My animal spirits, especially the balance between fear and security, almost prevented me from writing this post, but I had to speak up against the herd when I read Anthony Iannarino’s post this morning: The Animal Spirits in Your Pipeline.
I also realize that my brief article will probably not sway too many people right away, but since I have a longer time preference, I do believe that over time my lonely lobbying in defense of reason may gradually win a few people over.
(If you don’t understand the italicized references, please read Anthony’s article first, then come back. I’ll wait.)
Let me first stress that I don’t disagree with Anthony’s theme, nor most of the details. I do believe, however, that the idea that buyers make decisions emotionally and then rationalize them after the fact is not new (in fact, Greenspan has arrived at the party about 30 years too late, unfortunately for the US economy). It was new in the 1970s when Amos Tversky and Daniel Kahneman, among others, began publishing the results of their experiments, and was a much-needed antidote to the overuse of quantitative methods. We all know how Robert McNamara’s body count mentality in Vietnam worked out. Closer to our times, Greenspan’s dismissal of psychological factors distorted his own decision making and contributed to our current economic mess.
But it seems to me that the pendulum may have swung too far in the other direction. Everyone is on the bandwagon now, which is why stories are touted as a panacea for persuasive presentations, and why people like Robert Cialdini, with his cue-based influence tactics, are seen as the complete answer to persuasive communication. We’re told to sell the sizzle, not the steak, but that only works once if the steak turns out to be crappy.
All animals have animal spirits that determine their behaviors in the circumstances they find themselves in. For every animal but humans, the animal spirits are the only influence on their behaviors and “choices”. But humans are the only animals that have an additional tool to help them make those choices, and the only animals that create the circumstances they find themselves in. It’s true that emotions can affect our rationalizing, but it’s also true in the other direction: reason can affect our emotions. I’ll give you a highly personal example. When I was in my 20s, I had some chronic stomach pain, and went to various doctors to try to determine the cause. Finally, after an unpleasant procedure, the doctor told me he could not find anything physically wrong with me, and that it was probably related to stress. From that moment on, I never had a problem again.
In addition, emotions tend to wear off, but truth endures. That’s one reason that organizations have created buying processes to avoid impulsive decisions.
Moving away from danger and towards security matters a great deal, as Anthony tells us. But once we begin moving, reason can point out the best direction. Emotion moves, but reason directs.
Anthony also says, “all things being equal, relationships win”. I could not agree more. But usually all things are not equal, and reason is the best tool we have for identifying and communicating precisely what those inequalities are, and why they should matter to the person we’re trying to persuade.
My main point is that we still need both. Don’t throw out the baby just yet. If you think you can ride on animal spirits alone, just try making a presentation to a CFO without spreadsheets or ROI calculations. Or try recommending a complex piece of hardware to technical staff with pretty pictures alone.
Getting in shape for the next meeting?
When I began my work life, I never anticipated that I would have to deliver presentations. In fact, I originally chose banking as a career partly because I thought it would enable me to comfortably indulge my introverted personality. I could crunch numbers all day without having to talk to too many people, and I definitely would never have to confront my greatest fear: having to stand and deliver a presentation to a room full of people.
Fortunately for me, my father, who came of age during WW2, was a great admirer of Winston Churchill and had always stressed the value of being able to speak. So, even though I was terrified at the prospect (or maybe because of it), I accepted a friend’s invitation to attend a Toastmasters meeting. What I learned there literally changed my life. I learned that fear could be overcome, and in fact could improve performance. I learned that speaking to many was as safe as speaking to one, and most of all I learned to enjoy the feeling of having an audience’s full attention, and the thought that my words could influence their thinking and even their behavior in some way.
Since I would come to work late on Friday mornings as a result of Toastmasters attendance, word got around that I could speak to groups, and I gradually got asked to do more and more presentations, both internally and to customers and the community. These opportunities in turn increased my visibility within the bank, to the point that it was perhaps a bit unfair that some of my peers who had the same banking skills and performance suffered by comparison.
Presenting and public speaking were never part of my job description, but the skill that I developed for personal reasons turned out to have a huge influence on my career trajectory.
I’ve just finished reading Decisive: How to Make Better Choices in Life and Work
But I decided not to do that. Instead, I am going to let you make the decision totally on your own, using some of the techniques outlined in the book.
The Heaths tell us that bad decisions are all too common in business and personal decision making. 40% of senior level hires by companies don’t work out within 18 months, 83% of mergers don’t create value for shareholders, and personally we all make bad investment and relationship choices all the time.
While incomplete information is sometimes to blame, the process used for making the decision is about six times more important. To put it bluntly, our processes for deciding are usually wrong, and they cite four main villains: narrow framing, confirmation bias, short-term decision making, and overconfidence. Our brains are simply not optimally wired for making complex decisions. We can’t eliminate our biases, but we can plan for them and try to counteract them.
To counteract these villains, there are four steps we should apply that encompass a number of specific tactics to improve our outcomes. The steps are described in the acronym WRAP:
- Widen your options
- Reality-test your assumptions
- Attain distance before deciding
- Prepare to Be Wrong
Let’s apply some of their suggestions to the momentous decision: should you buy the book?
