Honest Signals

In his podcast, Akimbo [https://www.akimbo.me/], Seth Godin teaches us how to adopt a posture of possibility, change the culture, and choose to make a difference. Here are my takeaways from the episode.

Through the evolution process, animals have developed various traits that serve as signals to others. Some signals are useful to fend off predators, and some signals are useful for mating and reproduction purposes. We the humans, through the conditioning of culture, also send many signals to other humans.

Cal Newport has written about how ineffective open offices are. For many types of work that require highly concentrated effort, open offices do not make sense. So why build one? Newport argued that it is a signaling strategy to investors and people we are going to hire next. The signal is that we are so smart, so productive, and making a ruckus, we can afford to cram people into this bullpen, so do you want to join us? Even though it is less productive, it appeals to a certain kind of employee and a certain kind of investor.

The first consideration for signaling strategy is are they honest signals or dishonest signals. We have a choice when we send signals to the world, and it is challenging to send dishonest signals. If we are bluffing and it fails to work, we lose creditability and very difficult to undo these days. When we go into the marketplace, we must decide whether we have built up enough of a resource, skill, capital, or reputation for sending the honest signals? Will we choose to invest or to bluff?

The second consideration is that many people, particularly people without a lot of experience, don’t know the signals they are supposed to send. As a result, they have talent that does not get found. If you have talent, passion, and skill, signals matter. Figure out what the signals are and over-invest in them. When we over-invest in our signals, they are more likely to work.

If we are looking for a resource, the obvious way to get a bigger return on investment is to ignore the expensive signals our competitors look for and to find other signals. This is the theory behind Michael Lewis’s Moneyball. Billy Beane came up with a new statistical way to find talent, and he was able to get players who were way cheaper. He was looking for signals that correlated with their real skills. The insightful thing to do is to look at which signals we think matter and get to those who are signaling the ones that do matter.

Thanks to the Internet, it is easier than ever to figure out which signals that the masses are looking at and to fake them. We harm ourselves all the time in the world of social media because people are intentionally or artificially boosting the signals. Once we realize that a signal has been corrupted, we have a choice. We can embrace the fact that other people are still looking at the old, corrupted signal. Or we can walk away and invent new, more honest signals that we want to live with. At times, we may need to do both. As diversity creates more value, we are going to have to discard many of the old signals and embrace new ones, ones that are more relevant and useful going forward.