[Note: I shared this mental model with my email subscribers on Nov 13, 2016. If you want to receive a new mental model every week, join the club.]
What it is:
We’re always looking for short cuts. Whether the latest fad diet, get-rich-quick schemes, or clever growth hacks, we’re all looking for that easy way out.
But to get what we want, we do have to do the hard part. We have to, as the metaphor goes, eat the broccoli.
This is especially relevant in nutrition / dieting. There’s a new fad diet every week. But nothing works unless you eat the broccoli (or give up sugary foods).
Examples in business:
Marketing: Growth hacks and Dropbox style incentives to acquire users are fine. But they’re ultimately useless if you don’t build something users want, and would pay for. Similarly, you can have the latest Material Design for your app, but it’s useless if there’s no reason to use the app.
Content: You (I) can try all kinds of content marketing SEO tricks to get traffic to your website, but the most important thing is – write to be helpful. To be useful. That’s the hard, but necessary, part.
People Management: Many of us hate giving negative feedback. We hope people take a hint, when we are brusque / don’t give positive feedback. We hope they can read our minds. Instead, the simplest way is through. Have the candid conversation. Your team and your relationships will be the better for it.
Rules to follow:
All things that are worth doing have some broccoli to be eaten. Identify the broccoli – the painful, necessary, non-scalable first step – and you’re already ahead of the others.
Instead of ways around the broccoli, identify ways to make it easier to eat it. If it’s a feedback chat, prepare a script for it if required. If it’s understanding what customers want, do structured interviews.
Now, an analogy can only go so far. But in summary, as Seth Godin says, when you’re looking for the trick, remember: it often turns out that the trick-free approach is the best trick of all.
Simple. But not easy.
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[Note: I shared this mental model with my email subscribers on Nov 6, 2016. If you want to receive a new mental model every week, join the club.]
What it is:
The Fogg Behavior Model (FBM) is a way to understand what drives behavior.
We normally assume that every decision / action is based on a solid rationale. That’s usually true, but that’s not enough. To overcome the inertia of inaction, you need something more. Enter the FBM.
At the heart of FBM is an equation:
Behavior = Motivation * Ability * Trigger
Thus, driving a behavior is not about just providing Motivation. You also need Ability (e.g., ease in terms of time, money, effort, routine vs. non-routine). And you need to Trigger the behavior – with a cue, prompt, or call-to-action.
[Source: BJ Fogg’s Behavior Model website]
Examples in business:
Marketing: Your customer value proposition (motivation) is not enough to drive a sale. You also need to make it super-simple to say Yes, as I found when trying to sell toilets in rural Bihar (see point 3 in article).
Design: Having the most important features in your app isn’t enough. You need to make them easy to access (Hick’s Law – anything more than 2 clicks away won’t get done), with a clear call-to-action (Fitt’s Law – the big red button always wins).
Productivity: The reverse also works. If you want to stop checking FB on your phone at work, make it difficult to access – log out so you’ll need to enter the password next time. And remove visual cues – take it off your home screen.
Rules to follow:
When you’re persuading a buyer, don’t just focus on why they should buy. Make it easy for them to say yes (e.g., easy, low-risk payment terms), and then trigger the sale (e.g., social proof, limited time offers).
If you want to break a habit, just make it hard to do. And remove all cues from the environment.
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Regular readers of this blog and my newsletter (subscribe here if you haven’t!) know that I’m an avid reader. 2015, for me, was a year of quantity. I read 60+ books, and at least ten times as many articles.
Some of these were bad, some good, and some changed my perspective on work and life.
I could list the top 5 books I read in the year. But instead, let me present the top 5 ideas that transformed my thinking, and the books I found them in.
1. Keystone Habit – One Habit to Rule Them All (The Power of Habit)
I’ve written before about Thinking, Fast and Slow, and the difference between System 1 and System 2 thinking. The former is rapid, automatic, instinctive and judgmental. The latter is slower, more considered and analytical, and more effortful.
In most situations, we tend to use the quick-and-dirty System 1. The more methodical System 2 is quite lazy.
