Compounding learning

Compound interest is the single most important concept in finance. Time value of money, as an idea, comes close. But, understand compound interest and it’ll change the way you think about saving money for the future. The simple notion behind compound interest is that you earn interest on your interest. This means small amounts invested today that get compounded over time earn a lot more in the long run than large amounts compounded less. It is powerful stuff.

I’d like to make the argument that learning works in exactly the same way.

Let’s imagine you come to me and say – “Hey, I’m going to read a non-fiction book for 10 minutes every day on an interesting subject.”

Great. Do we expect a difference between your understanding of the world and mine tomorrow? Probably not.

Day after? Again, probably not.

But, what about a year from now? Sure, there is likely to be a difference thanks to the accumulated knowledge of 3650 minutes of reading.

What about 10 years from now? Now, there is sure to be a difference. You’ve clocked 36,500 minutes of reading.

Then, what about 30 years?

Little actions carried out consistently over time can have tremendous power. You and I know that. But, learning is a different monster. In that first year, you probably just accumulated a vast amount of knowledge. But, fast forward a few years and that knowledge soon becomes understanding. As you read an interesting mix of topics, you soon begin to realize that science, art, management, psychology, leadership, self-help all become interrelated. You begin to see patterns and links. It is a deep understanding of these links that gives us wisdom. Wisdom is simply an extension of that understanding – it is knowing what to do with all this knowledge in the context of daily life. And, we know that it is one thing to be knowledgeable but it is quite another to be wise.

This is why we see a tremendous difference between people’s wealth, success, happiness and energy as they age. For most of the population, education ends when they finish schooling. But, for the folks who take it upon themselves to learn with greater vigor once formal learning is complete, the effect of their learning over time compounds. Put it simply, if Jeff Bezos or Bill Gates read an interesting book on human behavior right now, they’d get a LOT more value out of it than you and I. That’s because they have so many interesting mental models that allow them to test findings and incorporate learnings. It is these mental models that differentiates masters/learning machines and everyone else. 

Every single day, we have a choice, both with money and with learning, to use the power of compounding or not. Not being aware of the choice is not an excuse. And, not choose is, really, choosing..

Rules vs. Guidelines – MBA Learnings

One of the more powerful ideas I’ve learnt in my ‘Values Based Leadership’ class is understanding the power of using rules vs. guidelines in setting culture.

Culture is by far the most powerful change tool that exists. If you really want to change behavior, it is the culture you should turn to. The culture is the mixture of norms and rituals that act as the default behavior in every group or organization. There are rule-based cultures and guideline-based cultures. There are advantages and disadvantages to both. And, to analyze the difference, I thought I’d examine how I’ve approached designing my own culture.

There are many ways to think about designing culture. I think of culture as a set of habits that we incentivize, one way or another. The basic habits I’ve been working to develop have been as simple as – sleep 8 hours, eat healthy, exercise 5 times a week, and meditate. This journey alone has taken the best part of the last 4 years and I am still not done. The first habit I sought to fix was sleeping 8 hours. And, my first instinct was to design a rule based system. When the 8 hour rule didn’t work, I mandated a 530am compulsory wake up as a way to encourage myself to sleep at 930pm. This didn’t work well either as I ended up sleeping late and going into work sleep deprived. I had a few similar experiences with attempting to exercise and meditate. These experiences taught me a couple of valuable lessons about rule-based systems. There is no doubt they are great when you just get started as they make you feel like you accomplished something. But, they work on the carrot-and-stick idea of motivation. And, as modern research has demonstrated, ideas of autonomy, mastery, and purpose motivate us a lot more than the carrot-and-stick model.

So, my next series of attempts were using guidelines. No punishments involved here. The first guideline was to attempt to sleep 8 hours every day. 1 year into that, I did that most of the time. Eating healthy was much easier and I didn’t have to try hard. Exercise was a real beast and I started in earnest in January 2013. Since then, I have averaged exercising ~5 times a week (typically a mix of 3-4 times in the gym and football in good weather). Meditation was much harder. After a rules based attempt in mid 2013, I gave meditation up. However, when I worked on my “tracking my purpose” last year, meditation was an important part of what I considered my ideal personal culture. But, as I swear by guidelines these days, I didn’t attempt to force it. As I tracked my progress every week, I just resigned myself to putting in a 0 as my meditation count for the week. And, after 6 straight months of putting in zeros, I abruptly decided to start meditating as soon as I woke up on Monday last week. I logged into my Headspace app and got started again. I’ve been meditating every weekday since.

