The E-Myth Revisited – Michael E. Gerber (Part 3 of 3)

February 29, 2012

Devon Sampson Business , , , , , Leave a comment

 

All organizations are hierarchical. At each level people serve under those above them. An organization is therefore a structured institution. If it is not structured, it is a mob. Mobs do not get things done, they destroy things.

-Theodore Levitt, Management for Business Growth

 

Draw up an Organization Chart that outlines all of the positions that will exist in your company once it has reached its full potential.

At the beginning, not only will you be working in each position, you will be working on each position; basically, you’ll be doing the work that the position requires but you should also be evaluating and improving the position itself.

If everybody is doing everything, no one is responsible for anything.

Once you’ve refined the procedure for fulfilling a position, document it in an Operations Manual – then your employee prospects theoretically don’t even need experience.

Job procedures that are documented in Operations Manuals should primarily be Technician jobs (fairly straightforward labour work).

Two keys to working with employees are to treat them seriously and with respect, and to take your business seriously. When you treat your employees respectfully, they’ll want to return the favour; by demonstrating how seriously you take your business, the only way for your employees to reciprocate your respect is to respect your business (and the jobs they currently hold in it!).

Gerber shares a story about an amazing hotel he visited that embodied every great characteristic a small business can hold. He asked to talk to the manager and some of the employees in order to understand why this business was so great:

“The first thing that surprised me when I came to work here,” the Manager said, “was that the owner took me seriously. I mean, think about it. Here I was, a kid, with absolutely no experience in this business. But he never treated me that way. He treated me as though I were a serious adult. Somebody worth talking to about what he obviously considered important.” (197-198)

“It was like the hotel was an expression of who he was, a symbol of what he believed in. So if I hadn’t taken the hotel seriously, it would have looked like I wasn’t taking him seriously, as a man whose values I respected.”

People do not simply want to work for exciting people. They want to work for people who have created a clearly defined structure for acting in the world, where they can test themselves and be tested – a “game”.

Hiring experienced managers can be a downside because they will manage by the standards they learned at someone else’s business, not your standards.

 

You need people who want to play your game, not people who believe they have a better one.

-Michael E. Gerber

 

People that attribute their problems externally seek to fix the world so that they can remain the same.

 

When you hear something, you will forget it.
When you see something, you will remember it.
When you do something, you will understand it.

-Chinese proverb

SPIN Selling – Neil Rackham (Guest poster: Sebastian Cass)

February 27, 2012

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Sebastian Cass has been a good friend of mine for many years.

Recently, we’ve been enjoying the work of best-selling author and Forbes columnist Michael Ellsberg. In one of Ellsberg’s most famous public appearances, a speech he gave at the Google headquarters, he recommended the book SPIN Selling by Neil Rackham. Since this was the second time it had been endorsed by someone I respected (the other person being Josh Kaufman, author of the The Personal MBA: Master the Art of Business), I decided that I should check it out for myself sometime in the near future.

Sebastian, on the other hand, was eager to read it right away since he has already worked in several sales jobs and possesses an utterly absurd amount of knowledge on the subject. Less than two days later, he had finished it.

So I’ve invited Sebastian to guest post about SPIN Selling and he’s agreed to share his notes and thoughts about the book with you guys today. In this post, you’ll learn about some of the most uncommon, unconventional wisdom behind sales and why the phrase, “high-integrity sales” is not a contradiction in terms. (D.S.)

 
SPIN Selling contains by far the best advice I’ve ever come across when it comes to selling. This short explanation is only meant to show you the specific things I took from it and why I think it’s a great tool for sales/marketing professionals looking to improve their results exponentially.

This book is based on a massive amount of research conducted by the Huthwaite group and by Rackham himself. The advice of the book is aimed at “large” ticketed items, items that will sometimes take longer than a single sales call to sell. The term “SPIN” is an acronym for the 4 kinds of questions that make the model, they break down as follows:

-Situation questions: A question in which the seller finds facts about the current state, short and long term plans, and overall condition of the buyer’s company
(Note: Research shows that they are not very critical in making a sale successful, and one should keep them short as a customer might become impatient.)

