Given that we are in a new year, I thought it might be nice to reflect on the past year. So today I want to share with you my favorite blog entries from 2011. I chose my top 10 for three categories: 1)innovation & creativity, 2) general business, and 3) life and happiness. Admittedly, the articles I like most tend to come from the last category as they are more personal in nature.
The articles are not listed in any particular order, but the asterisks do indicate the crème de la crème (in my humble opinion).
And don’t forget, these only represent the entries from 2011. I have been writing since January 2005 (7 years) and have over 500 articles on this blog.
I welcome any and all comments (e.g, if I missed one you liked, or if one should be taken off the list). Enjoy!
TOP 10 INNOVATION AND CREATIVITY ARTICLES
- *** Freedom Can Limit Innovation
- *** My ABC News Interview (and other media)
- *** My Article in Southwest Airlines Magazine
- *** Ask a Different Question, Get a Different Answer
- *** Ideas, Ideas Everywhere…
- Why Brainstorming is Stupid
- What I Learned From an Expired Bottle of Mayo (AMEX OPEN Forum)
- Is Thinking Choking Your Creativity? (AMEX OPEN Forum)
- Stop Asking for Ideas (AMEX OPEN Forum)
- Why Edison Was Wrong (AMEX OPEN Forum)
- *** How to Publish a Book in 2 Weeks (AMEX OPEN Forum)
- *** Before You Can Multiply You Must First Learn to Divide (AMEX OPEN FORUM)
- *** Your Customers Are Cynics (AMEX OPEN Forum)
- *** I Won’t Work for Money
- *** Why You Should Work with People You Don’t Like (AMEX OPEN Forum)
- How to Create a Happy Work Environment (AMEX OPEN Forum)
- Tactics for Captivating Your Audience (AMEX OPEN Forum)
- 7 Strategies for Running Your Business While Pursing Your Passions (AMEX OPEN Forum)
- The Performance Paradox (Idea Connection)
- How I Used Crowdsourcing the Wrong Way And What You Can Learn From It (AMEX OPEN Forum)
TOP 10 LIFE AND HAPPINESS ARTICLES
- *** Balance of Work and Life is a Myth (AMEX OPEN Forum)
- *** How to Embrace and Conquer Pain (AMEX OPEN Forum)
- *** How to Always Be On Time (AMEX OPEN Forum)
- *** When You Sit on the Fence, You Get Splinters in Your Ass! (AMEX OPEN Forum)
- *** How to Be Selfless by Being Self-Centered (AMEX OPEN Forum)
- *** How Losing Personal Attachments Can Help You Realize Ambition (AMEX OPEN Forum)
- *** How to Create Luck in Business and Life (AMEX OPEN Forum)
- The Key to Immediate Happiness (AMEX OPEN Forum)
- Is It OK To Marry Your Work - part 1 (AMEX OPEN Forum)
- Is It OK To Marry Your Work - part 2
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I realize that book publishing does not directly relate to innovation. But I have had so many conversations with people about this in recent weeks that I decided to write an article about it.
This article is nearly 3000 words in length. As you will see, if I double (or triple) the length, this article could become a book.
It seems as though everyone wants to write a book. Well, actually everyone wants to publish a book. Few people want to write one. Unfortunately, most people don’t know where to start and therefore become undermotivated or overwhelmed. The result? Good intentions; no book.
But what if you could have a bookstore quality paperback in your hands in two weeks? And what if you didn’t have to do much writing?
Here’s a technique you can use to publish a non-fiction book in a fortnight. I recently wrote a book in a few days and had a published version in one week.
To do this, you must use a print-on-demand self-publisher and not a traditional publisher.
Business books work best with the method. Fiction requires an entirely different approach.
Before you get started, there is one question you must answer…
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Which will help your business be more successful: statistics or probability?
Underwriters at insurance companies use statistics to assess future risks. This is based on years of collected data.
Probability is what card counters in Vegas use to increase their odds of success. This is based on real-time, real-life experience.
If you want to play it safe, use statistics. If you want to win big, use probability.
There Are Lies, Damned Lies, and Statistics – Mark Twain
Businesses are increasingly using statistics to manage decision making, as evidenced by popular books like Tom Davenport’s Competing on Analytics and the boom in CRM system usage.
The belief is that if we gather more data we can make better decisions. But this may not be true when it comes to innovation.
