The $100 Question

“A crisis is a terrible thing to waste” – Paul Romer, 2004

It’s taken a while to get to this point, but I trust you will find that it is worth it. Where we are now is the result of reassembling existing knowledge (and some discovered) after playing with and rearranging the pieces for a while. I invite you to bear with me for a few words (ok, more than a few).

We’ll start with an assertion from my last post, that employees are the basic building blocks of an organization, the assets on which the organization is built, and, very importantly, that they bring with them their own Personal Culture (their Temperament and Personalities).

Contrary to popular belief, “employee” here refers to all individuals employed by an organization, and thus extends to include the founders, CEOs, executives, and management, not just those lower on the ladder inferred by common usage of the word. As a consequence, and contrary to their (management’s) popular misunderstanding, they too are infected with the same human condition the development of which follows as the topic of this post, and which is closely tied to the Missing Attribute presented in the last post.

As a segue, let me relate yet another personal experience which I think turns out to be all too common.

The $100 Question

Later in my career we passed into the “Second Phase of Career and Life.” The First Phase was characterized by not having enough income to live as we would have desired and having to learn the tremendous benefits of living on a budget judiciously set to be 80% of our income. We did without certain things until they became important enough to move to the top of the “list.” Sort of like Capital Budgeting in an organization: choosing among a number of projects which ones are the most important for this year’s budget.

Fortunately, with hard work and skill growth, in two or three years the current “80% of income for living” had grown to be nearly 100% of what was total income previously. By habit we stuck with the “live off of 80%” rule, and one small positive consequence of many was that we could now afford to have a Kleenex© box in every bathroom and bedroom (and kitchen) rather than just one that we had to cart around the whole house. One might say that the important things in life were coming into reach. This was the beginning of the Second Phase of Career and Life. And this was when an important new discovery was made.

We were then living in the northeast, so the cost of living was appreciable. We were living off of a monthly budget (yes, still! – it is a discipline that provides a continual harvest) of about $6000/month. What I noticed was that when all living categories were covered and there was perhaps an extra $100 left over, there was a significant peace, a relaxed atmosphere at home, and we could even go out for an end-of-the-week dinner date without a guilty conscience. The glass of wine helped, too.

However, when (not if) circumstances arose where unplanned expenses popped up or expected expenses were somehow larger than expected, there might be a $100 shortage. Even when we had this in a buffer, there was still an unexpected tension in the house, accompanied by shuffling small amounts from one category to another (yes, this is legit) to cover everything. And no dinner date.

The discovery, or realization, was that the emotional response to a $100 shortfall (a threat) resulted in a tension and stress that was measurably greater than was the relaxed response to the apparent security of a $100 surplus.

Why is this?

Part of the reason is embedded in the quote I included in the last post: “If there’s a threat in the environment, you’re more likely to feel that your position is insecure, and this causes you to want to guard your resources, to defend yourself, and try to accumulate more resources…” This results in a tense, stressful environment. One might even steal paper clips from the office.

Another way of looking at this is to refer to a classic visual that is commonly used in discussing issues of inventory management (bear with me), and the driving force for implementing Just-In-Time inventory techniques. Here’s the visual:

Entry 99 - JIT Inventory Davis 10.5

and here’s a simple explanation: [1] when there is an inventory (or monetary, or emotional) surplus (the tide is high), it is fairly easy for anyone to sail through the seas (the conditions) with little or no concern for any threats. [2,4] It’s when there is an inventory (or monetary, or emotional) shortage (the tide is ebbing or low), when the threats of rocks and shoals are visible that it takes a knowledgeable and skilled person who knows the channels to navigate safely. [3] And even when the big threats have been avoided, there may still be other threats hidden until the tide ebbs further. [5] Perhaps with Just-In-Time techniques most inventory threats can be eliminated or managed, but the reality for Living in Real Life conditions (including monetary and emotional circumstances) is that the best we can hope for is probably [4]  (i.e., SIT Happens).

That’s the what, simply put. Now with a bit of this rearranging of existing pieces of knowledge from various venues we can possibly illuminate the why.

Let’s start with Maslow’s Hierarchy of Human Needs, which if you don’t recall we’ll do a quick summary here.

