Are You Manipulating or Inspiring?

This is Part 1 of 2 of my notes from Simon Sinek’s START WITH WHY. A must-read book. You can read Part 2 here.

Most companies have no clue why their customers are their customers. Odds are good that they don’t know why their employees are their employees either. Then how do they know to attract more employees or encourage loyalty? The reality is most businesses today are making decisions based on a set of incomplete or, worse, completely flawed assumptions about what’s driving their business.

Earlier in the book, Simon Sinek shares an example of an assumption that is epic in proportions — that the world is flat. With this assumption, there was little exploration (I may fall off the edge of the earth!). When this assumption was dispelled, trade routes were established, spices were traded, new ideas like mathematics were shared between societies which unleashed all kinds of innovations and advancements. The correction of a simple false assumption moved the human race forward.

There are only two ways to influence human behavior: you can manipulate it or you can inspire it.

Here are some common manipulations businesses use.

Price: A highly effective manipulation. Drop your price low enough and people will buy from you. Playing the price game, however, can come at tremendous cost and create a significant dilemma for the company. As a seller, the more you do it, the harder it becomes to kick the habit. The list of commodities created by the price game goes on and on. Home computers. Mobile services. Insurance. In nearly every circumstance, the companies that are forced to treat their products as commodities brought it upon themselves. Price always costs something. The question is, how much are you willing to pay for the money you make?

Promotions: Whether it is “two-for-one” or “free-toy-inside,” promotions are such common manipulations that we often forget that we’re being manipulated in the first place. In the B2B world, promotions are called “value-added.” But the principles are the same — give something away for free to reduce the risk so that someone will do business with you. And like price, promotions work. Rebates are promotions too. However rebate process remains cumbersome and that means free money for the seller. But at what cost?

Fear: “No one ever gets fired for hiring IBM,” goes an old adage, describing a behaviour completely borne out of fear. When fear is employed, facts are incidental. This is how terrorism works. We use fear to raise our kids. We use fear to motivate people to obey a code of ethics. Fear is regularly used in public service ads (No Smoking, AIDS, Seat Belts?). Or even by Politicians who says their opponent will raise taxes. If anyone has ever sold you anything with a warning to fear the consequences if you don’t buy it, they are using a proverbial gun to your head to help you see the “value” of choosing them over their competitor. Or perhaps it’s a banana. But it works.

Aspirations: If fear motivates us to move away from something horrible, aspirational messages tempt us toward something desirable. “Six steps to a happier life.” Though positive in nature, aspirational messages are most effective with those who lack discipline or have a nagging fear or insecurity that they don’t have the ability to achieve their dreams on their own (which, at various times for various reasons, is everyone). You can get someone to buy a gym membership with an aspirational messages, but to get them to go to gym three days a week requires a bit of inspiration. This short term response to long term desires is alive and well in the corporate world also. A management consultant friend of mine was hired by a billion-dollar company to help it fulfil it’s goals and aspirations. The problem was, she explained, no matter the issue, the company’s managers were always drawn to the quicker, cheaper option over the better long-term solution. Just like the habitual dieter, “they never have the time or money to do it right the first time,” she said of her client, “but they always have the time and money to do it again.”

Peer Pressure: “Four out of five dentists prefer ..”. “A million satisfied customers and counting ..”. Celebrity endorsements. Peer pressure works because we believe that the majority or experts know more than we do. Peer pressure works not because the majority or the experts are always right, but because we fear than we may be wrong. Have you ever had a sales rep try to sell you some “office solution” by telling you that 70% of you competitors are using their service, so why aren’t you? But what if 70% of your competitors are idiots? Or what if that 70% were given so much value added or offered such a low price that they couldn’t resist the opportunity? The practice is designed to do one thing and one thing only — to pressure you to buy. Better to go with the majority, right?

Novelty (aka Innovation): Aircraft grade metal, hidden antenna, etched keypad etc made Motorola Razr sell well. Less than four years later, CEO was forced out and stocks tanked. Like so many before it, the company confused innovation with novelty. Real innovation changes the course of industry or even society. The light bulb, microwave oven, iTunes. Novelty can drive sales — but the impact does not last. If a company adds too many novel ideas too often, it can have a similar impact as the price game. It all ends in a downward spiral.

How to avoid the trap of manipulation?

The Price You Pay for the Money you Make

Manipulations work. But there are trade-offs. Not a single one of them breeds loyalty. The gains are only short term. And they increase the level of stress for both the buyer and seller. Loyalty is not easily won, Repeat business, however, is. All it takes is more manipulations.

Manipulations lead to Transactions, Not Loyalty

Manipulations are a perfectly valid strategy for driving a transaction, or for any behaviour that is only required once or on rare occasions. In any circumstance in which a person or an organization wants more than a single transaction, however, if there is hope for a loyal, lasting relationship, manipulations do not help.

Knowing you have a loyal customer and employee base not only reduces costs, it provides massive peace of mind. Like loyal friends, you know your customers and employees will be there for you when you need them most. It is the feeling of “we are in this together,” shared between customers and company, voter and candidate, boss and employee, that defines great leaders.

In contrast, relying on manipulations creates massive stress for buyer and seller alike. It’s not an accident that doing business today, and being in the workforce today, is more stressful than it used to be. Many of the ills that we suffer today have very little to do with the bad food but in the way Corporates developed that has increased our stress to levels so high we’re literally making ourselves sick because of it. We are suffering ulcers, depression, high blood pressure, anxiety and cancer at record levels. All those promises of more, more, more are actually overloading the reward circuits of our brain.

The short term gains that drive business in the World today are actually destroying our health.

Just because it works doesn’t make it right

The danger of manipulation is that they work. And because manipulations work, they have become the norm, practiced by the vast majority of companies and organizations, regardless of size or industry. That fact alone creates a systemic peer pressure.

The economic crisis that began in 2008 is just another example of what can happen if a flawed assumption is allowed to carry on for too long. The collapse of the housing market and the subsequent collapse of the banking industry were due to decisions made inside banks based on a series of manipulations. Employees were manipulated with bonuses that encouraged short-sited decision making. A free flow of loans encouraged aspiring home buyers to buy more than they could afford. There was very little loyalty. It was all a series of transaction decisions — effective, but at a high cost. Few were working for the good of the whole. Why would they? — there was no reason given to do so. There was no cause or belief beyond instant gratification. American car manufacturers conducted themselves the same way for decades.

Bucking or even collapse is the only logical conclusion when manipulations are the only course of action. But, there is an alternative.