What changed? I think the fact that I expected meditation to be a part of my personal culture meant I had an subconscious reminder every week. Next, the fact that I didn’t force it meant that it happened out of intrinsic motivation. And, now that it is there, I have no intention of letting it slip. And, even if it does, that’s okay. I’m sleeping, eating, exercising and meditating because I want to. That’s just how I like leading my life. (“This is how we do things here” – is the all powerful statement of culture)

It is that realization that makes a guideline-based culture incredibly powerful. In some ways, the guiding principle of a guideline-based culture is – “I trust you to do the right thing in the long term. And, if you don’t, be kind to yourself and come back and fix it tomorrow”

It is as empowering as it gets.

PS: The MBA Learnings series is an example of a guideline. It is 1 per week. I aim to do it on Wednesdays. But, the one per week guideline is much more important than the Wednesday rule idea.

Fear, duty or inspiration

There are 3 broad ways to motivate people – fear, duty or inspiration. Each comes with a different narrative –

Fear – “If you don’t do the job, I will… ” – there is typically at least a small degree of bullying involved in this method and works best when you have the power to coerce or when the people you are leading are naive or uneducated.

Duty – “You get paid to do this” – duty is what keeps most city trains full at 8am. This is the most passive form of leadership of the three as you don’t really need to do much. Most of us have an intrinsic sense of duty and a need to be fair.

Inspiration – “Everything we do here has a purpose and we’re building something great” – this is the hardest of the lot. The reason this is incredibly hard is because it requires you, as the leader, to be continuously inspired. And, it also requires you to design and reinforce systems that celebrate and encourage people.

There is no right or wrong style in most cases. I’ve just observed the following –
1. Outstanding organizations are built around inspiration. You don’t need to be a shout-off-the-rooftops leader to be inspiring. There are many in Microsoft who would say Bill Gates was many times more inspiring than Steve Ballmer.

2. You will have a personal preference for one of these styles. Inspiration, for example, doesn’t work for everyone. Just make sure you build teams that work with your style. And, similarly, make sure you join teams that are aligned to your style preference. Style mismatches never end well.

3. Inspiration comes easiest when what you do is aligned with who you are and why you do things. When that happens, you don’t have to try to be inspired – your integrity alone will inspire. The word ‘integrity’ comes from the word ‘integer’ and means “whole.” When it feels consistent, it shows.

The $4000 false decision – The 200 words project

I hope you’re having a nice weekend. Here’s this week’s 200 word idea thanks to Decisive by Chip Heath and Dan Heath.. prides itself on world class customer service. So, every hire into Zappos (including a Chief Financial Officer or Head of IT) goes through Customer Service training in their first week. In their second week, they have a person walk in and give them a unique offer. “If you don’t feel Zappos is the right place for you, let us know and we’ll pay you $4000 to quit.”

Why does Zappos do this? Because the offer prods employees to carefully consider the commitment they are making. The misfits (2% of all who get hired) take the $4000 and walk away. Zappos is relieved about this as the cost of a bad hire is much higher than $4000. And, the fits fully commit to succeeding at Zappos. It is a false decision that makes all concerned happy.

Inserting false decisions/check points ensures we check our commitment from time to time and avoid going into “auto pilot” mode. Amazon has started doing the same in fulfilment centers via a Pay-to-Quit program where employees receive a note every year with an offer that starts at $1000 dollars. The headline – “Please don’t take this offer.”

4000 dollar false decisionSource and thanks to:

‘The $4000 really makes people think, is this the right role for me? Is this the right culture for me? Are these the core values I’m actually going to live by?’ | Jenn Lim,

The double whammy principle

Let’s imagine 2 situations –
– You have an important interview tomorrow and are trying to get through as much of the preparation as possible
– You are going through an incredibly busy time and there just doesn’t seem to be enough time in the day to do the things you want to do

In both situations, you could justify an impulse to stop doing one or more of the following “basic” things – sleeping, eating healthy, or taking time to stay organized.

