For our IndigoMBA program we are trying something new. While we will continue to post the titles on The Indigo Community and Facebook, we are also going to be doing a monthly blog post on our chosen title. The program has been scaled down slightly, this year we are focussing on one book a month.
Our September title was chosen as an introduction to the program, to lay a bit of groundwork and act as a recap for last year.
How Successful People Think by John C. Maxwell is our first title for this year’s Indigo MBA. It will be familiar to those who participated last year, but because of the content and readability of the book, we felt the need to once again bring it forward. The insight and wisdom contained in it is extremely helpful for getting you in the right state of mind. It’s not heavy like some of our later books, but don’t let that sway you; Maxwell’s specialty is producing books that are short concise and to the point.
The book took a lot longer to read than I had originally thought it would. It wasn't that I found it to be a difficult read, but because I found myself slowing down to read it because I wanted to do more than just grasp the basic ideas in the book. By no means is it as heavy or long as the recent wave of "brain books," and it makes sense because How Successful People Think isn't a brain book in the traditional sense. Titles like Thinking Fast and Slow are Predictably Irrational look at the psychological side of thinking, the inner workings of the mind, these books look at how we think – the wheels that spin, the cogs that turn etc. etc. While they give insight and explain why we do the things we do, they offer little in the way explaining how to change the way we think. How Sucessful People Think, on the other hand, isn't about how "we" think, it was about how "to" think.
October's title for the IndigoMBA program will be The Snowball: Warren Buffett and the Business of Life.
The IndioMBA program is a self-guided learning program based around a yearlong reading list handpicked by the Indigo Non-Fiction team. Currently in its 5th iteration, the Indigo MBA program strives to find and bring forth titles, new and old, that touch on all major aspects of the business world.
I think of myself as an honest person – who doesn’t? Other than criminals I guess. So, reading The (Honest) Truth About Dishonesty, I expected insight into the fraudsters constantly on the news from Bernie Madoff to Enron. Instead, I found the mirror turned on myself and thought, "Oh wait, I’ve done that..."
Using simple tests, Dan Ariely, the bestselling author of Predictably Irrational and The Upside of Irrationality, investigated lying and cheating in everyday situations. It turns out we all lie – but generally just by a little bit. This "fudge factor" is so part of everyday life that we can rationalize our dishonesty to ourselves. Who doesn’t have an extra pair of shoes in the back of the closet hiding from a significant other or occasionally record fewer swings on the golf course? Everybody does it, right? But, while Ariely shows that we fudge the truth, we don’t do it all the time. So, what motivates us to cheat or not? Turns out that simple things can drive dishonesty. Who would have thought that bad service or fake Guccis are tipping points for dishonest actions? But it’s not all bad news – sometimes we only need a gentle reminder of our possible guilt to tip the scales back.
Now I have to find those shoes so I can wear them tomorrow.
One-Minute Reviews aim to bring you frequent short reviews of our most current titles. Check out previous reviews here.
Last week we posted a Q&A with Dan Ariely, author of Predictably Irrational and The Upside of Irrationality, regarding his new book The (Honest) Truth About Dishonesty. To follow up on last week's post, we present to you an excerpt from his newest work, The (Honest) Truth About Dishonesty.
What do we know about the causes of dishonesty? In rational economics, the prevailing notion of cheating comes from the University of Chicago economist Gary Becker, a Nobel laureate who suggested that people commit crimes based on a rational analysis of each situation. As Tim Harford describes in his book The Logic of Life, the birth of this theory was quite mundane. One day, Becker was running late for a meeting and, thanks to a scarcity of legal parking, decided to park illegally and risk a ticket. Becker contemplated his own thought process in this situation and noted that his decision had been entirely a matter of weighing the conceivable cost— being caught, fined, and possibly towed against the benefit of getting to the meeting in time. He also noted that in weighing the costs versus the benefits, there was no place for consideration of right or wrong; it was simply about the comparison of possible positive and negative outcomes.
And thus the Simple Model of Rational Crime (SMORC) was born. According to this model, we all think and behave pretty much as Becker did. Like your average mugger, we all seek our own advantage as we make our way through the world. Whether we do this by robbing banks or writing books is inconsequential to our rational calculations of costs and benefits. According to Becker’s logic, if we’re short on cash and happen to drive by a convenience store, we quickly estimate how much money is in the register, consider the likelihood that we might get caught, and imagine what punishment might be in store for us if we are caught (obviously deducting possible time off for good behavior). On the basis of this cost-benefit calculation, we then decide whether it is worth it to rob the place or not. The essence of Becker’s theory is that decisions about honesty, like most other decisions, are based on a cost-benefit analysis.
The SMORC is a very straightforward model of dishonesty, but the question is whether it accurately describes people’s behavior in the real world. If it does, society has two clear means for dealing with dishonesty. The first is to increase the probability of being caught (through hiring more police officers and installing more surveillance cameras, for example). The second is to increase the magnitude of punishment for people who get caught (for example, by imposing steeper prison sentences and fines). This, my friends, is the SMORC, with its clear implications for law enforcement, punishment, and dishonesty in general.
But what if the SMORC’s rather simple view of dishonesty is inaccurate or incomplete? If that is the case, the standard approaches for overcoming dishonesty are going to be inefficient and insufficient. If the SMORC is an imperfect model of the causes of dishonesty, then we need to first figure out what forces really cause people to cheat and then apply this improved understanding to curb dishonesty. That’s exactly what this book is about.*
Life in SMORCworld
Before we examine the forces that influence our honesty and dishonesty, let’s consider a quick thought experiment. What would our lives be like if we all strictly adhered to the SMORC and considered only the costs and benefits of our actions?
If we lived in a purely SMORC-based world, we would run a cost-benefit analysis on all of our decisions and do what seems to be the most rational thing. We wouldn’t make decisions based on emotions or trust, so we would most likely lock our wallets in a drawer when we stepped out of our office for a minute. We would keep our cash under the mattress or lock it away in a hidden safe. We would be unwilling to ask our neighbors to bring in our mail while we’re on vacation, fearing that they would steal our belongings. We would watch our coworkers like hawks. There would be no value in shaking hands as a form of agreement; legal contracts would be necessary for any transaction, which would also mean that we would likely spend a substantial part of our time in legal battles and litigation. We might decide not to have kids because when they grew up, they, too, would try to steal everything we have, and living in our homes would give them plenty of opportunities to do so.
Sure, it is easy to see that people are not saints. We are far from perfect. But if you agree that SMORCworld is not a correct picture of how we think and behave, nor an accurate description of our daily lives, this thought experiment suggests that we don’t cheat and steal as much as we would if we were perfectly rational and acted only in our own self-interest.
* Beyond exploring the topic of dishonesty, this book is fundamentally about rationality and irrationality. And although dishonesty is fascinating and important in human endeavors its own right, it is also important to keep in mind that it is but a single component of our interesting and intricate human nature.
Copyright, 2012 HarperCollins Publishers, Ltd.
The Indigo Non-Fiction Blog would like to thank Dan Ariely and Harper Collins for providing us with this excerpt.