The Architecture of Options

Malcolm McLean, an ambitious young truck driver from North Carolina, spent hours watching the cargo of his truck getting loaded onto a ship. Armies of longshoremen spent days manually packing sacks of coffee, barrels of oil and crates of fabric into the dark hulls of ships like a chaotic game of Tetris.

The whole industry at the time was focused on one question. How do we make the men pack faster? Malcolm McLean asked a different one. What if the ship and the truck are not two different things?

In 1955, he sold his highly profitable trucking company, by then the fifth-largest fleet in America, and used the money to acquire a small steamship company. On April 26, 1956, his converted tanker, the SS Ideal-X, carried the first 58 metal containers from New Jersey to Texas, dropping the cost of loading cargo from $5.83 per ton to just $0.16 per ton (Levinson, 2006).

The wall limiting your thinking

When we face a problem, our brains often just accept the boundaries of the situation as fixed. We treat the rules of the market, the habits of our industry or current technical limitations as solid walls.

Psychologists call this "functional fixedness", a cognitive bias that limits us to using an object or a concept only in the way it is traditionally used (Duncker, 1945). We focus entirely on how to maneuver within the grid we’ve been given. You get handed a nice wooden chessboard and immediately start to play chess. But the chessboard in its essence is just a board and there are many things you can do with it. You could play Othello. ​Also called Reversi. The two players take turns placing double-sided discs on an 8x8 grid to trap and flip their opponent's pieces, aiming to own the majority of the board by the final move. Or why not use it as a cutting board? But we see the board and immediately think of chess.

One board, three uses

The board is the same in all three. Only the use we hand it changes and the last one stops treating the squares as rules.

Hand a chessboard to a five-year-old and it becomes a roof, a tray, a bridge for toy cars. In "Immunity to functional fixedness in young children," German and Defeyter (2000) pointed out that five-year-olds showed far less functional fixedness than six- and seven-year-olds, who had already had more time learning what things are "for". In other words, we learn the utility of given objects and then reduce them to that use, which can make the expert in a field the most fixed person in the room.

If expertise fixes, does distance loosen it? According to a study by Lars Bo Jeppesen and Karim Lakhani, it does. They studied 166 scientific problems that companies had failed to solve in their own research labs and then posted online, open to anyone with an idea. More than twelve thousand scientists worked on them. The further a solver’s own field lay from the problem, the more likely they were to crack it (Jeppesen & Lakhani, 2010).

But then there is a profession whose specific training allows its members to look beyond the walls and focus on what is not there.

The presence of absence

What is an architect actually creating when they plan a house? Walls, floors and ceilings are the obvious answer, since a house is built out of them. Great architects would say emptiness, as we don't live in walls, floors or ceilings but in the space they happen to enclose. A room is only a room if there are walls, but the room is exactly everything except the walls.

Walls and room

The same plan twice. We build the walls on the left but we live in the shape on the right.

But the idea itself is far older. Two thousand years ago, the Chinese philosopher Laozi described this duality.

Clay is fashioned into vessels; but it is on their empty hollowness, that their use depends.

Translated by James Legge (1891)

This ancient duality is also mirrored in the Japanese concept of Ma (間), which translates roughly to "negative space", "gap" or "pause". The character itself shows light falling through a gateway. The outer part 門 is a gate or door, the inner part 日 is the sun and together they form Ma 間. Ma treats that emptiness as an active, intentional force. It is not the absence of something. It is the presence of absence.

As a house cannot function without its void, intellectual and structural problems cannot be truly understood by looking only at their visible components. Seeing more of the options that already exist is one skillOpportunity QuotientHow high is your Opportunity Quotient?Read the essay↗, building the ones that nobody thought to put on the table yet is another.

Generic parts technique

Anthony McCaffrey taught people to describe every object in a problem by its parts instead of its use. For each part they asked two questions. Can it be broken down further? Does its name already say what it is for? A candle stops being a candle and becomes wax and a wick. But “wick” still says that the fabric draws up moisture, in this case wax for burning. Call it a string and you conceptually allow it to tie things. People trained this way solved 67 percent more of the problems that hinge on an unusual use (McCaffrey, 2012).

Options can be taken apart the same way. To everyone on the docks a truck was a truck. Take it apart and it is an engine, a set of wheels and a box. McLean’s first plan was to drive whole trailers onto ships, wheels and all. Then he saw that only one part needed to cross the sea. The wheels and the engine could stay on the pier. The box could go alone.

A struggling department store can just look like a business that is losing money. But taken apart, it is a brand, a customer list and the buildings it owns. Priced one by one, the parts can be worth more than the company, making it a potentially interesting asset play for investors.

Inverse option engineering

Inverse option engineering is the work of building the option that is not on the table. It runs the other way from ordinary choosing. Instead of starting with the options and ending with a pick, it starts with what is missing and ends with an option. Instead of asking which of these should I pick, you ask which options would have to exist for this to go well.

Working back from the outcome

None of the options in hand reaches the outcome. That is the moment to stop choosing from the list and derive the option the outcome implies.

Seen from the end, McLean’s problem looks different. The goal was cargo that nobody had to touch between the factory and the buyer. Written out like that, the answer is already inside it. Whatever carries the goods has to be packed once, ride on a truck, cross on a ship and never be opened on the way.

Amazon has made this a rule. Before a new product is approved, the team writes the press release announcing its launch (Bryar & Carr, 2021). The outcome comes first. The product is derived from it. If the press release is hard to write, the product is probably not worth building.

Inverse option engineering turns you into an architect. As a good one, you focus on the negative space, just as Dmitri Mendeleev did. When he arranged the sixty or so known elements by weight and behavior in 1869, he came up with a structure into which he could fit the known elements. Some before him had focused on arranging the elements into a neat block, but he was willing to accept holes in it. He left the cells empty and described what should sit there, its weight, its density and how it would bond (Scerri, 2007). Six years later a French chemist isolated gallium. Mendeleev read the reported density and wrote back that it had been measured wrong. It had.

Putting effort to the right place

If you make a great decision from a set of three bad options, nothing about the option you choose is great.

A decision can only be as good as the best option on the table.

Therefore the best you can do is settled the moment you accept what counts as an option.

This is where most of our effort goes to the wrong place. We study how to weigh, compare and choose, as if the list were a given. But the wiser move might be to spend more time as the architect and less as the tenant.