Widen your options. First, the question asked immediately above is the wrong one. Too often we turn decisions into either/or choices, which automatically shuts down the spotlight of our attention and closes out other options. The real choice is: how should I invest $14.97 and the time it will take to read the book? You could buy other books that might be more useful and/or more fun to read, or you could spend the money on a twelve-pack of Heineken and save the reading time. (Although I don’t recommend this technique just before making an important decision.) There’s no guarantee that any of the other choices will be better, but one study showed that “whether or not” decisions failed 52% of the time, compared to 32% for those where two or more alternatives were considered.
Reality-test your assumptions. When you consider whether to read a book, you might read some of the reviews on Amazon. If you’re leaning toward purchasing this book, you will note that there are 50 reviews, averaging 4-1/2 stars. There is only one 1-star review. Check it out, at least for a disconfirming opinion. I don’t agree with the reviewer (in fact, I note that he did not even finish the book), but some of his criticisms contain some truth.[1]
Another technique is to zoom out and then zoom in. Zoom out means to consider the base rate. I’m assuming if you’re considering a book on improving decision making that you hope it will improve your life in some way. In this case, I’m guessing the base rate (the percentage of people who read a book and actually make positive changes as a result) is probably quite low. But then, you zoom in and consider what factors might make you more successful than the base rate. The fact that you’re reading this suggests that you’re a person who is seriously interested in personal growth and self-improvement, so your chances of getting practical benefit from the book are probably quite good.
Attain Distance before Deciding. This suggestion goes against my own self-interest, because if you click on the link above to buy the book, I will earn about 28 cents. But, you really should not decide immediately. Put some time between the stimulus and the response and you can take the short-term emotion out of it. Another great technique is to consider whether you would recommend that your best friend buy this book if she were considering making a life-changing decision. Somehow we can think more objectively about others’ choices than about our own.
Prepare to Be Wrong. Despite following the first three steps, you can never guarantee that your decision will be the right one, so one technique you can use is taken from the world of investing. It’s called “bookending”. Rather than trying to predict what a stock’s price will be in the future, “bookend” a range from reasonable worst case to reasonable best case. Then, gauge where on that spectrum the current price lies. Closer to the left means high upside and closer to the right means high downside. For this decision, I can’t see a reasonable scenario where applying these techniques will worsen the quality of your decisions, so the downside is that you spend $15, and either don’t like or don’t apply it. The upside is that you keep your company from making a multi-billion-dollar mistake and become a hero.
Of course, some of your life’s decisions are much more important than the trivial example I’ve cited here, and that’s when a sound process for making decisions can make a real difference. There’s a lot I’ve left out, but hopefully you have enough of a flavor of the techniques in the book to make the right decision. Of course, the Catch-22 is that if you’re good at making decisions, you don’t need this book!
The truth is in here somewhere
Occasionally he stumbled over the truth, but hastily picked himself up and hurried on as if nothing had happened.
Winston Churchill
I was wrong, but at least I know why.
My guy didn’t win last night, but this article is not about politics. It’s about critical thinking, objectivity, and trusting the numbers. And trust me, I’ll relate it to sales in the end.
Like so many others, I’ve been closely following the polls over the past few weeks for a clue to the outcome. Almost all of the polls predicted Obama’s victory, but there was plenty of other “evidence” that suggested the polls were wrong, and that’s what I chose to focus on:
- Some experts said the polls were fundamentally flawed because they were based on 2008 turnout proportions, and of course everyone knew that the Democrats would not turn out in those same numbers this time around.
- Others told us how large and passionate Romney’s crowds were in the past two or three weeks, and said that would make the difference.
- Still others assured us that undecideds tend to break for the challenger.
- My own theory was that the polls are fundamentally flawed because people either don’t have home landlines anymore, and those that do use caller ID to avoid answering calls from pollsters, thereby making random samples impossible.
Of course, when I was explaining that theory to my son, who works in politics, he pointed out that if my theory were correct, it would probably mean that the polls would overstate Romney’s support, because younger people are less likely to have landlines. (He was much more objective and accurate than I was during this whole process.)
Naturally, experts on the other side had ready answers for my theories, but of course those weren’t the ones I focused on. My own confirmation bias told me that they were victims of confirmation bias. Here’s another example: just last weekend the Miami Herald, my local paper, published a poll showing Romney ahead in Florida by 6 points, and yet the same day the Wall Street Journal poll showed Obama ahead in Florida. I noted the disparity, but of course put more faith in the Herald numbers, because after all, they would know more about Florida, wouldn’t they? I suppose if it had been the other way around, I would have justified the WSJ numbers by saying they’re a much more prestigious paper.
At least when I was doing this, I was completely aware of what I was doing. When I would click on a favorable article and ignore another, I knew I was indulging my confirmation bias. I knew that that I was not being completely objective, but I hoped that this time I was wrong. I was a “prisoner of hope”, but at least I knew it. In some ways, I was using the entire process as an experiment, and the results are pretty conclusive: trust the numbers, not your gut.
Here’s where all this relates to sales. Mike Weinberg, in his book New Sales.Simplified., cautions salespeople against becoming prisoners of hope. Hope is a great motivator but a poor crutch. Salespeople become prisoners of hope when they fail to prospect, because they hope something will fall into their laps. The funnel numbers may be bleak, but instead of doing the work to fill the funnel with qualified prospects, they instead fall back on hope as their principal strategy. Something will come up, they say; it always does. Except when it doesn’t.
Trust the numbers, especially when you don’t like what they’re telling you.