If you are crunching numbers, you are probably gathering information from existing customers. This will give you insight into their buying habits, usability behaviors, and other patterns. But most likely you are only gathering data on YOUR customers. This represents the middle of the bell curve or the norm. This information may be useful in “incremental” improvement, but it will rarely lead to significant innovations.
When you move beyond the norm to the far ends of the bell curve, you will find the real interesting ideas.
Being normal is not a virtue; it denotes a lack of courage
On the far right-hand side of the curve are the market leaders; the advanced users. They may not be your customers because you can’t meet their high-end needs. Or maybe they were once your customers and they left. When someone is not a customer it is difficult to gain insights into their wants and needs. If you could somehow understand their perspectives, you may find opportunities for “advanced” innovation and insights on where the industry may be going in the near future. These innovations would be more radical, yet continuous in nature. Think of this as the Blu-ray improvement on the standard DVD (we’ll save a discussion on the demise of HD DVD for another time).
On the far left-hand side of the curve are the laggards; the less sophisticated users. Your products/services may be too advanced, too complicated, or too expensive for their needs. Again, you are probably not gathering statistics on these individuals or organizations. But here lies the greatest opportunity for discontinuous innovation. Or as Clayton Christensen would call it, disruptive innovation. If you can find a way of “dumbing down” your offering, you might find new and untapped sources of revenue. Quite often these products become the de facto standard, much like when PCs replaced the more sophisticated mainframes and mini-computers.
The problem is, it is very difficult to get data about the ends of the bell curve. Focus groups, surveys, and other traditional data gathering techniques are useless. I love this quote from Scott Cook at Intuit: “For every one of our failures, we had spreadsheets that looked awesome.” We can use numbers to justify anything we want. But quite often they justify the wrong actions.
The Probable is What Usually Happens – Aristotle
If a statistics-driven innovation model does not work, what would a probability-based model look? Probability tells me that if everything is equal, the more bets I have, the more likely one will be successful. The odds of 1 success out of 200 are greater than 1 success out of 20.
But how can you have more bets without diluting your effort and potential returns? The key is to learn as you go. This is exactly what card counters to.
Let’s contrast a more statistics-driven model with a probability-based model. To do so, we will use two exceedingly simplistic examples. With innovation model #1, you make a few “big bets” based on analytics you gathered from your customers (a statistics-driven model). Innovation model #2 is a more experiential “learn as you go” model (a probability-based model).
In both examples, let’s assume you have $100 million to bet, woops, I mean invest in innovation.
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When I conduct executive training, one of my favorite activities requires participants to consider a typical set of processes common in the insurance industry: Develop Products and Services, Customer Service, Manage Revenues, Manage Distribution Channels, Market Products and Services, Underwriting, Claims Fulfillment, Manage Provider Network, and Plan and Manage the Enterprise.
I ask the group to tell me which process is most important to an insurance company. Quite often, the first answer will be Claims Fulfillment. “Why?” I ask, and they will say, “Because this is why customers get insurance in the first place.” I usually respond that Claims Fulfillment is a very important process, but I want to know which is the most important process. Someone will then suggest Manage Revenues because it is how the company makes money. Again, I commend them for their answer, but I still want to know the most important process. This goes on for a while, until nearly every process has been suggested. Eventually I stop the group and say, “Okay, I am going to give you the answer to this one: ‘It depends.’”
I then tell them about the strategies of four insurance companies serving relatively similar markets.
Unum Insurance. Unum is the market leader in disability insurance, a firm that differentiates itself by its skill in assessing and pricing risk. Unum claims, for example, to have such finely tuned data that it can distinguish the difference in risk between left-handed and right-handed doctors who drive Volvos and live in New Jersey.
Progressive Insurance. This company has achieved a remarkable level of excellence in claims processing and, as a result, has become one of the most profitable firms in the industry. Progressive’s loss adjusters operate from vans with cellular communication links and computer workstations. Driving around their assigned territories, they are often at the scene of an accident before the police. In many cases, claims are processed on the spot, and it has been known for a check to be handed over by the company’s loss adjusters at the site of an accident.
State Farm. Competitive positioning for State Farm depends on its exclusive (and extensive) network of agents and offices. Its wide geographic coverage is reinforced by the company’s motto: “Like a Good Neighbor, State Farm Is There.” The firm differentiates itself from the rest of the pack by this type of branding.
