Persuasion

Three Questions to Ensure Alignment

July 17, 2023 By Nagesh Belludi Leave a Comment

When engaging in conversations with your partner, boss, or team, utilizing the following discussion framework can significantly contribute to productive discussions, cultivate shared understanding, and foster harmonious relationships:

Where am I headed? What are my expectations for you?
Where are you headed? What are your expectations for me?
Where are we headed? How can we bring about positive change?

Before initiating the conversation, it is beneficial to reflect on your thoughts and emotions. Gain a clear understanding of what you wish to discuss and consider how to communicate your expectations while demonstrating respect and empathy effectively. This self-awareness will greatly assist you in expressing yourself with clarity.

The overlap of these three questions is where friction will come from. What’s at odds with each others’ expectations?

Identify tension points. Plan around them. Push through with open-mindedness and a willingness to find common ground.

Why Incentives Backfire and How to Make Them Work: Summary of Uri Gneezy’s Mixed Signals

June 20, 2023 By Nagesh Belludi Leave a Comment

Misguided Motivations: The Folly of Incentives in the Great Hanoi Rat Massacre

In the late 18th century, Governor Paul Doumer of the French colonial government had a vision to modernize Hanoi. His plan included the introduction of toilets, which unfortunately attracted disease-spreading rats. As time passed, the rat population became a growing concern. In a desperate attempt to control the vermin invasion, the government launched a program that rewarded citizens for every rat tail they brought in, hoping to reduce the rat numbers. However, this seemingly brilliant solution turned into a catastrophic event.

Unbeknownst to the government, the citizens of Hanoi discovered a loophole in the system. Instead of exterminating the rats, they started amputating the rats’ tails without killing them. This allowed the rats to continue to breed more rats with tails, as these would become a future source of income.

The situation quickly descended into utter madness. Driven by insatiable greed, some individuals established rat-breeding farms to maximize their rewards, while others resorted to importing rat tails from distant regions. The unintended consequence of this perverse incentive scheme was a massive explosion in the rat population, exacerbating the very problem it was meant to solve.

This ill-fated event, known as the “Great Hanoi Rat Massacre,” is a notorious example of the dangers of perverse incentives.

The Unintended Consequences of Incentive-driven Actions

In his insightful book, Mixed Signals: How Incentives Really Work (2023,) Uri Gneezy, a distinguished behavioral economist from the University of California-San Diego, masterfully presents compelling examples that highlight the profound disparity between the intended behaviors incentives aim to promote and the unforeseen behaviors they unintentionally trigger. Gneezy’s astute analysis illuminates the perplexing nature of these gaps, offering invaluable insights into the actual workings of incentive systems. Another example of this point is the situation with many doctors operating under Fee for Service (FFS) payment models. In these models, doctors are incentivized to perform additional tests and procedures to increase their own payment. As a result, their focus may shift from promoting overall health to simply recommending more procedures.

To avoid sending confusing messages through incentives, Gneezy emphasizes the importance of carefully considering such initiatives’ potential outcomes and unintended effects. Gneezy strongly advocates for the use of prototype incentive programs.

Consider the case of the Wells Fargo cross-selling scandal, which was caused by aggressive sales practices. To increase the number of accounts held by existing customers, the company decided to motivate bank employees to promote additional services, like credit cards and savings accounts, to customers with checking accounts. However, due to a lack of proper oversight, employees resorted to fraudulent practices by creating over three million unauthorized credit card accounts without customers’ knowledge or consent. These unethical practices harmed customers who ended up with unwanted and unnecessary accounts, violated their trust, and exposed them to fees and penalties. In order to prevent such a scandal, Wells Fargo could have implemented prototype techniques and established an auditing system to verify the legitimacy of accounts randomly.

The Irony of Fines as Deterrents in Action

Gneezy brilliantly dissects the flawed notion that imposing fines is a universal remedy. He highlights how fines, often intended as deterrents, can backfire by diverting people’s focus from deterring behavior to merely avoiding punishment. For instance, when drivers are warned about the perils of texting while driving, they may genuinely reflect on the risks involved and the value of their own lives. However, the introduction of a $500 fine shifts their mindset. Now, their attention shifts from personal safety to the likelihood of encountering law enforcement. If they perceive a lack of police presence, the thought process changes to “No police around, no risk of getting caught—time to text!” In this way, the imposition of fines skews individuals’ attention from contemplating potential hazards to the probability of facing the consequences.

