Thursday, October 23, 2008

Emotional buying

A friend of mine recently asked me, "is it true that 75% of our buying decisions are based on emotion? It sounds like a made up statistic". This was my response:

The quick answer is that we have two type of processes that go on in our brains when making any decision:
System 1 is when we use our intuition. This is fast, automatic, effortless and rooted in emotion. It is our gut instinct
System 2 is when we use our reasoning. This slow, controlled, effortful and rule-governed. We have to consciously so it

Most decisions, including buying decisions, involve people using a combination of System 1 and System 2. Classic Economics has flaws because is assumes we are all rational players with perfect information using System 2 only. Behavioral economics, psychology etc recognizes the importance of system 1.

There is a growing amount of research on how they interact. I think it's fair to say:

- everyone uses system 1 all the time without realizing it. e.g. most people choose their life partner on this

- different people engage system 2 (reasoning) for different decisions in different situations but generally those they consider v important. some buying decisions fall into this category, many don't

- but it's not so much a question of what % of buying decisions are based on emotion. All of them are. But they are also partly based in reasoned thinking. The real question is do we think rationally then let in our emotions to influence the decision to some extent? Or do we have a gut instinct ("I like the look of John McCain", "I love that dress") and then use all the data & reasoning to justify that initial reaction?

- there is near overwhelming evidence that the latter is true. this a robust but depressing finding. it explains why republicans and democrats so deeply believe that their view of the world is right - look out for the upcoming book by Jonathan Haidt, 'The Righteous Mind'

Women at work

What drives and sustains successful female leaders? A new study out by McKinsey argues that the women who make it to the top AND enjoy it are all doing a few things right:

1. Meaning: finding strength and putting it to work toward an inspiring purpose
2. Managing energy: knowing where your energy comes from, where it goes, and what you can do to manage it
3. Positive framing: adopting a more constructive way to view your world, expand your horizons, and gain resilience to move ahead even when bad things happen
4. Connecting: identify who can help you grow, building stronger relationships, and increasing your sense of belonging
5. Engaging: finding your voice, becoming self-reliant and confident by accepting opportunties and the inherent risks they bring, and collaborating with others

All of these are consistent with ongoing research in Positive Psychology (the scientific study of what goes right with life). Unlike other leadership frameworks, their 'Centered leadership' lends itself to practical things we can do differently today: knowing what our strengths are and deploying them to our advantage each day, learning to frame our experiences in a more constructive light, building our sense of belonging at work and in the community.... not rocket science but do-able.

Interestingly they also found, anecdotally, that senior women at McKinsey often fail to reciprocate and find doing so distasteful. This is a consistent finding. Roy Baumeister (one of America's top psychologists) also found that woman have small intimate social networks – men go shallow & broad. Indeed, studies were set up so two girls were playing together and the researchers brought in a third, the two girls resist letting her join. But two boys will let a third boy join their game.

This gets into broader gender questions which are a subject for another day

Here's the McKinsey article:

Monday, October 20, 2008

Blowing up the review process

Let's blow up the annual performance review. It's an utterly flawed process with misaligned incentives. There's a much simpler idea that leads to honest and, more importantly, helpful conversations. Or so argues Sam Culbert in today's Wall Street Journal

A funny thing happened on the way to The Forum

I am sometimes hear from friends that they are going to the Landmark Forum. They want to know about my experience when I went in 2003. Here are some quick notes:

On balance I liked it and got useful ideas that have helped me since. The lessons I took away from it were:
- being honest and having integrity is a good thing
- being open to being loved and expressing it to others is also pretty important
- knowing what holds you back is v useful
- looking for greater meaning and purpose in life is important

Things that annoyed me:
- the persistent selling and self-promotion of landmark programs
- the one size fits all approach (especially the thing about calling friends and family during the weekend and apologizing for stuff - it works for some but generally it is self-indulgent. I resisted all weekend and was glad I did)
- their belief that their way was THE only way

Things that changed as a result
- I stopped attempting to date multiple girls at once (integrity yes, but my amusing stories to mates at the pub declined)
- set me off thinking about what were scientifically proven ways to make people happier
- made me realise how much I resist someone implying I am incompetant at something - it brings out the worst in me

Now I have studied the psychology in much more depth, it is clear they are onto the right big issues with integrity, love, rackets and purpose. They mention strengths briefly(or Strong Suits) but don't equip people with the taxonomy or language to really identify them (nothing on Strengthsfinder by Gallup or VIA survey available at

With a business hat on their selling techniques are absolutely first-class and should be written up in a business scool case study. I hated them but I also admired them

I once recommended the landmark forum to a friend who was not that mentally resilient. I regretted doing so. She found the whole thing hugely emotional, overwhleming and it was too much for her.

So I am not a net promoter (given that I haven't ever recommended it to friends or colleagues). But I am glad I did it and took away relevant lessons

Tuesday, October 7, 2008


What’s wrong with a brother a sister having protected sex if no-one ever finds out? What about cooking and eating roadkill? How about drinking apple juice that’s had a sterilized cockroach dipped in it?

These are the issues of moral dumbfounding - when people feel strongly that something is wrong but cannot explain why.

Jonathan Haidt’s work describes how emotional responses occur instantaneously — we have primitive gut reactions that evolved to generate split-second decisions and enhance survival in a dangerous world. Moral judgment, on the other hand, comes later, as our conscious mind develops a plausible rationalization for the decision already arrived at through moral intuition.

Haidt uses his theory of morality to explain why Liberals and Conservatives disagree on so much and why they cannot even see how others could view a moral issue differently. He explains how Liberals use two strong moral foundations. They value the individual and fairness (or reciprocity). You are free to exercise your free-will just don’t harm anyone and don’t cheat on anyone. On the other hand while Conservatives do value these two foundations they also place value on three others: In-group loyalty, Authority and Purity. For most people in the world the unit of society is not the individual but the family or broader community.

If you want to know where you stand go on the political spectrum to There’s an article describing it from the NY Times but better is a 5mins a video from the New Yorker conference 2007. Not great production quality but good enough

By the way his book, The Happiness Hypothesis is one of the best written accounts on what really makes people happy today. An accessible and fascinating read (but not self-help).