This proclivity to use System 1 underlines the importance of habits. Such sequential, repetitive tasks are so ingrained that we do them without thinking. The essence of System 1.
For instance, do you think when you’re brushing your teeth in the morning? More likely you’re so woozy you can’t walk straight. Still, your teeth are sparkling clean by the end of it.
That’s the power of habits – you can do certain tasks without thinking.
To understand more about habits, I read two books this year – Hooked and The Power of Habit. They talk a lot about the structure of habits, how to build good habits, how to break bad habits, etc.
But the most powerful concept to me was that of the keystone habit. Keystone habits are small, narrow habits in one area of your life that impact several other areas in a significant manner.
As Charles Duhigg says in The Power of Habit:
Some habits have the power to start a chain reaction, changing other habits as they move through an organization. Some habits, in other words, matter more than others in remaking businesses and lives. These are “keystone habits,” and they can influence how people work, eat, play, live, spend, and communicate. Keystone habits start a process that, over time, transforms everything.
A few examples of this are:
Exercise. When you start exercising, even if only once a week, it triggers changes in various other areas. You start eating better. You become more productive and confident at work. You show more patience towards your family and colleagues. All because of a few push-ups once a week. That’s a keystone habit.
Making your bed every morning. It’s a tiny, almost irrelevant change. But studies show that this correlates with better productivity, greater well-being, and more willpower.
Willpower. This is the most important keystone habit. Studies show that willpower in children is the most accurate indicator of academic performance throughout their student lives. Even more accurate than IQ.
At an organizational level as well, keystone habits can have transformative impact. The book cites an example of how a worker safety program at Alcoa ended up not only improving safety, but also turning Alcoa into a profit machine.
How do these small, unrelated habits have such widespread impact? In Duhigg’s own words:
Small wins fuel transformative changes by leveraging tiny advantages into patterns that convince people that bigger achievements are within reach.
So what are your keystone habits at life and work?
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2. Rewards and their Unintended Consequences (Drive)
Incentives are strange, powerful beasts. Whether it’s pocket money we give children for doing household tasks or bonuses our bosses give us for exceeding sales targets, incentives play a key role in driving us to perform.
I think I’ve been in the top five percent of my age cohort almost all my adult life in understanding the power of incentives, and yet I’ve always underestimated that power. Never a year passes but I get some surprise that pushes a little further my appreciation of incentive superpower.
Given the immense power of incentives, it becomes all the more important to design them right. If they’re even slightly misaligned, they can “damage civilization” (Munger’s words, a tad hyperbolic).
I read Drive earlier this year – an insightful book on the powers of rewards. The book also talks about the negative influences of incentives, if not designed well.
Incentives can drown out intrinsic motivation, even when you’re doing a task you enjoy. If you receive an incentive for doing something, you also receive a subliminal message that the task is not worth doing without the incentive. End result: incentives transform an interesting task into a drudge, and play into work.
[Tweet “Incentives transform an interesting task into a drudge, and play into work.”]
Incentives can only give a short-term boost. Like caffeine, they’re useful when a deadline looms. But beware the energy crash that will inevitably follow.
Rewards can become addictive. As Daniel Pink, the author, says – Yes, rewards motivate people. To get more rewards.
Incentives do have their uses, but only for process-oriented tasks. In fact, incentives for creative tasks can impede progress. They narrow your focus at the exact moment when you need broad thinking.
The book captures many more interesting and significant implications of an innocuous, innocent incentive.
3. Your MVP can be more “minimum” than you think (Lean Startup)
Most people working in the startup ecosystem are familiar with the Minimum Viable Product. The MVP is the most basic version of your product that still delivers your core offering.
It’s an important concept to keep in mind as you build a product. You don’t want to spend too much time building the first version, before realizing customers don’t want it.
I thought I’d understood the concept well. I congratulated myself as I built my first product in three months, found that people didn’t need it, and junked it. And again when I built my next product in four months, tested it with customers for three, and then pivoted it to its current form.
Then I read Lean Startup.
I realized then that I’d taken far too long to build my MVP. What’s more – so had everyone else I know. Why do we all take so damn long to build an MVP?