-Problem questions: These are the types of questions that most people should consider improving, they’re designed to find any dissatisfactions or hassles that the customer is having at the moment (these should be aimed at the kinds of problems the customer would no longer have if he owned your product).

-Implication questions: This is where conventional selling techniques verge off, most training would direct people to give solutions that their product could offer to solve the customers “needs” as explained by the customer in the previous phase, however, this model takes it a step further. Implication questions are meant to show the customer/buyer the implications and future hassles his current problems will lead him to (ie: fast turnover on workforce, training costs of new employees, time that could be spent more wisely). In short it makes his problems become EXPLICIT NEEDS; he is now aware that the problem is more severe and he is now looking for a solution.

-Need-payoff questions: This is the final step in which the seller posses a different set of questions. These are aimed to get the customer/buyer talking about how if he had a solution to his now-explicit needs (from the implication stage) and the other ways in which having such solution (seller’s product) could help him (customer/buyer) and his business.

 

The SPIN model however is only one part of the bigger 4 part breakdown of a sales call. The whole model looks like this:

Opening –> Investigating (SPIN model for questioning comes in here) –> Demonstrating Capability –> Obtaining Commitment.

Opening: the research shows that staying on point is key, conventional wisdom on opening may not work so well for bigger sales, specially “starting off with chit-chat” or “open by demonstrating advantages”; a good rule of thumb to follow will be to establish:
-who you are
-why you’re there (but not by giving away product details)
-your right to ask questions.

Investigating: I’ve explained above in the SPIN model.

Demonstrating capabilities: The main thing to learn from this is the difference between features, advantages (usually referred in sales training as benefits), and “true” benefits.

Features – have low impact over the long and short term, they don’t really relate to the customer. Over-featuring a product will always lead to price objections, which might either be a service or disservice to the product depending on whether the price is low or high respectively.

Advantages – these are the ways that a customer/buyer could benefit from using the product, but since it does not tie in to their Explicit Needs, they’re very easy to forget.

(True) Benefits – They tie in strongly to the customer/buyer’s explicit needs and are the answer to their Need-Payoff statements. Customers/buyers will remember them because they relate to their deepest needs.

Obtaining commitment: the main point here is to understand the four kinds of outcomes that can come from a sale.

  • No Sale
  • Continuation
  • Advance
  • Sale

Since immediate No Sale/Sale situations only make up 10% of sales calls for high price items, one should pay attention to Continuation and Advances instead.

Continuation is usually made up of flattery of the product: “that was a great presentation”, “we look forward to hearing more”, but no actual commitment to follow the relationship in any meaningful way. This is why they are considered unsuccessful.

Advances on the other hand offer a “next step” kind of mentality. The sale won’t be done right there, but both parties are taking steps forward and it is considered a success since it’s more likely to lead to an actual sale.

The book also covers how research suggests that the areas in which most sales training focus most of their energy (closing techniques, open-closed questions, objection handling) are far less effective for large sales. Instead there’s obtaining commitment, SPIN model for questioning, and objection prevention.

……

These are the main points I drew from this book; I’d recommend you read the book if you saw any information here you’d like to improve and/or learn more about. I’ve decided that I’m going to work in a position in sales that pays solely on commission for the next little while. The items I’m aiming to sell will be high-ticketed items (cars sales, real estate, corporate tech solutions).

I’m not doing this for the financial remuneration but rather to apply the skills and mindsets that this book has taught me. As with anything you read, I also recommend that once you finish SPIN Selling (either the actual book or just my notes) you should take action in the near future to practice the ideas that Rackham presents.

Entelechy – the becoming actual of what was potential.

This word is used towards the end of the book to emphasize the importance of actually integrating any skill one learns in order to make it truly ingrained. I included here as well to reiterate its importance.

Until the next time guys.

-Sebastian Cass

Nerve – Taylor Clark (2/2)

February 4, 2012

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“The more certainty and control we think we have about a potential threatening situation, the less stress we will feel.” (98, emphasis added)

In World War 2, despite having the highest mortality rate in the military, dogfighters were more happy with their jobs and felt less stress than almost every other division of troops. They believed that their piloting skill would determine their survival, not luck – they felt they were in complete control of their fate.