USAA. The customers of USAA are primarily in the transient, mobile military services. Because its customer base is so mobile, USAA tries to be as helpful as possible to its customers. At one time, USAA was the world’s largest user of toll-free numbers, which it uses as the main means to communicate with customers. These investments have paid off. In 2007, USAA was rated the #1 Business Week customer service company.
What is the most important process to Unum? It is Underwriting. For Progressive its source of differentiation is Claims Fulfillment. For State Farm, its Distribution Network is critical because the large volume it generates spreads its risk across a broad swath of the population. And USAA is focused on Customer Service. Capabilities that are strategic for one organization may well be less critical for another in the same industry. All four of these companies are essentially in the same business, but each concentrates on a different process to achieve its competitive advantage and its differentiation in the marketplace.
What is YOUR most important process? When I ask this question of CEOs, top executives, and employees, there is typically a very long, uncomfortable silence. Most people do not think of their business in these terms.
Although the question is simple, the answer requires significant reflection and alignment. And answering this question is important for determining your innovation strategy. In particular, how to focus your innovation investments. Companies have limited resources that must be invested in the processes that will have the greatest impact on the bottom line.
Here is a framework I use to help organizations prioritize their innovation investments.
Consider that your processes fall into three levels of strategic importance: “differentiating,” “core,” and “support.”
Differentiating processes (or I prefer the word capabilities) are those that set you apart from your competition. These are your most important capabilities. Ideally you only have one or two of these capabilities. At USAA, for example, this is Customer Service.
Core capabilities are critical to your business, but are not your source of competitive advantage. These create direct value for the customer. For a manufacturing company, core capabilities might include order fulfillment, order acquisition, and product support.
Support capabilities are necessary for running the business, yet are not considered core. Quite often, these are thought of as HR, IT, or finance.
Categorize all of your capabilities and then consider different strategies based on their position:
- Support work should be minimized, and ideally, outsourced as much as possible. Cost containment is the main strategy while still assuring high quality.
- Core work should be simplified and automated whenever possible. The objective is to turn these capabilities into well-oiled machines. Efficiency is the main strategy.
- Differentiating work is typically knowledge work and is where you want to make the greatest investments in innovation. Ideally, you want to empower knowledge workers to deliver non-cookie-cutter results that will continually set you apart from your competitors.
There are several important points to note with this model:
1. Because innovation seems glamorous, companies often try to focus on differentiators before they have a good foundation. This is a mistake. You must have your “core” capabilities working well (efficient, low error rates, high service levels) before you can start worrying about your differentiators.
2. The most valuable use of this model is not at the enterprise level, but rather when used within each capability. Even support capabilities have components that help differentiate the company. For example, a major consulting firm was re-evaluating its corporate training curriculum and used this model to assist. They first determined which classes provided capabilities necessary to beat the competition – that is, their “differentiators.” For these, in house custom courses were developed. For “core” consultant skills, they partnered with world-class training organizations to provide tailored versions of existing training. And for less important, support skills, they used off-the-shelf training modules (outsourced training).
3. Sometimes, your differentiating capability can be one that ensures that the work of others is repeatable and predictable. Wal-Mart invests heavily in the ability to connect stores, warehouses, and vendors through leading-edge technology. The employees who develop these computer systems are Wal-Mart’s most valuable knowledge workers. McDonald’s innovation labs help ensure that every customer gets the same quality hamburger.
4. If you are #2, #3 (or worse) in your industry, your differentiating capability should ideally be different than that of your leading competitors. When you are playing catch-up, changing the rules of the game is critical. It is hard to beat someone at their game.
5. Your differentiating capability should be something that is difficult for your competition to replicate. One service company I worked with claimed its “offerings” were its competitive differentiator. I asked the group, “How long after introducing a new offering does your competitor offer the same deal?” The answer was, “In as little as two weeks.” Unless you want to reinvent yourself on a weekly basis, you should find a differentiator that is difficult to replicate and is uniquely yours.
This is an extremely powerful framework, and its uses are unlimited.
What is YOUR most important process?
Back in the 1980’s, executives used to joke that you would never get fired for buying “Big Blue” (IBM) computers. It’s not that IBM was the best, but you knew they would not screw up.
When I worked for Accenture (then Andersen Consulting), the Economist once called us “The McDonalds of the consulting industry. You know what you will get and it’s not fillet mignon.” People hired us not to get highly creative solutions, but rather to be assured of a successfully implemented solution.
