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Conversations about the media economy, and how to think clearly when things get messy.
This is Puzzle Problem Mess, conversations about the media economy and how to think clearly when things get messy. In this episode, I'm joined by Gerald Ashley. Gerald is based in London and is an expert in business risk, behavioural economics, and decision making, with a particular focus on how people actually make decisions under uncertainty. He's written three books on decision making, financial speculation, and how businesses evolve and innovate. In fact, this podcast takes its name from a previous conversation that I came across in which Gerald explored the puzzle problem mess framework.
Dan Fahy:So it's only fitting that Gerald is the first guess and to introduce the ideas of puzzles, problems, and messes. Here's Gerald Ashley. Hello, Gerald. Welcome on what I gather is a very cold January morning in London.
Gerald Ashley:Indeed it is, Dan. Thank you very much for having me on the show.
Dan Fahy:You and I have been discussing that the broader media industry is becoming increasingly complex, and for media executives and teams, it's getting harder to pin down how to best tackle a particular challenge or opportunity. There are myriad overlapping dynamics at play, be that technology, consumer, competitive dynamics, and there's pressure to act decisively, and it's become a real mess, and it's a tough environment for people. Now, in the '70s, a management professor by the name of Russell Akoff developed a problem solving approach for dealing with messes based on categorising particular challenges into puzzles, problems or messes. And I know you're familiar with Akoff's thinking, and also strategy formulation generally. How do you think we should best understand Akhov's puzzle problem mess framework?
Gerald Ashley:I wonder if we might start with the overall universe of life itself, if you like, which is that out there now and in the future, there is always an element of uncertainty. Let's get the certainty bit out of the way, first of all. There are some things that are certain, sunrise, sunset, tide tables, and they aren't totally 100% certain, but unless the sun explodes, they're kind of pretty much predictable. So we could we could know what the sunrise is in London in a hundred years time or in five hundred years time. Now that is very appealing to the sort of human mind because I think we are very much geared towards the idea of locking down certainty and things we feel comfortable with.
Gerald Ashley:I think all intelligent people realize you can't lock things down entirely, but there is a there's a mainspring or an internal desire to put a framework around things. And to put a framework around, let's call it an issue, it could be sales revenue, it could be managing a local government organization, being a doctor, lawyer, whatever. But we're all faced with the fact that there will be elements of uncertainty in in our life and in our working career. And we we seek to try and put a framework around that. And with that framework, we try to contain it so that we can so so called solve it.
Gerald Ashley:So to answer your question about puzzles, problems, and messes, if you think about what we're doing, the outside world in many ways is quite messy. There's a lot of uncertainties about things. And the the human desire is to put a framework around it and contain a certain element of it, how to slice off, if you like, turn it into a so called puzzle, solve the puzzle, and then say, look how clever I am. I've done it. So if we look at the universe of those three elements, what what messes are, if we start with messes, is there's no clear answer.
Gerald Ashley:In fact, there's no clear question because it's it's in the future. There are so many variables of differing volatility and likelihood that incredibly difficult to to nail everything down. Now in the middle, we have something called problems or what Achoff calls problems. And this is where you take a subset of that, but that you can have defined questions, but not defined answers. So for example, you and I look at the cost of flying from London to Sydney, and there will be a variety of prices depending on which class you go, which airline you go with, which time of day, blah, blah, blah.
Gerald Ashley:There isn't a definitive answer because your question might be what is the cheapest or what is the fastest or what is the most luxurious, whatever. But with a problem, you've got a choice of different options you can use. And let's take another example. Something like pension fund management. So if you're running your own personal pension or or savings account, should you be in bonds?
Gerald Ashley:Should you be in equities? Should you be in real estate? Should you just blow the lot and not worry about your kids? You know, there are there are variety of ways you can do it. And then within that subset, there are puzzles.
Gerald Ashley:Now puzzles, you can get a very definitive answer if you ask a very very definitive question. So find me the cheapest flight from London to Sydney and go You use a search engine or or some form of of agency, either an individual or increasingly a computer program these days. They find you the ticket and you're done. To wrap all this up into into a thought, a lot of things are a mess. There's a tendency to try and turn those into problems with different potential options.
Gerald Ashley:Pick one, and then so called solve it, and high five everybody that you've dealt with the issue. This comes in up a lot in politics. So politicians, I I don't know so much about Australia, but in The UK, transport policy has been a complete mess since the Second World War. There are various lobbies between rail and road and public transport, lesser airlines because we're a small country. And these lobbyists aggressively lobby politicians who almost invariably cut things down to a puzzle, a so called policy, and then announce that they've solved the overall issue.
