Beware of financial incentives crowding out other 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 ecomomic 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

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

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

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 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. Tje ‘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 the mistake of believing findings from behavioural science are only relevant to trivial 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

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

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 Plate 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

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

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

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 read.

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

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 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 early 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

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

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 staying within your circle of competence

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

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

On the importance of successes and failures

Other people conjecture based on case studies and anecdotes. Because so many of the most popular YouTube videos are either funny or cute — involving babies or kittens — you commonly hear that humor or cuteness is a key ingredient for virality.

But these “theories” ignore the fact that many funny or cute videos never take off. Sure, some cat clips get millions of views, but those are the outliers, not the norm. Most get less than a few dozen.

You may as well observe that Bill Clinton, Bill Gates, and Bill Cosby are all famous and conclude that changing your name to Bill is the route to fame and fortune. Although the initial observation is correct, the conclusion is patently ludicrous. By merely looking at a handful of viral hits, people miss the fact that many of those features also exist in content that failed to attract any audience whatsoever. To fully understand what causes people to share things, you have to look at both successes and failures. And whether, more often than not, certain characteristics are linked to success.

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

On giving people too much choice

Another study, conducted by Shafir and a colleague, Donald Redelmeier, demonstrates that paralysis can also be caused by choice. Imagine, for example, that you are in college and you face the following choice one evening. What would you do?

  1. Attend a lecture by an author you admire who is visiting just for the evening, or
  2. Go to the library and study.

Studying doesn’t look so attractive compared with a once in a life-time lecture. When this choice was given to actual college students only 21 percent decided to study.

Suppose, instead, you had been given three choices:

  1. Attend the lecture.
  2. Go to the library and study.
  3. Watch a foreign film that you’ve been wanting to see.

Does you answer differ? Remarkably, when a different group of students were given the three choices, 30 percent decided to study – double the number who did before. Giving students two good alternatives to studying rather than one paradoxically makes them less likely to choose either.

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

On the power of headline writing

By early evening, the decision is finalised as to what the front page (“the splash”) will look like. At the Sun, this was one of the most important jobs of the editor. Before, say, 2010, the newspaper could shift an extra 100,000 copies on the strength of having a good story on its front; that is a rarity now indeed. The craftsmanship of headlines, though, is one of the great joys of tabloid journalism. Sun meeting rooms are named after famous headlines of its past: How Do You Solve a Problem Like Korea (on the threat of Kim Jong-Il); Super Caley Go Ballistic Celtic Are Atrrocious (on a Scottish football match); and so on. Headline-writing is a competitive sport: people sit at their desk, brows furrowed trying to come up with the funniest line. At the Sun there is a headline of the month competition too.

Excerpt from: How Britain Really Works: Understanding the Ideas and Institutions of a Nation by Stig Abell

On a little bit of controversy going a long way

Everywhere potholes are a problem, everywhere councils ignore the,

Sure they’ll fix them, eventually, when they get around to it.

Which usually means months, sometimes a year later.

One cyclist in Bury decided to elevate potholes up the council’s list of priorities.

He knew the council couldn’t be bothered about potholes.

But the council were red hot on covering up graffiti.

Graffiti left on display was like advertising that the council weren’t doing their job.

It was very visible so it was covered up immediately.

He decided to use graffiti to solve the pothole problem.

Wherever there was a large pothole in the road he sprayed a set of genitals round it.

Badly drawn — just balls and a knob, crude in every way.

But suddenly the potholes stood out.

Suddenly the potholes, which had previously been invisible to the council, were seen to be outraging public decency.

The potholes, which had been ignore for months, were repaired and the graffiti removed within forty-eight hours.

Excerpt from: Creative Mischief by Dave Trott

On how our habits can be changed by environment

In 1971, as the Vietnam War was heading into its sixteenth year, congressman Robert Steele from Connecticut and Morgan Murphy from Illinois made a discovery that stunned the American public. While visiting the troops, they had learned that over 15 percent of U.S. soldiers stationed there were heroin addicts. Follow-up research revealed that 35 percent of service members in Vietnam had tried heroin and as many as 20 percent were addicted — the problem was even worse than they had initially thought.

