Tuesday, July 03, 2012

Perspective, Perception, Reality


Must-watch video. Good businesses and ideas find the sweet spot between technology, economics and psychology. 

Extract: I think it's because there's an imbalance, an asymmetry, in the way we treat creative, emotionally-driven psychological ideas versus the way we treat rational, numerical, spreadsheet-driven ideas. If you're a creative person, I think quite rightly, you have to share all your ideas for approval with people much more rational than you. You have to go in and you have to have a cost-benefit analysis, a feasibility study, an ROI study and so forth. And I think that's probably right. But this does not apply the other way around. People who have an existing framework, an economic framework, an engineering framework, feel that actually logic is its own answer. What they don't say is, "Well the numbers all seem to add up, but before I present this idea, I'll go and show it to some really crazy people to see if they can come up with something better." And so we, artificially I think, prioritize what I'd call mechanistic ideas over psychological ideas.

Extract: One of the great mistakes, I think, of economics is it fails to understand that what something is, whether it's retirement, unemployment, cost, is a function, not only of its amount, but also its meaning.

Extract: Now von Mises said that modern economists make exactly the same mistake with regard to advertising and marketing. He says, if you run a restaurant, there is no healthy distinction to be made between the value you create by cooking the food and the value you create by sweeping the floor. One of them creates, perhaps, the primary product -- the thing we think we're paying for -- the other one creates a context within which we can enjoy and appreciate that product. And the idea that one of them should actually have priority over the other is fundamentally wrong.

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