This week on Lendio Business Fuel, I had the chance to interview Noreena Hertz, author of Eyes Wide Open: How to Make Smart Decisions in a Confusing World. In this video, we discuss the multiple variables that go into a decision, including important business decisions. Here's some of my favorite quotes from the interview: "Innovation comes back not only from the creation of ideas but also from their destruction." "I think definitely you want to categorize your decisions into two categories, the decisions you have to make, the ones that don't really matter." "The best decision makers all consciously carved out thinking time every day." Noreena Hertz is a bestselling author, strategist and commentator who advises some of the world’s top CEOs and Presidents on economic, geopolitical and technological trends and business decisions. You can learn more about her at http://www.noreena.com. You can listen to the audio from the interview here. Transcript: ERIK LARSON: Hi. Welcome to Lendio Business Fuel. Today we have a very special guest, Noreena Hertz, author of 'Eyes Wide Open'. She's an academic, economist and a very prolific author. She has been featured on the cover of 'Newsweek’ and she's also has a ‘TED Talk’. So just really excited to have you here Noreena. Welcome to the show. NOREENA HERTZ: Thank you so much Erik. It's great to be on it. ERIK LARSON: All right, so you recently wrote a book called 'Eyes Wide Open', talking about decision making. Can I ask you, where did the inspiration for that book come from? NOREENA HERTZ: Well, I spent most of my career advising some of the world’s most successful decision makers, CEOs, political leaders on really big decisions. But about six years ago, I got really sick, myself. And I had to make big decisions about, you know, what doctor to trust? What medical treatment to have? And as I went through that journey, and thankfully I'm a 100% well now, but as I went through that journey, I started thinking about how little it is that we think about how to make decisions. Now it's even me who has been advising you know big top head hunters on decisions. So we really think very little about how to make decisions. And so when I was sick, I started really researching on decision making, and in economics, in brain science, in psychology. And when I got well, I went around the world into meeting some of the smartest decision makers out there. From Hollywood film producers, to people running big hedge funds, to emergency room doctors, to fighter pilots. Really trying to piece together what it takes to make smart decisions when it matters. Decisions that really affect your health, or your wealth, or your business. ERIK LARSON: All right. Yeah and that's already into business owners. So I'm sure this book would actually be really handy for them. I've been reading into it. I'm about half way through it and there's some really really great things in there. What are some of the best advice that you've - or what's the best decision makings skills you think that business owners could use? NOREENA HERTZ: Well I think... I mean to single out just a few, and the book is jam packed with, you know, great suggestions, great stories, great tips. But just to fill out a few. I think one thing that's really critical and especially if you're a business owner yourself is to make sure that you have in your orbit what I call a 'challenger in chief'. You need someone who you trust and respect, who will be the person to say to you “Hand on a minute. Have you thought about this?” or “Wow you're very, you know, this is what you think is going to happen but blah, blah, blah.” Or someone who's going to be that devil advocate and play that role for you. You know, so it may be somebody within your company. It maybe someone in your broader network, in your church, in your home, someone who is that trusted individual and you can run back. What I say is some of the smartest individuals I met, they consciously have that person. So for example, even Eric Schmidt, the chairman of Google, a big successful businessman. He said that in meetings, he would look for the person who was kind of looking skeptical, and you know, sitting back and he would say, “What are you thinking?”, you know. What is his due help with what we're saying because with those insights, he’d get smarter. So I think that's really useful thing to do when you're running your own business. Have that way to gauge what you're actually doing. ERIK LARSON: Yeah, sure. I mean – I think in business, I've seen this a lot. A lot of times, people would kind of become 'yes man'. When you surround yourself with 'yes man, you really only have your perspective bounced off of others. So when you have someone in there criticizing and saying, "Hey, you haven't looked at this one.” There are things to, like, better