Category: Excerpts

💎 Beware the salesperson’s incentives (are they aligned to yours?)

Only 1.5 percent of the purchase price goes directly into your agent’s pocket.

So on the sale of your $300,000 house, her personal take of the $18,000 commission is $4,500… Not bad, you say. But what if the house was actually worth more than $300,000? What if, with a little more effort and patience and a few more newspaper ads, she could have sold it for $310,000? After the commission, that puts an additional $9,400 in your pocket. But the agent’s additional share — her personal 1.5 percent of the extra $10,000 — is a mere $150…

It turns out that a real-estate agent keeps her own home on the market an average of ten days longer and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she encourages you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and to make them fast. Why not? Her share of a better offer — $150 — is too puny an incentive to encourage her to do otherwise.

Excerpt from: Super Thinking: The Big Book of Mental Models by Gabriel Weinberg and Lauren McCann

💎 On the power of the media context to shape the message (it matters where you see it)

Information is not processed neutrally. We are swayed by contextual cues.

Jeremy Bullmore, former Creative Director and Chairman of JWT in London, notes that this affects not just headlines, but advertising too:

A small ad reading “Ex-governess seeks occasional evening work” would go largely unremarked in the chaste personal columns of ‘The Lady’. Exactly the same words in the window of a King’s Cross newsagent would prompt different expectations.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On how we impose a stronger burden of truth on ideas we don’t want to believe (disconfirmation bias)

When our bathroom scale delivers bad news, we hop off and then on again, just to make sure we didn’t misread the display or put too much pressure on one foot. When our scale delivers good news, we smile and head for the shower. By uncritically accepting evidence when it pleases us, and insisting on more when it doesn’t, we subtly tip the scales in our favor.

Excerpt from: Super Thinking: The Big Book of Mental Models by Gabriel Weinberg and Lauren McCann

💎 On the importance of finding the real, and sometimes hidden, reason for someone purchasing your product (a tale of milkshakes)

You might assume that a milkshake’s job is to be a special treat to cap off a meal. While it is true that many parents offer shakes as an after-dinner family treat, this restaurant learned that almost half of their shake customers were using them for a different job — to make their long morning commutes more interesting. People felt their trips were more enjoyable as they sipped milkshakes while moving through traffic.

Doing two jobs at once sounds great, but that usually means at least one job isn’t being done particularly well. In this case, parents didn’t like how long it took their kids to drink the shakes. Yet that was one of the key features for the commuters.

The restaurant chain realized they needed two different products to do the two different jobs well. They decided to further improve the shake for the commuters by making it even thicker, adding more chunks and moving the shake machine to the front of the stores for the fast on-the-go service that commuters wanted. They then needed to market a wholly different dessert product to kids and their parents.

When you truly understand what job people are really truing to get done by using your product, then you can focus your efforts on meeting that need.

Excerpt from: Super Thinking: The Big Book of Mental Models by Gabriel Weinberg and Lauren McCann

💎 On the power of framing a (subway) performance

Bell’s subway performance started with Bach’s Sonatas and Partitas for Unaccompanied Violin, on of the most challenging piece ever composed for the instrument. Over the next forty-three minutes the concert continued, but on that January morning there was no thunderous applause. There were no cameras flashing. Here was one of the best musicians in the world playing in the subway station for free, but no one seemed to care. Of the 1,097 people who walked by, hardly anyone stopped. One man listened for a few minutes, a couple of kids stared and one woman, who happened to recognise the violinist gaped in disbelief.

Except from: Sway: The Irresistible Pull of Irrational Behaviour bu Ori Brafman and Rom Brafman

💎 On the power of being on the (bestseller) list (social proof)

A 2007 study by Sorensen investigated the impact of appearing in the NY Times bestseller list. He tracked the success of books that should have been included on the basis of their actual sales, but — because of time lags an accidental omissions — weren’t, and compared them to this that did make it on to the list. He found a dramatic effect: just being on the list led to an increase in sales of 13-14 per cent on average, and a 57 per cent increase in sales for first-time authors.

