First, the part on fear.
Fear plays a major, major role in all of our lives. In fact, it's kind of like an invisible friend that follows you around wherever you go. Every single decision you make has some element of fear attached to it. When I say that, I mean that fear played some part in the decision making process. While that may not be a huge deal, the huge deal is that we rarely acknowledge its participation in the decision making process.
Fear is like gravity. It's always there, and we get used to it. Fear sometimes spurs people into action, and other times withholds people from acting.
Like I said, every decision we make has an element of "fearsomeness" consideration. Do you turn left on the yellow light or wait? What if a police man sees you? What if you get hit? But what if the car behind you thinks you're going to pull through the light and they hit you from behind? All elements of fear. That's an easy example, but what about the more subtle ways fear affects us. Some people grow up with parents that tell them 'you can be anything you want to be.' Others have parents who say 'you have to be a doctor (or lawyer or XYZ) to carry on the family tradition.' The fear that the child won't honor the heritage of the family dictates that whole person's life. Imagine! One simple emotion dictating a person's entire life. If that's not deep-in-your-gut, mind blowingly significant I don't know what is. And few people face their fears! Instead we mask fear by other terms. "She's just shy" or "I'm just not good at [insert skill]." For example, being a telesales representative is not an easy job. I've rarely seen fear show its face so clearly as when you put a phone in front of someone and ask them to start cold-calling. Few people can stand up to the constant rejection. Oh, and how about public speaking? How many people would rather die than speak in front of an audience (literally - studies show many people would rather die!).
So why does all this matter? Well obviously because fear controls the majority (all?) of the actions in our lives, so fess up to it! Fess up to the fact that you didn't apply to that ivy league school because you were afraid you wouldn't get in, or that you haven't made that phone call because you're afraid of what the person will say, or you haven't figured out how to do-that-thing because you don't know how (oh - and ignorance? just another term for fear, my friend. Not knowing how to do something = being afraid to figure out how to get it done. With Google, you can figure anything out, even how to build a nuclear reactor. So ignorance is no excuse for anything these days).
Really, my only point is to try to get people to own up to the fear that controls them. At least if you can acknowledge to yourself that fear is causing you to make certain decisions, then you can start to get a handle on it. Or at least treat it as a mutually respected foe instead of being blindsided by it when fear controls your decision making process. Go ahead and make a quick mental list of the top handful of things that you haven't done, or haven't figured out, and accept that fear has been holding you back. That business you've been wanting to start? Nothing stopping you except fear. What's that, you have obligations? Kids to feed? A mortgage to pay? Very convenient fear-shields, my friend! Believe me, even if you lose everything, there are still about a billion people in 3rd world countries that would trade places with you any day of the week. So stop kidding yourself and get serious; we only go around on this planet once, so make it count. Go do what you truly love to do. "Half of life is just showing up," as someone once said. And "the harder I work, the luckier I get."
OK - on to part two, expectations.
When you stop to think about it, it's amazing how important expectations are. For example, when you walk into a movie theater, you pay for a ticket. You sit down and watch your movie, and then you leave. But nobody's forcing you to leave. You could just as easily walk into another theater and watch another movie! But the expectation everyone has is the same - that you'll sit down and watch one movie, then leave.
What are expectations? They are these intangible, yet very powerful man-made cultural vibes that resonate throughout our society. You go on green. You stop on red. You drive on the right side of the road. When you borrow money from someone, you repay it. There are no laws of physics dictating that these things happen, but they just.... do. We're all trained to have the same expectations about a number of things, so they just 'are'.
When you get two sets of people together with different expectations, you run into real trouble. Many wars start because of misaligned expectations. I'd argue that much of the unrest in the Middle East can be traced back to vastly differing expectations about who's land is who's, among other differing expectations.
This is why it's so important to make sure two people's expectations are the same when you're interacting, especially in business. This is primarily true because it's really hard to change a person's expectations. It seems like it should be easy, but it's not. Things like:
1) That item actually costs 10x more than you thought it would
2) You were expecting to go out for your anniversary, but your spouse wants to stay in
And many people are remarkably inflexible when it comes to changing their expectations (my argument is that's where much of the fear issue comes in to play, hence the relation between the two).
The bottom line? In business you should be fearless (not careless - there's a difference!) and be ready to change your expectations at a moment's notice, and adapt to the reality that's surrounding you. As Jack Welch used to say, "Face reality as it is, not as it was, or as you wish it would be." Aaahhh, truer words were never spoken.
Daniel Odio gives tips and tricks for entrepreneurs!
