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Conned By The Force

Con artist.

Con artist.

(Warning: spoilers ahead.)

I finally got around to seeing Star Wars: The Force Awakens the other day. It was pretty much what I expected – lots of action, lots of explosions, and a shocking shortage of suggestive double entendres. It’s a very earnest movie.

Here’s what I didn’t expect: I didn’t expect to be conned. But, boy, was I ever. And I fell for it like … well, like a death star falling into a black hole.

As always, it’s a story of good and evil, of course. The vile, evil bad guy is Kylo Ren who dresses like a fashionable Darth Vader. Though we can’t see his face, we know he’s young — the script tells us so several times. Since he’s young, we assume he’s impressionable and, perhaps, redeemable.

And redmption is exactly what we expect when an aging Han Solo confronts him, man-to-man and mano-a-mano. We’re just sure that the wise and wizened Han can save Kylo’s young soul and bring him back to the bright side. (Cue Monty Python: always look on the bright side of life).

And it works! Kylo drops his mask. His eyes fill with tears. His lips tremble. With evident emotion, he hands Han his most terrible weapon, the lightsaber. Han reaches for the weapon and we’re convinced that Kylo is about to be redeemed. Han grasps the saber and we know that angelic music will soon swell to celebrate Kylo’s conversion.

But, no. It doesn’t work out that way. I was conned. More to the point – and with much more devastating effect – Han was conned.

As I look back on the scene, I think: I should have seen that coming from a parsec away. But I didn’t. I wanted to believe. I got conned.

Why was I conned? According to Maria Konnikova, it’s because I wanted to be conned. In her new book, The Confidence Game, Konnikova writes that the con game is “…the oldest story ever told.” Simply put, we’re wired to believe. We want to believe. If we’re unsure about the future, we want someone to tell us a story to reassure us. It doesn’t have to be logical. It simply has to be believable. Since we want desperately to believe, the bar is set pretty low.

The Kylo Ren con also worked on me because I already knew the story. It’s the prodigal son. I’ve always loved the story of the prodigal son, perhaps because I was one. So I was primed. I knew how it’s supposed to end. I half-expected Han to kill a fatted calf and say, My son was lost but now he is found. That’s the way it always happens, doesn’t it? That’s what I want to believe.

Konnikova writes that we ultimately are the enablers of con artists:

“In some ways, confidence artists … have it easy. We’ve done most of the work for them; we want to believe in what they’re telling us. Their genius lies in figuring out what, precisely, it is we want and how they can present themselves as the perfect vehicle for delivering on that desire.”

So how can we protect ourselves against con artists? More on that in future articles. In the meantime, you might consider some traditional Minnesota wisdom: You’re not so special.

Questions or Answers?

Question or answer?

Question or answer?

Which is more important: questions or answers?

Being a good systems thinker, I used to think the answer was obvious: answers are more important than questions. You’re given a problem, you pull it apart into its subsystems, you analyze them, and you develop solutions.

But what if you’re analyzing the wrong problem?

I thought about this yesterday when I read a profile of Alejandro Aravena, the Chilean architect who just won the Pritzker Prize. Aravena and his colleagues – as you might imagine – develop some very creative ideas. They do so by focusing on questions rather than answers. (Aravena’s building at the Universidad Católica de Chile is pictured).

In 2010, for instance, Aravena’s firm, Elemental, was selected to help rebuild the city of Constitución after it was hit by an earthquake and tsunami. I would have thought that they would focus on the built environment – buildings, infrastructure, and so on. They’re architects, after all. Isn’t that what architects do?

But Aravena explains it differently:

“We asked the community to identify not the answer, but what was the question,” Mr. Aravena said. This, it turned out, was how to manage rainfall, so the firm designed a forest that could help prevent flooding.

Architects, then, designed a forest instead of a building. If they were thinking about answers rather than questions, they might have missed this altogether.

On a smaller scale, I had a similar experience early in my career when I worked for Solbourne Computer. We build very fast computers – in 1988, Electronics magazine named our high-end machine the computer of the year. Naturally, we positioned our messages around speed, advanced technology, and throughput.