In 1943 Maslow proposed that humans have a Hierarchy of Needs, beginning with the basics of air, water, and food necessary for survival. His proposal was that an individual cannot/will not move up the Hierarchy to the next level of Need unless and when the needs on the lower level are fulfilled. The needs he identified are as follows:

-Physiological Needs
-Safety and Security
-Love and Belonging
-Self-Esteem, and

The Hierarchy and the levels as Maslow pictured them are as follows:

Entry 99 - Maslowr

Hold that picture for a moment, and let’s next consider the Behavior Curve below, which I posted about on here, on page 3. This attempts to show how our active mode behavior becomes more and more focused on Self-Provision (the Taking, negative direction, or what I also called the Survivor mode, here) as we put more priority and emphasis on Self (our internal wants and needs) than we do on our external Values (that is, the ratio of Self to Values (Self / Values) is greater than 1). When we stress our external Values, behavior moves into the Building or positive direction, where the ratio (Self / Values) is less than 1. (Builder and Survivor modes are discussed here).

Entry 99 - Behavior Curve Excel No Title Text

Interesting concepts flow from this picture.

  • Positive results (the added value available to others) can arise even when there is still some attention paid to one’s Self. A 60% external Value focus means there is some 40% Self focus remaining, but this still moves overall active behavior into the Building, positive area (to the upper right). One can certainly add value in one’s job even when appreciating the pay, benefits, and work environment and not feel guilty about it.
  • Altruism, the complete sacrifice of Self for “other oriented external” Values, is not only impossible to achieve, but is then only a single spot on the curve to the far right where 0% Self lies. This is important because thinking one needs to be completely altruistic to be able to add value to others is simply not true. That’s more an either/or mode of thinking, rather than the preferable and/and.
  • Even if one person could become 0% focused on Self (that is, 100% focused on external Values), the most positive results they could contribute (to the right) pale in comparison with the negative impact (to the left) that one relatively selfish person can inflict!
  • Following that thought, this supports the concept of teamwork where many people contributing in and leveraging their respective areas of skill are needed to increase the total value added, and why we bristle with the presence of just one non-contributor who inflicts significant negative impact to the entire group effort (and psyche).

Now for some rearranging of these pieces in perhaps an unexpected way. First, take Maslow’s hierarchy as pictured above and rotate it to the right, as follows:

Entry 99 - Maslowr rotated stripped

and then superimpose it on the Behavior Curve above with the Hierarchy’s most basic survival needs (left) placed on the 100% Self point, and the tip of the Self-actualization placed at the 0% Self point, thus:

Entry 99 - Behavior Curve Excel No Title Text Maslow 1 crop

Then note the following, probably not unrelated correlations between Needs and active Behaviors:

  • The lowest level most basic Need (Physiological) for the Self (now at the far left) superimposes directly over the most negative, Taking (or Survivor) behaviors (Recall the drowning ocean swimmer in the last post);
  • The next level of Need, for Safety and Security, superimposes over more moderately negative but still Taking (Survivor) behaviors;
  • The Need for Love and Belonging (for instance, with Clan or Tribe) superimposes over slightly moderately negative behaviors; and
  • The Need for Self-esteem superimposes over the least negative behaviors (we tend to stifle or compensate for these needs in public, don’t we?).

These four most basic Needs are often referred to as Deficit Needs by psychologists, as they deal with recognizable personal voids. For various reasons, we could also identify them with the various forms of Baggage that everyone carries. Perhaps rather fortuitously they superimpose with the negative behavior areas of the curve (yes, this is no doubt due to arbitrary artistic scaling of the Maslow hierarchy triangle; no “magnitudes” of needs have ever been implied, to my knowledge);

and the last but important Need correlation:

  • The Need identified as Self-actualization superimposes on the positive active Building behaviors.
    • The culture or environment (including one’s “boss”) has to provide support (tools, resources, recognition, esteem, reward) for this need of Self-actualization for the added value to be birthed and maintained;
    • If/When the culture or environment does not/can not/will not provide this support, the individual can fall back onto Deficit Need fulfillment behaviors. In this case, if the culture or environment cannot be changed, the employee’s recourse is most likely to seek employment elsewhere (Gallup Poll: ~50% of departing employees indicate dissatisfaction with their boss as the number one reason for leaving).

I would be negligent if I didn’t point out that this last Self-actualization Need correlation and the two points noted seem to be uniformly applicable to all People Groups: Marriage and spouse, Family, Clan, Tribe, Organization, and Nation.

This correlation is also the strongest support for the need to monitor and increase employee engagement in the organization.

