and create and trust with those we have met on social networks such as Twitter, Facebook, Linked-In, Ning and others.

Trust is rebuilt one relationship at a time.  We are fortunate the technology is in place to rebuild those relationships not in an insular, local fashion but globally.

Return to your tribe until you can trust again, but please make sure your tribe is global.

When I was eleven, my family and I piled into a white Ford Maverick for a road trip to Niagara Falls.  I had never been there and didn’t know what to expect.  We parked far from the falls – as my Dad was not one to pay for parking.  Even from that distance, I heard the distant roar and saw the towering mist clouds.  When we reached the edge, the site of four million cubic feet of water plunging 167 feet filled me with awe.

Yet, it was the view upstream from the falls that had the most lasting impact.   We walked a path that ran along the Niagara River.   Next to us the river raced and churned faster than any water I had ever seen.  There was no fence.  Only three feet of unobstructed space kept me from being swept down river and over the falls to a certain death.  The river seemed to call out to me, daring me to jump.  Inviting me to taste of its seductive power and test my skinny frame against its convulsive waves.  I moved to the far side of the path, shaken. Death had never seemed so close, and I wanted no part of it.

Rivers that race over waterfalls are powerful but chaotic.  There is only one way to harness that power to create electricity.  Focus.  Because the water pressure is too great to harvest all of a river’s force, a small part of the river is channeled into a conduit that sends the liquid plummeting through water turbines.  The rushing water rotates the turbines hundreds of times per minute, creating the necessary force to generate electricity.

Living on the leading edge of the present involves taking advantage of new ideas and new opportunities as they present themselves.  But this stream of ideas/opportunities needs to be channeled by our strategic focus to have optimal impact, just as a conduit channels the river current that turns water turbines to create electricity on the Niagara River.

In previous posts, I stated intuition means pattern recognition, and higher strategic elevations provide more data to recognize patterns. Just as a skydiver is better able to see road connections and waterways from 10,000 feet above the surface than while rushing headlong into an oak tree, we can better discern the pattern and direction of events from higher strategic ground.

But not too high of a strategic elevation.  Nor too low.

If our strategic elevation is too high, we end up floating in clouds of generalities and our intuition fails us because there is too much data to recognize patterns.  It’s like trying to harness an entire river for electricity.  The water pressure (i.e. the flow of ideas) is too great.

Strategic statements such as, “Our business strategy is to make money.  We will do so by being entrepreneurial” or “This year I will focus on being better” are too generic.  They are rudderless, providing no direction as to which plot of fertile ground we should search for ideas to try.

Likewise, if we set our strategy too close to the tactical trenches, we are likely to get sidelined by unexpected events.  A good clue that a strategic intent is too narrowly focused is its length.  The longer it takes to explain, the more likely it is too specific.

What is the optimal strategic elevation?

Sufficiently high to place strategic stakes in the ground that bring some order to the tactical chaos below.  In other words, we have to set the metes and bounds of our playing field, our area of focus.   We have to channel the river of ideas into a strategic conduit.

Strategy means making choices.  Not only choosing what activities to pursue, but even more importantly choosing what not to do.  It means deciding what won’t change.  What principles will we adhere to no matter what the circumstances.  We can’t do everything.  There are too many ideas, to much popping corn to catch.  We have to focus on what we can be the best at the world at.  Our intuition will help us know what that is.

A skydiver jumps from a plane and marvels at the patchwork of fields and forests below. From 10,000 feet above the earth’s surface, the jumper sees how the roads connect and where the rivers and creeks drain. Subtle changes in shading outline the hills and valleys. The diver flips, turns and rolls by manipulating her body shape, doing everything a bird can do except one – climb back up.

Instead, the skydiver plummets at 120 miles per hour until she deploys her chute at 3,000 feet, slowing the descent. The view is narrower with the ground approaching. The fields and forest directly below become clearer with the diver able to make out individual trees and the planted rows, but she can no longer discern the broad patterns of roads and rivers.