The discovery led to a flurry of activity in Washington, including the creation of the Special Action Office of Drug Abuse Prevention under President Nixon to promote prevention and rehabilitation and to track adducted service members when they returned home.

Lee Robins was one of the researchers in charge. In a finding that completely upended the accepted beliefs about addiction, Robins found that when soldiers who had been heroin users returned home, only 5 percent of them became re-addicted within a year, and just 12 percent relapsed within three years. In other words, approximately nine out of ten soldiers who used heroin in Vietnam eliminated their addition nearly overnight.

This finding contradicted the prevailing view at the time, which considered heroin addiction to be a permanent and irreversible condition. Instead, Robins revealed that addiction could spontaneously dissolve if there was a radical change in the environment. In Vietnam, soldiers spent all day surrounded by cues triggering heroin use: it was easy to access, they were engulfed by the constant stress of war, they build friendships with fellow soldiers who were also heroin users, and they were thousands of miles from home. Once a soldier returned to the United States, though, he found himself in an environment devoid of those triggers. When the context changed, so did the habit.

Excerpt from: Atomic Habits: An Easy and Proven Way to Build Good Habits and Break Bad Ones by James Clear

On Social Proof’s deep roots

Humans are herd animals. We want to fit in, to bond with others, and to earn the respect and approval of our peers. Such inclinations are essential to our survival. For most of our evolutionary history, our ancestors lived in tribes. Becoming separated from the tribe — or worse, being cast out — was death sentence. “The lone wold dies, but the pack survives.”

Meanwhile, those who collaborated and bonded with other enjoyed increased safety, mating opportunities, and access to resources. As Charles Darwin noted, “In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed.” As a result, one of the deepest human desires is to belong. And this ancient preference exerts a powerful influence on our modern behaviours.

Excerpt from: Atomic Habits: An Easy and Proven Way to Build Good Habits and Break Bad Ones by James Clear

On the Knowledge Illusion

How does a zipper work? Rate your understanding on a scale from 0 (no clue) to 10 (easy-peasy). Write the number down. Now sketch out on a piece of paper how a zipper actually works. Add a brief description, as through you were trying to explain it very precisely to someone who’d never seen a zipper before. Give yourself a couple of minutes. Finished? Now reassess your understanding of zippers on the same scale.

Leonid Rozenblit and Frank Keil, researchers at Yale University confronted hundreds of people with equally simple questions. How does a toilet work? How does a battery work? The results are always the same: we think we understand these things reasonably well until we’re force to explain them. Only then do we appreciate how many gaps there are in our knowledge You’re probably similar. You were convinced you understood more than you actually did. That’s the knowledge illusion.

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

On how higher prices increase joy but not happiness

How much pleasure do you get from your car? Put it on a scale from 0 to 10. If you don’t own a car, then do the same for your house, your flat, your laptop, anything like that. Psychologists Norbert Schwarz, Daniel Kahneman and Jing Xu asked motorists this question and compared their responses with the monetary value of the vehicle. The result? The more luxurious the car, the more pleasure it gave the owner. A BMW 7 Series generates about fifty percent more pleasure than a Ford Escort. So far, so good: when somebody sinks a load f money in a vehicle, at least they felt a good return on their investment in the form of joy.

Now, let’s ask a slightly different question: how happy were you during your last car trip? The researchers posed the question too, and again compared the motorists’ answers with values of their cars. The result? No correlation. No matter how luxurious or how shabby the vehicle, the owners’ happiness ratings were all equally rock bottom.

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

On how Pixar’s most original and successful films started out as “Ugly Babies”

Originality is fragile. And, in its first moments, it’s often far from pretty. This is why I call early mock-ups of our films “Ugly Babies”. They are not beautiful, miniature versions of the adults they will grow up to be. They are truly ugly: awkward and unformed, vulnerable and incomplete. They need nurturing — in the form of time and patience — in order to grow.

Excerpt from: Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries by Safi Bahcall