By Jason Lim
I am playing on the term, "Homo Economicus," that refers to the "rational actor" or "economic man" as coined by John Stuart Mill in 1844. The "rational actor" plays a central role in traditional economics, along with "perfect information," as the key drivers of decision making in a market economy. They are both myths, of course. No such thing exists.
Rationality, especially, has been historically contrasted against emotions, with the former being respectful and good while the latter impulsive and bad. This is a false dichotomy, of course. All our core values as human beings wouldn't be there without our emotions anchoring them into our subconscious, nestled in our limbic system (reptilian brain) out of reach of our conscious intellect. This is not a bad thing, of course. Certain values such as fairness and relatedness to others keep our worst impulses in check ― just imagine the types of behaviors that we would be capable of rationalizing away if our emotions didn't keep us in check with a sense of self-disgust.
Modern neuroscience has shown, further, that rationality can't hold a candle to emotions ― they are not equal rivals jostling for decision making equities in our brain. Our decisions are singularly made by our emotions operating in our subconscious. As these decisions surface to the conscious, we use our intellect to rationalize our decisions so that they seem thought-out and respectable in everyone's eyes, including our own. But we really make decisions because they fit into our preconceived paradigm of what's good and therefore reinforce a sense of rightness. When others also make the same decisions, the sense of rightness becomes exuberance that can border on mass hysteria driven by the sense of inevitability.
According to Bloomberg, "the unprofitable members of the 2019 class of IPO's have already raised most cash of any year since at least 2000," which was the middle of the Dot. Com era. Remember how that ended? Probably, but it doesn't seem to matter. We are talking about household names such as Uber, Pinterest, Lyft, etc.
And WeWork. Recent news about WeWork and the shenanigans of its CEO, Adam Neumann, triggered the above musings. These are all companies that became household names and developed a mass cult following event before turning a profit. There was something about these companies that resonated emotionally and universally across not just investors looking for the next unicorn but throughout the public.
That something is that these companies are essentially selling a story about the future. Stories are the most effective tool that we have developed to influence and inspire others precisely because they carry our culture, identity, values ― these make up our emotional being. These companies have crafted stories about themselves that speak to our emotional being in a way that builds familiarity and trust while feeding into our sense of superiority and status for being a part of the new, brighter future as an insider: the chosen ones.
Remember that famous quote by Tom Goodwin in his book, "The Battle is for the Customer Interface?" "Uber, the world's largest taxi company, owns no vehicles. Facebook, the world's most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodations provider, owns no real estate. Something interesting is happening."
How cool did that sound? Take the inefficiency inherent in the current market and maximize its utility by making connection using the power of technology. It was almost like a slap in the face when I first heard it. It was profound. I didn't fully understand it, mind you, but I wanted to partake in the profoundness of the insight because it seemed to make so much sense! And we were all so clever to understand how this worked. This also all fed into the gig economy in which we could, in the near future, work only as much as we needed to when we needed to while being creative genius pursuing our own passions. This was heaven!
I became a believer, and the founders of these unicorns were prophets of a new religion selling a brighter future. The new religion was technology, and its Mecca was the Silicon Valley.
Of course, as we now know, the business model based on don't own or make anything, but control everything by being a highly scalable match-maker between goods and services sounds so smart, but not so easy to sustain. You can't make a business out of being not-accountable for what happens on your platform. Irresponsibility and exploitation are not meaningful innovations. The bust will inevitably come, and converts will flee.
But fear not. We will all be lurking in wait for the next religion to sweep us off our feet with stories that speak to our emotional being and promise to elevate us as the chosen people on our way to the promised land.
Jason Lim (jasonlim@msn.com) is a Washington, D.C.-based expert on innovation, leadership and organizational culture.
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Rationality, especially, has been historically contrasted against emotions, with the former being respectful and good while the latter impulsive and bad. This is a false dichotomy, of course. All our core values as human beings wouldn't be there without our emotions anchoring them into our subconscious, nestled in our limbic system (reptilian brain) out of reach of our conscious intellect. This is not a bad thing, of course. Certain values such as fairness and relatedness to others keep our worst impulses in check ― just imagine the types of behaviors that we would be capable of rationalizing away if our emotions didn't keep us in check with a sense of self-disgust.
Modern neuroscience has shown, further, that rationality can't hold a candle to emotions ― they are not equal rivals jostling for decision making equities in our brain. Our decisions are singularly made by our emotions operating in our subconscious. As these decisions surface to the conscious, we use our intellect to rationalize our decisions so that they seem thought-out and respectable in everyone's eyes, including our own. But we really make decisions because they fit into our preconceived paradigm of what's good and therefore reinforce a sense of rightness. When others also make the same decisions, the sense of rightness becomes exuberance that can border on mass hysteria driven by the sense of inevitability.
According to Bloomberg, "the unprofitable members of the 2019 class of IPO's have already raised most cash of any year since at least 2000," which was the middle of the Dot. Com era. Remember how that ended? Probably, but it doesn't seem to matter. We are talking about household names such as Uber, Pinterest, Lyft, etc.
And WeWork. Recent news about WeWork and the shenanigans of its CEO, Adam Neumann, triggered the above musings. These are all companies that became household names and developed a mass cult following event before turning a profit. There was something about these companies that resonated emotionally and universally across not just investors looking for the next unicorn but throughout the public.
That something is that these companies are essentially selling a story about the future. Stories are the most effective tool that we have developed to influence and inspire others precisely because they carry our culture, identity, values ― these make up our emotional being. These companies have crafted stories about themselves that speak to our emotional being in a way that builds familiarity and trust while feeding into our sense of superiority and status for being a part of the new, brighter future as an insider: the chosen ones.
Remember that famous quote by Tom Goodwin in his book, "The Battle is for the Customer Interface?" "Uber, the world's largest taxi company, owns no vehicles. Facebook, the world's most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodations provider, owns no real estate. Something interesting is happening."
How cool did that sound? Take the inefficiency inherent in the current market and maximize its utility by making connection using the power of technology. It was almost like a slap in the face when I first heard it. It was profound. I didn't fully understand it, mind you, but I wanted to partake in the profoundness of the insight because it seemed to make so much sense! And we were all so clever to understand how this worked. This also all fed into the gig economy in which we could, in the near future, work only as much as we needed to when we needed to while being creative genius pursuing our own passions. This was heaven!
I became a believer, and the founders of these unicorns were prophets of a new religion selling a brighter future. The new religion was technology, and its Mecca was the Silicon Valley.
Of course, as we now know, the business model based on don't own or make anything, but control everything by being a highly scalable match-maker between goods and services sounds so smart, but not so easy to sustain. You can't make a business out of being not-accountable for what happens on your platform. Irresponsibility and exploitation are not meaningful innovations. The bust will inevitably come, and converts will flee.
But fear not. We will all be lurking in wait for the next religion to sweep us off our feet with stories that speak to our emotional being and promise to elevate us as the chosen people on our way to the promised land.
Jason Lim (jasonlim@msn.com) is a Washington, D.C.-based expert on innovation, leadership and organizational culture.
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