Issue 3.6 | April 2012

In this Article: business might be fast, but success requires thinking slowly.

by Jonathan Wilson 

Even at 5:30 in the morning, the sauna-like climate saturated the airport terminal on the north coast of New Guinea.  With other first-flight travellers who had arrived ahead of me, I stood near the back of a roped-off line outside the locked check-in hall.  A heavy backpack hung off one shoulder.  A camera bag hung off the other.  At my feet sat boxes of supplies intended to keep me going for months in the remote interior.  At the stroke of some unseen clock, an airport worker opened the door, and the rush was on.  The notion of a line instantly vanished.  Knowing how things worked, I quickly hefted my luggage by foot and hand through the hall and, by the time I arrived at the single check-in desk, was the leader in the surging pack of travellers.  I slapped my ticket on the counter and moved my luggage to the manual scale.  Locals massed at the desk in apparent disarray, each one placing his ticket on top of another in a steadily growing pile of paper.  At that point, a plaintive voice with a distinct German accent rose above the fray: “but I vas here first, I vas here first!”

I quickly educated the distressed tourist: “Put your ticket on the pile right now!  The queue was irrelevant!  They sort and process tickets by order of placement on the pile.”  While he remained pinned to the desk by the crowd, I moved through to the shabby travel lounge.  Eventually, the German made it through, shaken but unharmed, a victim of behaving in one world as though he was in another.

In business, the quest for the holy grail of differentiation and market share regularly takes us, whether by force or by our own will, into unfamiliar and often uncharted territory.  When we get there we run the very real risk of choosing the wrong approach, because we impose on this new world the understanding we have of signals in the old world.  We do so at the peril of our business.

I am told by observers on the ground that, when India’s telecommunications market first opened up in the early 2000s to foreign enterprise, Western companies quickly took advantage of the opportunity posed by a new market comprised of a billion people.  Their initial efforts, however, failed to gain them traction with Indian users.  Bharti Airtel, by comparison (a local provider), quickly established its dominance in India’s cell phone market, and today it remains India’s largest telecommunications provider with a market capitalization of around $12 billion.  In time, after Europe’s Vodafone bought shares in a local telecom, becoming Vodafone Essar, it began to make significant gains in the Indian market.

At their first run, Western companies failed to read the signals of this new world correctly, and by doing so, had consigned themselves, for some time, to being a follower in the market, and not a leader.

Their initial failure arose because they imported business model assumptions from their primarily European market base.  Cell phones were introduced to Western markets as an overlay on the base of a long-established landline infrastructure.  The pricing model that worked in this environment depended on high margins, initially on the premise that wireless technology constituted a premium service (that it no longer does, however, has not affected this price model).

India, on the other hand could use the relatively low infrastructure costs associated with wireless technology as its primary means of bringing telecommunications to the whole country.  Thus local telecom businesses such as Bharti Airtel introduced a radically different pricing scheme – typically pay-as-you-go at extremely low rates.  Low margins were offset by a truly massive customer base (one needs to combine the populations of the US, Canada, and the fifty-odd countries of Vodafone’s European base to get the same number of one billion potential users).  As a result, cell phone usage across India exploded and so did the coffers of Indian telecom providers.

Few can know what was going on in the minds of the executives of incoming foreign telecoms at this time.  But we can reasonably guess: for the common tendency in any human enterprise is to act on our assumptions, because assumptions provide the lowest barrier to haste.  Fools rush in, as the saying goes.

The Danger of the Lazy Mind

Our minds operate by two basic systems, what leading psychologist Daniel Kahneman describes as fast thinking and slow thinking.  Business is fast.  It is an environment that easily encourages us to use our fast thinking, our intuition.  Fast thinking is crucial in situations that require a quick response.  If you’ve hit an icy patch in your car once and survived, chances are the next time it happens your intuition will serve you very well.

Your intuition works by way of signal and pattern recognition, specifically by associating what it sees with what it previously has learned.  The second system – slow (reflective) thinking – lays the foundation for our intuition.  Unfortunately, it is lazy.  Our brains are hardwired to avoid doing hard mental work any longer than necessary, and thus lead us away from thoughtful reflection and towards acting on instinct and intuition.

The pressure of business is such that virtually everything we do, we do in haste.  When we enter a new market, or launch a new product, our brain’s natural instinct will be to operate intuitively, and not reflectively.  The result for European wireless companies entering India was that they interpreted the signals of a new, foreign market using the assumptions they had unconsciously acquired in European markets.  The result was a misapprehension on the grandest scale.

Whenever we enter new territory in business, we need to treat it as seriously as if it were a cross-cultural encounter (which it often is, in its own way).  Learning how to properly read – and respond to – the signals of a new world requires a conscious effort to treat our intuitions with circumspection, and to engage in reflective observation.  In other words, although business is fast, we are actually wasting time unless we choose to think slowly.

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