Recommendation: Fast-read Mixed Signals: How Incentives Really Work (2023.) Greezly’s work serves as a resounding reminder that designing an incentive system to encourage desired behavior while minimizing unintended consequences is no easy feat. Greezly’s advice on balancing multiple metrics to avoid the pitfalls of fixating on a single metric at the expense of others and the importance of regularly reviewing and updating the system while keeping a vigilant eye on unintended consequences is undeniably accurate.

Numbers Games: Summary of The Tyranny of Metrics by Jerry Muller

June 19, 2023 By Nagesh Belludi Leave a Comment

The Tyranny of Metrics (2018) by Jerry Muller, a historian at The Catholic University of America, is a poignant reflection on our society’s obsession with measurement. Muller’s eloquent arguments shed light on the dual nature of metrics—they can be valuable diagnostic tools, yet their misuse as the sole measure of success and tied to rewards poses significant problems. Drawing upon many empirical examples across various fields, Muller skillfully reveals the inherent pitfalls of our reliance on metrics.

Consider the initial allure of measuring and publicly disclosing the success rates of surgeons performing specific procedures. At first glance, this transparency appears beneficial, empowering patients to make informed decisions. However, a disheartening trend emerged once these performance scorecards entered the public domain. Surgeons, fearing a decline in their reported success rates, started avoiding the most complex cases. Shockingly, even cardiac surgeons refused to operate on critically ill patients, jeopardizing lives to protect their perceived success.

Muller further elucidates the case of hospital emergency rooms, where the pursuit of improving the metric for timely patient admission became paramount. In a tragic turn of events, the desire for statistical accolades overshadowed the urgent needs of the suffering. Ambulances formed a distressing queue outside the facility as the metric was manipulated, leaving genuine care and compassion languishing in the background.

In 2009, when Medicare implemented public reporting and penalties for hospitals with higher-than-average 30-day readmission rates, hospitals resorted to manipulating the metric. They cleverly distorted the numbers by categorizing many readmitted patients as outpatient services, concealing them and evading penalties.

Education, too, falls victim to the obsession with metrics. The relentless focus on using metrics to influence teacher retention or determine school closures has given rise to a phenomenon known as “teaching to the test.” Educators find themselves trapped, compelled to prioritize teaching subjects aligned with standardized exams, such as math and English while neglecting crucial skills like critical reading or crafting extended essays. Pursuing metric-driven success inadvertently sacrifices holistic education on the altar of narrow measurement.

During the Vietnam War, the US Defense Secretary introduced the “body count” metric. This idea, advocated by US Defense Secretary Robert McNamara, suggested that a higher number of enemy casualties indicated greater success and brought the US closer to victory. However, an unintended consequence emerged when the body count became an informal measure for ranking military units and determining promotions. In this dangerous pursuit of numbers, the metric lost touch with reality, often inflated to fulfill the desire for perceived success. Counting bodies became a precarious military objective in and of itself, overshadowing the true essence of the conflict.

Muller’s perspective does not advocate completely disregarding metrics as a management tool. Instead, he emphasizes the importance of utilizing meaningful and comprehensive metrics that contribute to informed decision-making. He distinguishes between measurable aspects and measurements that hold true significance.

To achieve this, Muller discourages starting with the metric itself. Instead of asking, “What metrics should we use?” he suggests a more practical approach: “What are we trying to accomplish?” This approach involves establishing goals and metrics that evaluate achieving desired outcomes and customer satisfaction (effectiveness) while efficiently utilizing available resources.

In a compelling concluding chapter, Muller encapsulates his central thesis with a resounding declaration: “Measurement is not an alternative to judgment; measurement demands judgment.” This statement emphasizes the need to make informed decisions regarding whether to measure, what to measure, how to interpret the significance of measurements, whether to assign rewards or penalties based on results and who should have access to the measurements.

Recommendation: Skim Tyranny of Metrics. This tome serves as an authoritative guide for comprehending the profound influence of numerical indicators on the very foundation of modern society. It should be considered essential reading for anyone seeking to understand why organizations often operate below their full potential.

The Streisand Effect: When Trying to Hide Only Makes it Shine

May 25, 2023 By Nagesh Belludi Leave a Comment

In a famous episode of the beloved British sitcom Father Ted, the main character and his fellow priests embark on a protest against the airing of a film titled “The Passion of Saint Tibulus.” The movie portrays a Catholic saint disrespectfully, causing outrage among the Vatican and local bishops. However, despite the priests’ efforts, their parishioners do not heed to the boycott. To their dismay, media coverage of the priests’ pickets only amplifies the controversy, inadvertently making the film even more popular.

This comical scenario perfectly exemplifies the Streisand Effect, a phenomenon wherein attempts to suppress something end up drawing more attention to it.

The term “Streisand Effect” originated in 2003 when singer and actress Barbra Streisand sued a photographer for including an aerial photo of her Malibu home in a collection of images documenting coastal erosion. The lawsuit garnered significant attention to the photo, which had only been downloaded six times before the legal action. Suddenly, the photo went viral, accumulating millions of views and symbolizing the Streisand Effect.

A more recent example of this phenomenon occurred in 2017 when then-White House press secretary Sean Spicer attempted to quash a story about his meeting with reporters. Spicer had requested that the reporters keep the meeting private, hoping to prevent it from being reported. However, his efforts backfired spectacularly when the journalists went ahead and wrote about the meeting. During a press briefing, Spicer scolded the journalists for disregarding his wishes, inadvertently bringing even more attention to the original story. Had Spicer ignored the reporting, the story might have fizzled out quietly. Instead, it became a viral sensation, sparking numerous memes and jokes.

These examples serve as a powerful reminder to carefully consider the potential consequences before attempting to suppress or control information.

Decoy Effect: The Sneaky Sales Trick That Turns Shoppers into Spenders

May 23, 2023 By Nagesh Belludi Leave a Comment

Imagine yourself at the movie theater, deciding whether to buy a small popcorn for $5 or a large popcorn for $8. You’re wondering if the extra popcorn is worth the extra money, so you consider the small size. Suddenly, the cashier offers you medium popcorn for $7.50, and you buy it instead of the small one.

However, the medium popcorn is a lure—a true distraction. By introducing it, the theater has made the large popcorn seem like a better value and the small popcorn seem less attractive. This is a classic marketing strategy known as the Decoy Effect, which aims to influence your decision-making.

In essence, the Decoy Effect presents you with two options and then adds a third option designed to make one of the original options more appealing. This can sway your decision-making and lead you to choose the more expensive option.

Studies have shown that framing can influence our decisions, as a well-designed decoy can shift opinions by up to 40%. One well-known example of the decoy effect in action is from The Economist, the influential weekly international news and business publication. Behavioral economist Dan Ariely’s book Predictably Irrational (2008) describes how the magazine offered a digital subscription for $59, a print subscription for $125, and a combined print and online subscription for the same price of $125. The print-only subscription was clearly a decoy, designed to make the combined subscription seem like a better value, and it worked; the presence of the decoy significantly increased the uptake of the combined subscription.

While psychologists are still debating the exact reasons for this cognitive bias, one theory suggests that the decoy provides a straightforward justification for a decision that might otherwise seem arbitrary.

Idea for Impact: If you run a business, you too can use the decoy effect to steer consumers towards certain purchasing decisions that benefit your bottom line. By strategically adding a decoy product to your offerings, you can provide perceived value for your customers while boosting your profits.

The Longest Holdout: The Shoichi Yokoi Fallacy

May 22, 2023 By Nagesh Belludi Leave a Comment

In 1972, while hunting near the Talofofo River in Guam, two cousins from the village of Talofofo were startled by rustling sounds emanating from the tall reeds. Initially, they assumed it was an animal or a hidden child, but to their surprise, they came face to face with an elderly and disheveled man clutching a shrimp trap. This unexpected encounter took aback the hunters, and after some initial confusion, they captured the man and escorted him back to their makeshift jungle home, about an hour’s walk away. The old man pleaded with the cousins to end his life.

That fugitive turned out to be Shoichi Yokoi, a Japanese soldier. During the latter stages of World War II, Yokoi served in the supply corps of the Japanese army stationed on the island of Guam. In 1944, when General Douglas MacArthur’s troops invaded and reclaimed control of the island, Yokoi retreated into the dense jungle. There, he sought refuge in an underground cave and remained hidden for 28 years, living as a determined survivor under harsh conditions.

Yokoi sustained himself by inhabiting a tunnel-like cave he had carved amidst the thick foliage, relying on a diet of nuts, fruits, shrimp, frogs, and rats. He fashioned his clothing by skillfully weaving tree bark strips and using the moon’s phases to track time. In 1952, he chanced upon a leaflet announcing the war’s end, but he and his fellow soldiers dismissed it as enemy propaganda, choosing not to surrender. Over time, all of Yokoi’s comrades perished due to starvation or illness, or were captured.

Loyalty Without a Glance Can Shroud the Mind in Ignorance

Yokoi remained firmly convinced that his fellow soldiers would eventually come to rescue him, and he clung tenaciously to this belief. Surrender was out of the question, as he later explained, “We Japanese soldiers were taught to choose death over the shame of being taken alive.” (Additionally, stragglers like him believed that returning to Japan was impossible, fearing they would be branded as deserters and face the death penalty.)

In 1972, Yokoi finally returned to Japan, where he was hailed as a national hero. Upon his arrival in Tokyo, he famously declared, “It is with much embarrassment that I have returned alive,” echoing the indoctrination he had received before the war. For the older generation, he symbolized greatness, embodying the prewar values of diligence. However, for the younger generation, he represented an awkward reminder of outdated ideals. Being captured and surviving was deemed cowardly, as the ideal soldier made the ultimate sacrifice for the divine emperor, even at the cost of his own life.

Yokoi’s remarkable story of surviving in the jungle captured the imagination of the Japanese people. The country was undergoing an industrial boom, and many were fascinated by his ability to endure on a meager diet and his resourcefulness in creating clothing from tree bark. Yokoi even returned his army-issued rifle to “the honorable emperor,” expressing his embarrassment at having returned alive rather than dying in service to the emperor. He regretted not having served his majesty to the fullest.

However, Yokoi never quite felt at home in modern society. Before his conscription in 1941, he had been an apprentice tailor, and now, he found himself overwhelmed by the changes that had occurred during his absence. He subsequently led a quiet life as a hermit, becoming a popular television personality and advocating for a simple way of life. He traveled across the country, delivering public lectures criticizing Japan’s “wasteful modern lifestyle” and championing values of thrift and self-reliance. He was deeply admired for his unwavering determination, his spirit of ganbaru (“enduring adversity without giving in,”) and his unwavering commitment to traditional values.

Embrace the Gifts That Doubt Can Bring. Let Enlightenment Take Flight.

Overall, Yokoi spent 27 years in isolation in the jungles of Guam, stubbornly holding onto his identity as a Japanese soldier long after the war had ended. In doing so, he squandered his life by adhering to ideals that held no significance for anyone else, sacrificing his relationships, career, and personal happiness to pursue the Japanese principle of ganbaru, or unwavering perseverance.

There reaches a point where virtue, taken to the extreme, can transform into a vice. Shoichi Yokoi personified this fallacy. We often admire the act of unwavering commitment, but we tend to lose sight of the underlying reasons behind it due to the blinding effects of rigid adherence.

Beware of blind devotion to any ideology that promotes rigid and restrictive beliefs. Do not overestimate the value of your morals beyond their practical utility, and be receptive to changing your perspective when circumstances demand it. This requires reevaluating your priorities and recognizing that what you once cherished may no longer align with your desires or aspirations. When faced with new information or situations, consider the possibility of altering your stance. There is a difference between sticking to your principles and being imprudent.

When Implementing Change, You’ll Encounter These Three Types Of People

April 6, 2023 By Nagesh Belludi Leave a Comment

To successfully make changes in your workplace, you’ll need to have everyone on board. But don’t try to get them all to accept change at once. Not everyone responds to change similarly; some employees will not react well to it initially.

According to Hans Finzel’s Change is Like a Slinky Paperback (2004,) you must anticipate your allies and adversaries. Determine which of these three groups each of your employees belongs to and adapt.

The Innovators and Early Adopters. Some people love the challenge of change for its excitement and the opportunity to spearhead change. These employees can research the topic, develop prototypes, and act as “change ambassadors” to motivate people further down the hierarchy.
The Careful Majority. Most employees will support change once they’re reasonably confident it’ll succeed. Demonstrate to skeptics what the change will represent and how it will benefit them and the company. Acknowledge concerns—both the spoken and unspoken—and the discomfort of being in unfamiliar territory while focusing on what’s within their control. Eventually, the majority will follow the early adopters’ lead.
The Holdouts. A few employees may resist—and even sabotage—change because they feel uncomfortable about it, don’t believe in it, or can’t see any benefits in it for themselves. If their contentions are worth the time and energy to debate and discuss, make a fair effort to gain alignment on perspective and resolution on position, but be firm with your strategic direction. Get key organizational leaders to give these dissenters reasons and opportunities to get on board, but let them know the price if they don’t accept change.

Idea for Impact: The best managers understand that each employee has different skills, sentiments, wants and needs—and work to put each employee in a position to feel valued and contribute.

Knowing When to Give Up: Establish ‘Kill Criteria’

March 27, 2023 By Nagesh Belludi Leave a Comment

Quit: The Power of Knowing When to Walk Away (2022) by the professional poker player and “decision scientist” Annie Duke meditates on how you could become so wedded to some predetermined goals that you don’t reassess your ever-evolving values and priorities based on new information that you may unearth along the way.