Click to listen to "Episode 65: Interview Part 1" and click to listen to "Episode 66: Interview Part 2"
Jim Hopkinson, Wired.com's Marketing Guy and creator ofThe Hopkinson Report, recently interviewed me for his Hopkinson Report podcast. Here's a Tweet of Jim's about the Podcast, and another one about my social media hardware bag and another on my blog posting about how to hire people effectively.
Here is a transcript of the Podcasts
I will try to give a short summary and introduction to the filed of Behavioral Economics in this post. Obviously such an interesting topic can't be introduced properly in one blog post, but I will try to provide links to other websites where the interested readers can find more about this field.
The Behavioral Economics is the field of studying the effects of social and psychological (cognitive and emotional) factors on the decisions the agents take in the context of economics.
According to classical economics, the agents are fully rational individuals (or organizations) that are able to: have clear understanding of what they want and prefer, collect every little detail and information required for decision making, analyze all the data in a rational manner, reach to an optimum conclusion and finally act accordingly by choosing the best option and making the optimum decision that is the most appropriate answer to the problem. It's needless to say that everyone of us have faced with situations where some or all of these presumptions have been violated. To show an example, consider the situation where someone wants to purchase a TV. If we were to accept the fully unbounded rationality, then the person should first of all totally understand why he needs to buy the new TV and what are his preferences and expectations, then collect information regarding every possible option (models of TVs) from price details in different stores to electricity consumption, guarantee conditions, screen size and resolution details, technological details, etc. In the next step, he should find a way to analyze all of the details and every piece of information to reach to a ranking where each TV model is ranked compared to others based on those details. And finally he would act on this ranking and buy the best possible option, the one which he will not regret after a period of time. It should be also noted that the person's decision will not be affected by any factor that doesn't directly influence the TV performance or cost. Now, if this individual wants to follow this process, it might take him a long time to make his decision. Many of us will not take all these steps, we might make some shortcuts like eliminating some brands, we might make our decision based on reviews and recommendations of others rather than our own research, our decision might be influenced by advertisement or even the way and order that TVs have been put on display in a shop (an interesting topic in decision making science which will be discussed in more detail during later posts), or it might be influenced by our mood or the sales pitch of the salesperson . We might purchase some TV with 3D function although we know that we will use this function very rarely, etc. In the end this decision might differ from what the fully rational model has suggested, and we may regret it after a few weeks. Note that this process was just for a comparably simple and unimportant purchase decision, if the person wanted to purchase something more expensive like a house or car, or something with more financial consequences such as insurance, stock or bonds then the process would have taken much longer with many more options and features to consider. Also even the thought of going through such process for every economical decision that we made everyday is mind blowing! So there should be no wonder that we use shortcuts (heuristics) in our decision makings. Our brains are not designed to undertake such detail process like a computer. Our ancestors weren't making such thoughtful decisions when they were being attacked by wild animals, cause if they were going to analyze every option they had in that moment, they would have been ended up dead and we wouldn't been here! The psychologists have introduced two different systems of thinking in humans, named Dual Process. There are many different names for each system but I will use more generic titles. System 1 is unconscious reasoning, quick process, more intuitive, influenced by emotions and experience. On the other hand System 2 is based on conscious and logical reasoning, it is effortful and explicit, slow process, influenced by facts and logic. System 1 is common among humans and animals, it is responsible for quick decisions and reactions, while system 2 is comparably new (probably only a few thousand years old) and can be developed by humans over time. People can work on improving the system 2 thinking, for examples experts tend to make quicker and better decisions in their fields compared to novice people. These two systems frequently work together, for example in some cases initial reaction of system 1 might be modified by system 2, but in many cases the adjustment provided by system 2 is not sufficient to avoid making mistakes by system 1. Going back to our example, we might have been able to produce a list of all TV models with related important factors that will effect our decision and came to a conclusion regarding which model we want to purchase. We enter the shop to buy that particular model and see that they show a movie on the selected TV in the display, and as we didn't like that movie when we saw it a few years ago, it affects our decision and we buy another model! In this instance the system 1 which is being influenced by the memories and emotions causes an unconscious dislike regarding that TV model just because some movie that we didn't like was being shown on it! There is no concrete logic in changing our decision, and there is clearly no connection between that TV model and the video being shown but then again we are not super rational people. Or we might be influenced by some other unimportant factors such as the boxing of the TV! We get influenced much easily by factors not related to performance and cost and we change our decisions. I will provide more examples in later posts where there are conflicts between systems of thinking and where we fail to make the correct decisions.