Gerald Ashley:They haven't, and there's a lot of there's a lot of waste and inefficiency in this approach, and there's also a lot of false starts.
Dan Fahy:And as an executive, is it easy or difficult to know where the boundary between a problem and a mess is, or between a puzzle and a problem?
Gerald Ashley:I think it can be a bit difficult, because I think we we we essentially don't look at messes. We kind of think, oh, let's sweep that under the carpet. Oh, it's a problem. And we've got that option a, b, or c. B looks good.
Gerald Ashley:Let's hone in on that and then turn it into a puzzle. Some people call this management by spreadsheet. So you can you can get you can get a puzzle into a perfect spreadsheet dead easily. Problems less so because you've got optionality. Do you do a b c d, whatever it may be?
Gerald Ashley:But there are plenty of management tools there. Scenario planning is one of the most obvious ones. When it comes to looking at messes, I think most people say, that's not that's not really my area I need to worry about. I need to focus on
Dan Fahy:Mhmm.
Gerald Ashley:That dreaded word solutions. You see, we all want solutions. The big boss says, give me the solution. You and I, as consumers, we buy solutions all the time. Oh, look.
Gerald Ashley:It's a better better carpet cleaner or whatever it may be. And humans actually have a a a I don't know, almost like stock exchange in solutions. We buy and sell solutions to one another all the time. Oh, this washing machine is guaranteed for three years, whatever it may be. And many businesses have the term solution in their corporate title.
Gerald Ashley:You'll meet a lot of people, and this is not to denigrate them anyway, but you will meet a lot of people who are management of whatever solutions department, because it sells. It may not be correct, or it may only be limited because you're only looking at a partial universe of what's going on, but we really lock onto that.
Dan Fahy:There's a quote often attributed to Akhoff that goes something like, In a mess, prediction is a form of self deception. And you know, and I know, that the managerial and strategic currency of large media companies is predictive planning. It's three to five year strategies, budgets, targets, operating plans. But ACOF's view was that these managerial techniques have their limitations in a messy competitive environment, for example. What's your view on this and what do you think the best role is for predictive planning in messy environments?
Gerald Ashley:Yeah, well that's a nice easy question, isn't it? I think the issue is one of recognition. Recognize you can't know everything. You can't nail everything down. You may have a perfect solution to something and somebody comes up with a better solution.
Gerald Ashley:And so your solution doesn't turn out to be as watertight as you thought it was. I think a lot of it is to do with mindset of how management is run. A name for listeners to go and look up and think about is a guy called Jules Goddard, who I now think is retired, but was a very senior academic at London Business School. And he wrote a book called Uncommon Sense Stroke Common Sense. And this was the idea that, in often the case that mavericks will produce better results over time than people who just stay in the very narrow guidelines of the industry or the firm they're working for.
Gerald Ashley:Now it's easy to say that if your career is not at risk, because if your career is at risk, you're going to stick to the rules. And maybe he has the academic freedom to suggest otherwise, but he has written two or three very interesting and quite entertaining books on on on this topic. Another area to look at is if you look at a company in manufacturing is somebody like three ms. Three ms, who are now very famous for the post it note, but they they produce endless endless sort of patents and designs all the time, and they treat it as a portfolio, and they chop ones that don't work, and they constantly look for new ones. And that feeds back into into Goddard's idea that companies can get into a closed loop where they have metrics and measurement, and they don't look out of that loop.
Gerald Ashley:It's difficult for organizations to do that because it's expensive. It's expensive in terms of time and money. A great example for people to look up is Skunk Works. The Skunk Works was developed in the nineteen forties, and essentially, this is idea where you take a lump of people or group of people out of your mainstream organization, and you put them to one side, and a phrase I'm not wildly happy with, but do some blue sky thinking, or that other dreaded cliche thinking outside the box, all that stuff. Oh, let's add another one, being ahead of the curve.
Gerald Ashley:This is all management speech. Should, you know, I should be taken out in shock for using these phrases. But the point the point about the skunk work was that you have people outside running the main business, trying to look for new developments. So actually looking into the mess, if you like, and seeing what could develop. Now there was a problem with this.
