The Most Expensive Gift of All – Free

Sometimes the most expensive gift of all is free. That’s right, sometimes a “free” gift cost you far more than it would have if you bought it. That’s part of the reason we’re so familiar with the saying, “There’s no such thing as a free lunch.” Let me illustrate with a story.

In early February I was in Austin, Texas to conduct some sales skill workshops for State Auto associates. The workshops went great and when they concluded I celebrated with a couple of coworkers by going down to Austin’s famous Sixth Street for dinner and to take in the historic sites.

If you’ve not been to Sixth Street it’s akin to South Beach minus the incredible wealth and palm trees you see on display at South Beach. There are restaurants, bars, live music and people galore. If you enjoy people watching it’s hard to imagine a place where you could see more diversity than Sixth Street.

As my two friends and I walked around after dinner, taking in the scenery, I was approached by a panhandler who shoved an old rose toward me and asked, “A rose for the lady?” There was no indication he was selling them and I knew he wanted me to think it was a gift. Nonetheless, I declined his offer because generally I only give flowers to my wife or daughter.

He shifted his attempt to the other man in the group but his response was, “I don’t think that would be appropriate, she’s my boss.” Because it takes three strikes before you’re out he pressed the rose towards the lady who was with us. She’d not seen or heard the original offers so when she turned around she took the rose and thanked him.

Game on because next he asked for money. She politely declined but he persisted for a bit as we walked away and then he left after several more refusals. A few moments later he was behind us again and this time it looked like there might be one or two others with him. We were on a busy street with lots of other people but nonetheless it was uncomfortable and immediately she gave the rose back saying, “Here, you can have it back.” They stayed near us for a short time then soon enough they were gone.

So what happened? The panhandler knew exactly what he was doing. He might not be familiar with the term “reciprocity” but he knew how the psychology behind it worked and that’s how he eked out a small living.

Reciprocity dictates that people “return the favor” so to speak. If I do something for you then you probably feel like you owe me something in return if you’re like most people. In the same way charities engage reciprocity by giving you mailing labels with the hope that you’ll give a financial gift in return, the panhandler was giving to get. The big difference between the charity and panhandler is it’s easier to say “No thanks” to an anonymous mailer than it is to a person, especially when they’re staring you in the eye. And even though it’s easier to say "no" to the mailing labels, donations typically double when charitable organization use them!

That point is worth exploring some. Most people have difficulty saying “No” when someone is literally handing them something. To avoid that feeling many people go to great lengths to avoid something as seemingly insignificant as making eye contact. Once eye contact is made whether with a beggar, a street vendor or someone at a mall kiosk, that person will descend like a vulture on a fresh carcass!

So what should you do? First, avoid eye contact with someone because that might stop the other person from approaching to begin with. If something is placed in your hand or forced upon you simply ask, “Is this a free gift?” If they say it is then you can feel free taking it without obligation. If they do anything more say, “You told me this was free. If I thought I had to pay for it I would not have bought it,” and keep going. Of course, your other option is to do what our friend did and just hand it back.

I’m willing to bet that most free offers that come our way during the day are just that; offers to help with no strings attached. Return the favor in some way down the road when the time is appropriate and you might have the start of a great working relationship. But outside the realm of friends and coworkers you might do well to heed the old saying that warns us, “Beware the man bearing gifts.”

Brian, CMCT
influencepeople
Helping You Learn to Hear “Yes”.

How Bernie Madoff with our Money

We all know the name Bernie Madoff, perpetrator of the biggest Ponzi scheme ever in American business. It’s estimated that $36 billion was invested with Madoff’s firm and that upwards of $18 billion is still missing.

A few weeks ago I was in Cleveland to speak at the local chapter of the Chartered Property Casualty Underwriters (CPCU). I was asked to talk about ethics so I decided a unique approach for this insurance group would be taking a look at Dr. Cialdini’s principles of influence and how they were used by Bernie Madoff. The title for my talk was “How Bernie Madoff with our Money.” When I talk about the principles of influence I usually refer to ethical influence and persuasion so talking about the unethical use was an interesting change for me.

The principles of influence tap into the psychology of human behavior – what causes someone to say “Yes” to a request – and they are powerful! Social scientists and behavioral economists have been scientifically studying human behavior for more than five decades so there’s plenty of data to back up that statement. Con men may not know the science but through trial and error they quickly figure out how to use the psychology to their advantage. I think it’s important that people understand the principles not only to become more adept at ethically influencing people but also to avoid being manipulated by con men such as Bernie Madoff.

I’m going to briefly describe each principle then share something Madoff did that helped him continually bring in new investors for decades. After all, Ponzi schemes depend on a continued inflow of investors and money or else they quickly collapse, so landing new clients was of the utmost importance for Madoff.

Reciprocity - We feel obligated to give back to those who first give to us. When someone does us a favor we want to return the favor in some way and silly as it may sound Bernie made it seem like he was doing his clients a favor by letting them invest with him. After all, his clientele were the rich and famous, he’d been a glowing success for decades and he was well respected. It was a privilege to let him handle their money. The favor was returned as people told others about him and new clients came by way of referral.

LikingLiking - People like to do business with people we like, especially those who are similar to them. Madoff tapped into this principle based on his similarities to many of his clients. For starters, he recruited from his country club. That’s not out of the ordinary at all because men gauge one another’s character a lot based on shared experiences like golfing. In addition to this, Madoff tapped into similarity through his Jewish heritage because many of his victims were Jewish and trusted him more based on this.