“In study after study, researchers have found that the most stressful occupations are those in which employees must deal not just with high demands, but with little control over their workdays.” (104)

Cultivating a strong internal locus of control is key to reducing stress in your life.

UC Irvine psychologist Salvatore Maddi claims to have found the three most important attitudes about stress, which he calls the “Three C’s”:

  • Commitment: as stress mounts, remaining involved in the world instead of evading reality
  • Control: realizing that you’re never helpless, even in the toughest circumstances
  • Challenge: perceiving a crisis not as a threat, but as an opportunity for growth

“Under stress, our natural tendency is to forget about our surrounding environment and focus instead on the immediate threat. The more people can resist this and pay attention to what’s really happening, the better they do under fire.” (120-1)

“(Psychologist Anders Ericsson’s) work adds an important caveat…Not all experience will help you improve decision-making under stress…Experience needs two characteristics to be effective: it has to be challenging, focusing on your weaknesses, and it has to include feedback that allows you to fine-tune your approach.” (121)

“[R]ecent research has shown that when we’re nervous or threatened, (short-term memory) is the kind of memory that is most prone to falling apart.” (147)

“Performance pressure harms individuals most qualified to succeed by consuming the working memory capacity that they rely on for their superior performance.” (Beilock and Carr, 2005) (150)

“(NYU psychology professor Joshua) Aranson’s research has revealed that kids who are cued to believe they can improve their test scores with practice tend to see exams as a challenge rather than a threat, performing better – and feeling less anxiety – than those who see their brainpower as set in stone.” (151)

“I don’t think I’m any smarter than anyone else who’s done well on Jeopardy! – I think I just handle the pressure better. There’s stuff I come up with when I’m actually playing Jeopardy! that I wouldn’t get if if I were just watching it on TV. The adrenaline focuses me.” -Brad Rutter, Jeopardy! Ultimate Tournament of Champions winner

A bias that is the root of many people’s performance anxiety is the “illusion of transparency” bias – we tend to believe that our internal emotional states are more obvious to others than they truly are.

“It’s not a case of getting rid of the butterflies. It’s a question of getting them to fly in formation.” -Jack Donohue, former Canadian Olympic basketball coach

“Fueled by what psychologists have deemed ‘normalcy bias,’ humans in crisis have a troubling tendency to deny that anything out of the ordinary is going on.” (242)
 

In combat, you do not rise to the occasion – you sink to the level of your training.

-Dave Grossman, psychology intructor, West Point military academy

Nerve – Taylor Clark (1/2)

January 11, 2012

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Nerves make us bomb job interviews, first dates, and SATs. With a presentation looming at work, fear robs us of sleep for days. It paralyzes seasoned concert musicians and freezes rookie cops in tight situations. And yet not everyone cracks. Soldiers keep their heads in combat; firemen rush into burning buildings; unflappable trauma doctors juggle patient after patient. It’s not that these people feel no fear; often, in fact, they’re riddled with it.

In Nerve, Taylor Clark draws upon cutting-edge science and painstaking reporting to explore the very heart of panic and poise. Using a wide range of case studies, Clark overturns the popular myths about anxiety and fear to explain why some people thrive under pressure, while others falter-and how we can go forward with steadier nerves and increased confidence.

-Amazon.com description

___________________________________________________

“Our fears are faster than our thoughts.” (38)

“We might wish our higher cognitive machinery could keep up with the amygdala, but evolution, in its savage wisdom, knows that it’s better to go through a thousand false alarms than to risk failing to react to a real danger just once.”

The amygdala has a greater ability to supersede the conscious mind than vice versa – “our brains are actually designed to thwart our efforts to override the fear response.” (40)

“So in the same way that your computer’s antivirus program compares each file on your hard drive with its data bank of malicious software, your amygdala scans all incoming stimuli against a memory bank of threats. If it gets a close enough match (say, a scurrying. Lack critter), it fires up a fear reaction (‘Spider alert!’). Memory, then, is an essential ingredient in fear.” (43)

The process of learning to fear something is imprecise, but the neural connections and imprints it makes are strong and almost impossible to undo completely.