Excerpt from: Hello World: How to be Human in the Age of the Machine by Hannah Fry

💎 On the dangers of focusing on short-term efficiency (and the waggle dance)

There is a parallel in the behaviour of bees, which do not make the most of the system they have evolved to collect nectar and pollen. Although they have an efficient way of communicating about the direction of reliable food sources, the waggle dance, a significant proportion of the hive seems to ignore it altogether and journeys off at random. In the short term, the hive would be better off if all bees slavishly followed the waggle dance, and for a time this random behaviour baffled scientists, who wondered why 20 million years of bee evolution had not enforced a greater level of behavioural compliance. However, what they discovered was fascinating: with out these rogue bees, the hive would get stuck in what complexity theorists call ‘a local maximum’; they would be so efficient at collection food from known sources that, once these existing sources of food dried up, they wouldn’t know where to go next and the hive would starve to death. So the rogue bees are, in a sense, they hive’s research and development function, and their inefficiency pays off handsomely when they discover afresh source of food. It is precisely because they do not concentrate exclusively on short-term efficiency that bees have survived so many million years.

If you optimise something in one direction, you may be creating a weakness somewhere else.

Excerpt from: Alchemy: The Surprising Power of Ideas That Don’t Make Sense by Rory Sutherland

💎 On reframing price comparisons in competitive markets (low-cost travel)

Transavia’s brilliant idea was to create a snack packaging that doubled as an aeroplane ticket to a low-cost destination. A €35 packet of crisps would buy you a one-way ticket from France to Barcelona, a €40 bag of gummy bears would take you to Lisbon, or a €40 cereal bar would get you to Dublin. Simply walk into your local Carrefour supermarket, buy the snack, and then enter the code found inside the packaging to redeem your ticket and choose your outbound flight.

Excerpt from: The Contagious Commandments: Ten Steps to Brand Bravery by Paul Kemp-Robertson and Chris Barth

💎 Beware of financial incentives crowding out other (good) motivations

In fact, the fun in gamification may crowd out important motives by changing how people see the experience entirely. In the late 1990s, economists Uri Gneezy and Aldo Rustichini tried to discourage parents from showing up late to collect their children from ten Israeli day care centers. The rational economic approach is to punish people when they’re doing the wrong thing, so some of the day care centers began fining parents who showed up late. At the end of each month, their day care bills reflected these fines — an attempt to dissuade them from showing up late the following month. In fact, the fines had the opposite effect. Parents at the day cate centers with fines showed up late more often than did parents at the day care center without fines. The problem, Gneezy and Rusitchini explained, was that the fines crowded out the motive to do the right thing. Parents felt bad coming late — until coming late became a matter of money. Then, instead of feeling bad, they saw coming late as an economic decision. The intrinsic motive to do good — to show up on time — was crowded out by the extrinsic motive to show up late in exchange for the fair price.

Excerpt from: Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked by Adam Alter

💎 On reframing price comparisons (Starbucks Short, Tall, Grande, and Venti)

When Howard Shultz created Starbucks, he was as intuitive  businessman as Salvador Assael. He worked diligently to separate Starbucks from other coffee shops, not through price but through ambiance. Accordingly, he designed Starbucks from the very beginning to feel like a continental coffeehouse.

The early shops were fragrant with the small of roasted beans (and better-quality roasted beans than those at Dunkin’ Donuts). They sold fancy French coffee presses. The showcases presented alluring snacks — almond croissants, biscotti, raspberry custard pastries, and others. Whereas Dunkin’ Donuts had small, medium, and large coffees. Starbucks offered Short, Tall, Grande, and Venti, as well as drinks with high-pedigree names like Caffe Americano, Caffe Misto, Macchiato, and Frappuccino. Starbucks did everything in its power, in other words, to make the experience feel different — so different that we would not use the prices at Dunkin’ Donuts as an anchor, but instead would be open to the new anchor that Starbucks was preparing for us. And that, to a great extent, is how Starbucks succeeded.

Excerpt from: Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely

💎 On the power of simplicity (in aviation and beyond)

The French aviator and author Antoine de Saint-Exupery once offered a definition of engineering elegance: “A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away.” A designer of simple ideas should aspire to the same goal: knowing how much can be wrung out of an idea before it begins to lose its essence.

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

 

💎 On the power of admitting flaws (in legal trials)

Evidence for the success of this strategy has been found outside the domain of advertising as well. Consider an example of its use in law: in a study conducted by behavioural scientist Kip Williams and colleagues, when jurors heard a lawyer mention a weakness in his own case before the opposing attorney mentioned it, they rated him as more trustworthy and were more favourable to his overall case in their verdicts because of that perceived honesty. Additionally, anyone who is considering a career change may be interested to learn that a recruitment study found that applicants whose curriculum vitae contained only wholly positive references were invited to fewer interviews than those whose curriculum vitae first highlighted a weakness or slight limitation before going on to describe positive characteristics.