But our early customers were actually buying something else. When we interviewed our first dozen customers, we found that they were all men, in their early thirties, and that they had recently been promoted to replace an executive who had been in place for many years. They bought our computers to mark the changeover from the old regime to the new regime. They were meeting a sociological need as much as a technical need.

When you go to a gas station to fill your car’s tank, you may imagine that you’re buying gasoline. But, as the marketing guru Ted Levitt pointed out long ago, you’re really buying the right to continue driving your car. It’s a different question and a broader perspective and may well lead you to more creative ways to continue driving.

More recently, another marketing guru, Daniel Pink, wrote that products and services “… are far more valuable when your prospect is mistaken, confused or completely clueless about their true problem.” So often our market research focuses on simple questions about obvious problems. The classic question is, “What keeps you up at night?” We identify an obvious problem and then propose a solution. Meanwhile, our competitors are identifying the same problem and proposing their solutions. We’re locked into the same problem space.

But if we step back, look around, dig a little deeper, observe more creatively, and ask non-obvious questions, we may find that the customer actually needs something completely different. Different than what they imagined – or we imagined or our competitors imagined. They may, in fact, need a forest not a building.

You Become What You Believe

You are what you believe.

You are what you believe.

We’ve all heard the phrase, you are what you eat. Now there’s also increasing evidence that you become what you believe.

Two recent studies suggest that what you believe shapes your biology as well as your attitude. Or perhaps, your beliefs shape your attitude, which in turn, shapes your biology.

The first study, from Yale’s School of Public Health, relates attitudes towards aging to the development of dementia. The primary finding is that “…individuals who hold negative beliefs about aging are more likely to have brain changes associated with Alzheimer’s disease.”

In other words, if you believe that you’ll become decrepit and demented in old age … well, you’re more likely to become decrepit and demented. Why would that be? According to the study’s lead author, Becca Levy, it’s probably stress. More specifically, “…the stress generated by the negative beliefs about aging … can result in pathological brain changes.”

Besides underscoring the benefits of a positive attitude, the study could help us better understand factors that appear to be biological. For instance, the Alzheimer’s rate in the United States is five times higher than that of India. Why? We’ve traditionally assumed that the critical factor was differences in diet. But it may instead result from cultural attitudes toward older people. In India, the aged are revered. In the United States, not so much.

The second study correlates a belief in free will to academic performance. Bottom line: students who believe they have free will – the ability to make their own choices and guide their own destiny – do better academically than those who don’t. The study found that the correlation held “…across age, gender, and cultural grouping”.

The study found a correlation and, as we know, correlation does not prove causality. But there is some intuitive logic to this. It seems logical that people who believe they control their own destiny will learn more from their experiences (and mistakes) than people who believe their fate is determined by external forces.

I think it was St. Francis who said, “Beware thy prayers; they may be answered.” Perhaps we can now add a corollary, “Beware thy beliefs; they may be causal.”

Disrupting the Lawyers

Filling out unemployment forms.

Filling out unemployment forms.

Last week, I wrote about the process of disintermediation and how it will disrupt banks and bankers. By encrypting transactions and distributing them across a peer-to-peer network, we will no longer need banks to serve as trusted intermediaries in financial transactions. We can eliminate the middleman.

Can we eliminate lawyers as well? You bethca.

We have lawyers for the same reasons that we have bankers: we don’t trust each other. I don’t trust that you’ll pay me; I want your bank to guarantee it. Similarly, I don’t trust that you’ll honor our contract; I want a lawyer to enforce it.

But what if we could create a contract that didn’t need a lawyer to interpret and execute it? We could eliminate the lawyer as an intermediary. That’s exactly the idea behind smart contracts (also known as self-enforcing or self-executing contracts).

First proposed by Nick Szabo back in 1993, smart contracts use software to ensure that agreements are properly executed. Not surprisingly, smart contracts use blockchain technologies spread across peer-to-peer networks. If you think that sounds like Bitcoin, you’re right. Indeed many people think that Szabo created Bitcoin using the pseudonym Satoshi Nakamoto.

So how do smart contracts work? Here’s how Josh Blatchford explains it:

“… imagine a red-widget factory receives an order from a new customer to produce 100 of a new type of blue widget. This requires the factory to invest in a new machine and they will only recoup this investment if the customer follows through on their order.

