When it comes to business, momentum and flow are real
Contrary to popular myth, there is no such thing as the “hot hand,” even if your lying eyes tell you differently. Don’t argue, just go read the NBA stats. That fantasy ranks right up there with the gambler’s fallacy.
But there is such a thing as “flow,” and the guy who developed this theory
— Mihaly Csikszentmihalyi — just died at 87 years old. The idea of the hot hand, momentum theory and flow are all circling the same issue — that state when you have ultimate focus and are in the zone and can actually see the seams on the baseball coming at you at 98 miles per hour.
Csikszentmihalyi talks about flow as “being completely involved in an activity for its own sake, when the ego simply falls away.” The flow “is an optimal state of intrinsic motivation,” where the person is fully immersed in what they are doing. And Csikszentmihalyi goes on to prove that when you are in that state, you are also additionally the happiest.
Derek Thompson recently wrote an article for The Atlantic about how and when you can get on a “hot streak.” This zone occurs when “trial and error are followed immediately by periods of deliberate focus.” He says you need to “explore and then exploit.”
I am noodling on this area of behavior because I want to use it to analyze deals. In simple terms, I am looking for teams that are about to enter a hot streak with high focus and flow.
Recently, I looked at a biotech. It had the wrong CEO, an advisory board of 17 big shots and now nearly out of money. I was puzzled because this team had impeccable credentials from their previous
lives. How did this happen that they got stuck? No flow.
The challenge for the founder/entrepreneur is to create the momentum that propels the company past simply incremental changes and instead as Thompson says, “expands the scope of our intelligence,” something that will give you a shot at the unicorn. So, what is the best preparation to find the flow?
The Wall Street Journal recently asked, “Should aspiring entrepreneurs major in business?” John Sullivan, professor at San Francisco State University, takes the position that studying business is the right track for the entrepreneur. “Learning skills by trial and error is painful and expensive.” (I got my MBA on the streets of New York, but it was not an accredited program).
Sullivan says, “business skills are complex and difficult.” Still, a business background helps to raise capital, you learn to pitch, you
work in teams. But, on the other hand, lots of business professors have never started anything other than their car, and their teaching can be too theoretical. I think you have to get your hands dirty.
On the other side of that coin, Henry Doss, English professor at the University of North Carolina, argues that a liberal arts education is critical preparation for many things and gives students “insight into the human condition.” Maybe Zuck should have taken one of his courses.
Doss goes further and points out that liberal arts “will help the entrepreneur understand not just numbers, but also the implications of the data.” He argues for the importance of narrative and storytelling. There is no question that the early bets by investors are mostly centered on the story and their belief in the people and the team.
The art of the deal is also the art of the pitch. As Mark Twain said, “Never let the truth get in the way of a good story.” I suspect Ms. Elizabeth Holmes may have taken one of Twain’s classes.
When Doss applied for his first job at a bank, he confessed to his boss that he knew nothing about banking. The banker said, “I don’t care. I can teach you banking in a week, but I can’t teach you to think, speak and write.”
In the end, of course, “the psychology of optimal experience” is hard to fully illuminate, but that is why art and architecture are also taught at MIT. So, I have the perfect class for a university to offer — How Leonardo da Vinci Used Flow to Create the Mona Lisa.
For the record, my college degree was in English.