The reason is that we’ve got the concept wrong. You don’t need to ‘build’ an MVP. You just need to put it together.
What does that mean?
Let’s say you want to create a website offering fashion tips. You can launch in one day or less.
Buy a domain. 3 hours (the actual purchase will take 2 min. But I know you’ll agonize over names for the remaining 2 hours 58. And no, the name won’t matter.)
Build a landing page with Unbounce where people can ask questions or upload photos. 1 hour.
Run a small Facebook campaign publicizing the site. Or tell 10 friends, and tell them to tell 10 more each. That’s your test audience. 2 hours.
Thus, you can be up and running tomorrow! Even if you’re slow because this is your first time.
[Tweet “Your Minimum Viable Product can be more “minimum” than you think.”]
Many popular products of today hacked together such makeshift MVPs when they started. Check out the article in Further Reading for examples.
4. Pareto Principle & the Minimum Effective Dose (Four Hour Work Week)
Four Hour Work Week, by Tim Ferriss, is THE book to read on personal and business productivity. Unlike most productivity books and blogs, he eschews all the standard life-hacking methods (of the “shake your hips while you brush your teeth, to get some exercise” variety).
All he has to say about traditional time management is, “Forget all about it.”
[Tweet “All you need to know about traditional time management is, “Forget all about it.””]
Instead, he focuses on using the Pareto Principle, or the 80/20 rule. He uses this to introduce the concept of the Minimum Effective Dose – the smallest amount of effort for the most impact.
Whether your customers, your vendors, books you read, anything – choose the few that give you the most value, and forget about the rest.
He should know. He puts the Pareto principle on steroids. Sample this:
In his nutrition products business, he “fired” the least profitable 97% (!) of his customers, to instead focus on the 3% most promising ones and double his income.
He eliminated 70% of his advertising costs and almost doubled his direct sales income.
He discontinued over 99% of his online affiliates.
Eliminating the least value tasks and business relationships helped him free up his time to do more productive tasks. And achieve the Holy Grail of less work but more profit. That’s how you do productivity!
Side note: In his follow up book, The Four Hour Body, Ferriss uses the concept of the Minimum Effective Dose to illustrate how to become more healthy. Check that out too.
One skill I tried to build last year was negotiation and persuasion. I read three great books on the subject. I’m still to have the investor conversations where I’ll use this skill, so I don’t know how much they’ve helped!
But one concept that has stuck is that of the BATNA – the Best Alternative To a Negotiated Agreement. In simple terms, the BATNA is your fall-back option in case talks fall through.
Your BATNA is tantamount to your leverage in the negotiation. It works in two ways.
1. The better your BATNA, the more leverage you have.
Let’s say you’re negotiating the sale of your house with a prospective buyer. Your alternative to this is to (a) rent it out; (b) sell it to a land developer to make a parking lot, and (c) live there yourself. If option (b), say, is the most attractive of these, then that’s your BATNA. The value the land developer offers you should form the baseline for the negotiation.
As long as the buyer’s offer is higher than this, you can reduce your price (after making a big deal of it, of course).
Far more important though, is that if the buyer pushes you below this BATNA, you can and should refuse. This is difficult. We tend to over-invest emotionally in a long negotiation. But with this hard stop in mind, you can overrule your emotions and walk away.
2. The worse you make your opponent’s BATNA, the more leverage you have.
Improving your BATNA gives you leverage. Straightforward. But there’s a more interesting insight here. You can improve your leverage by worsening your opponent’s BATNA.
Let’s say you’re the prospective buyer in the above transaction. You know that your seller is holding out because of the safety net of the land developer.
So, you remove that safety net. For example, you could sell one of your own other properties to the land developer, so he’s no longer making an offer to your seller.
By removing the most promising alternative your seller has, you’re weakening his leverage. And strengthening your own considerably.
[Tweet “Show your opponent he has a lot to lose from breaking talks, and he’ll be surprisingly pliable.”]
6. [BONUS] Focus on strengths, not lack of weaknesses (The Hard Thing about Hard Things)
By default, we are all risk averse. In fact, Loss Aversion is one of the strongest, most deep-rooted cognitive biases there is, squirming deep inside our brain’s reptilian core.
