Embracing friction

Silicon Valley Bank, a regional bank in the US, collapsed earlier this month, precipitating a crisis of confidence in the global banking sector.

A bank run simply works as follows: Depositors have concerns that a bank may become insolvent, and a large number of depositors withdraw their money. This can lead to a further loss of confidence in the bank, triggering more withdrawals and potentially causing the bank to fail. A self-fulfilling prophecy.

In the past a bank run would involve customers anxiously queuing for hours outside branches. However in today’s world, it only requires the click of a button to instantly move funds from a bank. It is clear from what we’ve witnessed with SVB, that these are now exacerbated by instant news (as well the spreading of rumours and panic on social media) and the ability to move funds instantly.

If only people had been more composed and patient, bank runs may have been prevented. But this is not a post about the psychology of bank runs. It is about friction.

Instant isn’t always better

In modern society, speed is often seen as a virtue. From fast food to fast internet, we're conditioned to believe that faster is better. This is especially true when it comes to decision-making, when we're often pressured to make fast choices.

As we’ll all know from our own experiences, quick decisions are not always better. Even a momentary pause could have led to a better outcome.

The value of introducing friction

One of the most common examples of introducing friction into decision-making is the advice to "sleep on it." Taking time to reflect and deliberate on a decision can help us avoid hasty judgments and consider alternative options.

Introducing friction allows us to gather more information and consider a wider range of options. When we rush to make a decision, we may not have all the information we need or may overlook important factors that could affect the outcome. Taking time to reflect can help us gather more data and consider a wider range of perspectives.

Introducing friction can help us avoid biases and errors in judgment. When we make decisions quickly, we're more likely to rely on heuristics or mental shortcuts that can lead to biased or flawed thinking. Taking time to reflect can help us identify and correct for these biases, leading to more rational and accurate decisions.

Implementation idea

Reflect on whether you have the right balance between speed of decision-making and time for thoughtful reflection. Consider introducing intentional frictions in to your decision-making processes where slower decisions could benefit you.

Best, Alex Joshi.

On my bedside table:

• Podcast: Diary of a CEO - Robert Greene: How to seduce anyone, build confidence & become powerful (link)

• App: Blinkist - I wanted to revisit the key ideas from some non-fiction books I’ve previously read and tried out Blinkist, which summarises books into bitesized ‘blinks’ that allow you to ‘read’ a book in ~15 mins. Verdict: Good for quick memory refresh, but could also be good for getting a sense of key idea in a book before then reading it (I did this with Zero to One by Peter Thiel which is on my to-read list), or even just after reading a book to consolidate key ideas. (link)

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