This is where the double whammy principle comes in – The return-on-investment of the “basic” things in our life goes up exponentially in times when doing them feels against the flow. Essentially, not doing them will feel like a double whammy.

So, even if you did pull that all-nighter for your interview and went a bit more prepared, your lack of sleep will ensure you don’t perform to the best of your ability. And, if you did compromise on taking the time to organize yourself before or during a crazy day, there is a very high probability you will lose a lot more time due to the disorganization and lack of planning.

So, what does that mean for you? Very simply, avoid the double whammy. The busier you feel, the more important it is to carve out time for the basic things in your life. In tough times, the time taken to sleep, eat healthy, to reflect and to stay organized will pay themselves forward many times over.

Starting ahead

I noticed something interesting in the way I approach the morning. If I’m up by around 5:30, I feel calm and ahead of the day. But, if I’m up around 6, I already feel behind and somewhat rushed.

I’ve been sensing this pattern of late but can definitely attest to it as of this morning. There’s a tipping point around the 5:30 mark that has a noticeable effect on my morning. And, it feels like a worthy enough tipping point to design around it, i.e., to make sure my alarms go off no later than 5:30. This, in turn, means being in bed by 9:30.

I find it fascinating to learn these little things about yourself.

This is also why I believe blanket productivity advice is useless. It is much better to explore productivity from a more overarching point of view – start from exploring what “the good life” means to you, understand what you value, what your ideal days would be like, how you’d like to work – and then work backwards to create an approach towards productivity. Once you have that baseline, it will still require a continuous chain of iterations as you reflect and learn more about yourself.

But, the fact remains that there is no productivity without a goal and there is no way you can approach the “how” behind productivity without understanding the psychology behind it. And, productivity goals and your mind’s psychology are uniquely yours. It helps to own it.

Art in human interactions

Art in human interactions is knowing when to ignore the science. There’s plenty of science out there that can tell you how to “win friends and influence people.” But, art is understanding what and when to ignore the science.

There are 3 pre-requisites that help us become artists –
1. An acceptance that universal popularity is a myth. This leads to a degree of comfort in just being ourselves.
2. Taking time to learn the science and understand human psychology and human behavior. Wisdom typically follows knowledge.
3. Developing the habit to be present when we interact and to take the time to reflect after interactions. That’s how we learn from our experiences.

There have been many great books written about influence and persuasion that have inspired courses in schools around the world. That’s great – it helps us understand the science. But, approaching human beings as scientific puzzles that need to be solved is one of the worst long term moves we can make. In the really long term, a purity of intent matters more than anything science can offer. That can only come with a genuine interest in understanding people and in building long term relationships.

Human interactions and relationship building isn’t a short term cash-and-carry game. There is a term for that game – networking. It doesn’t work in the long run.

The Dropbox peace-of-mind – MBA Learnings

If I had to summarize my learning on pricing from my Microeconomics classes, it would be -> avoid price competition like the plague. And, to do that – differentiate, differentiate, differentiate.

We discussed Dropbox’s move in August last year to lower prices to compete with Google, Apple, Microsoft and Amazon. The big question was whether this was going to be a race to the bottom in a future where storage would inevitably be free?

Now, Dropbox is one of my favorite products. I have been a user since the early days when they used to be hosted on “” and their brand has nothing but positive associations. All my working files sit on my Dropbox folder and, ever since I did that 3 years ago, I’ve never had to fret about whether my working files will ever be lost.

So, I thought I’d put together 2 recommendations for Dropbox based on what I’ve learnt in Marketing and Microeconomics in the past few months. These recommendations are based on the principal that differentiation matters. If we make the argument (and we can) that most storage providers inherently offer a similar product, the game-changer will be Dropbox’s ability to horizontally differentiate, i.e., inspire great brand loyalty among its users. That, then, leads us to a marketing question – how can they do that? My line of thinking is to think around the traditional 4 P’s – product, price, promotion and place. And, my 2 recommendations are going to be based on promotion and price –

1. Target the peace-of-mind business. The question is – what can Dropbox do to differentiate? That leads me to – what is the market? The first answer seems to be storage. But, is it really storage? Or, put differently, do we want it to be storage?