There is a reason why consulting firms are so successful.
People choose safe, tried and true solutions over those which may be better yet have a risk of failure.
This is human nature. People take risks to minimize losses, yet play it safe when it comes to increasing gains.
But how much of a gain must be dangled in front of us before we will risk giving up the sure thing? I’ve been conducting a survey to find the answer.
Here’s the first question posed to respondents:
Which would you choose?
- Option 1: A guaranteed gain of $75K or
- Option 2: An 80% chance of getting $100K and a 20% chance of getting nothing
Our survey found that 75% of the people go for the sure thing, option 1. People play it safe when it comes to increasing gains. But how safe?
What if the upside is increased to an 80% chance of getting $150K? Now, 57% take option 2. Still, 43% play it safe, even though there is an 80% chance of doubling their money.
What if the upside is increased to $225K? 76% choose option 2. This means that, 1 in 4 people still play it safe even when the potential upside is 3 times the original amount. When we increase the upside to $450K – 6 times the original amount – we still have 20% of the people who go for the sure thing.
It appears that people believe the expression, “A bird in the hand is worth two in the bush.” Interestingly, the original Old English expression was, “”Better one byrde in hande than ten in the wood.” That seems even more accurate.
Ok, let’s look at the loss side of things.
Here’s the first question posed to respondents:
Which would you choose?
- Option 3: A guaranteed loss of $75K or
- Option 4: An 80% chance of losing $100K and a 20% chance of losing nothing
This time, when presented with a loss rather than a gain, 71% go for the riskier option 4. People take risks to minimize their losses. [As an aside, when I ask audiences this question, the percentage of risk takers is closer to 90%]
Increase the potential loss to $125K and 44% still go for the riskier option 4. When the potential loss is increased to $250K, 22% of the respondents still opt for option 4.
If you plot these responses (risk-taking probabilities against expected gains), they make a nice “S” curve as depicted in the graphic left.
What does this graph tell us?
It clearly supports the premise that people take risks to minimize losses, yet play it safe when it comes to increasing their gains. The loss of $1,000 hurts more than a gain of $1,000 feels good.
This means that you can sell someone more easily when you focus on losses rather than the gains. This might explain why Al Gore has been so successful with his “Inconvenient Truth.” Instead of focusing on the benefits of a cleaner environment, he focused on the “meltdown” associated with the status quo. Can anyone say Nobel Prize?
The shape of the curve also gives us a bit more insight. First, the gain of $2,000 does not feel twice as good as the gain of $1,000. Equally, the loss of $2,000 does not hurt twice as much as the loss of $1,000. There is a point where we become numb to the increased gain or loss.
Another potentially useful take-away is what I call the “risk/reward tipping point.” This is the point where the “S” curve flattens out on both the loss and gain side. This occurs at the point when 80% of the people take the desired action. And based on my research, this ratio is a little under 3.
What does this mean?
The hoped for win (the upside) must be three times the guaranteed amount in order for most people to risk the sure thing.
There is a reason why the status quo wins out in business, politics, and life. Rarely are we given options where the benefit is three times the sure thing/current situation.
On a final note, there was some interesting research on this topic…but with a twist. Researchers at Duke University, in a paper entitled “Sleep Deprivation Elevates Expectations of Gains and Attenuates Response to Losses Following Risky Decision” (Venkatraman, Chuah, Huettel, Chee), wrote that this risk-taking profile changes when someone does not get enough sleep.
When kept awake for 24 hours, the study (supported by brain scans) showed a double whammy: people became more optimistic about potential gains and they were also numbed to the negative feelings associated with losses. They would act riskier and have less regret (distinct from disappointment) about bad decisions. Their decisions were often bad decisions. If you go to Las Vegas, be sure to get plenty of sleep!
Our ancestors lived in a world of scarcity. Therefore it is not surprising that we do everything in our power to horde what we have. Unfortunately, our desire to play it safe can cause us to miss out on big opportunities. Risk taking is fundamental to innovation. And innovation is critical to long-term success.
If you want to see some of this stuff action, be sure to read my entry on 10½ Ways to Improve Your Life – By Losing. This may give you some tools to enable you to take healthy risks to improve your life and business.
Much literature has been written on branding.
But what is a brand? Can you define it in just 6 words?