ideas. NOREENA HERTZ: Absolutely. Absolutely. And the knowledge, the innovation comes back not only from the creation of ideas but also from their destruction. So you have to be willing to test, innovate, create but also destroy. And not to be too wedded to any plan that you become incapable of seeing problems but also opportunities. ERIK LARSON: Yeah. You know that actually reminds me when in college once. They give us assignments and they said, "Okay, you need to come up with an (advantage?). Okay now, throw that away." Now I'll come back with another one. "Now, throw that way." And eventually the ideas just kept getting better and better because you're looking at - for more and more angles. So that's really great advice. NOREENA HERTZ: Well you know, Abraham Lincoln famously had his team or rivals. I mean, he famously surrounded himself with really smart people who had very different points of views. In the knowledge, in that contrast, he would make better decisions. ERIK LARSON: Yeah, exactly. Now for small business owners, they are obviously making decisions you know day-to-day. And a lot of times, they're on the fly. They may not be able to communicate together. What would be your advice for those quick decisions that they've got to make within 10 minutes or less? NOREENA HERTZ: Well I think definitely you want to categorize your decisions into two categories, the decisions you have to make, the ones that don't really matter. Because when you're on small business, there are so many decisions to make the whole time. So to agonize over, "Should you buy your printer ink from here versus here?" You know little things which can, you know, consume you. No, you don't have time for that. So you want to categorize. You want to go, “What are the big decisions I have to make and what are the small ones?” And with the small ones, you need to be quite ruthless. There was another thing I found. If you needed to actually say "Okay, I'm going to spend one hour maximum on these things", and then be quite ruthless and come to decisions. Set a time limit on the trivial decisions so that with the bigger decisions, you actually have some time to do your own research. Because that's another big message from my book. Don't blindly follow experts. Don't blindly follow your accountant's advice, or your lawyer's advice, or you know, a forecast in the papers about “I don't know how the economy is going to go? What oil prices are going to look like?” and then we saw just very recently off course, “collapse of the old price is not predicted”. Not predicted by big experts. So I now that we can become such better information hunt together as ourselves. So you want to have time, when decisions matters, to do your own research which may be about going out to your network which we can do now online in ways we couldn’t before. So you know, use your network. Use our social network, your links and your Facebook to get a stare and don't just - And when you're making your plans, take into account that the experts could be wrong and think about "Well, what is my plan B? What is my plan C if things come out differently? ERIK LARSON: Yeah, that's great advice. I mean I think a lot of times, business owners will get stuck in a paralysis of indecision. They’ll go, “Oh my gosh, this doesn't even matter.” But they've lost an hour. NOREENA HERTZ: Yeah. No. You have to set that limit. You really have to set the limit. The other kind of critical thing that came out in my research, and what was fascinating was this was even people who, one would just think “you must be so busy” was, best decision makers all consciously curved out thinking time every day. What I called TTT, time to think. Half an hour, some maybe fifteen minutes. They even put it in their diary a lot of them. Some of them put in Project X so that their assistant wouldn’t know what it was. Because in our email, overloaded. To do list, heavy, go go go lives. It's so tempting to just be in a state of continuous response. But the dangers is that, the important gets crowded out by the immediate and we can't make the strategic decisions which in small business is essential, that's needed. It doesn't mean that you just have to kind of sit in your office and kind of think like that. Like some maybe that’s going – they’ll say, I'll do my strategic thinking at the gym in the morning. I'll do it driving on my way to work. I'll do it when I'm taking a walk. But people continuously put it in their diary. People really have great strategies they shared with me. Really practical things about things like dealing with emails because I don't know what your life looks like. But my life is just constant emails. ERIK LARSON: Constantly fighting with emails, yeah. NOREENA HERTZ: And one of the techniques which I now adopt and partly two techniques I learned from