With the drop zone in site, the jumper directs the chute with hand toggles attached to steering lines. The video below captures the final descent.

There is no better way to illustrate intuition works best from higher strategic elevations than a skydiver crashing into a tree.

Intuition means pattern recognition. Patterns can’t be discerned when you are rushing headlong into an oak. There is only one data point and there is precious little time to react to it.

Higher elevations provide more data points for pattern recognition. Just as a skydiver is better able to see road connections and drainage patterns from 10,000 feet above the surface than from 500 feet, we can better discern the pattern and direction of events from higher strategic ground. In other words, focus on the big picture rather than minute detail.

Jeff Bezos, CEO of Amazon, illustrated this concept in an October 2007 Harvard Business Review interview. At Amazon, one of the questions they constantly ask is what is not going to change over the next 5 to 10 years. They then design their activities around the broad patterns they identify in answering that question rather than more transitory items, such as who their customers will be or what technologies will be available. In Amazon’s case, what they believe won’t change is customer demand for large selection, low prices and fast delivery. Perhaps that seems too simplistic, but the brilliance comes from what they do with that information.

They plant seeds.

Having determined what they believe will not change over the next decade, they are free to conduct experiments in areas that will improve the items that won’t change.

Bezos said, “We are willing to plant seeds and wait a long time for them to turn into trees. We may not know that it’s going to turn into an oak, but at least we know it can turn out to be big. I think you need to make sure with the things you choose that you are able to say, ‘If we can get this to work, it will be big’”

What won’t change?
What will change?
What is the rate of change?

These are questions intuition can help answer. They can produce insights into what may happen and help decipher trends and determine which are likely to continue. They can point to the areas where we should experiment, where we should plant seeds.

On the continuum of life, there are those who are stuck in the past. They live looking through a rear-view mirror, smiling at their successes and fretting about what might have been.

Others plant themselves firmly in the mediocre present where their days are predictable and the surprises few.

Others are mavericks, hurling themselves into the future with bold plans, taking care to burn their ships to prevent retreat.

99% of mavericks fail. They go down in flames, tripped up by some nasty surprise they didn’t foresee when viewing the future through the lens of the present.

The 1% of mavericks who succeed receive extraordinary acclaim. They are heralded as visionaries. The press gushes over their wealth and beauty, creating lists to rank these heroes by riches, influence and prestige. Successful mavericks sell books by the millions, explaining step by step how everyone can repeat their success. Failed mavericks never get book deals.

Mavericks are needed. The innovations spawned by their risk taking help create the future. Mavericks are indeed visionary. The question is how clear was their vision beforehand.

Mavericks, like everyone else, are near-sighted. Their vision is fuzzy. The 1% of mavericks who cross the finish line and are crowned with laurels and wealth rarely acknowledge they were at times stumbling in the dark. Success always appears inevitable to those who are successful. When looking backwards in time, the beaten path the maverick sees that led to his or her success looks straight and true. The lucky breaks and near disasters are hidden from sight. That’s not to imply that mavericks’ success is all due to luck and randomness. Only that there is a happy dance between skill and serendipity.

I applaud mavericks. I admire them. I just don’t like the odds. That is why I’d rather live on the leading edge of the present. Not stuck in the past, or muddling in the boring middle, nor blazing the maverick’s trail to glory or disaster. I’d rather be a step or two behind the maverick.

How do you live on the leading edge of the present? That’s what this blog is about, but here is a summary of steps covered in earlier posts.

1. Try the ideas and products successful mavericks produce. I’ve mentioned before these ideas are legion, as numerous as popping corn.
2. Don’t burn your ship when trying these new ideas, rather scale the experiment based on its risk. As the personal cost of being wrong about an idea or decision increases along with the uncertainty of success, the size of the bet should be reduced.
3. Measure the results of the experiment, paying particular attention to the unexpected, to the surprises both good and bad.
4. Step back and put the results in context. Look for patterns. What does your intuition say about the results?
5. Experiment some more, be a piece-meal engineer, a tinkerer. Take incremental steps to edge you closer to the future.

These are of course just steps. What are needed are more examples. A topic of many future posts.

At the beginning of a chess game, White has twenty possible moves and Black has twenty ways to respond – for a total of 400 possible positions after the opening turns. After two moves for each player there are close to two hundred thousand possible chess positions and after five moves the possible number of positions is over a trillion. In fact, there are more possible chess positions than there are atoms in the universe, according to estimates made by mathematicians.

Yet, if a chess grandmaster is given a brief look at a chessboard with 25 pieces arranged as they might be midway through a game, he can place all 25 pieces on a clean board exactly as they were configured during his brief encounter. A novice on average can only place six of the 25 pieces in their original spots.

At first it might appear chess grandmasters have superior memories, but if the 25 pieces are scattered randomly on the board, the chess masters perform no better than a novice, repositioning only six pieces correctly.

Kurt Matzler, Frank Bailom and Todd A. Mooradiun discussed this contradiction in an article published in the MIT Sloan Management Review entitled Intuitive Decision Making. They contend grandmasters see a pattern behind potential configurations of a game. One estimate is a professional player can recognize more than 50,000 configurations, but if the pieces are positioned in a way that doesn’t make sense according to the rules of the game, the chess masters are unable to recognize a pattern and their results are no better than a novice.

The authors define intuitive decision making as the ability to recognize patterns at lightening speed, often unconsciously. This intuition or pattern recognition involves a process where knowledge, experience and emotions are linked.

I mentioned in my last post that while we can’t escape viewing the future through the lense of the present, there are circumstances where we can get insight into what may happen. On the leading edge of the present – the thin line that separates the now from the future – intuition, or pattern recognition, can assist in deciphering current trends. Our intuition can help us develop a better than average assessment of which trends are likely to continue, at least until they get disrupted by some unexpected event.

While intuition is not as good as having a crystal ball to predict the future, it is better than flying blind.

As I mention previously, John Elfreth Watkins Jr.’s predictions of the year 2000 were mostly wrong, but a number of his predictions were surprisingly prescient, particularly in regards to communication. He wrote “persons and things of all kind would be brought within focus of cameras connected electrically with screens at opposite ends of circuits, thousands of mile at a span.” He also mentioned, “Wireless telephones…will span the world.” Perhaps communications was an area where Watkins had more knowledge and experience, allowing him to better recognize patterns that led to his correct predictions.

I’ll explore in an upcoming post how intuition works better in some situations more than others.

Imagine a world where strawberries are as big as apples and peas as large as beets. In this imaginary world, mosquitoes, flies and roaches have been exterminated, while horses are nearly extinct. Only a few high breed horses are kept by the rich for racing, hunting and recreation. It is a land where packages are delivered through a network of pneumatic tubes and the letters C, X and Q have been eliminated from the everyday English alphabet in order to simplify it.

These were some of the predictions by John Elfreth Watkins, Jr. in a Ladies Home Journal article published in the year 1900 entitled, “What May Happen in the Next Hundred Years.”

The illustrations in this post are predictions made that same year on souvenir cards produced for the Paris Exposition. They depict what life would be like in the year 2000 (I originally found these on Paleo-Future: A Look into the Future that Never Was. They come from tvhistory.tv).

Most of the predictions were wrong, although a few were correct.

The incorrect ones exemplify why it is so difficult to predict what is going to happen. Our predictions are fuzzy like seeing a giraffe in the distance. We leave out important details and place too much emphasis on the details we imagine. The reason we put so much weight on the accuracy of those imagined details is they are heavily influenced by our present attitudes, feelings and knowledge. We view the future through the lense of the present.

Take Watkin’s prediction that horses would become nearly extinct, for example. It is illustrated below, showing the horse was expected to be so rare it would be put on display as a curiosity.