This loss aversion manifests itself in several ways. Holding on to bad-performing stocks in the hope of a turnaround. Not making bets because of high risk, even if the reward is much higher.
In the corporate environment, this results in a preference for well-rounded candidates. We tend to choose such people over others who are spiky in some areas, but middling in others. We choose average programmers with great communication skills over 10x programmers who are introverts. We reject uber-salesmen just because they don’t know much about tech.
As Ben Horowitz says in this book, that’s the exact wrong approach. That’s not how great organizations work. Instead, such organizations look for excellent candidates, who are in the top 1 percentile of their roles. Never mind that they’re not good at other things.
“Identify the strengths you want, and the weaknesses you’re willing to tolerate.”
Your Product team should have the best programmers. Even if their communication skills could be better. For sales, hire the best salesmen out there, even if they’ve not worked in your industry before.
We also tend to paper over the weaknesses and focus on repairing them. Again, not the most optimal approach. Instead, focus on honing your employees’ strengths. Plug the weaknesses (If they’re important. They often aren’t.) by hiring superstars in those areas.
[Tweet “Identify the strengths you want, and the weaknesses you’re willing to tolerate.”]
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So, those were the books and ideas that captivated my thinking in the last year. Here’s to many more brilliant ideas and books in the new year. Of course, you’ll be the first to know of any great books I find (sign up here to receive regular updates!).
Hello! I’m finally back to blogging, after a short hiatus to focus on my app’s launch. It’s been a topsy-turvy few weeks with several delays, but we’re now only a week away from launch. Hopefully.
Delays beyond your control can be quite deflating when you’re waiting for the culmination of months of effort. But it’s at times like these that it’s most important to keep your shoulders to the wheel – even when things are not fully in your control, you need to do everything you can.
In this sense, the last few weeks have been a microcosm of the entire starting up experience – unless you’re Elon Musk, luck and other external factors will play a significant role (often more than your otherwise significant efforts) in success or failure. What you can do, is stay on the field. And that requires motivation.
Motivation is a strange beast. I used to think that decent pay and bonuses are good motivators, but here I am, grinding away with no income. And I’m enjoying myself. Clearly, there are some intrinsic factors at play that keep struggling entrepreneurs in the game (hopefully not foolhardiness though).
I’ve wondered about this quite a lot over the last 2 years. But a lot of my questions were answered when I read Drive a few weeks ago. This book, written by Daniel Pink, explores what really motivates us, based on findings from scientific research. [Hint: it’s not money and bonuses]. I’d recommend this book to everyone – understanding what motivates people has pretty direct implications for how we manage our employees, our bosses, our customers, our families, and everyone else we interact with on a regular basis.
But this isn’t a book review or summary. Ever empathetic to the busy reader, Pink himself has included summaries (both Twitter and cocktail party variants) at the end of his book. Instead, I would like to dwell a little on one aspect – his discussion on extrinsic motivation. I found it fascinating to understand some of the pitfalls of extrinsic ‘carrot’ rewards like money and bonuses.
1. Money drowns out intrinsic motivation and performance.
Research shows that even if you innately like a task, being paid for it actually reduces how much you like it. I was surprised by this result, but some others intuitively get it. For example, one person I know loves baking in her free time, but doesn’t want to do it full-time – she feels that the pressure of earning money will reduce the pleasure she gets from baking.
Rewards perform a weird sort of behavioral alchemy – they can transform an interesting task into a drudge, a fun assignment into a bore, and play into work. And by reducing intrinsic motivation, they can send your performance and creativity toppling like dominoes. What’s more, you’ll now only do these tasks if you’re paid for them. [Note to parents – don’t pay your kids for household chores]
[Tweet “Money can transform an interesting task into a drudge, and play into work”]
2. Extrinsic rewards give a short-term boost. Like a jolt of caffeine, they’re particularly useful when a deadline is looming. But like the energy crash that inevitably follows a post-coffee frenzy, long-term motivation and performance will also fall.
3. ‘Carrots’ can become addictive.