these wise people. One is I don't check my emails all through the day. I designate times. You know maybe it's four times a day. Maybe it's five times a day. Maybe it's even six times a day. Because every time we check an email, it takes us twenty two minutes to get back to the same level of focus we were at before. ERIK LARSON: Wow. NOREENA HERTZ: Wow. ERIK LARSON: So if you've checked ten emails throughout the day, and you've lost what, time. NOREENA HERTZ: Exactly. And the other thing that I learned and that I now adopt is I take a digital Sabbath. One day a week, I don't go online. I need - You need that time to be creative. Think to recharge. And you know, try it Erik. Try it for a week. See what it’s like. ERIK LARSON: Well I don't know about that but I could sure try. NOREENA HERTZ: Well, try it for one day in a week. One day in a week, thirty minutes everyday thinking time and see where you get to. ERIK LARSON: All right, sounds good. You know, I think like – I think you have to know I’m ahead there. If we don't take time to think about strategy, then we could end up spending our day-to-day on just the response time and then we ended up way way off where we're supposed to be. NOREENA HERTZ: Exactly. Exactly. And you see that happen with companies, and you just think it's not a place you want to go. Smart decision makers take that time. ERIK LARSON: Yeah, that's great advice. Speaking of advice, I ask this with everybody who comes on the show. What's the best advice you have ever received? NOREENA HERTZ: I think for me personally, the best advice is something that, I was told actually by Dick Zanuck. Dick Zanuck was one of the most successful movie producers of all time. He made movies like Jaws, Sound of Music. When he was - I mean, he's an amazing film producer. But when he was some 30 years old, he made Sound of Music, a huge success. And he said, okay afterwards, it was the biggest success of all time at that time. He said, "Okay, I know what to do.” And he made three more movies, all very similar. ‘Hello, Dolly’; ‘Star’; ‘Doctor Dolittle’; musicals. Kind of the same sort of vibe and they all tanked, disaster. And it's the advice I got from him many years later when I said to him, "Dick, what went wrong?" and he said, "History is not an army on a forward march. What worked yesterday may not work tomorrow. And I think in a world that's so fast moving, a world like ours, where technology changing, industry after industry where, you know, what's happening economically and demographically really potentially affecting our business. Remembering that even what worked for us yesterday may not work tomorrow is something really useful as a business person to keep in mind. Because she's here to constantly be looking forward and not be looking backwards. ERIK LARSON: Well, that's really good advice. I mean, you’re exactly right. With the way technology exactly moves, I mean, even… I do a lot of market. And so, let’s take market as an example. Some - in that work a week ago did not work, the next week completely tanked you know. NOREENA HERTZ: Exactly. And you know, it's very easy… I’m sure you’ve heard Harry Potter. ERIK LARSON: Yeah. NOREENA HERTZ: Okay. So when JK Rowling tried to sell Harry Potter, all the leading publishers in the UK and the US turned it down. All of them. They turned it down because they said, "We know what works". They said, "we know what works and we know what doesn't". Boys won't read a big book. Kids don't want fantasy. Children want books about social issues nowadays. And they had a whole list of like 'beliefs', 'wisdoms', and they all turned it down. And it took a new guy in publishing with a very small publishing house in the UK to buy the book. He only paid $3,000 for it. ERIK LARSON: That's a good lesson. NOREENA HERTZ: It's a really good lesson because, you know, we can get trapped in beliefs about what works and what doesn't. We actually may not be right and I think especially nowadays, you know, when we're trying things out as business people. It is a matter of trying things out and trying things out and new things. Because often they’re the ones we’re using from your own experience. The other ones, they could pay off. ERIK LARSON: Yeah, exactly. I think in a world that's moving as fast as today, the innovators are really the ones that will pull ahead. NOREENA HERTZ: Definitely. ERIK LARSON: And I've seen so many businesses that - I mean look at Kodak for instance, they had a really good opportunity to jump to digital camera market. They have brand. They have the distribution and they were too slow. And... NOREENA HERTZ: Absolutely, and Nokia. I mean in 2007, four out of every ten hand sets held globally was a Nokia hand set, four out of every ten. And when Apple introduced the iPhone, Nokia was completely left clipping at the