Consensus - We feel more comfortable doing what everyone else is doing or doing what people just like us are doing. If you’re rich then you hang with people who are rich too. Inevitably conversation turns to business so undoubtedly Madoff’s name was passed around like the offering plate at church. If you know many of your most successful friends invest with someone that’s going to give you pause to consider making a switch.

Authority - People tend to trust those who are viewed as experts and Bernie had this one down! He’d been investing successfully since the early 1960s, but what was more impressive was that he helped start the NASDAQ. His trustworthiness was impeccable because he also served as the Chairman of the Board for the National Association of Security Dealers. Why wouldn’t you automatically trust him with those credentials on his side?

Consistency - We like to be consistent in what we say and do because when you do something you usually do it because you believe it’s the right thing to do. If someone asks who you invest with and whether or not you’re doing well of course you’ll respond positively. Being the con man he was, I’m sure Madoff occasionally asked his biggest clients for referrals and recommendations which they were probably all too willing to do. After all, it would be inconsistent not to.

Scarcity - People want more of what they can’t have or something that is hard to come by. I don’t think Madoff’s firm was one in which any person could pick up the phone and ask to open an account. When you’re dealing in the billions like he was it tends to be a very exclusive club and the more exclusive, the more people wanted in. How would you feel if you knew a business only took on a limited number of new clients each year and you were one they were considering? Most people would jump at the chance!

So there you have it, a quick overview of some of the psychology of How Bernie Madoff with our Money. Hindsight is 20/20 so it’s easy for us to look back and think we’d never be fooled in such a way. However, think about the kinds of people who invested with him – the rich and famous – people who were smart or had smart people managing their money. No, the reality is we’re all susceptible because we’re human and the same psychological pull would be at work in us. Madoff’s situation and science both confirm that. Here's my advice to you; continue to learn about influence, keep your eyes and ears open, and learn to trust your gut because when something seems too good to be true it usually is.

Brian, CMCT
influencepeople
Helping You Learn to Hear "Yes".

Confirmation Bias and the Sweater Vest

If you live in Columbus, Ohio then you know there was no bigger story than last week’s revelation that Ohio State football coach Jim Tressel admitted knowing about some rules infractions by his players nearly a year ago. If you don’t live in Columbus it’s still likely you’ve heard the story or read about it in the news. And for those outside of the United States think of one of the most revered coaches you know then imagine that person caught in a scandal that seems to go against everything you know about his or her character.

Jim Tressel is known sometimes called “the vest” because he’s brought the sweater vest back into style, at least in Columbus, Ohio. By way of quick review, Jim Tressel has been the head football coach at The Ohio State University for a decade and his success exceeds even the great Woody Hayes’ in many respects. Having won the Big Ten title seven times, including an unprecedented six times in a row, the Buckeyes have played in eight BCS games, three national championships and won the national championship in 2002. You would be hard pressed to find a coach more successful on the field and yet for all the on the field success many would say Tressel’s off the field accomplishments have been even more impressive. His charity work, fund raising and focus on developing young men into good, productive citizens have been held in high regard by all those who know him. It’s not uncommon to hear people say, “If I had a son I’d want him to play for Coach Tressel.”

But this post is not so much about Jim Tressel and the controversy he finds himself in right now as it is the reaction to the news. It’s fierce from both sides – loyal supporters of Jim Tressel and Buckeye Nation and those who are glad to see the coach and program tarnished. I’ve read the new stories, Facebook posts, Tweets, etc., and it made me think about a psychological principle I thought would be good to explore -- confirmation bias.

Confirmation bias is nothing more than the term we use to describe the reality that most people look for information that confirms current beliefs or places more emphasis on information that confirms their current thinking. For example:

• Republican supporters will look for any and all reasons that Democratic initiatives are wrong, bad or could be better. By the way, Democrats view Republican initiatives through the same distorted lenses.
• Criminal prosecutors start with the thought that the person they’re prosecuting is guilty and look for information to build that case. Of course, defense lawyers take the opposing stand.
• When it comes to race, religion and sex we all have preconceived ideas of right and wrong, good and bad, and that shades how we view those who are different than we are.

We’re selective in what we choose to consider and how much weight we put on certain information when it comes to decision making. In the case of the Jim Tressel news story, for those who’ve observed the coach for a decade or more his actions seem inconsistent with previous actions and stated values. It’s only natural to then search for a reason that explains such behavior.

On the opposite side, for people who either dislike the Ohio State program or hold a belief that cheating goes on in all highly successful sports programs they come from a position where they don’t look to his prior actions and ask, “Why?” because they place more weight on anything that appears to confirm the belief that everyone cheats in big time sports programs.

The goal of this post is not to convince anyone of innocence or the guilt of Jim Tressel because in the coming weeks and months we will hear and see more information. The point is to make us all aware of the reality that we’re impacted by confirmation bias every day and knowing that, if we want to make the best decisions possible, then we need to take this psychological principle into account as we process information. Simply put, we would do well to occasionally try to put ourselves on the other side of the issue.

• Republicans and Democrats each have agendas and voters to satisfy but with the government gridlock we see I’m willing to bet the average American would like to see the two sides work together more to push agendas that would benefit more Americans. How much could it hurt if each side looked for what’s right in the other side’s proposal?
• Prosecutors don’t get paid to let criminals go but it would be nice to see fewer innocent people go to jail. