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Externalities: Why We Can Never Do “One Thing”

No action exists in a vacuum. There are ripples that have consequences that we can and can’t see. Here are the three types of externalities that can help us guide our actions so they don’t come back to bite us.

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An externality affects someone without them agreeing to it. As with unintended consequences, externalities can be positive or negative. Understanding the types of externalities and the impact they have in our lives can help us improve our decision making, and how we interact with the world.

Externalities provide useful mental models for understanding complex systems. They show us that systems don’t exist in isolation from other systems. Externalities may affect uninvolved third parties which make them a form of market failure —an inefficient allocation of resources.

We both create and are subject to externalities. Most are very minor but compound over time. They can inflict numerous second-order effects. Someone reclines their seat on an airplane. They get the benefit of comfort. The person behind bears the cost of discomfort by having less space. One family member leaves their dirty dishes in the sink. They get the benefit of using the plate. Someone else bears the cost of washing it later. We can’t expect to interact with any system without repercussions. Over time, even minor externalities can cause significant strain in our lives and relationships.

The First Law of Ecology

To understand externalities it is first useful to consider second-order consequences. In Filters Against Folly, Garrett Hardin describes what he considers to be the First Law of Ecology: We can never do one thing. Whenever we interact with a system, we need to ask, “And then what? What will the wider repercussions of our actions be?” There is bound to be at least one externality.

Hardin gives the example of the Prohibition Amendment in the U.S. In 1920, lawmakers banned the production and sale of alcoholic beverages throughout the entire country. This was in response to an extended campaign by those who believed alcohol was evil. It wasn’t enough to restrict its consumption—it needed to go.

The addition of 61 words to the American Constitution changed the social and legal landscape for over a decade. Policymakers presumably thought they could make the change and people would stop drinking. But Prohibition led to numerous externalities. Alcohol is an important part of many people’s lives. Few were willing to suddenly give it up without a fight. The demand was more than strong enough to ensure a black-market supply re-emerged.

Wealthy people stockpiled alcohol in their homes before the ban went into effect. Thousands of speakeasies and gin joints flourished. Walgreens grew from 20 stores to 500, in large part due to its sales of ‘medicinal’ whiskey. Former alcohol producers simply sold the ingredients for people to make their own. Gangsters like Al Capone made their fortune smuggling, and murdered his rivals in the process. Crime gangs undermined official institutions. Tax revenues plummeted. People lost their jobs. Prisons became overcrowded and bribery commonplace. Thousands died from crime and drinking unsafe homemade alcohol.

Policymakers did not fully ask, “And then what?” before legislating. Drinking did decrease during this time, on average by about half.  But this was far from the hope of a total ban. The second-order consequences outweighed any benefits.

As economist Gregory Mankiw explains in Principles of Microeconomics,

In the presence of externalities, society’s interest in a market outcome extends beyond the well-being of buyers and sellers who participate in the market; it also includes the well-being of bystanders who are affected indirectly…. The market equilibrium is not efficient when there are externalities. That is, the equilibrium fails to maximize the total benefit to society as a whole.

Negative Externalities

Negative externalities can occur during the production or consumption of a service or good. Pollution is a useful example. If a factory pollutes nearby water supplies, it causes harm without incurring costs. The costs to society are high and are not reflected in the price of whatever the factory makes. Economists often view environmental damage as another factor in a production process. But even if pollution is taxed, the harmful effects don’t go away.

Transport and manufacturing release toxins into the environment, harming our health and altering our climate. The reality though, is these externalities are hard to see, and it is often difficult to trace them back to their root causes. There’s also the question of whether we are responsible for externalities or not.

Imagine you’re driving down the road. As you go by an apartment, the noise disturbs someone who didn’t agree to it. Your car emits air pollution, which affects everyone living nearby. Each of these small externalities will affect people you don’t see and who didn’t choose them. They won’t receive any compensation from you. Are you really responsible for the externalities you cause? If you’re not being outright careless or malicious, isn’t it just part of life? How much responsibility do we have as individuals, anyway?

Calling something a negative externality can be a convenient way of abdicating responsibility.

Positive Externalities

A positive externality imposes an unexpected benefit on a third party. The producer doesn’t agree to this, nor do they receive compensation for it.

Scientific research often leads to positive externalities. Research findings can have applications beyond their initial scope. The resulting information becomes part of our collective knowledge base. However, the researcher who makes a discovery cannot receive the full benefits. Nor do they necessarily feel entitled to them.

Blaise Pascal and Pierre de Fermat developed probability theory to solve a gambling dispute. Their work went on to inform numerous disciplines (like the field of calculus) and transform our understanding of the world. Probabilities are now a core part of how we think. Pascal and Fermat created a positive externality.

Someone who comes up with an equation cannot expect compensation each time it gets used. As a result, the incentives to invest the time and effort to discover new equations are reduced. Algorithms, patents, and copyright laws change this by allowing creators to protect and profit from their ideas for years before other people can freely use them. We all benefit, and researchers have an incentive to continue their work.

Network effects are an example of a positive externality. Silicon Valley understands this well. Each person who joins a network, like a marketplace app, increases the value to all other users. Those who own the network have an incentive improve it to encourage new users. Everyone benefits from being able to communicate with more people. While we might not join a new network intending to improve it for other people, that is what normally happens. (On the flipside, network effects can also produce negative externalities, as too many members can decrease the value of a network.)

Positive externalities often lead to the “free rider” problem. When we enjoy something that we aren’t paying for, we tend not to value it. Not paying can remove the incentive to look after a resource and leads to a Tragedy of the Commons situation. As Aristotle put it, “For that which is common to the greatest number has the least care bestowed upon it.” A good portion of online content succumbs to the free rider problem. We enjoy it and yet we don’t pay for it. We expect it to be free and yet, if users weren’t willing to support sites like Farnam Street, they would likely fold, start publishing lower quality articles, or sell readers to advertisers who collect their data. The end result, as we see too frequently, is low-quality content funded by page-view advertising. (This is why we have a membership program. Members of our learning community create a positive externality for non-members by helping support the free content.)

Positional Externalities

Positional externalities are a form of second-order effects. They occur when our decisions alter the context of future perception or value.

For example, consider what happens when a person decides to start staying at the office an hour late. Perhaps they want a promotion and think it will endear them to managers. Parkinson’s Law states that tasks expand to fit the time allocated to them. What this person would otherwise get done by 5pm, now takes until 6pm. Staying late becomes their norm. Their co-workers notice and start to also stay late. Before long, staying at the office until 6pm becomes the standard for everyone. Anyone who leaves at 5pm is perceived as lazy. Now that 6pm is the norm, everyone suffers. They are forced to work more without deriving any real benefits. It’s a lose-lose situation for everyone.

Someone we know once made an investment with a nearly unlimited return by gaming the system. He worked for an investment firm that valued employees according to a perception of how hard they worked and not necessarily by their results. Each Monday he brought in a series of sport coats and left them in the office. He paid the cleaning staff $20 a week to change the coat hanging on his chair and to turn on his computer. No matter what happened, it appeared he was always the first one into the office even though he often didn’t show up from a “client meeting” until 10. When it came to bonus time, he’d get an enormous return on that $20 investment.

Purchasing luxury goods can create positional externalities. Veblen goods are items we value because of their scarcity and high cost. Diamonds, Lamborghinis, tailor-made suits — owning them is a status symbol, and they lose their value if they become cheaper or if too many people have them. As Luca Lambertini puts it in The Economics of Vertically Differentiated Markets,

The utility derived from consumption is a function of the quantity purchased relative to the average of the society or the reference group to whom the consumer compares.” In other words, a shiny new car seems more valuable if all your friends are driving battered old wrecks. If they have equally (or more) fancy cars, the value of yours drops. At some point, it seems worthless and it’s time to find a new one. In this way, the purchase of a Veblen good confers a positional externality on other people who own it too.

That utility can also be a matter of comparison. A person earning $40,000 a year while their friends earn $30,000 will be happier than one earning $60,000 when their friends earn $70,000. When someone’s salary increases, it raises the bar, giving others a new point of reference.

We can confer positional externalities on ourselves by changing our attitudes. Let’s say someone enjoys wine but is not a connoisseur. A $10 bottle and a $100 bottle make them equally happy. When they decide to go on a course and learn the subtleties and technicalities of fine wines, they develop an appreciation for the $100 wine and a distaste for the $10. They may no longer be able to enjoy a cheap drink because they raised their standards.

Conclusion

Externalities are everywhere. It’s easy to ignore the impact of our decisions—to recline an airplane seat, to stay late at the office, or drop litter. Eventually though, someone always ends up paying. Like the villagers in Hardin’s Tragedy of the Commons, who end up with no grass for their animals, we run the risk of ruining a good thing if we don’t take care of it. Keeping the three types of externalities in mind is a useful way to make decisions that won’t come back to bite you. Whenever we interact with a system, we should remember to ask Hardin’s question: and then what?

A Wandering Mind: How Travel Can Change the Way You Think

Most people travel as an observer, and as a result, “see” a lot. When you travel as an active participant, the experience can transform the way you think, and how you see the world.

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Here’s a situation familiar to many of us: We decide to take a vacation and go somewhere exotic. We plan the trip and mark our calendars, and as the date gets closer we get increasingly excited. Before we step on the plane, the possibilities seem endless. Anything could happen! Accidental encounters and adventures could change our lives!

We go. We have a good time. We see what we wanted to and enjoy the break from work. Upon returning home, we share the pictures and recount some of our experiences with friends. We give away the souvenirs. We step back into our lives. The glow fades and we settle to planning the next round of travel in our daydreams.

In the end, it’s a little sad. That incredible experience becomes like a mirage or a dream—similar to watching a movie, but a lot more expensive.

What if it doesn’t have to be like this?

Travel without participation and reflection is entertainment. Try to notice yourself in the journey, and capture the experience and insights when you interact with all the new things you are confronted with. You can get more out of your travel by using mental models to weave yourself into the experience, and come away enriched as well as entertained and rested.

First, inspiration from the past …

Just over 200 years ago, Mary Wollstonecraft, philosopher, feminist, and author of A Vindication of the Rights of Woman, was going through an emotionally difficult period. Her lover—the father of her child—wasn’t interested in being with her anymore. She was devastated and frustrated. As a philosopher, she believed it was important to live according to the ideals she espoused. The realities facing a middle-class woman in 18th-century England made that very hard. Women had essentially no rights. Having a child out of wedlock might have supported her ideas regarding how oppressive the institution of marriage was for women, but without the support of the child’s father, she knew she would struggle financially and socially. It was one of the lowest points of her life.

Wollstonecraft went to Scandinavia, mostly to recover some money for her lover and thus try to win him back. In this she failed. But she captured her journey in Letters Written During a Short Residence in Sweden, Norway, and Denmark. In doing so, she revolutionized travel writing and healed herself.

The Letters offer remarkable insight into Wollstonecraft’s lively mind. As she moves through the unfamiliar surroundings of three foreign countries, she asks herself questions and explores the ideas brought to mind. Observing the agricultural development of Norway, in many ways behind that of England at the time, she asks, “And, considering the question of human happiness, where, oh where does it reside? Has it taken up its abode with unconscious ignorance or with the high-wrought mind?”

She learns why the locals are nervous about serving coffee and how different their fashions are. She comments on the different gardening practices and the beauty of the trees. In contemplating how the Norwegians organize their social hierarchy she makes comparisons to England and infers conclusions about her native country—namely that the way things are is not necessarily how they have to be.

Most importantly, she records what effect the traveling has on her. “When a warm heart has received strong impressions, they are not to be effaced. Emotions become sentiments, and the imagination renders even transient sensations permanent by fondly retracing them. I cannot, without a thrill of delight, recollect views I have seen, which are not to be forgotten, nor looks I have felt in every nerve, which I shall never more meet.”

Here are some goals we can construct from Wollstonecraft’s approach to travel:

  1. Try to actively know the place you are in. Observe the customs. Interact with the locals.
  2. Learn the whys behind the observation. Explore the history. Ask questions. Try to understand the answers in relation to what you are experiencing now, setting aside any previous assumptions.
  3. Notice how the journey is affecting you. What memories surface? What new insights do you have? Are your opinions and beliefs challenged?
  4. Don’t plan out every detail. Explore. The map is not the territory.

So how do we put those goals into practice?

Here is where mental models can amplify the travel experience.

We all have a tendency to generalize from small samples. Our own little world becomes, without the infusion of new experiences, our frame for understanding the entire world. Travel broadens your sample set. You start to really understand the universals of the human condition versus the particulars of the area you occupy.

Travel is a great way to counter confirmation bias. Chances are, people in a different country will think differently than you. Interactions won’t reinforce your feedback loop. You will be exposed to new ideas and ways of approaching life that can remind you of the options you have when you go back home.

You can apply the power of algebraic equivalence. In algebra, as we solve abstractions such as x + y = 8, we learn that values can be equal without looking exactly the same. When you explore other cultures and ways of living, you see that there are many definitions of a good life and many ways to be happy. You begin to understand that equality of experience is different from sameness of experience. Not everyone wants what you want. This diversity in how we manifest our goals and desires accounts for differences in everything from personal philosophy to product markets.

The distance from your regular life can give you perspective. Using the terms of Galilean relativity, you get to be the fish instead of the scientist. The lens of travel can help you untangle problems back at home in many ways. The distance, both physical and psychological, also gives you the opportunity to observe yourself in your regular life without the day-to-day pressures clouding your judgment.

Try these specific tips to apply this mental models approach to travel:

  1. Keep a travel journal. It doesn’t have to be complicated. Travel is full of idle moments like waiting for transportation, or museum-feet recovery at the end of the day. Reflect and capture.
  2. Encourage serendipity in your experiences. Give yourself the chance to experience the unexpected. Over-planning reinforces your current biases. You can’t possibly know the best of a place before you get there.
  3. Be deliberate in setting your goal. Go somewhere with the intent of gaining something out of that experience. Don’t try to recreate your life at home, with the same restaurants and television shows.
  4. Be open to growth. Travel is an opportunity to choose to be different. Anticipate that you might add to the construct that is “you” when you travel. Embrace the additions to your identity so that you have new resources to draw on.

Through considering mental models and staying actively engaged, travel can jolt you awake, and show you the world in a different light.

The Evolutionary Benefit of Friendship

Healthy friendships offer far more than a reliable person to share a beer with. Research shows they can make us healthier, wealthier, happier and overall more successful. Here’s how.

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Is friendship important for our survival?

At first glance, the answer isn’t obvious. Other relationships get more play: romantic partners, parents and kids, families, professional networks. It’s easy to find books on improving your marriage or your relationship with your coworkers. The ability to create and maintain friendships, though, seems a bit taken for granted. Often it appears that either we all do it with relative ease, or we just don’t care. We have a feeling that neither of these is true.

Friendships require sustained effort that can often be just as confusing to navigate as a marriage. Over time they will go through ups and downs, face challenges from time pressures or geographical constraints, and have to resolve misunderstandings. And these are the good ones. We also have to try out many friends to find the ones who stick, and weed out the ones who turn out to be bad for us. And unlike our ancestors, we have to put a lot of effort into considering what is a friend, given the seemingly infinite number of connections we can make on social media.

Our ability to form relationships with people who aren’t related to us, however, is a critical skill that helped turn us into humans. It’s a fundamental part of who we are.

Biologically, our ability to develop and maintain social connections is directly related to the size of our brain. The research of Robin Dunbar (of Dunbar’s Number, one of our mental models), has demonstrated that because we are limited by our brain capacity, the fitness advantage of larger social groups was a driver in the evolution of parts of the brain. Other scientists have corroborated this idea that our larger brains are primarily a social versus ecological adaptation. It wasn’t because we happened to have a bigger brain for say, hunting, that we pursued complex social relationships, but rather that these relationships were critical for the evolutionary development of neocortical capacity. Friends made us smarter and gave us more potential.

Looking at ourselves through a biological lens also suggests that one of the obvious advantages to friendships is the diversity they create. If you are being attacked by a saber-toothed tiger, it would be nice to be able to rely on more than one individual for help. And, perhaps more importantly, your chances of thwarting the tiger are increased if you are part of a tribe that includes people with different skill sets. Someone who understands tiger behavior, someone who can kill it, and someone who can treat any resulting wounds could be helpful. Furthermore, being part of this diverse group means that when the environment changes, someone can likely adapt and lead the way for everyone else.

In a modern context, having diversity in our relationships has multiple applications. For one, it doesn’t make much sense to put all your emotional eggs in one basket. Committed romantic partners are wonderful, but if they die the last thing you want to be is alone. Your survival is quite literally dependent on having close friends who can support you through the hard times. And having friends with different specialties, interests, strengths and weaknesses can help us test out ideas and develop our character by giving us a safe space to experiment.

What about the value of friends who are smarter or better at the things we aspire to do? As in dealing with the tiger, friends with different talents can help us realize our own potential.

In her book The Friendship Cure, Kate Leaver provides a convincing argument for the value of friends. They are worth it for the benefit to cardiovascular health alone! Interestingly, she writes that “social integration and close relationships are the most important predictors of mortality, well above things like alcohol consumption, exercise and diet.” With a network of reliable friends, we live longer and in better health. And good friends make us feel good. There is a reciprocity that Leaver explores in all sorts of manifestations, demonstrating just how amazing friendships can be for the quality of our lives.

The value of friendship has been evident for a long time. Aristotle devoted a good part of the Nicomachean Ethics to contemplating friendship, but took it as self-evident that friends were important. He wrote, “for no one would choose to live without friends even if he had all the other goods.” Defining what makes a good friend, fine, he could spend some time on that, but there was no doubt that friendship itself was “a necessary component of happiness.”

To really see the value of friends, think of your social ecosystem, the web of interpersonal connections that you engage with as you live your life. Leaver asks, “what do we get from friendship that we don’t get from romantic relationships, family or work?” When you answer this question, you’ll see where your friends fit.

The answers are going to be different for everyone. It could be that friends provide you with a place to go to admit your fears and frustrations without being judged, or a history of yourself that you tap into to keep you grounded, or someone to go to axe throwing with on Thursday nights. The point is, we can get profound positives from friends that we cannot get in our other relationships.

We become who we are in great part because of the friends we have. — Alexander Nehamas

Aristotle also said that “though the wish for friendship comes quickly, friendship does not.” Yes, they do take work. But the good news is that if you put some effort into learning what it means to be a good friend, the rest isn’t going to feel like work at all. Why? Alexander Nehamas writes in On Friendship that friendship “provides companionship and a safety net when we are in various kinds of trouble; it offers sympathy for our misfortunes, discretion for our secrets, encouragement for our efforts.”

So why does friendship seem to get relegated to the bottom of our relationship endeavors? Leaver argues that “we’ve built a culture of individuality without knowing how to be alone successfully or how to truly combat loneliness.” If friendship becomes another check box on your daily to-do list, you’re probably not going to feel like you actually have friends. That kind of social interaction is going to feel more stressful than beneficial, and consequently you will likely start to avoid it.

A further consideration is that friendship seems to go by the wayside as we pursue the things we believe we need to consider ourselves successful. Material goods, titles, fame, a large number of social media followers. Whatever.

But Leaver’s point is that friends are actually a key component of success. Without them we become isolated and vulnerable to loneliness, pain, and poor health. With them we live longer, with more laughter and less fear, and a higher quality of life. Doesn’t that sound like something worth some effort?

The Power of Questions

The quality of the answers we get are directly correlated with the quality of the questions we ask. Here’s how to improve your questions.

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When we run our once-a-year Re:Think Europe event, 10 participants work with us for a month before the event to hone their questions. This is the most intense event we run for a reason. Each person brings a problem or challenge to the table for others to help with. Participants research each other’s problems before the event. Before they even show up, refining and iterating the questions often helps the participants make huge leaps forward.

As a society, we tend to focus a lot on answers. Answers are solutions to problems. We tend to give less prestige to questions. Everyone has them. They’re easy. It’s the answers that take the work.

This overlooks the power of questions. Asking questions gives you a better understanding of everything: the situation you are in, the challenges you are facing. Life.

Let me share a story that took place in my second-year history class in university. We started discussing the assigned reading. I didn’t really understand it, but I figured I’d get it just sitting there. Then this guy raised his hand and said, “Hey Professor, could you explain [technical term]? It wasn’t clear to me from the article.”

Boom. I had this startling insight. Up until then, I had always been afraid to ask questions like that for fear of looking stupid [read about pluralistic ignorance here]. But this guy didn’t appear stupid. At that moment, he seemed like the smartest guy in the class.

Asking questions means you want to learn. You want to understand and know. So where do you start? Anywhere you want. But don’t feel pressure to begin with the big questions, the ones we all confront at one time or another, like the meaning of life, or what exists beyond our physical experience of earth. There is a significant amount to be learned from the seemingly mundane ones, questions that seem so basic, once we reach about age 12 we no longer bother asking them—because we either think we know the answer or are afraid of admitting we don’t.

Consider the following three questions:

  1. What is a horse?
  2. What is green?
  3. What is a point in time?

At first glance, these don’t seem difficult. They’re grade school stuff. But these are actually really hard questions that can show us how much is to be gained from asking them.

First, what is a horse? Most people will list the physical characteristics that horses have in common, saying, “A horse has four legs, and a mane, and you can ride it.” This is definitely true of some horses, but we would reasonably consider a three-legged horse still a horse. And a horse doesn’t cease to be a horse if it can’t be ridden. It doesn’t become some other animal.

There is, I think, some component of DNA that is the same for all horses, a bit of code that tells the cells to form the horse. So why don’t we reference a specific gene sequence when we are explaining what a horse is? Because it wouldn’t in any way communicate what we mean by the word horse. Horses have properties that relate to our experience of them. The problem is, they all don’t have the same properties.

So what we do is fix a vague concept in our minds of horseness. It can’t be an image, because then it would be a specific horse, and it can’t be explicitly defined because we wouldn’t encompass the whole category. So we keep it at a fuzzy level that, despite its lack of precision, is extremely useful when we have to communicate in any way about horses. The abstract concept must stay abstract to retain its utility.

So, are you being pedantic when you ask, “What is a horse?” Not at all. You’re actually doing something very important. You are assessing the understanding of the person you are talking to in reference to yours. And you discover that it’s never going to be a perfect match.

As for the second question, what is green? This one is definitely more painful. The easy answer is, a color. But that’s not a good answer, for what is a color? A quality that objects possess? Ooh cool. Where can I get some of this quality? Ah. Nowhere. Green is a quality that does not exist outside of the objects that possess it.

There is no place you can see green without seeing something being green. How unfair is this? I know green. I see it all the time. But it is not a thing I can hold. A change in the way my eyes process light and there could cease to be green [related: How do you know that you know what you know?]. But greenness would always be out there, a property of the interaction of light and molecules that can be so vivid but doesn’t actually exist on its own.

Does this make asking, “What is green?” a waste of time? No. Wanting to get a handle on the fundamentals is never a waste of time. You can learn what you can influence and what you cannot. In this case you learn that you can change the color of an object, but you have no powers when it comes to color itself.

Finally, what is a point in time? This one really hurts. First, we should ask what is a point? Conveniently, Euclid provided some definitions over 2000 years ago.

  1. A point is that which has no part.
  2. A line is length without breadth.
  3. A surface is that which has length and breadth only.

From this, we can conclude that a point has neither length nor breadth. That’s okay. It’s just this thing, and if you connect two of them with length you get a line. Euclid also said, “The extremities of lines are points.” It all works. Conceptually, it makes sense. I can wrap my head around it enough to do basic geometry. Great.

But if you actually think about it, your brain could explode. A point has neither length nor breadth? Then what does it have? It has to have something, in order to be something, doesn’t it? But anything that occupies space must have length and breadth, however infinitesimal. Since points have neither, they cannot occupy space. But then how can they form the ends of lines? How can they be?

The same thing happens when we try to conceive of a point in time. It’s something we all get. We say things like “going forward” as if there is a specific moment that we can measure all other moments against. But how exactly would you describe a moment in time? To say that implies that there are many moments, all of which could be distinguished from each other. But can they be? What fills the space between them? And if you say nothing, then how can the points be distinguished at all?

Are we unreasonable, then, when we question, ‘What is a point in time?” No. We can’t question everything every day, as it would likely put us in a state of paralysis, but asking questions like this shows that there is much to be gained from the act of trying to answer. We can learn a lot, often more, from the work involved in answering a question than from the answer itself.

There are no dumb questions. Don’t be afraid to ask them. They are the most straight forward path to learning.

The Eternal Pursuit of Unhappiness

Along the same vein as Yvon Chouinard’s Let My People Go Surfing, The Eternal Pursuit of Unhappiness is the business philosophy handbook from the marketing, advertising, and PR firm Ogilvy & Mather.

The book is a roadmap for the desired organizational culture at Ogilvy & Mather and clearly articulates the unique culture they espouse: one focused heavily on creativity.

The book outlines eight simple virtues of an organization where creativity is pervasive:

  1. Courage
  2. Idealism
  3. Curiosity
  4. Playfulness
  5. Candour
  6. Intuition
  7. Free-Spiritedness
  8. Persistence

These eight virtues are common to creative people down through the ages. They are our path to recognizing our own inner greatness. Together, they should represent the distillation of what is best in this company. We must live by them and for them.

1. Courage

If fear is our principal adversary, then, courage is our chief ally. It is the first of the eight creative habits for good reason: it is the habit that guarantees all the others.

In the absence of courage, nothing worthwhile can be accomplished.

2. Idealism

Helen Keller, the deaf and blind activist, was asked by a journalist what she thought would be worse than being born blind. She replied without missing a beat, ‘to have sight and no vision.’

3. Curiosity

‘He who no longer pauses to wonder and stand rapt in awe,’ Einstein pronounced, ‘is as good as dead; his eyes are closed.’

It is only in the open state of curiosity that we can explore, dream and make babies in our heads.

For a start, we have to ask stupid questions like a pesky 6-year-old.

Once again, Einstein has something to say on the matter (as well as proving that he would have made a very short-lived cat): ‘I am neither especially clever nor especially gifted,’ the physicist said. ‘I am only very, very curious.’

4. Playfulness

David (Ogilvy) never entirely grew up.

He would heckle in meetings, throw chocolate cakes at dinner parties and roll down grassy slopes in Brooks Brothers suits.

He told us to develop our eccentricities while we’re young so people would not think we’re going gaga as we got older.

Like all creative people, David knew that necessity may be the mother of invention, but it is horseplay that’s most certainly the father.

5. Candour

We are a company of problem solvers.

Our job requires us to be brutally honest and totally dedicated to the truth.

For unless we know the truth, in all its unlovely details, how are we going to go about the business of problem solving.

The tendency to be nice and avoid telling the truth is so omnipresent in human beings that it can properly be considered a characteristic of human nature.

6. Intuition

We waste our beautiful mind by leaning lopsidedly on logic.

We are in the business of creativity and discovery. What clients value most about us is our ability to find one-of-a-kind solutions for their business problems through intuitive leaps.

7. Free-Spiritedness

Ironically, most agencies fail to grasp the fragility of the idea-generation process.

The notion that bureaucratic sausage factories pumping out fodder for meetings will solve the problem is ludicrous, as are the box-ticking, paint-by-numbers follow-up sessions.

The work is, not infrequently, as dull as the meetings that precede it.

Bureaucracy has no place in an ideas company.

8. Persistence

If the client kills your day, do him a better one.

If he kills the better one, do him an even better one.

If he kills that even better one, do him your damn best one.

Dogged determination is often the only trait that separates a moderately creative person from a highly creative one.

If you’re interested in reading the book for yourself, you’ll have a very hard time finding it on the open market (as the Amazon link above attests). To learn more this video does a great job of summarizing the eight virtues. You could also listen to The Knowledge Project Podcast Episode #19 with Rory Sutherland, Vice Chairman of Ogilvy & Mather.

The Danger of Comparing Yourself to Others

The most important things in life are internal not external.

“The big question about how people behave,” says Warren Buffett, “is whether they’ve got an inner scorecard or an outer scorecard. It helps if you can be satisfied with an inner scorecard.” To make his point, Buffett often asks a simple question: Would you rather be the world’s greatest lover, but have everyone think you’re the world’s worst lover? Or would you rather be the world’s worst lover but have everyone think you’re the world’s greatest lover?

Comparing ourselves to others allows them to drive our behavior. This type of comparison is between you and someone else. Sometimes it’s about something genetic, like wishing to be taller, but more often it’s about something the other person is capable of doing that we wish we could do as well. Maybe Sally writes better reports than you, and maybe Bob has a happier relationship with his spouse than you do. Sometimes this comparison is motivating and sometimes it’s destructive.

You can be anything but you can’t be everything. When we compare ourselves to others, we’re often comparing their best features against our average ones. It’s like being right-handed and trying to play an instrument with your left hand. Not only do we naturally want to be better than them, the unconscious realization that we are not often becomes self-destructive.

Comparisons between people are a recipe for unhappiness unless you are the best in the world. Which, let’s be honest, only one person is. Not only are we unhappy but the other people are as well. They are probably comparing themselves to you—maybe you’re better at networking than they are and they’re jealous. At worst, when we compare ourselves to others we end up focusing our energy on bringing them down instead of raising ourselves up.

There is one thing that you’re better at than other people: being you. This is the only game you can really win.

When you start with this mindset the world starts to look better again. No longer are you focused on where you stand relative to others. Instead, your focus and energy is placed on what you’re capable of now and how you can improve yourself.

Life becomes about being a better version of yourself. And when that happens, your effort and energy go toward upgrading your personal operating system every day, not worrying about what your coworkers are doing. You become happier, free from the shackles of false comparisons and focused on the present moment.

When what you do doesn’t meet the expectations of others, too bad. The way they look at you is the same way you were looking at them, though a distorted lens shaped by experiences and expectations. What really matters is what you think about what you do, what your standards are, what you can learn today.

That’s not an excuse to ignore thoughtful opinions—other people might give you a picture of how you fall short of being your best self. Instead, it’s a reminder to compare yourself to who you were this morning. Are you better than you were when you woke up? If not, you’ve wasted a day. It’s less about others and more about how you improve relative to who you were.

When you stop comparing between people and focus internally, you start being better at what really matters: being you. It’s simple but not easy.

The most important things in life are measured internally. Thinking about what matters to you is hard. Playing to someone else’s scoreboard is easy, that’s why a lot of people do it. But winning the wrong game is pointless and empty. You get one life. Play your own game.