No, it is not Nike’s “swoop.” It is not McDonald’s “I’m Lovin’ It” jingle. It is not Accenture’s Tiger Woods ads. It is not the design of my website or my “Unconventional Thinking” tag line.
Erik Hansen, Tom Peters’ brand manager (and a good friend of mine), said it quite eloquently. A brand is… “what your customers say it is.”
What is great about this definition is that it gives you direct access to changing your brand. To change your brand you must change your customers’ perceptions and experiences. No logo or advertising campaign has ever done this.
Much less has been written about culture. Can you define it in just 4 words?
This one is a bit trickier. If you Google “definition of culture” you will find a wide range of thoughts on the topic. Webster’s definition of organizational culture is “the set of shared attitudes, values, goals, and practices.” Not bad. But it does not give you direct access to changing your organization’s culture.
Try on this definition.
Culture is… “what your employees say.”
It not what they (or you) say it is, but rather what they say.
It is defined by the conversations. Verbal, written, and unwritten conversations. These might be your mission, vision, rules, and policies. But quite often, your culture is more powerfully defined by the informal conversations that take place.
Conversations between employees. Conversations between bosses and subordinates. Conversations between employees and customers. Conversations between employees and their family and friends. And most importantly, the conversations that take place in the heads of your employees.
Given this, how do you change a culture?
You change the language.
There is a reason I have been dedicating so much blog space to the power of language. Yes, I am fascinated by language. But more importantly, the words we use define our culture. The words we use impact risk taking, perceptions, and motivations.
I would love to hear your thoughts on these definitions.
In future blog entries, I will discuss specific ways in which you can change your organization’s culture by changing its language.
Imagine the following situation. You are single and live in New Jersey just outside of New York City (NYC). Your employer wants you to work in London for a few years. You are excited about the possibility of living overseas and are interested in the job. Assuming that the costs of living for New Jersey and London are roughly equivalent, which option would you choose?
1. Temporary Option: You stay an employee of the NYC office and are “on loan” to London. You continue to pay your mortgage/rent in New Jersey, but can rent/sublet your place to someone during your absence. The company pays all of your expenses in London: housing, food, and travel to and from the US. They cover the difference in taxes between the US and UK. Basically you have no expenses for the three years you are there and you can sock away 100% of your salary. Your stay is temporary. After your time overseas, you will return to the US.
2. Permanent Option: You transfer from the NYC office and become an employee of the London office. You are paid in British pounds just like all other British employees and you pay UK taxes which are higher. Although you sell your house in New Jersey and have no expenses in the US, you need to cover all of your expenses in London. There is no guarantee of a job in the NYC office should you decide to return to the states.
Financially, option #1 is a SIGNIFICANTLY better deal.
But when faced with this situation in real life, I chose option #2.
Three years is a long time. I wanted London to feel like home. I wanted to live like a native. I wanted to know that there was no return to the US. It forced me to be present to what I was doing and to take full advantage of England. I formed new social circles. I dated. I lived as though I would be there forever. London became my home. A little more than three years later, I was back in the US, without a job.
Although from a financial perspective, it may not have been a great decision, it was the right decision. I had the most spectacular three years of my life. Had I chosen option #1, I may never have felt settled. I always would have known that I was leaving. It would have been a missed opportunity.
How often do you live with uncertainty? How much of that uncertainty is created by you in your mind? How much does this uncertainty ruin your present moment experiences?
Have you ever been in a great relationship…yet continually worried about it ending? Maybe you were concerned that your partner didn’t love you as much as you loved them. Or perhaps you thought that your relationship was just too good to be true. Although you have great times together, these concerns permeate your mind. Doesn’t the uncertainty about the future affect your pleasure now? Doesn’t it also this increase the likelihood that your greatest fears will materialize and your partner will leave? Let’s face it, most relationships eventually end. You leave your partner, your partner leaves you, or your partner dies. But if you live with the anticipation of that ending, you will never enjoy the present.
Have you ever been in a job that you didn’t like? Did you daydream continuously about leaving…yet three years later you are still in the same job? Instead of dreaming about the future, be present to what you can do today in your job. Look for new opportunities internally. Do the best job you can. Find ways of adding more value. If you are focused on leaving, you will be miserable. And the odds are, you will lose your job because of poor performance. That’s when you will begin to daydream about how great your job used to be.