In the year 1900, automobiles were not widespread, having begun commercial production only ten years earlier. Still, the automobile had sufficient momentum that a forecaster could conceivably project they would replace the horse. What is interesting is how turn of the century attitudes toward thrift and utility influenced that prediction, not to mention the stink a surging horse population was causing for cities.

If the car was expected to replace the horse, then the horse would no longer be needed for farming and transportation. So why continue to raise and feed horses if they have no utility. And if there are no horses, then there is no horse manure and the attendant flies. In 1890, the Times of London estimated by 1950 the city would be buried in 9 feet of horse manure. One estimate is three billion flies hatched per day in U.S. cities in 1900 with horse manure being the preferred fly breeding ground. The stench, the muck and the flies caused by horses was overwhelming. (Here is an interesting article by Eric Morris on the topic).

So the logical forecast for the future based on a late 19th century frame of reference is the horse would become nearly extinct, and it would be a welcome development. What was unseen is the car and other technological breakthroughs would lead to increased efficiencies, greater wealth and more free time, greatly expanding the demand for recreational horse use, not only for the rich, but for farmers, ranchers and many others. The U.S. horse population did drop from an estimated 19 million in 1900 to approximately 9.5 million today. Worldwide horse population today is estimated to be 58 million, far from being extinct.

The turn of the century frame of reference influenced Watkin’s other predictions. Many were agrarian in nature, mirroring the predominant but changing culture back then. Predictions of transportation advances were focused on trains, ships and cars, the modes of transportation experiencing the greatest expansion at the time while the only reference to man flying was air-ships (zeppelins), which were not expected to be competitive with ground transportation for passenger and freight traffic.

What gets left out of all predictions is the unpredictable - the unexpected events, the surprises. It is these surprises that have the greatest impact on the future. They are the game changers that can swamp the incremental improvements and current trends. Since most forecasts are simply extrapolations of current trends, it’s understandable most predictions are wrong because they are torpedoed by disruptive events and surprise technological breakthroughs.

If we can’t escape viewing the future through the lense of the present, are there any circumstances where we can get insight as to what may happen. Yes there are, and I’ll address them in my next post.

The joy of a Caribbean vacation. The white sand, the aqua water, relaxing with loved ones by the pool. Such were the things I looked forward to several years ago when we booked a holiday along the Mexican Caribbean coast. We were scheduled to leave snowy Idaho a few days before Christmas, fly to Atlanta for the night, and take a short flight to Cancun the next morning where a rental minivan would be waiting. We’d then drive south to an ocean side condo and be frolicking in the sand by mid afternoon.

For months leading up to our departure, I imagined the sunny days of calm and tranquility. Somehow in my mind’s eye I overlooked a few details.

We woke the morning of our departure to a massive snowstorm. Our flight out of Idaho was canceled so the airline bussed us five hours to Salt Lake City where we caught a delayed flight to Atlanta that arrived late at night. The next morning, having slept for less than four hours, we returned to the airport and found utter chaos. Thousands of travelers with their stacks of luggage snaked through the terminal, all having the same aim as us—to escape for the holidays. We barely made our flight.

Upon arrival in Cancun, we found the rental car company didn’t have our reserved minivan. They didn’t even rent minivans. Instead, they offered a subcompact to hold our three kids, five suitcases and an assortment of backpacks. It took an hour before the car was cleaned and readied.

We arrived at the condo too late to hit the beach, but the next morning we walked to a pristine stretch of sand in front of a neighboring hotel, laid out our towels and water toys and prepared to take a dip.

A Mexican security guard caught me before I hit the water.

“You have to move,” he said in broken English, adjusting his ill-fitting brown uniform.
“Por que?” I said.
“This beach is private,” he continued in Spanish.
“There are no private beaches in Mexico. They’re all public.” I sensed the condescending stares from my fellow sunbathers. They clearly thought we were beach interlopers.
“The boss says you must go. This is a private beach” The guard shifted his feet, apparently not used to gringos knowing Mexican laws.
“Tell your boss we won’t leave. This is public ground.”