Instead of trusting the customer or hiring an expensive lawyer, the company could create a smart property with a self-executing contract. Such a contract might look like this: For every blue widget delivered, transfer price per item from the customer’s bank account to the factory’s bank account. Not only does this eliminate the need for a deposit or escrow — which places trust in a third party — the customer is protected from the factory under-delivering.”

Smart contracts, in other words, precisely define the conditions of an agreement — not unlike dumb contracts. They also execute the terms of the contract by automatically (and irrevocably) transferring assets as the contract is fulfilled.

Blatchford wrote his description in VentureBeat – an online magazine that helps venture capitalists identify and invest in leading edge technologies. This suggests that the money to fund smart contract platforms is already flowing.

Indeed, the first smart contract platform – Ethereum – launched in July 2015. Ethereum’s website describes the endeavor as “… a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.”

Ethereum seems to be essentially a developer’s platform today. Developers can use the platform to develop applications that eliminate the need for trusted (human) intermediaries. Should lawyers be worried? Not yet. But soon.

Blockchain Beyond Bitcoin

Blockchain - It's not just for Bitcoin anymore.

Blockchain – It’s not just for Bitcoin anymore.

In 1979, Paper Mate introduced the world’s first ballpoint pen with erasable ink. Technology analysts considered it an important breakthrough and the news made headlines around the country. Many of us thought, “Wow! Finally I can write in ink and then erase it. How cool is that?” After a few moments of reflection, we had a second thought, “Why would I ever want to do that?”

Before erasable ink, we thought of ink’s permanence as a drawback and a disadvantage. After erasable ink appeared, we realized that ink’s permanence was actually its primary benefit. Write it once and you know it will never go away. If you might want to erase something, use a pencil.

In an odd way, permanence may also be the primary benefit of the blockchain technology that underlies Bitcoin. We think of databases as interactive, up-to-date records of the world as it is. The closer to real-time, the better. If you want to know what’s happening right this millisecond, high-speed databases will tell you.

But what if you want to know what happened some time ago? And what if you want assurances that the information you retrieve is tamper-proof and immutable? In other words, what if you want the electronic equivalent of permanent ink?

That’s exactly what blockchains on distributed ledgers give you. You can’t change the blockchain unless you can decrypt it – and that’s very difficult. Even if you can decrypt it on one network node, many original copies exist on other nodes. It’s fairly easy to restore the status quo ante. You can be very confident that the information you retrieve is unchanged from the original. It’s an immutable, permanent record.

The blockchain/ledger technology allows Bitcoin to keep a permanent record of all transactions. That’s important if you want to create a trusted financial system. But why stop at financial transactions? Are there other transactions that might benefit from permanent, tamper-proof records?

Indeed, there are. Here are a few that are in production or beta today:

  • Ascribe – allows artists to “…lock in attribution [and] securely share and trace where your digital work spreads.”
  • Storj – a potential weak point of cloud storage is that, ultimately, your data is assigned to one server. What if that server fails or is corrupted or hacked? To improve security and privacy, Storj breaks your data into blockchains and stores it on multiple servers.
  • BitHealth – while Storj can store most any kind of data, BitHealth focuses on healthcare data. It claims to provide highly secure, uninterruptible, tamper-proof health data around the world.
  • Everledger – where did your fancy diamond come from? How did it get here? Where is it insured? For how much? Everledger keeps a permanent, immutable “ledger for diamond certification and related transaction history.”
  • Proof Of Existence or Bitproof — you want to prove that you had an idea at a certain date (preferably before anyone else). You could file a patent application. But that’s expensive, time-consuming, and public. Or you could register your document in the Proof of Existence or Bitproof blockchain databases.
  • Warranteer – you buy a product that comes with a warranty, which is described in a document. The product goes bad at approximately the same time that the document goes missing. Why not save the warranty in Warranteer’s blockchain, cloud-based database?

I could go on and on. (If you want to dig deeper, click here, here, and here). While Bitcoin popularized the technology, blockchain extends far beyond the financial world. Indeed blockchain may disintermediate and disrupt supply chains around the world. If so, the world will get much more efficient. Is that what we want?

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