When I look at why customers use Dropbox, collaboration is obviously a massive reason and is at the core of why they do what they do. They have understandably worked really hard at making collaboration easy. My recommendation would be to also target the peace-of-mind business. Every user who collaborates via Dropbox likely has many important files on it. Why not just move them all onto Dropbox and make it a full set?

I pay Crashplan a yearly fee to back up my photos. That could easily be Dropbox. I think Crashplan works fine but I don’t love Crashplan the same way and would be more than happy to pay a bit of a premium for that love and trust.

In short, I think the customer problem that Dropbox could look to solve is to remove the worry about files not being backed up. This needs an investment into customer education and a few tweaks into the way it is marketed. But, if done well, I think this could be a huge win.

2. Get creative with pricing. The current “band” approach to pricing from the storage providers is staid. The problem with bands is that it only feels like a good deal if you are near the edge of the next band. Why pay $10 for 1 terabyte if all you have is a 100 GB worth of content to store.

An approach that could be really impactful is Amazon Web Services-style “you-pay-for-what-you-use.” This could work well for 2 reasons –
1. Foot-in-the-door. Even if I’ve not fully made up my mind, I could put in 10 extra GB into my Dropbox folder and try it out for a month. Once I’m in and experience the peace of mind, it’ll be hard to get out.
2. Customer’s use will expand with time. It is much easier to get a customer paying $6 to pay $10 vs. one paying $0. This use expansion is part of the reason behind the fact that Dropbox and Netflix still use AWS for storage.

Dropbox has a strong edge when it comes to differentiation because its brand associations are all linked to storage. Amazon, for example, has begun offering photo back up for free for Amazon Prime members but I still haven’t checked it out because I don’t associate Amazon with photo storage (yet). It’ll be interesting to see how the storage wars play out. Good luck, Dropbox!

3 steps to approaching behavioral interviews

If you’ve interviewed for a professional role in the past few years, you’ve likely faced a “Tell me a time when..” question. There are lots of guides on how to answer these sorts of questions. I’ve found most of them to only be moderately useful. I’d like to share a 3 step process that I’ve come to use for these interviews.

Base line requirements. There are 2 base line requirements –
a) Create a behavioral matrix. Create a table with a few rows that list the various types of questions (typically – Leadership and Influence, Challenges, Failure, Success, Teamwork, and Approaching problems) and let the columns be Professional, Education and Personal. For each combination, list stories that fit the behavioral themes. The key here is not to miss important stories from various aspects of your life. While you are at it, also list the key starter questions – “Tell me about yourself,” “Why industry/company/role/you?” “What are 3 weaknesses?”

b) Really work on the main 5-8 stories. You will probably narrow down to a set of 2-3 super star stories and 3-4 good stories. Work hard on fleshing them out so they feel really concise. Flesh out the rest of the stories in bullet point fashion as well. Once you’ve fleshed them out, make sure you really know them by heart. There is no substitute to practice here.

Once you hit the base line requirements, you are ready for a behavioral interview. The 3 step process that needs to follow is –

1. Think deliberately about your strategy. The way to think about it is to ask yourself 2 questions – what is the one thing I’d like the interviewer to remember about me? And, what are three themes I’d love the interviewer to remember?

If your themes are wicked design skills, creativity and your ability to take initiative with the “wicked design skills” being the 1 thing you’d like the interviewer to remember, that needs to be woven in as a thread through the interview. Your “tell me about yourself” should have all 3 explicitly mentioned, your answers to “why role/why you?” should have them mentioned. Your weakness will probably be something along “think too much about design and not enough about implementation” since most great strengths moonlight as weaknesses.

The important thing is to start with your strategy and work it in through the stories. The best strategies will fit well with the company and role you are interviewing for. So, if you’re interviewing to be an interface designer, I would define what skills the best interface designer should have and see how your skills match. Great interviewees present a story that just makes sense. Deciding on a strategy and weaving it through is how you do that.