He went to find his boss, who came and told me the same story. We still refused to budge. They then went after the hotel manager, who finally gave us permission to remain on the beach.

So we stayed, but the water seemed less inviting now. After an hour, we decided to return to our hotel pool where we didn’t need permission to swim. There we found a family from Spain with their three teenage daughters, who insisted on swimming and jumping off the diving board topless to the utter fascination of my young sons.

Except for major items like water and sand, my prediction of what our Caribbean vacation would be like wasn’t even close to what transpired. Dan Gilbert explains why in his fascinating book, Stumbling on Happiness.

When we see into the distant future we tend to think abstractly, leaving out many details and putting too much faith in the accuracy of the details we imagine. It’s like seeing a giraffe in the distance. We know it’s a giraffe by its neck, but we can’t see its spots, its mouth or its ears. Our brain knows this and compensates. Unfortunately, our brains are lousy at realizing our imagined future is as fuzzy as a distant giraffe. Hence, our predictions of what will be are invariably wrong.

During the frigid Idaho winter, my vision of spring bicycle rides is full of sun, pleasant breezes and smooth roads. When I actually get back on my bike come spring, I am startled by the ever-present headwind that howls in my ears, the bugs that fly in my mouth, the dogs that sneak up to snap at me and that once smooth roads have been chip sealed with gravel, making them as rough as cobblestone.

In 1908, Wilbur Wright was honored by the Aero Club of Paris. He spoke at a dinner in front of 200 guests, which included many of France’s premiere scientists and experts on aviation (Link to original New York Times Article).

Regarding the airplane, Wilber Wright said, “Ten years ago the world ridiculed the idea. As late as 1901, I told my brother men would not fly for fifty years, yet two years later we flew.”

How is it Wilbur Wright could be off by 48 years when he was a leading expert on flight? The writer Arthur C. Clarke said, “When a distinguished but elderly scientist states that something is possible he is almost certainly right. When he states that something is impossible, he is very probably wrong.”

We, like Wright, get it wrong when imagining the future because the starting point for our predictions is invariably what we know and feel today. Our present feelings cloud our ability to see across time. Wilbur probably made his prediction about flight to his brother on a particularly frustrating day.

Of course, not all surprises as we move from the present to the future our unpleasant. Swinging in the hammock on the roof of our Mexican condo, watching a pair of Chiapecan boys wrestle poolside next the trinkets they were selling, eating delightful candlelight dinners along Lake Bacalar, and watching wild howler monkeys in the trees above the Mayan ruins of Calakmul were all unanticipated discoveries on our holiday vacation.

Living on the present’s edge means not worrying about the future or trying to predict what it will be like. Rather, it’s recognizing the future will be full of surprises, and like catching popping corn, we can latch onto the unexpected discoveries.

 In 1519, Hernan Cortés landed with a fleet of 12 ships near present day Veracruz, Mexico.  The flotilla held 500 Spaniards, 300 natives, a dozen horses and a few cannons. Cortés’ aim was to conquer the Aztec Empire and take possession of its great wealth.

The legend is that before launching the attack Cortés burned his ships to prevent his men from retreating.   Through the ages this brazen act has come to represent fully committing to a course of action.  Going all in.  Burning all bridges.

The legend is also wrong.  It turns out Cortés had nine of the twelve ships sailed into the sand, grounding them.  There is no word on the other three ships.  According to Hugh Thomas in the Conquest: Montezuma, Cortés, and the Fall of Old Mexico, the burning ship error derives from sloppy handwriting.  Two Spanish words were confused in the written record: quebrando (breaking) and quemando (burning).

Cortés was successful in his conquest, but one wonders if he intended to use the three unharmed ships as a backup plan in case the expedition didn’t go well.