There is one more interesting piece of information that arises from this Behavior Curve. I noted that the curve implies that the most positive results one person could contribute (“+” to the right) pale in comparison with the negative impact (“–“ to the left) that one moderately selfish person could inflict. How does this positive impact compare with the negative impact?

  • Take the horizontal line in the Behavior Curve graph marked 100% Self on one end and 0% Self on the other. This represents the Zero Sum game line, where there is a balance between giving and taking in normal exchanges;
  • The area to the right, marked “+” between this horizontal line and the Behavior Curve therefore represents the results of a Positive Sum game, the “value” that can be added;
  • The area to the left, marked “–“ and below the horizontal line and the Behavior Curve represents the results of a Negative Sum game, that is, “value” that has been taken to the advantage of the selfish (Taking, or Survivor) player;
  • Since the left side of the Behavior Curve plunges and we can’t measure the area exactly, I took the curve from “90% Self” over to “10% Self” (to make it balanced and fair), and tried to calculate the “–“and the “+” areas. For my simplistic efforts, I arrived at the following approximations:
    • Negative area: 80.5%
    • Positive area: 19.5%

Looks remarkably like The Pareto Principle, the 80/20 Rule.  In other words, in hiring from the general population without an effort to select and maintain a Building culture, 80% of the employees potentially will somehow subtract something from the optimal environment, which could be one or more forms of poor attitude, lower efficiency, disengagement, or poor quality.  This may not be a surprise.

What are the implications of all this for us as individuals and our organizations?

I propose that we mostly live on a daily basis with a Self/external Values balance of about 50/50. Sometimes we venture more emphasis on external Values, especially when doing so feeds some personal needs, and sometimes we venture more emphasis on our Deficit Needs. We basically can shift a bit left and right along our horizontal Zero Sum line around the 50/50 midpoint depending upon normal circumstances.

However, when confronted with a challenge, threat, or a crisis, we shift into a defensive mode, which means our active behaviors shift to the left along the Behavior Curve. The bigger the threat or crisis, the bigger the shift.

Psychological research indicates a striking asymmetry that correlates well with the shape of the Behavior Curve and our responses to threats and crises:

We perceive a loss from a threat or crisis as having, on average, about twice the impact of a gain of the same magnitude.  This is known as Loss Aversion.*

This brings us back to the $100 Question: the surplus of $100 over the budget feels good, but the shortfall of $100 from the budget causes twice the distress. It’s the way we are built. And when we shift our balance from external Values to Self in a defensive mode, it’s what the Behavior Curve predicts.

We have to train ourselves to recognize these natural responses and intentionally overcome them. We can do this in Marriage, and really should be doing this in the Family, but it gets more difficult to accomplish in Clan and Tribe.

But in an Organization, for reasons to be discussed later, once again, we can train ourselves.

In an organization, we need to selectively hire not only people with skills, but also people who recognize threats and crises and can react to them as opportunities or be trained to react to them as such (the Missing Attribute).

We should do this to create an environment (culture) that Regresses to an Opportunity Mean, has the tools to accomplish this, focuses on teamwork to amplify the added value, and is rewarded for accomplishing it.

It means intentionally creating an overall positive and active Building (Added Value) culture and environment, which includes the minimization of the negative Taking environment.

However, here’s the surprise.  Since all of us are infected with the human condition, even with highly selective hiring in a positive Building cultural environment, we are all potentially susceptible to occasionally slipping over, even slightly, into the negative Taking zone. It takes awareness, a high EQ, good self-management, and good boss-manager skills to maintain our assets in healthy shape.  I think we call this engagement.

Simple, eh?


* Thinking, Fast and Slow, D. Kahneman, p 282-6, and The Ascent of Money, N. Ferguson, p 347.

What others are saying along similar lines about selective hiring and coaching talent:

Dan Rockwell (Leadership Freak):

Richard Branson (Virgin):

Angela Ahrendts (Apple):

Ralph de la Vega (AT&T):


About Jim Edmonds

I am a husband, father, mentor, who once was a chemist turned physicist turned marketer turned executive turned missionary turned professor. And survived it all.
This entry was posted in 02: Value Added, A Definition, 04: Games People Play, 13: Values & Self, 14: Behavior, 15: Baggage, 16: Culture, Career and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

1 Response to The $100 Question

  1. Lots to digest — opportunity for engagement!


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