2.  Answer the question. The famous “STARL” framework (Situation-Task-Action-Result-Learning) is a good starting point for behavioral interviews. Using the STARL analogy, don’t spend more than 20 seconds on describing the situation. This is very hard to do because it feels like we need to give the other person a real taste for the complexity of the situation. Don’t bother. It doesn’t matter. Just answer the question.

I’d recommend just paraphrasing the question and starting with a crisp situation before you dive into the details. Being succinct when you tell your stories is how you differentiate yourself.

3. Don’t just tell them what you did – explain your thought process. Let’s say you are asked a question – “Tell me about a time when you faced resistance to an idea you proposed.” You can pull off a great interview answer if you answer the question, weave your overall strategy in and talk about a time where you responded to the situation well and generated great results. That would work because that’s what most folks do.

Let’s think about the “why” behind behavioral interviews for a moment. They don’t exist because interviewers want to know what you did. They exist because they want to understand how you approach problems. So, make it easy for them. After succinctly describing the situation, explain how you think about it. An example would be – “Whenever I face resistance to one of my design ideas, I typically do 3 things – first, I speak one-on-one to the dissenter to understand the source of the dissent. Next, I take time to explain what my rationale and thought process was. Finally, if it is a easy fix, I make the change but, if I feel it compromises on the integrity of the design, I work to understand the decision criteria and see if we can bring an objective person to discuss it with us. I followed these steps when I was faced with this situation..”

In 20 seconds, you’ve explained how you think about dissent and then will have given him/her confidence that you’ve walked your talk before. Follow this process for each of your key stories and explain this thought process before you dive into the details – you’ll be golden.

I hope this helps.

No getting around focus

We’re all on a spectrum between obsessive compulsive and attention deficit. I am definitely firmly in the attention deficit side. We didn’t have too much testing for all of this when I was growing up in India so you just learnt to live with it. I am sure I’d have a dose of the hyperactive ‘H’ as well.

Ever since understanding this, I’ve designed my life around these characteristics. For instance, it used to really annoy me that I would never be able to hold my attention through an entire class when I’d observe friends around me do it with ease. It used to also annoy me that I could never get through an online tutorial or read a rule book. Now, I’m more tolerant to these quirks and don’t mind them as long as I’m aware of what’s happening. I don’t read rule books or watch online tutorials if I can help it. I listen to books more often than I read them. I prefer asking for directions rather than reading maps and I definitely expect myself to get distracted every few minutes. I treat that as completely normal and expect work sessions to be littered with lots of small breaks. I do email breaks and kill two birds with one stone. I banned Facebook feed breaks in April 2013 and have managed to stick to that ban – the Facebook feed is too much of a rabbit hole for someone like me. :-)

However, as I’ve been working hard on getting to my ideal life process (sleep, eat, exercise, read, meditate, be incredibly productive and reflect – consistently), I’ve realized there’s no getting around focus. And, here it is important to understand focus, both as a noun and as a verb.

Focus as a noun. Focus as a noun is our normal vision of focus – think someone bent over a library book for hours. This is hard when you are wired to be distracted. But, on the plus side, I’ve realized that folks like me tend to have speed on our side. I think our brains realize that the time we spend focused on something is precious and it aims to compensate for the distractions with increased intensity. In short, if you pay attention and work on this, distractions become no big deal. You learn to harness them productively.

Focus as a verb. This is where the magic lies. Focus as a verb is an intensive, dynamic and iterative process. Focus as a verb is when you understand your big directional goals, are deeply committed to them, and are going to leave no stone un-turned to get to them. This involves a relentless pursuit of the things that matter. It requires constant reflection to make sure you’re doing the right things and a mindset that just refuses to give up despite the many challenges you are to face. It is an overarching idea that governs your life. This is what obsessive leaders like Bill Gates and Jeff Bezos have in spades.

The easier way to think about these 2 kinds of focus is to think of them as analogous to management and leadership. Management is getting things done efficiently while leadership is doing the right things in the first place. Once we learn to manage ourselves, focus as a noun becomes easy to deal with. The hard part is the focus as a verb. That’s where we prove our mettle as leaders of our own selves. That’s where the magic happens.

And, there is no getting around it.

Hat tip to Greg McKeown for the focus as a noun and verb insight