Gerald Ashley:The problem is a lot of people do not want to be put into one of those groups. A, because they feel a bit exposed. You know, what if they spend a year going around and discovering or developing nothing, And at the end, all they come up with is a square wheel. And then they worry about their careers because they then, you know, they're out of the mainstream. They've got to get back in, and they may be tarred with the brush of failure.
Gerald Ashley:Now the key insight is that you guarantee anybody who's selected to go into that group has a promotion when they come back to the main group. So they actually get rewarded. Now some people can say, oh, so look, you spent a year doing nothing, you just got a promotion. Well, no. You can make it a much more tight and organized thing than that.
Gerald Ashley:So I think, in a way, there's nothing new in life. You know, skunk works goes back to nineteen forties development of planes in The United States. Jules Goddard wrote great stuff from the nineteen sixties onwards. In fact, I think he was an early adviser to David Ogilvy. So he's he's got quite a he's got quite a background.
Gerald Ashley:And it's about trying to be open, but recognizing and this is where you it has to be shareholders and very senior management are willing to take the risk of failure. Not to bet the entire firm, but maybe you put a small percentage of management time and effort and money into developing new things. Lots of firms just won't take that risk. And in a funny sort of way, I think that puts them at risk.
Dan Fahy:Yeah, and great examples on three ms, I think it's Lockheed Martin had the Skunk Works program,
Gerald Ashley:didn't That's right. Yeah. Yes, exactly.
Dan Fahy:And, you know, the majority of media companies, people that might listen to this, might be media companies that, for perhaps good reasons, aren't able to do a Skunk Works type spin off, or don't have the culture and heritage of innovation that three ms had. If you're an executive in a traditional media company that's been around for a while and it's, because of its public reporting responsibilities, it's got a very strong culture of predictive modelling and forecasting, how would you try and introduce some of these more iterative styles?
Gerald Ashley:I think it's about mindset. What you mustn't do is just completely upend the company and sort of scrap things and start again. Sometimes quite large companies have done this and have in one notable occasion, General Electric, The UK version of GEC, went from being the largest company in The UK, or certainly in the top two or three, to essentially going bust, because it just abandoned all all its usual way of managing things and markets, and and basically put everything into what was a .com boom, and it went bust. So I think at the individual level, I think it's about just learning to have a different mindset. I mean I was well into my 40s before I I got ahead of the tram lines of thinking of how do we solve the puzzle and just trying to widen it.
Gerald Ashley:And I think as soon as you do that, that has some form of effect in in your day to day work. And at the very senior management levels, I think in a way that's a large part of their day job. And I know there's this cult of the CEO is sort of the guiding light who makes all the decisions at the top. But surely the most beneficial thing board level management can do is to think in different ways and and explore different areas and get used to failure. This is the other thing about certainty.
Gerald Ashley:You see, we all like certainty and solutions because it's not gonna fail, is it? So, you know, why why why should we change something? It may not fail immediately, but you may be on a slow declining track over time. The the world around you moves if you, even if you don't.
Dan Fahy:Great. And what do you think? The cost is organizationally or culturally of misclassifying a mess as a puzzle, or a
Gerald Ashley:problem Yeah, as a potentially very huge, but again, it may well be a slow burn. So if you're meeting quarterly targets in a in a big corporation or even annual targets, it may not initially show through. But there are new developments. There are new industries. There are new techniques.
Gerald Ashley:One of the sort of classical management ways to sort of at least try to address is is to look at scenario planning. Scenarios go all the way back to just after the war, nineteen fifties. Basically Shell, the big oil company, they employed a a very sharp guy called Harry de Goyce. He's written a number of books on the topic. I'm not certain he's still alive now.
Gerald Ashley:He'd been pretty ancient. But he is still very much the sort of person to go to to look at scenarios. And scenarios just do make you think a little differently. They can be a dead end if you don't do it properly or you don't think it through enough. And just creating the scenario doesn't actually do anything.
Gerald Ashley:It's what it's how you implement it. One incredibly simple little rule of thumb is never have three scenarios. Because believe it or not, a group of people will cluster towards the middle one. And this is this is a little bit like a magic trick. You know, when the magician says, you gotta find a lady or or would pick pick a particular card.
Gerald Ashley:Well, if you're very manipulative, you put options either side of your preferred option, and people go for the one you want, whether that's sensible or barking mad. So a way around that is to make certain that you have a group of four scenarios. So somebody has to jump one way or the other. In totally unrelated thing, I was in Vietnam last year, and Vietnam is like a mini version of China, and this is a very free market economy, but politics is absolutely under the iron control of the communist party. To the extent that hardly anybody seems to know who's actually running Vietnam.
