(Note: I use the options industry as an example here but stick with me, the message is broadly applicable.)
The options industry has always had a problem. People don’t understand options. The definition for the simplest option position, a long call, is confusing. It is the right to buy an underlying security at or before a specified time at a specified price. There are five inputs into option pricing which are stock price, strike price, time to expiration, interest rate/dividend, and volatility. Volatility is a measure of fluctuation of the price of the underlying security...except when it's not… Your eyes have glazed over already and I hope I haven’t lost you entirely.
For decades the industry has attempted to combat this problem by providing additional education. The Options Industry Council was formed for the sole purpose of educating the public. Cboe Global Markets has The Options Institute. TastyTrade offers education materials. Investopedia attempts to explain options. Even with all of this education available, even my finance professor in graduate school had a fundamental misunderstanding of options. What is the industry doing wrong? They are solving the wrong problem.
The way the industry has been solving the problem is the equivalent of teaching children Latin so they can read Newton’s Principia to learn Physics. There is a simpler way. Translate it for them. I had this realization when talking to my friend Alex Griffiths at OptionsAI. Options AI gives you the ability to choose between stock, options, and spreads, all from one chart. Set a price target and find the trade that’s right for you. That’s it. You don’t need to understand the Black Scholes pricing model or even learn to read complicated options chains. They have translated the Latin for you. It’s genius.
This struck me as particularly insightful in light of conversations I have been having recently about onboarding new employees. Teaching new team members processes and procedures and how to use internal systems seems to be the most difficult task. This is the perfect opportunity to evaluate if you are trying to teach new employees Latin to understand Physics or translating it for them. Rather than making the training more comprehensive, can you make the subject easier to understand?
Tactical application: How can you apply this? Find your newest hire and pick their brain about the training. What was the most difficult part to comprehend? What did they find the most complex? Then expand this to the larger organization. What is the most difficult/complex part of their job? Do they have any suggestions on ways to make anything simpler/easier?
Sometimes it is easier for an outside party to have these discussions because they don’t have any “sacred cows” and can see where things are being done a certain way “because they have always been done that way.” Consider contracting with someone external to review your onboarding and do these interviews for you. (I am, of course, available to have a discussion about this or anything else. Email me at len@lenmusielak.com or make an appointment at lenmusielak.com/meetlen.)