Quitting isn’t bad, especially if you’re blindly heading toward a “fixed object goal” that’s perhaps no longer serving your values—even hurting you in some way you didn’t anticipate.

A Mental Model to Help You Cut Your Losses

Duke suggests instituting “kill criteria” in advance. Before a pursuit, ask yourself: what signals you could see in the future would tell you it’s time to quit or change course?

Before entering a marathon, for example, you could decide if the medical tent counsels that you’re hitting your physical limitations, you’d quit trying to push yourself and walk out.

In other words, every goal needs a resolute “unless” for every task, investment, and relationship. E.g., if you’re miserable at your job, you could give it three more months and pre-select some indicators that would tell you if things haven’t improved even after you’ve increased your efforts.

Idea for Impact: Know when to give up. Grit is great—but only for carrying on for hard things that are worthwhile. Beware of tunnel vision; don’t get so narrowly focused on a specific goal and overlook other opportunities or priorities.

Managerial Lessons from the Show Business: Summary of Leadership from the Director’s Chair

March 13, 2023 By Nagesh Belludi Leave a Comment

Notes on Directing: 130 Lessons in Leadership from the Director’s Chair (2008) explores the parallels between directing the stage and managing projects. The shared themes include ad hoc teams, one-off goals, tight time frames, limited budgets, nebulous chains of command, shared objectives, etc.

Compiled by writer Russell Reich from the notes of British stage director Frank Hauser, this tome contains 130 meditations on casting actors, rehearsing, stage-setting, supervising the production units, and handling critics.

Organized temporally from a director’s initial encounter with the play’s script to its final production, this slim volume is so much more—it’s not just for stage directors.

#7: “Learn to love a play you don’t particularly like. You may be asked—or may choose—to direct a play that, for any number of reasons, you don’t think is very good. In such cases it is better to focus and build on the play’s virtues than attempt to repair its inherent problems.” Idea for Impact: Focus on virtues and strengths, not weaknesses. Spend more of their time reinforcing the good performers than dealing with untrainable performers—i.e., you can never remediate grievous weaknesses. Position the person somewhere else where her talents are a better match.
#33: “Every scene is a chase scene. Character A wants something from Character B who doesn’t want to give it.” Idea for Impact: Productive relationships with balance and joy call for continuous concession and managing one another’s expectations. Work hard to ensure that all sides feel contented with a negotiated compromise.
#73: “Know your actors. Some like a lot of attention; others want to be left alone. Some like written notes; some spoken. Get to know them. It doesn’t have to take long. It’s a good investment that will pay enormous benefits later.” Idea for Impact: Embrace individualized management. No two employees are alike—their temperaments, qualifications, experiences, and backgrounds shape them into thoroughly unique people who’re persuaded, challenged, and inspired in different ways. So why treat them all the same way?

Recommendation: Read Notes on Directing. It’s a worthwhile meditation in managing people, projects, and yourself. Anyone who must get things done through people will find insightful meditations on getting to the core of the narrative, handling people with diplomacy and nuance, and navigating conflict.

Confirm Key Decisions in Writing

March 9, 2023 By Nagesh Belludi 1 Comment

All human dealings are subject to intended and (largely) unintended misunderstandings and misinterpretations. In fact, when an agreement is distasteful, it’s easy to misunderstand.

Confirm oral agreements, instructions, and understandings in writing at the first chance you get. Don’t rely on just memory.

After meetings, email all the participants recording what was discussed. That way, if there’s ever a debate about what was discussed in the meeting, there is a written record to review. Do this even for phone calls if what was discussed is important. A helpful template:

I am confirming the agreement we reached at our meeting this afternoon. We decided on the following provisions: A, B, and C. Let me know as soon as possible if this information is not accurate so we can finalize this part of our negotiations. Call me to discuss any necessary changes if this doesn’t reflect your understanding.

Idea for Impact: “If it wasn’t written down, it wasn’t said.” Documenting critical decisions—your interpretation of it at least—helps avoid future fracas. If you don’t receive a written protest or correction, your account of the meeting stands accepted.

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Persuasion

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Misguided Motivations: The Folly of Incentives in the Great Hanoi Rat Massacre

The Unintended Consequences of Incentive-driven Actions

The Irony of Fines as Deterrents in Action

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Loyalty Without a Glance Can Shroud the Mind in Ignorance

Embrace the Gifts That Doubt Can Bring. Let Enlightenment Take Flight.

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A Mental Model to Help You Cut Your Losses

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