Excerpt from: Yes! 50 Secrets from the Science of Persuasion by Noah Goldstein, Steve Martin and Robert Cialdini

💎 On the dangers of relentlessly seeking cost-savings and efficiency (the doorman fallacy)

Business, technology and, to a great extent, government have spent the last several decades engaged in an unrelenting quest for measurable gains in efficiency. However, what they have never asked, is whether people like efficiency as much as economic theory believes they do. The ‘doorman fallacy’, as I call it, is what happens when your strategy becomes synonymous with cost-saving and efficiency; first you define a hotel doorman’s role as ‘opening the door’, then you replace his role with an automatic door-opening mechanism.

The problem arises because opening the door is only the notional role of a doorman; his other, less definable sources of value lie in a multiplicity of other functions, in addition to door-opening: taxi-hailing, security, vagrant discouragement, customer recognition, as well as in signalling the status of the hotel. The doorman may actually increase what you can charge for a night’s stay in your hotel.

When every function of a business is looked at from the same narrow economic standpoint, the same game is applied endlessly. Define something narrowly, automate or streamline it — or remove it entirely — then regard the savings as profit.

Excerpt from: Alchemy: The Surprising Power of Ideas That Don’t Make Sense by Rory Sutherland

💎 On decision-making quality decreasing as the stakes rise (small versus large purchases)

After my first lecture, Binmore offered a version of the “low stakes” critique. He said that if he were running a supermarket, he would want to consult my research because, for inexpensive purchases, the things I studied might possibly matter. But if he were running an automobile dealership, my research would be of little relevance. At high stakes people would get stuff right.

The next day I presented what I now call the “Binmore continuum” in his honor. I wrote a list of products on the blackboard that varied from left to right based on frequency of purchase. On the left I started with cafeteria lunch (daily), then milk and bread (twice a week), and so forth up to sweaters, cars, and homes, career choices, and spouses (no more than two or three per lifetime for most of us). Notice the trend. We do small stuff often enough to learn to get it right, but when it comes to choosing a home, a mortgage , or a job, we don’t get much practise or opportunities to learn. And when it comes to saving for retirement, barring reincarnations we do that exactly once. So Binmore had it backward. Because learning takes practice, we are more likely to get things right at small stakes than at large stakes. This means critics have to decide which argument they want to apply. If learning is crucial, then as the stakes go up, decision-making quality is likely to go down.

Excerpt from: Misbehaving: The Making of Behavioural Economics by Richard H Thaler

💎 On the folly of hunting for a guaranteed formula for business success (because one does not exist)

Hunting for a guaranteed formula for success is a fool’s errand. As Phil Rosenzweig, Professor of Strategy and International Business at IMD wrote in The Halo Effect:

“Anyone who claims to have found laws of business physics either understands little about business, little about physics or little about both.”

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On how concrete imagery is more memorable than abstractions (Iliad and the Odyssey)

Yale researcher Eric Havelock studies tales that have been passed down by word of mouth, such as the Iliad and the Odyssey. He notes that these tales are charachterized by lots of concrete actions, with few abstractions. Why? The ancient Greeks certainty had no problem with abstraction — this was the society that produced Plato and Aristotle, after all. Havelock believes that the stories evolved away from abstraction over time. When they were passed along from generation to generation, the more memorable concrete details survived and the abstractions evaporated.

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

💎 On unpicking complex problems (using Post-it notes)

I visited a very high-powered consultant friend with hundreds of degrees and a CV to die for.

Yet his desk was littered with Post-it notes.

I asked him what he was doing. He said he was solving a problem by writing down the key themes on separate notes, then simply grouping and rearranging them until he saw a pattern emerge.

My first reaction was that this was a hopelessly analogue and ‘scattergun’ way of working — until I had a go myself.

I’ve never looked back.

Try it.

Excerpt from: Now Try Something Weirder: How to keep having great ideas and survive in the creative business by Michael Johnson

💎 On letting let people figure things out for themselves, rather than spelling it out (try before you buy ideas)

Sticky ideas have to carry their own credentials. We need ways to help people test our ideas for themselves — a “try before you buy” philosophy for the world of ideas. When we’re trying to build a case for something, most of us instinctively grasp for hard numbers. But in many cases this is exactly the wrong approach. In the sole U.S presidential debate in 1980 between Ronald Reagan and Jimmy Carter, Reagan could have cited innumerable statistics demonstrating the sluggishness of the economy. Instead, he asked a simple question that allowed voters to test for themselves: “Before you vote, ask yourself if you are better off today than you were four years ago.”

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

💎 On our preference for positional success over absolute success (comparing ourselves to others)

A few year ago, students at Harvard University were asked to make a seemingly straightforward choice: which would they prefer, a job where they made $50,000 a year (option A) or one where they made $100,000 a year (option B)?

