Six Questions For Dan Pink

Part of our investing philosophy is the belief that finance is, at its core, a behavioral field.

Dan Pink had a big influence on this thinking. His bestselling books Drive, To Sell is Human, and A Whole New Mind changed the way I think about the intersection of business and psychology. Business is not about numbers and charts. It’s about people and feelings.

We recently asked Dan six questions about business.

What’s a piece of commonly accepted business advice that’s totally wrong?

The notion that large contingent rewards — bonuses, hefty sales commissions, etc. — are effective way to promote excellence. Fifty years of social science tells is that those types of rewards are effective for simple tasks with short time horizons, but not very effective at all for more complex tasks with longer time horizons. Alas, too many businesses continue to deploy these types of motivators for every type of work, not merely the one category of work where they’re effective.

What aren’t we talking enough about?

Our legal and democratic system is based on assumptions about human behavior that might not be true. Adam Benforado wrote a great book on this last year, called UNFAIR, about the legal system. He shows, for instance, that eyewitness testimony is utterly unreliable because our memories don’t work in the way such testimony presumes. It’s remarkably easy to coerce confessions, so the fact that someone confessed to crime — amazingly — doesn’t provide much assurance that the person committed the crime. Our instincts about what criminal faces, gestures, and behaviors — which juries use to assess guilt and innocence — are hopelessly skewed. And so on.

Meanwhile, democratic processes — like electing leaders, fashioning legislation, or the Supreme Court deciding cases — is built on the idea that rational actors will weigh the facts and through deliberation produce a just result. However, especially when it comes to topics with moral freight, all of us engage in motivated reasoning. That is, instead of deliberating, we look for facts that support our position and use them to rationalize our instinctive responses and help our tribe prevail over competing tribes. Meantime, elections are premised on an informed electorate. But we live in a country where one-third of Americans cannot name a single branch of government and most people have little idea how governments spend their tax dollars. It’s scary.

What have you changed your mind about in the last decade?

I used to believe one’s socioeconomic status as a kid didn’t matter all that much to one’s trajectory as an adult. Now I realize that it exerts a far more powerful force — that how we begin life plays a huge and often unfair role in where our lives go. It’s only recently that I’ve understood that I won the “birth lottery” — being born in America to two college-educated parents in a middle-class household — and that my lottery “victory” gave me an edge billions of people lack.

What do you want to know about business that we can’t know?

How much of “success” — at both the individual and organizational level — is due simply to luck and randomness rather than talent, tenacity, and other more ennobling explanations.

How much of what’s taught to MBA students will still be relevant by the time they retire?

That’s up to MBA programs. Certainly, the idea of teaching content — beyond the content necessary to master enduring skills — is becoming obsolete. But if MBA programs focus on certain competencies — working effectively with others, understanding strategy, certain kinds of quantitative and financial reasoning — I suspect they’ll be OK.

You were Al Gore’s chief speechwriter in the 1990s. Is politics actually nastier today than it was in the past, or do we just see more of it with broader access to more types of media?

It’s nastier.