Being present, without worrying about the future, is not easy. Could I have chosen option #1 and treated London like my home? Quite possibly. However, for me it was better to take what seemed like a permanent option, even though it was just as temporary.
What if everything is temporary? But what if the option we choose – temporary versus permanent – is the one thing that determines our happiness?
Where in life are you living the “temporary option,” where you think/hope/fear that your current situation will end? Where is this not serving you well? How can you choose the “permanent option” so that you are living fully in each moment?
This may be THE key to happiness.
Once again we explore the power of language. This one was given to me by Michael Wiederman, Professor of Psychology at Columbia College.
Imagine that you serve on the jury of an only-child custody case following a relatively messy divorce. The facts of the case are complicated by ambiguous economic, social, and emotional considerations. Therefore you need to base your decision entirely on the following few observations:
Parent A has an average income, average health, average working hours, a reasonable rapport with the child, and a relatively stable social life. This parent is essentially average in every way.
Parent B has an above-average income, minor health problems, lots of work-related travel, a very close relationship with the child, and an extremely active social life. This parent has both notable strengths and notable weaknesses.
Here’s the interesting part…
If the jury is asked who should get custody, most people choose Parent B.
If the jury asked who should not get custody, most people choose Parent B.
Adding one word changed people’s responses and beliefs.
When asked who should get custody, people look for the positive attributes and see that Parent B has more positive attributes than the blander Parent A.
Conversely, when asked who should not get custody, people look for the negative attributes and see that Parent B has more negative attributes. Therefore Parent A should be awarded custody.
This is an example of the psychological concept, confirmation bias.
This is important to keep in mind as we get closer to the Presidential elections. Political polls, such as the Gallop Poll, are often biased (unintentionally or other) by the wording of the surveys. Think critically before you make important decisions.
In two previous blog entries, (#1 and #2), I discussed the psychology behind risk taking. In particular, I explored why people take risks to minimize losses, yet play it safe when it comes to increasing gains.
In this blog entry, I discuss a number of implications of this mindset. Here are 10½ – potentially irrational – ways in which people do everything in their power to minimize losses, even though the gains that can come from risking the loss can be amazing.
1. CREATIVITY: According to studies, 98% of children age 5 are highly creative, yet only 2% of adults over the age of 25 are. Why? One reason is that children do not worry about looking silly. Adults do. Adults will stifle a potentially great idea in order to avoid losing face. Action: Add some play to your life and work. Stop being so serious. Take improv comedy lessons. This will certainly get you comfortable with looking silly!
2. INNOVATION: Companies continue old business practices, processes, and products because the perceived risk of losing these is too great. Action: Keeping a business or product because of sunk costs is stupid. Ditch anything (including people) that is not working. Ask yourself, “If I were starting my business from scratch, how would I design it?” If it is different than your current model, then maybe you should get rid of a few things. What you stop doing is often more important than what you start doing.
3. INVESTING: Stock owners often hold on to investments that they would not buy if they did not already own them. Or worse, if they own a stock that is tanking, they buy more on the belief that “because I own it, it will recover.” I did this with Webvan stock. I kept buying more stock as the share price plummeted, convinced it would bounce back. Alas, you can’t buy anymore when it is worth nothing. Action: Sell anything in your portfolio that you would not buy if you did not own it. Low transaction costs make holding on to duds irrational (unless tax implications indicate otherwise).
4. CAREER: People often stay in unsatisfying careers because the “devil you know is better than the devil you don’t.” I know what you are thinking. “Why should I give up my crappy job that gives my ulcers and high blood pressure? I worked my entire life to get where I am.” Um, I don’t know. Maybe because there are at least 1,000 better careers for you. Action: If you don’t love your job, quit. Ok, not so fast. But imagine leaving your job. Explore what is possible. When you discover something better, list all of the reasons why you are still not prepared to leave your current situation. Then find ways of addressing each of these concerns.
5. CUSTOMERS: Are all of your customers profitable? Are all of them desirable? The odds are, you have many customers or customer segments that are just not worth the effort. Ironically, companies often spend an inordinate amount of time with customers that provide the least returns. Action: Ditch the least profitable 20% of your customers. Or at least find creative ways to make them more profitable – and less time consuming.