Seems like a no-brainer, right? Everyone should take option B. But there was one catch. In option A, the students would get paid twice as much as others, who would only get $25,000. In option B, they would get paid half as much as others, who would get $200,000. So option B would make the students more money overall, but they would be doing worse than others around them.

What did the majority of people choose?

Option A. They preferred to do better than others, even if it meant getting less for themselves. They chose the option that was worse in absolute terms but better in relative terms.

Excerpt from: Contagious: Why Things Catch On by Jonah Berger

💎 On the persuasive power of vivid details (even when they’re not central to the argument)

In 1986, Jonathan Shedler and Melvin Manis, researchers at the University of Michigan, created an experiment to simulate a trial. Subjects were asked to play the role of jurors and were given the transcript of a (fictitious) trial to read. The jurors were asked to assess the fitness of a mother, Mrs. Johnson, and to decide whether her seven-year-old son should remain in her care.

The transcript was constructed to be closely balanced: There were eight arguments against Mrs. Johnson and eight arguments for Mrs. Johnson. All the jurors heard the same arguments. The only difference was the level of detail in those arguments. In one experimental group, all the arguments against her had no extra details; they were pallid by comparison. The other group heard the opposite combination.

As an example, one argument in Mrs. Johnson’s favor said: “Mrs. Johnson sees to it that her child washes and brushes his teeth before bedtime.” In the vivid form, the argument added a detail: “He uses a Star Wars toothbrush that looks like Darth Vader.”

An argument against Mrs. Johnson was: “The child went to school with a badly scraped arm which Mrs. Johnson had not cleaned or attended to. The school nurse had to clean the scrape.” The vivid form added the detail that, as the nurse was cleaning the scrape, she spilled Mercurochrome on herself, staining her uniform red.

The researchers carefully tested the arguments with and without vivid details to ensure that they had the same perceived importance — the details were designed to be irrelevant to the judgment of Mrs. Johnson’s worthiness. It mattered that Mrs. Johnson didn’t attend to the scarped arm; it didn’t matter that the nurse’s uniform got stained in the process.

But even though the details shouldn’t have mattered, they did. Jurors who heard the favorable arguments with vivid details judged Mrs. Johnson to be a more suitable parent (5.8 out of 10) than did jurors who heard the unfavorable arguments with vivid details (4.3 out of 10). The details has a big impact.

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

💎 On how to have good ideas (throw away the bad ones)

The American writer and scientist Linus Pauling famously said: ‘The best way to have good ideas is to have lots of ideas and throw away the bad ones.’ He was right. Stop staring at a blank screen, waiting for a ‘Eureka!’ moment. Start scribbling. Stick thing on the wall. Create stuff. Share it with others. It’s amazing how often just talking about your ideas leads to new, better ones.

Excerpt from: Now Try Something Weirder: How to keep having great ideas and survive in the creative business by Michael Johnson

💎 On how contextualising statistics in more everyday terms can make them more tangible (compelling)

Contrast the following two statements:

  1. Scientists recently computed an important physical constraint to an extraordinary accuracy. To put the accuracy in perspective, imagine throwing the rock from the sun to the earth and hitting the target within one third of a mile if dead center.
  2. Scientists recently computed an important physical constraint to an extraordinary accuracy. To put the accuracy in perspective, imagine throwing a rock from New York to Los Angeles and hitting the target within two thirds of an inch of dead center.

Which statement seems more accurate?

As you may have guessed, the accuracy levels in both questions are exactly the same, but when different groups evaluated the two statements, 58 percent of respondents ranked the statistic about the sun to the earth as “very impressive.” That jumped to 83 percent for the statistic about New York to Los Angeles. We have no human experience, no intuition, about the distance between the sun and the earth, The distance from New York to Los Angeles is much more tangible. (Though, frankly, it’s still far from tangible. The problem is that if you make the distance more tangible — like a football field — then the accuracy becomes intangible. “Throwing, a rock the distance of a football field to an accuracy of 3.4 microns” doesn’t help.)

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath

💎 On avoiding pricing that’s based on time spent (it’s about the value of an idea)

There are countless ways to price a project.

Thinking about how long it will take and adding up the days is a start. But really it’s about the value of an idea, not the time spent. In a famous Victorian court case, John Ruskin taunted the artist James Abbott McNeill Whistler that a painting that had taken just two days to make was not ‘worth’ the fee of 200 guineas. The painter responded: “I ask it for the knowledge I have gained in the work of a lifetime.”