wheel. And what happened? And I told this story in my book, What happened is, this is really scary. Engineers at Nokia had actually designed a phone very similar to an iPhone. It had a color screen. It had the touch screen. It had the swipe. But when they took it to management, management said no no no. We know what makes us a successful company. What makes us a successful company is that we have a phone that you can drop from seven feet and the screen doesn't crack. And that's what people really care about more than anything else. As we all learned, people were willing to give up a few - willing to live with a few cracks on their iPhone screens. ERIK LARSON: Oh for sure. I’m not even sure if Nokia breaks. Yeah, I had a Nokia. Those things lasted. I dropped it so many times. NOREENA HERTZ: I know but do you still have a Nokia today? ERIK LARSON: No. Mine was gone. Yeah, that's... NOREENA HERTZ: And you've got Finnish roots even, so you’re type of… ERIK LARSON: I don’t know. That’s the most painful part of it. My mom’s from Finland. For all the viewers who didn’t know. Nokia is from Finland. So that one is close to home. All right. So speaking of terrible terrible mistakes, what's the worst mistake you've seen business owners make? NOREENA HERTZ: This one maybe, it's one that I saw from which I found out based on research. But then I run it by business owners and people are like, “I might have well made this mistake”. So I came across this fascinating research. It was done with judges in Israel. The research is wanting to find out why a judge granted parole to the criminal in (Princeton?). Was it because of the gender of the applicant? Was it because of the ethnicity? Was it because of the type of crime? No, the single biggest reason for whether a judge would grant parole or not was whether the judge had recently eaten. Seriously. If you went before the judge just before their 10 a.m. mid-morning snack, disaster. Zero percent chance of getting a parole. Immediately after the snack, shot up to 65%. Just before lunch, disaster. 10% chance of getting a parole. Immediately after, shot up to 65%. And what I have – And when I took that, there was this whole chapter in which is about how our physical and our emotional states can really affect our decisions. And we don't think about that stuff, do we? We don't think about how, if we're stressed because, “I don't know”, our kid is playing up in school or our parent is, you know, being really stressful. We don't think that could be making us just generally at work much more risk of us that day, much more tunnelled vision. ERIK LARSON: Right. NOREENA HERTZ: We don't think about how not enough sleep can really affect our decision making. I mean, President Clinton talks about how the worst decisions he ever made in office was when he didn't have enough sleep. And there's a lot of research now on how not enough sleep can really affect your decision making. So I think it's a whole host of physical and emotional states. That if we want to make more decisions at work, we need to be very mindful. ERIK LARSON: I mean, you have to be aware of what you’re feeling. I mean, that's terrifying, you know. Like parole? That's a big decision. Like someone has to be imprisoned for ten years is, like, today is the day and I didn't have this morning bagel and... NOREENA HERTZ: That's right. ERIK LARSON: Wow, that is... NOREENA HERTZ: And then you know when I’ve run this kind with business people, I've heard people say, for example, I want to disclose the company but – one company, they say, like big company, they said, "Gosh, it's so true.” Because when at our board meetings, they said, if we have learned - and they've just learned it by experience, that if we want to the board to pass something, we will do it just before lunch. ERIK LARSON: Wow, does that look like, let this through. I'm hungry. NOREENA HERTZ: Yeah, exactly. So when you're courting a customer or negotiating a deal, you might want to think about stuff like that. ERIK LARSON: Now, I'm starting to wonder how many wars could've been buried if we just ordered a couple of pizzas, you know. Oh man, that is some scary stuff. Well that is some really good advice. But worst mistakes that business owners make was that is not being aware of their physical statement when they make decisions. That is just absolutely great advice. Well Noreena, it has been an absolute pleasure having you on the show. Again, everybody go out and read her book 'Eyes Wide Open'. It's really good. You'll change the way you make decisions. Thanks again for coming on the show. NOREENA HERTZ: Thank you Erik. It's been a pleasure. I look forward to coming to Utah again and seeing you in your place. ERIK LARSON: Yeah, come on out. It's a great place to be. All right, we'll see you all next week. Thanks for tuning in.