Date: 03-03-2023 at 07:57
I was reading a brilliant book “Philosophy and the real world - an introduction to Karl Popper” by Bryan Magee. And one line stuck in my mind that forced me to stop reading and write a few paragraphs around the same concept.
In the chapter The Open Society: Popper regards - living as first and foremost a process of problem-solving, he wants societies which are conducive to problem-solving. He wants forms of society which permit the untrammelled assertion of different proposals, followed by criticism, followed by the genuine possibility of change in the light of criticism. Regardless of any moral consideration, he believes that a society organized on such lines will be more effective at solving its problems, and therefore more successful in achieving the aims of its members, than if it were organized on other lines. I agree, but only 80% because moral consideration is unimportant, however, there should be a cap to that. It is a thin line let's flip a few pages of history and take an example: defective genes were/are a problem, and Hitler used this problem as a medium and passed the Sterilization law in 1933 and expanded to adults in 1939 - prevention of genetically diseased offspring - to build a strong nation/state.
Tens of millions (newborns and young adults) were exterminated and sterilized in the name of fixing the genetic problems. For me, that was one of the darkest phases of humanity. History is filled with many such examples. I believe there should be a moral consideration at some point and rethink the direct consequence of problem-solving. I am not sure whether Popper would have agreed with me - most certainly not. :)
Even though I disagree partially on moral consideration, I believe problem-solving is the first and foremost aspect of our living - the root cause of our progress and development. Great! But things get interesting when Popper highlights - it is essential to face the fact that any action we take is likely to have unintended consequences (2nd order effect). I think we consider it in businesses but avoid that in our personal lives, I don’t know why because the fundamental building block of all known complex systems is a single unit. I have highlighted this in my past essay. But the example that I would like to highlight here is of the Multiverse (A fascinating conjecture of our universe): thanks to an experiment with an atom (single photon) in our know instance felt like passing through a vast cloud of instances, and some of were stopped by an invisible barrier. And that's how the whole idea of the Multiverse struck the human mind. Unfortunately, we can’t go deep into the Multiverse because I lack explanatory knowledge. We should remind ourselves: solving a complex problem should start with fundamental units.
We shall come back to the essay, since societies are the collection of individual species (mostly humans) - we must consider these unintended direct consequences. Let’s take an example: If you want to buy a house (I have not used we because my chances of buying a house are 0.000001%) your very appearance in the market as a buyer will tend to raise the price (because you will be creating demand); even though this is a direct consequence of your action, no one can possibly maintain that as an intended one. Similarly, when I am buying term insurance to bring a safety net for my family, this will tend to raise the value of the insurance company’s shares, and here also, the direct consequences of my action have no connection with my intention. These are all unintended direct consequences of our actions because neither I intended to increase the share prices of that insurance company nor your intended to increase the price of houses. And the unfortunate/fortunate part of these unintended direct consequences is that we can’t control or prevent them.
One more example: me writing this essay, for my personal benefit, after reading the above book, on a laptop, on a Google doc with the help of the internet that is operational due to a cellular network connection - all of these demand some form of energy (work). And since I am not the source of these energies, this means: in some parts of the world, my action is generating more heat (entropy) either by boiling water or converting the sun into a flow of electrons, or a flow of water that is rotating massive turbines etc. And who knows, generated heat could be the reason for global warming (I don’t know). Whatever could be the method of generating energy (work), the fact is: my action has unintended direct consequences. And there is only one way I can minimize if a few more read this, find it informative, get more clarity of thought, use this to solve problems etc. And therefore making it public is a way to minimize the direct consequences that my action is creating unintentionally. Beautiful, now you know why you should be sharing more! :)
Things get interesting when we get a sense, the unintended consequences of our actions can be both - Good or Bad. Considering the above examples, if buying a house inflates the price of houses - restricting your temptation and not buying (even though you have resources) shall deflate the price. Good. Same for me, if my insurance purchase is raising the share price of an insurance company, I should be inclined to purchase insurance from a company that uses revenue of unclaimed premium for education, reducing cognitive load so more customers can make informed purchasing decisions, let go Foreclosure Charges or Surrender Charges, and always operate the business with a mindset to return policyholders’ money. So, unintended direct consequences (increase in the share price of the Insurance company) of my action (Insurance purchasing) can help a few more customers in taking an informed decision or claim received.
Since you and I are rational people (at least, I believe, lol), we can minimize the negative consequences. However, we can’t expect from everyone - especially for a nation like ours. In that case, it becomes our fiduciary duty to make sure, we either create products or services that can minimize unintended negative direct consequences for billions of fellow members or do a bit on a personal level. Awesome!
In fact, keeping this mindset has a greater impact on business use cases. Nithin (Zerodha's founder) has been emphasizing the utilization of unintended direct consequences of going public to reduce CAC and retention costs. The prime reason for going public is to raise money however, Nithin published a post on his website before Zomato's public listing and highlighted - how this can be a channel to reduce CAC and Retention Costs. This was a prime example of the unintended direct consequences of our actions. Your (I am a Swiggy customer) action of ordering through Zomato is creating unintended consequences of increasing its share price. And if you own Zomato shares - the value of your shares is increasing by you making orders through Zomato. And this creates a strong flywheel. And hence zero CAC and retention costs. I think this aspect of going public is not being considered or in better words not being leveraged. This also means that participation (number) in the capital market must increase. Not only before the listing, but Nithin has also emphasized this again on Twitter. Also, I am trying to reach Nithin and have been unsuccessful, yet - Can anyone please help me? (Universe do your magic, please).
It seems Zomato missed this, but the next set of consumer companies thinking to list could effectively leverage this.
The bottom line is: we as a society must strive to create positive unintended consequences for our actions. And aspire to propagate this mindset among every member of our society!
Thanks for reading, if you find this informative - please share this essay with your network :)