Excerpt from: Now Try Something Weirder: How to keep having great ideas and survive in the creative business by Michael Johnson

💎 On the human desire to meddle ever so slightly (an old presentation trick)

This is an old presentation trick, but it’s good.

It was started by an advertising agency that would produce carefully worked-out presentation concepts, but always include a blue duck somewhere in the visual. When it came to the feedback, clients would say: “We love it, apart from just one thing — can you take the duck out?”

The creatives would sign a little, make a brief but lacklustre defence of their ultramarine mascot, then agree to the change — knowing everything else was going through. And they used this trick for years.

It’s a simple bit of psychology, really, reflecting the human desire to meddle ever so slightly. The clients would feel they had made a crucial intervention, little knowing that they had been deceived into approving everything else.

Excerpt from: Now Try Something Weirder: How to keep having great ideas and survive in the creative business by Michael Johnson

💎 On P-hacking leading to the most ridiculous conclusions (the emotions of dead salmon)

A classic demonstration was an experiment carried out by reputable researchers in 2009 which involved showing a subject a series of photographs of humans expressing different emotions, and carrying out brain imaging (fMRI) to see which regions of the subject’s brain showed a significant response, taking P < 0.001.

The twist was that the ‘subject’ was a 41b Atlantic salmon, which ‘was not alive at the time of scanning’. Out of a total of 8,064 sites in the brain of this large dead fish, 16 showed a statistically significant response to the photographs. Rather than concluding the dead salmon had miraculous skills, the team correctly identified the problem of multiple testing – over 8,000 significance tests are bound to lead to falsepositive results. Even using a stringent criterion of P < 0.001, we would expect 8 significant results by chance alone.

Excerpt from: The Art of Statistics: Learning from Data by David Spiegelhalter

💎 On staying within your circle of competence (when not to bet)

In his far from mediocre book Risk Intelligence, Dylan Evans describes a professional backgammon player by the name of J.P. “He would make a few deliberate mistakes to see how well his opponent would exploit them. If the other guy played well, J.P. would stop playing. That way, he wouldn’t throw good money after bad. In other words, J.P. know something that most gamblers don’t: he knew when not to bet.” He knew which opponents would force him out of his circle of competence, and he learned to avoid them.

Excerpt from: The Art of the Good Life: Clear Thinking for Business and a Better Life by Rolf Dobelli

💎 On how too much data can make us overconfident in our predictions (rather than boost their accuracy)

The problem of more data was investigated by Paul Slovic, Professor of Psychology at the University of Oregon. He ran an experiment with professional horseracing handicap setters in which they were given a list of 88 variables that were useful in predicting a horse’s performance. The participants then had to predict the outcome of the race and their confidence in their prediction. They repeated these tasks with access to different levels of data: either 5, 10, 20, 30 or 40 of the variables.

The results were illuminating. Accuracy was the same regardless of the number of variables used. However, overconfidence grew as more data was harnessed. Experts overestimated the importance of factors that had a limited value. It was only when five data points were used that accuracy and confidence were well calibrated.

Marketers face a similar set of problems. They have access to more data than ever before and many believe that because the information exists they should use it. The Slovic experiment suggests otherwise. We shouldn’t harness data just because we can. Instead, as much time should be spent choosing which data sets to ignore as which to use.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 Having an idea isn’t enough, you’ve got to persuade others to act (an extreme example)

One morning in 1984 Barry Marshall skipped breakfast and asked his colleagues to meet him in the lab. While they watched in horror, he chugged a glass filled with about a billion H. pylori. It tasted like swamp water”, he said.

Within a few days, Marshall was experiencing pain, nauseam and vomiting — the classic symptoms of gastritis, the early stage of an ulcer. Using an endoscope, his colleagues found that his stomach lining, previously pink and healthy, was now red an inflamed. Like a magician, Marshal then cured himself with a course of antibiotics and bismuth (the active ingredient in Pepto-Bismol).

Even after this dramatic demonstration, the battle wasn’t over. Other scientists quibbled with the demonstration. Marshall had cued himself before he developed a full-blown ulcer, they argued, so maybe he had just generated ulcer symptoms rather than a genuine ulcer. But Marshall’s demonstration gave a second wind to supporters of the bacteria theory, and subsequent research amassed more and more evidence in his favor.

In 1994, ten years later, the National Institutes of Health finally endorsed the idea that antibiotics were the preferred treatment for ulcers.

Excerpt from: Made to Stick: Why some ideas take hold and others come unstuck by Chip Heath and Dan Heath