“Faced with a vague physical sensation, the hypochondriac dwells not in the probability that it’s benign, but in the possibility, however slim, that it heralds something catastrophic.” (54)

“An estimated 5 percent of all visits to primary care doctors in the United Stares stem from hypochondria, at an annual cost of $20 billion to the health care system.” (55)

“Fear is primarily physiological, yet anxiety is predominantly cognitive: fear supercharges the body to escape real danger right now, and anxiety motivates the brain to figure out how to avoid theoretical danger in the future.” (58)

“People who can’t stand uncertainty interpret ambiguous information not as vague or neutral, but as threatening.” (62)

“(A) lack of negative outcomes reinfoces the worry habit. Because feared events almost never follow worry, we start subconsciously believing that worry prevents such things from happening.” (64)

Our prefrontal cortex distinguishes us from other species; only we can plan ahead for potential threats in the future. But Joseph LeDoux explains the downside of this: “Bigger brains allow better plans, but for these you pay in the currency of anxiety.” (70)

“If fear is like a living organism in the mind, avoidance is its primary means of self-preservation. Without exposing ourselves to the things that trigger our fears, we never get a chance to learn that we can cope, or that our catastrophic worries are wrong, or that the things we fret really aren’t going to tear us limb from limb. Avoidance ensures that the fear lives on.” (71)

(Arguing against brute force struggles with fear) “Fear and anxiety are a great, rushing river upon which we float in our bobbing little kayaks. We can paddle furiously against the stream in a futile struggle to get upriver and avoid the rapids, or we can work with the current and use our energy to navigate the challenges ahead. The choice is always ours.” (72)

“To get over a fear, you have to expose yourself to it, and you have to feel afraid.” (75) -then it will naturally pass and you’ll learn that you can handle it

“More conventional therapies attempt to help patients relax, but (Boston University’s David Barlow) contends that focusing on becoming calm can send a false message that fear is dangerous. ‘There’s a place for relaxation,’ explained Craske, a Barlow collaborator, ‘but if the crux of the problem is that a person is afraid of feeling fear, then too much focus on relaxation simply feeds that fear.’” (76)

“(UCLA psychologist Matthew Lieberman) believes (that) mindful noting – the simple act of putting our feeling into words – helps the brain disambiguate our emotions and provide a level of detachment from them.” (82)

Once ironworkers tie off ther ropes and their harness is set, they like to lean back into the harness instead of clinging next to the column they’re suspended near. They understand that you have to trust the equipment. It reflects back to them that everything’s working.

(An ironworker’s description of this process) “You tie off. You lean back into it. You don’t fall. Okay.” (90)

Fooled by Randomness – Nassim Nicholas Taleb

January 4, 2012

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At least in terms of Expected Value it is far better to be a dentist than a rock star, because dentists earn consistently large salaries while the majority of rock stars earn very little, and even those that do become successful and make millions don’t swing the profession’s average salary to the level of dentists.

And if lack of variance is valuable to you, than being a dentist becomes even more attractive!

Statistical example of the lack of variance in the long-term relative to the short-term: “A 15% return with 10% volatility (or certainty) per annum translates into a 93% probability of success in any given year. But seen at a narrow time scale, this translates into a mere 50.02% probability of success over any given second” (65)

“(T)here are Monte Carlo generators designed to structure such texts and write entire papers. Fed with ‘postmodernist’ texts, they can randomize phrases under a method called recursive grammar, and produce grammatically sound but entirely meaningless sentences that sound like Jacques Derrida, Camille Paglia, and such a crown.” (73)

If you let an infinite amount of monkeys type on typewriters, it is 100% certain that one will type a word-for-word copy of The Iliad.

“The following inductive statement illustrates the problem of interpreting past data literally, without methodology or logic:” (120)

I have just completed a thorough statistical examination of the life of President Bush. For fifty-eight years, close to 21,000 observations, he did not die once. I can hence pronounce him as immortal, with a high degree of statistical significance.