Offering an extrinsic monetary reward for a task signals that it is undesirable (if it were desirable, would you need a carrot?). And this, to resort to cliché, is a slippery slope. Offer too small a reward, and they won’t comply. But offer a reward that’s enticing enough the first time, and you’re doomed to offer it forever.
[Tweet “Yes, rewards motivate people. To get more rewards.”]
But the bad news doesn’t end there. Once the initial money buzz wears off, this will feel less like a bonus and more like the status quo. You’ll then have to offer ever-larger rewards to get the same task done, just like the nicotine addict falls into the vicious cycle of more and more cigarettes to get his ‘hit’.
4. Rewards promote short-term thinking
Once there’s a carrot in front of you, that’s all you’ll see, at the expense of more long-term objectives. Just like the auto mechanics who conduct unnecessary repairs to meet their sales quotas. Or, more terrifyingly, Delhi’s monster Blueline buses which went on a killing spree, all because of an innocuous incentive to ply their routes quickly.
5. However, extrinsic rewards aren’t completely useless. If the task at hand is process-oriented, like filing documents into folders, then an incentive can speed you up and reduce your Facebook / power nap breaks. But if a task is creative, then monetary rewards have the effect of narrowing your thinking – when what you require is the exact opposite.
6. When you attach a bonus to a target, you may increase the probability that it will be hit (at least if the task is process-oriented). But you almost guarantee that the target will not be surpassed. Your teams will work hard to meet the target. But no further.
Thus, over a basic threshold of the amount needed for basic comforts and happiness, monetary incentives can work negatively. This has deep implications for how we manage our teams, employees, families, etc.
We could now talk about what does motivate people. But why don’t you read the book for that? Let’s do something more interesting instead – let’s predict what these findings mean for some of the trends in our economy.
b. Many heavily funded startups are spending equally heavily to acquire employees and customers. But these efforts may have a short shelf life.
If you’re throwing money at employees, you should expect that you won’t retain them over time, and that performance will suffer in the interim. Unlike large companies, work at startups is not algorithmic and process-oriented – you need someone who reigns in (and reins in) chaos.
In their bid to conquer the mobile space, many companies are incentivizing app downloads by the millions (yes, users actually get paid for downloading apps). Even if these investments boost vanity metrics today, results will tail off very quickly, as users begin to install apps just for the rewards, and then never use them again.
c. If you do have to use incentives, design a mix of long- and short-term targets, and make them harder to game.
App marketers could incentivize use of the app over time, and not just installs. Give a bonus on the first major activity, rather than on ‘Install and use for 30 seconds’.
In a corporate sales scenario, bonuses could be driven by both new sales and customer churn, to promote longer-term customer management vs. one-time discounts.
d. But even when promoting use, a monetary incentive is bad news. Just like Drive showed, if you create incentives around specific targets, people will work hard just to meet them, and no more.
A case in point is the Indian government’s drive for rural toilet construction (a strong interest area of mine – see this). Over the last 15 years, the government has given ever-increasing incentives for toilet construction – starting with Rs. 200-400 in the early 2000s, to Rs. 12,000 today. But they’ve seen large numbers of toilets being used as anything but – often as store-rooms or an additional room. People have just constructed ‘toilets’ to pocket the incentive.
Yes, this is a toilet!
Many stakeholders are now trying to move the incentive towards usage – e.g., a part of the reward comes to you only if you’re still using the toilet 3 months after construction. While this idea sounded great the first time I heard it, I now fear it may also be doomed to fail. This effectively destroys intrinsic motivation to use a toilet (which there otherwise would be – it is indeed far more convenient than open defecation). People will feel they’re being paid to defecate at home because that’s the less comfortable thing to do. When the incentives stop, use will fall too. Bringing us back to square one.
Extrinsic rewards are undoubtedly simpler to design – what’s easier than throwing money at a problem, in these profligate times? But Drive serves a timely reminder that as in most other areas, only the hard work of creating intrinsic motivation will bear fruit.
Hope you found this post interesting. Can you think of any other implications of extrinsic ‘carrot’ rewards? Do share in the comments. You can also email me at [email protected] or tweet at @jithamithra. Until next time, then!