While there are times it makes sense to burn ships to prevent retreat, there are other times when doing so is foolhardy.  How do we discern which is which?  The sketch below provides some insight.

As the personal cost of being wrong about an idea or decision increases along with the uncertainty of success, the size of the bet should be reduced.

For example, the negative consequences for a twenty five year old with no dependents who quits her job and maxes out a few credit cards to start a business that ultimately fails is much less than for a fifty year old with a child in high school and another in college who also quits his job and liquidates his 401k to start a similar venture.

The twenty five year has many more years to get back on her feet whereas the fifty year old’s failure could have catastrophic consequences for his retirement.

Earlier, I mentioned testing new thoughts, trying new things, is the essence of expanding the present, but not everyone is brave enough to do it.  Learning to scale our new endeavors based on the uncertainty of success and the personal cost of being wrong increases our courage to try new things.

I love the concept of the piecemeal engineer introduced by Karl Popper in Poverty of Historicism A piecemeal engineer is a tinkerer—someone who doesn’t believe in burning ships.  Piecemeal engineers seek to achieve their aims by “making small adjustments and readjustments which can be continually improved upon.”  Like Socrates they know how little they know so they are always on the “lookout for the unavoidable, unwanted consequences of reform.”

The leading edge of the present is where the best ideas are found.  It is also the realm of maximum uncertainty because it’s the jumping off point into the unpredictable future.

Experimenting is the key to minimizing pain amidst such uncertainty.   Experiments increase flexibility to react to the unintended consequences of our actions, both the positive and the negative.  And on the present’s leading edge there are always unintended consequences.  Having a ship to retreat to when a surprise turns nasty not only can save our hides but it provides a safe haven to regroup before venturing out again.

Pressure builds inside the kernels until one by one the casings give way in a steam explosion so powerful the kernel turns inside out as it arcs through the air.

Apply enough heat and popcorn will pop.  That outcome is certain.  Knowing beforehand which kernel you will catch in the air is impossible.

New ideas are like popping corn.   They’re abundant if you know where to look and brave enough to try them on.  They are out there floating on the ether, waiting for us to pick them up as Paul Arden writes in his book, It’s Not How Good You Are, It’s How Good You Want To Be.   But forecasting which idea will be successful, which idea will make a difference in our lives is as difficult as predicting the timing and trajectory of a popping kernel.

Just because we can’t tell beforehand which ideas will make a difference to us shouldn’t stop us from trying them on.  Testing new thoughts, trying new things, is the essence of expanding the present.  Not everyone is brave enough to do it.

My friend’s in-laws went on a mission trip to Thailand.  Six month after their departure, my friend traveled overseas to visit them.  He loves Thai food.  This trip would be nirvana for his taste buds.  Two days after arriving, my friend still hadn’t eaten a Thai meal.  They would pass street vendors and restaurant stalls, but his in-laws insisted they return to their small apartment where they would eat bland American dishes.

Finally, on the third day my friend couldn’t stand it.  He asked if they could eat out at a Thai restaurant.  His in-laws were hesitant.  They said they were tired of Thai food.  They didn’t really like it.

“What have you had?” he asked.
“Sweet and sour chicken.”
“What else?”
“That’s it,” they said.
“You’ve been here six months and all you’ve eaten is sweet and sour chicken?”
“Yep.  That’s the only dish we’ve heard of”

Fear had kept them from trying anything else.  Needless to say my friend introduced his in-laws to a wide variety of curries and noodle dishes.  They ended up loving Thai food.

This blog is about living in the present.  Not the mediocre present where bland meals are partaken safely within the walls of tiny apartments, but the leading edge of the present — that thin line that separates the now from the unpredictable future.  The expanded present where deep within a maze of back alleys on a faraway isle, a Thai cook experiments with a new combination of exotic spices to produce a previously unknown curry for us to try.

I’ve named this blog Now Squared.  I hope to make it a place to catch popping corn – random kernels of ideas and thoughts that jump out at me as I live my life on the present’s leading edge.