It’s easier to remember a logically linked story than an assortment of unrelated facts. Causality is easier to commit to memory, so sometimes we create it where it doesn’t exist.

“If you meet someone randomly, there is a one in 362.25 chance of your sharing their birthday…Now let us look at a situation where there are 23 people in a room. What is the chance of there being 2 people with the same birthday? About 50%. For we are not specifying which two people need to share a birthday; any pair works.” (159 – The Birthday Paradox)

“When the statistician looks at the data to test a given relationship…odds are that the results can be taken seriously. But when one throws the computer at data, looking for just about any relationship, it is certain that a spurious connection will emerge, such as the fate of the stock market being linked to the length of women’s skirts. And just like the birthday coincidences, it will amaze people.” (160)

“Data that is perfectly patternless would be extremely suspicious and appear to be man-made. A single random run is bound to exhibit some pattern – if one looks hard enough.” (169)

“Our brain is not cut out for nonlinearities…Our emotional apparatus is designed for linear causality.” (179)

Studies have shown that people are almost incapable of making the simplest decisions without emotions (Tested by surgical ablation on a piece of the brain to suspend the ability to register emotion, isolating logic. Subjects couldn’t get out of bed in the morning and wasted entire days weighing various decisions.) This is why psychologists call emotions “lubricants of reason.”

“No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word. We are left only with dignity as a solution – dignity defined as the execution of a protocol of behavior that does not depend on the immediate circumstance.” (246)

“There developed a social model for a stoic person, like the gentlemen in Victorian England. Its tenets can be summarized as follows: The stoic is a person who combines the qualities of wisdom, upright dealing, and courage. The stoic will thus be immune from life’s gyrations as he will be superior to the wounds from some of life’s dirty tricks.” (248)

“(E)conomics is a narrative discipline, and explanations are easy to fit retrospectively.” (257)

“It took me an entire lifetime to find out what my (core framework) is. It is: We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract. Everything good (aesthetics, ethics) and wrong with us (Fooled by Randomness) with us seems to flow from it.” (262)

Nathaniel Branden – Self-Esteem Articles

December 21, 2011

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“Nathaniel Branden is a psychotherapist and writer best known today for his work in the psychology of self-esteem from a humanistic perspective (see self-esteem in humanistic psychology). A former student and one-time romantic partner of novelist Ayn Rand, Branden had a prominent role in promoting Rand’s philosophy, Objectivism.” -excerpted from Wikipedia entry on Nathaniel Branden

 

Yesterday I did some independent research on Nathaniel Branden, one of the key figures of the Objectivist movement. I was curious to find out how someone so intimately familiar with Rand’s philosophy had grown to reject it (or at least some aspects of it.) During the search, I came across a number of outstanding articles written by Branden that were particularly interesting to me because they represented the first legitimate critiques of Ayn Rand. Granted, the main article in which this came from also included vast amounts of (rightly deserved) praise for Objectivism as well.

As I continued researching, I discovered that Branden went on to do extensive research in the field of self-esteem, penning numerous books and articles on the subject. I’m just scratching the surface of his body of work, but so far I’m extremely impressed.

Here are my notes on the various articles featured on his blog, which you can find at NathanielBranden.com:

______________________________________________________________________

 

Self-esteem is the experience of being competent to cope with the basic challenges of life and of being worthy of happiness.

 

You cannot have a world that works, you can’t have an organization, a marriage, a relationship, a life that works, except on the premise of self-responsibility. (“Self-Responsibility”)

(People) have been taught that the essence of virtue is self-sacrifice. To a large extent that is a doctrine of control and manipulation. “Selfish” is what we call people when they are doing what they want to do, rather than what we want them to do.

High self-esteem seeks the challenge and stimulation of worthwhile and demanding goals. Reaching such goals nurtures good self-esteem. Low self-esteem seeks the safety of the familiar and undemanding. Confining oneself to the familiar and undemanding serves to weaken self-esteem. (“Our Urgent Need For Self-Esteem”)

The higher our self-esteem, the stronger the drive to express ourselves, reflecting the sense of richness within. The lower our self-esteem, the more urgent the need to “prove” ourselves—or to forget ourselves by living mechanically.

