The Agency for Financial Advisory Firms

 

    Graphic of woman watering chart of enterprise level growth

    How Range Can Create Enterprise Level Growth

    What’s the most effective path to success in any domain? David Epstein says it’s not what you think. Many financial advisors seek to understand how to use proven methods to scale their business, whether it be the type of hire, proven workflows, or marketing tactics. They are all looking for that “golden key.” At the same time, many struggle with differentiating their firm from others. Why is that?

    The cover of Epstein’s book, Range, features a key ring with several different metallic keys. What do keys do? They open doors, of course – different doors. Using keys as a metaphor for resources and tactics, this book discusses the advantages of “range,” and how a mixture of people, ideas, viewpoints, and innovation creates a higher probability of success than using the same old key.

    The Beyond AUM book club recently finished Range, and many lessons from the book resonated with us on both personal and professional levels. David Epstein packs a plethora of concepts into 295 pages, but we’ve selected a few that really stood out to us in terms of why financial advisors and business owners should be thinking about diversity in skillset to create enterprise level growth.

    Concept 1: If you’re having trouble solving a problem, try looking at it in a different light

    One concept that Epstein returns to over and over again is analogical thinking, meaning using experience from one situation to solve a current problem. A particularly illustrative example he uses is a hypothetical scenario posed by Karl Duncker in the 1930s. The problem pertains to a doctor who has a patient with a malignant stomach tumor. The patient cannot be operated on, but the doctor can use a particular type of ray to destroy the tumor. The caveat is that the ray will also destroy healthy tissue. At a lower intensity the ray would not damage the healthy tissue, but would also not destroy the tumor. What does the doctor do?

    According to Epstein, only about 10% of people solve the problem right away. But when they are given information to compare it to a totally different analogical situation, the majority of people are able to figure it out.

    The information given comes in a second scenario that features a small-town fire chief who comes upon a woodshed fire near a family home. If the fire isn’t extinguished quickly, it will likely spread to the house. Villagers have formed a makeshift assembly line and are filling up buckets from a nearby lake and trying to extinguish the fire by throwing water on it one bucket at a time. Unfortunately, the fire is still roaring. The fire chief has an idea. He has all of the village people fill their buckets simultaneously and surround the fire from all sides. On the count of three, they throw their buckets on the fire, and it soon goes out.

    Have you figured it out yet? The answer to the initial predicament is that if the doctor directs multiple low-intensity rays at the tumor from different angles at the same time, he or she can destroy the tumor while leaving the healthy tissue intact.

    As Epstein writes, “Deep analogical thinking is the practice of recognizing conceptual similarities in multiple domains or scenarios that may seem to have little in common on the surface.” Financial advisors can benefit from looking at growth strategies from other industries’ case studies and thinking about how they might apply those to their client experience.

    Concept 2: Often times, there is an outsider advantage

    Stemming from the idea that analogical thinking is a critical tool, Epstein argues that oftentimes outsiders are more likely to be able to look at the bigger picture without getting caught up in the details. This point surprised us. Shouldn’t an expert be an excellent forecaster in their area of expertise?

    One example Epstein uses is the 1989 Exxon Valdez oil spill that resulted from the oil tanker hitting a reef in the Prince William Sound. The oil mixed with water, creating what spill workers referred to as “chocolate mousse,” a thick substance difficult to remove. Nearly 20 years later, 32,000 gallons of the oil remained stuck along the coast of Alaska. A research program manager at the Alaska-based Oil Spill Recovery Institute named Scott Pegau decided it was worth posting the dilemma on InnoCentive, a website that enables organizations to present unsolved problems, or “challenges,” to outsiders to try and solve.

    John Davis, an Illinois-based chemist, came up with an ingenious solution. “I visualized the problem as drinking a slushy. You end up having to whip around the straw and stir it up. How could you make it so you don’t have to work so hard to get that slushy out?” asked Davis. He mulled it over for a while and thought about a day he had spent helping his friend to build a flight of concrete steps. He remembered his concern at watching the concrete harden prematurely from the sun, and then his astonishment at watching it instantly fluidize again at the touch of a motorized rod, or a concrete vibrator. Davis proposed that the spill workers try using concrete vibrators to do the same thing to the “chocolate mousse.” Spoiler alert: it worked.

    Later, when Epstein interviewed Davis, he asked if Davis typically used analogical thinking to reframe chemistry problems in his day-to-day life. He replied, “You know, I don’t, not really. It’s these other puzzles or problems where you have to think outside the box.”

    Imagine if we tried looking at things from different points of view every day? What if instead of getting caught up in the details, we tried thinking outside the box? Maybe, just maybe, we’d find solutions more quickly, more cost-effectively, and with greater innovation.

    Concept 3: We are works in progress claiming to be finished

    This is what psychologist Dan Gilbert calls the “end of history” illusion. We recognize that we have changed a lot in the past, but we aren’t necessarily able to recognize that we will change a lot in the future.

    A particularly interesting chapter is titled “Flirting With Your Possible Selves.” Epstein introduces this chapter by telling the story of Frances Hesselbein. If you’ve never heard of her, look her up. You won’t regret it. Despite never having applied for a position in her life, Hesselbein has held four professional jobs, all CEO or president. Still alive today at 104 years old, she is a fantastic example of someone who has embraced being a work in progress. One of the phrases she lives by is, “you have to carry a big basket to bring something home,” meaning “a mind kept wide open will take something from every new experience.”

    Herminia Ibarra, a London Business School professor of organizational behavior, has concluded from her research that we learn who we are only by living, and not before. “All of the strengths-finder stuff, it gives people license to pigeonhole themselves or others in ways that just don’t take into account how much we grow and evolve and blossom and discover new things. But people want answers, so these frameworks sell. It’s a lot harder to say, ‘Well, come up with some experiments and see what happens,'” Ibarra says.

    Kodak is a good example of how claiming to be finished can hurt a company in the long run. Kodak thought they had reached the finish line with photographs. They failed to keep an open mind and look beyond their success, thus failing to see the potential of digital photography.

    Essentially, these examples serve to remind us that life is trial and error and nobody has all of the answers, no matter how smart or successful or informed they may seem. An open mind and acceptance of the fact that a non-linear life path is in fact the rule, not the exception, will open you up to a world of possibility.

    At Beyond AUM, we understand that no two advisors have the same story, we are all works in progress, and it’s important to look at the big picture rather that getting caught up in the status quo. That’s why we never automatically recommend the same cookie-cutter approach for every financial advisory firm. Instead, we create tailored plans to match the specific goals of our clients in order to increase your firm’s credibility online, build visibility for your advisors, compel leads and prospects to take action, and enhance your relationships. For a tailored plan of your own, reach out to us today.