6. DATING: People will do anything to avoid losing face. The fear of rejection stops people from asking others out on a date, even though if they said “yes” it could lead to a new relationship. Action: Stop being a wimp! Rejection never killed anyone. Ask out that person you’ve had your eye on. Go up to a stranger in a bar and say, “I’m thinking of changing my name to Romero. What do you think?” (if you don’t know the Romero story, click here)
7. RELATIONSHIPS: Imagine that you are in a relationship that is going nowhere fast. Your gut tells you it should end, but for some reason you do everything in your power to keep the relationship alive. Action: First, do what you can to bring the relationship up to the standards you deserve. If that does not work, find an equitable way of ending things and moving on. Do you really want to wake up 25 years from now in the same wretched relationship?
8. BELONGINGS: Go through your closets. Look in your bookcases. How much “stuff” do you have that you really need? How much of it would you buy if you did not own it? 20%? 30? Certainly not more than 50%. I often hear people say, “as soon as I throw something out or give it away, that’s when all of a sudden I find a need for it.” Although this phenomenon is not true, it seems real. As a result we hold on to things “in case” we need them, rather than “because” we need them. Action: Go through everything you own. If you haven’t used it in a year, put it in a box. If after a year you haven’t opened the box, give away (or sell) the entire box.
9. HEALTH: People will spend a lot of money on health insurance – a way of reducing losses associated with an illness. But they won’t put much time or energy into increasing their health. Action: For every dollar you spend on health insurance (loss prevention), spend at least 10 cents on things to improve your health. Get a gym membership. Buy vitamins. Get a massage. Take a stress relieving vacation.
10. REQUESTS: People are often afraid to ask for help because they don’t want to seem needy (lose face), or impose upon and risk losing their friends. Action: Identify 10 requests you could make of 10 different people (e.g., a connection with a person who may be able to help your business, feedback on a new business idea, financial support, moving your house). Then, ask these people for help. You may be surprised to find that few people say “no” and that most people are willing – and want – help you.
10½. Why do I blog on a regular basis? One motivator is to avoid losing readers. I currently get 50,000 visitors here a month. I intentionally write for a mass-market to attract as many diverse readers as possible. I have considered writing only for a niche market (e.g., corporate innovation), but I know in doing so I would lose a lot of readers. I realize that having fewer, yet more active readers may actually be a good thing. Alas, for now, I like appealing to a large audience.
Where in your life have you given up something only to find a huge gain? Where have you held onto something knowing it was holding you back?
In an earlier blog entry, I discuss the power of language. I want to explore this a bit further today.
Here’s my variation of the “Asian disease problem” mentioned in that earlier blog entry:
Which would you prefer?
- OPTION 1: A guaranteed gain of $75,000?
- OPTION 2: An 80% chance of gaining $100,000 with a 20% chance of getting nothing?
When I give a speech and ask the audience this question, 75% choose Option 1. This percentage is consistent across all groups, regardless of who is in the audience.
Ok, what about the following? Which would you choose?
- Option 3: A certain loss of $75,000?
- Option 4: An 80% chance of losing $100,000 with a 20% chance of not losing anything?
When audiences answer this one, 99% choose option 4.
This once again supports the premise that people will take risks to reduce losses, yet will be more risk averse when it comes to increasing gains.
Interestingly, when you look at these options, even though most people choose options 1 and 4, options 2 and 3 give you better returns. On average, you will gain $80,000 with option 2 and will lose $80,000 with option 4.
Look around and you may begin to see examples of advertisers focusing on losses rather than gains, with stellar results. For example…
How many mattress commercials have you heard that say, “Buy our xyz bed and you will get your best night’s sleep ever.” Yawn. Boring. The commercial may put me to sleep, but it’s not going to get me to buy a bed.
Consider this actual advertisement. “If your mattress is 10 years old, it weighs twice its original weight due to the dust mites that accumulate over the years.” Ouch! This makes me want to replace my mattress now.
Instead of selling customers on how great your product or service is, show them the downside of using a less reliable alternative. As a friend of mine says, “If you need open heart surgery, would you shop for a cardiologist based on price?” She then launches into the risk associated with not getting it (your product/service) right.
What examples have you seen of great sales pitches, advertisements, or anything else that uses this concept?
P.S. One place where this concept apparently does not apply is on TV game shows. I see people on “Deal or No Deal” risk a certain $500,000 for a 50% chance of winning $1 million. Their interviewing process must do a great job at finding the few people who really do take risks to increase their gains.