The higher our self-esteem, the more open, honest, and appropriate our communications are likely to be, because we believe our thoughts have value and therefore we welcome rather than fear the clarity. The lower our self-esteem, the more muddy, evasive, and inappropriate our communications are likely to be, because of uncertainty about our own thoughts and feelings and anxiety about the listener’s response.

“Self-esteem” is sometimes used interchangeably with “self-image,” which is unfortunate, because the concept is much deeper than any “image.” Self-esteem is a particular way of experiencing the self. (“Self-Esteem as a Spiritual Discipline”)

To observe that the practice of living purposefully is essential to well-realized self-esteem should not be understood to mean that the measure of a person’s worth is his or her external achievements…The root of our self-esteem, as I have discussed at length elsewhere (Branden, 1994) is not our achievements, but those internally generated practices that, among other things, make it possible for us to achieve all the self-virtues mentioned above. (“Nurturing Self-Esteem in Young People”)

To give a child the experience of being accepted and respected does not mean to signal that “I expect nothing of you. “Teachers who want children to give their best must convey that that is what they expect. Children often interpret the absence of such expectations as evidence of contempt.

Self-esteem is an experience. It is a particular way of experiencing the self. It is a good deal more than a mere feeling. It involves emotional, evaluative, and cognitive components. It also entails certain action dispositions: to move toward life rather than away from it; to move toward consciousness rather than away from it; to treat facts with respect rather than denial; to operate self-responsibly rather than the opposite. (“Answering Misconceptions About Self-Esteem”)

Excessive and inappropriate self-absorption is symptomatic of poor self-esteem, not high self-esteem. If there is something we are confident about, we do not obsess about it-we get on with living.

(S)ometimes when people lack adequate self-esteem they fall into arrogance, boasting, and grandiosity as a defense mechanism-a compensatory strategy. Their problem is not that they have too big an ego but that they have too small a one.

What shall it profit us to win the approval of the whole world and lose our own?

(T)o be effective, “praise” – or, more exactly, recognition – should be reality-based, calibrated to the significance of the child’s actions (in other words, not extravagant or grandiose), and directed at the child’s behavior rather than his or her character. Sweeping statements such as “You’re a perfect angel,” or “You’re always such a good girl,” or “You’re always so kind and loving,” are not helpful: rather than nurture self-esteem, they tend to evoke anxiety, since the child knows there are times when they are not true.

Neither a business, nor a marriage, nor a soul can be kept alive and healthy without continuous effort. Responsibility for appropriate action never ends.

The Virtue of Selfishness – Ayn Rand (Introduction)

December 1, 2011

Devon Sampson Ayn Rand, Human Psychology , , , , , Leave a comment

 

The Virtue of Selfishness is a collection of essays regarding the topic of individual rights, ethics, values, and the subtly corrosive effect that altruism and collectivism have. What is especially remarkable about this book is her superior use of logic. The Virtue of Selfishness is not an emotional appeal to get you to believe in her cause; it is a thoroughly argued, brilliantly reasoned argument for liberty and individual rights. Although Rand has been received an equal amount of criticism as she has received praise, it is rare to find one such detractor who dares challenge her logic.

______________________________________________________________________

“In popular usage, the word “selfishness” is a synonym of evil; the image it conjures is of a murderous brute who tramples over piles of corpses to achieve his own ends, who cares for no living being and pursues nothing but the gratification of the mindless whims of any immediate moment.

Yet the exact meaning and dictionary definition of the word “selfishness” is: concern with one’s own interests.