Gerald Ashley:So when I got back, I sort of had a look at how does the government work. And they have a group of four generals. Inevitably, they are generals. But again, four, much better number than three. Because again, the problem you're gonna have there is two versus one, and one gets seriously teased off and, you know, maybe is a counterrevolutional, who who knows what.
Gerald Ashley:But with four, you're either gonna split down the middle, and so you're gonna have to rethink the whole issue, or three to one is a a much more solid majority. Now these things seem trivial in a way, but all the time they're forcing us to address the things that we can't or don't understand. Some things will remain, you know, misunderstood or or beyond our immediate knowledge. But at least look at that rather than just tinker around with models that are playing with no known certainties all the time.
Dan Fahy:Now, you and I started our careers when there was arguably more certainty and predictability than there is for people starting careers today. What advice would you have for someone early in their career at this particularly messy time, and what advantages do you think younger professionals have?
Gerald Ashley:Well, I you're right. I mean, for my sins, I actually started in the nineteen seventies, which, as a younger relative pointed out to me, was the last century, and that's a comment I haven't quite recovered from yet. And it was a very formulaic sort of world. You've got a decent education or you do professional exams, and you've got on a a fairly stable sort of career path. And people who changed jobs were or changed firms were sometimes viewed with suspicion.
Gerald Ashley:You may move once. If you've moved three times, what's what's the hell the matter with you? You know? Are you the right sort of employee or you're incompetent or whatever? That's completely in a way, if you think about it, was a closed world.
Gerald Ashley:We had much less access to information in any other area. So I was in international banking. Did I know anything about manufacturing, advertising, media, medicine? No. I got to know a fair bit about medicine because of other relatives, but we lived in a very closed world.
Gerald Ashley:Now we live in a very open world. And you might say it's almost overly open because there's such access to information and knowledge. And maybe if we're not careful, we misunderstand it or or misinterpret it. But what it does do is it informs you about your own area. So I think it's really important to look at other industry sectors or could even be government sectors to see how they do things and what you can learn.
Gerald Ashley:And you know, you should think, can you learn from their mistakes? I certainly learned that in my my days in banking, that when I then took up doing advisory work, I I found that the clients often knew a lot more about risk than I did, particularly in in things like aerospace. Because in banking, all you can do is lose money. Where in aerospace, you know, if a plane falls out of the sky, it's gotta be serious. And the same with pharmaceuticals.
Gerald Ashley:So there there are always very bright people you can you can learn of. And that comes again back to this whole thing of Jules Goddard and Lockheed Martin and the mindset of being open. It's an open world out there, so you have to be open as well. You can't you can't control the game. And I'll come to one last point on this, which is that my heart sinks when I go to a strategy meeting or presentation.
Gerald Ashley:And on the PowerPoint, it has chess men. And you think that this is a nice sort of, you know, mindset of we're playing a deep game of chess here, and we're we've got to be really careful, you know, what we're doing. Well, chess is completely unlike life and business. You and I playing chess, there's a defined board of 64 squares. There's these defined pieces, and they can only move in certain directions, and it's all completely rule based.
Gerald Ashley:You move, I move, ping pong, backwards. Life's not like that at all. It may be that you look at your business as chess or you look at your career as chess and think, I've just got to make this move. I've just got to do that. Well, there may be somebody the other side of the world who, whilst you're making one move, makes five and just runs away with something.
Gerald Ashley:And so if I have any message today, it's it's about openness openness to new ideas and learning from people in other disciplines. There's lots to be learned from risk in things like surgery, for example. Or as I I spoke earlier about aerospace. A lot of the formulas and a lot of the mindset is very similar to finance, but sometimes it's more sophisticated or people have come up with good ideas. So I suppose the younger generations these days, and I think your supply is still to me, is like it or not, life has turned into much more of a a long term learning experience.
Gerald Ashley:Now I know that can be again one of these trite trite management phrases. But the fact of the matter is there is loads to learn and there's loads to apply. And so that can be a positive message rather than freezing in in front of uncertainty.
Dan Fahy:Gerald Ashley, thank you very much for your time and your expertise. Very appreciative.
Gerald Ashley:Dan, been a great pleasure. Thank you.
Dan Fahy:That was Gerald Ashley. Thanks for listening. I'm Dan Fay. Original music by Lee Roosevelt and So Kao. And if you think a colleague or friend would enjoy this episode, please pass it on.