This concept does not include a moral evaluation” (vii)

A common fallacy is substituting a particular concrete – the ethics of altruism – for the wider abstract class to which it belongs – the entire field of ethics. Not only is this confusing for those who practice ethics, but even worse, it discourages many others from having any standard of ethics. Rand states this the best:

The first thing (man) learns is that morality is his enemy; he has nothing to gain from it, he can only lose; self-inflicted loss, self-inflicted pain and the gray, debilitating pall of an incomprehensible duty is all that he can expect. (viii-ix)

Altruist ethics imply that there is no moral difference between an industrialist who makes a fortune for himself and a common robber. Rand explains the “fundamental moral difference”:

The evil of a robber does not lie in the fact that he pursues his own interests, but in what he regards as his own interests; not in the fact that he pursues his values, but in what he chose to value (ix)

The pervasive influence of altruism also has profound psychological consequences, as Rand illustrates:

If you wonder about the reasons behind the ugly mixture of cynicism and guilt which most (people) spend their lives, these are the reasons: cynicism, because they neither practice nor accept the altruist morality – guilt, because they dare not reject it. (x)

However, the other side of the coin is not right either. “Nietzschean egoists”, as Rand refers to them, believe that regardless of nature, any action intended for one’s own benefit is good. What they fail to recognize is that morality is not defined by the beneficiary of one’s actions, but rather, the rationality of one’s actions.

Ayn Rand’s Objectivist philosophy is about rational self-interest, not simply one’s self-interest.

Altruism, however, makes no distinction between the man who is primarily concerned with his rational self-interest and the hedonistic brute.

Drive – Daniel Pink

November 28, 2011

Devon Sampson Business, Human Psychology, Motivational Psychology, Social Dynamics , , , , , Leave a comment

 

“According to Pink (A Whole New Mind), everything we think we know about what motivates us is wrong. He pits the latest scientific discoveries about the mind against the outmoded wisdom that claims people can only be motivated by the hope of gain and the fear of loss. Pink cites a dizzying number of studies revealing that carrot and stick can actually significantly reduce the ability of workers to produce creative solutions to problems. What motivates us once our basic survival needs are met is the ability to grow and develop, to realize our fullest potential.”

-Amazon.com description

 

RSA Animate:

 

“When money is used as an external reward for some activity, subjects lose intrinsic interest in the activity.”

Human beings have an “inherent tendency to seek out novelty and challenges, to extend and exercise their capacities, to explore, and to learn.” But this third drive is more fragile than the other two; it needs the right environment to survive.

“An algorithmic task is one in which you follow a set of established instructions down a single pathway to one conclusion. That is, there’s an algorithm for solving it. A heuristic task is the opposite. Precisely because no algorithm exists for it, you have to experiment with possibilities and devise a novel solution.”

“The consulting firm McKinsey & Co. estimates that in the United States, only 30 percent of job growth now comes from algorithmic work, while 70 percent comes from heuristic work. A key reason: Routine work can be outsourced or automated; artistic, empathic, nonroutine work generally cannot.”

“External rewards and punishments—both carrots and sticks—can work nicely for algorithmic tasks. But they can be devastating for heuristic ones.”

Stuff like salary, etc., are called “baseline rewards” and are mandatory, otherwise they’ll just focus on the unfairness of their situation and they won’t be extrinsically or intrinsically motivated.

“Rewards can perform a weird sort of behavioral alchemy: They can transform an interesting task into a drudge.”

Functional fixedness = seeing an object in a certain problem as only having one function, instead of thinking outside the box and seeing that the object can have many functions.

When your only motivation is intrinsic motivation, you’ll always reach your goal via ethical means. Extrinsic rewards encourage people to take shortcuts and act unethically (ie: sales quotas for Sears car repair people, Enron)

“Using extrinsic rewards can cause the presence of such an award seem like the status quo, thus requiring larger awards to be offered to achieve the same effect. In this way, this phenomenon resembles addiction.”

“The very presence of goals may lead employees to focus myopically on short-term gains and to lose sight of the potential devastating long-term effects on the organization.”

CARROTS AND STICKS: The Seven Deadly Flaws
1. They can extinguish intrinsic motivation.
2. They can diminish performance.
3. They can crush creativity.
4. They can crowd out good behavior.
5. They can encourage cheating, shortcuts, and unethical behavior.
6. They can become addictive.
7. They can foster short-term thinking.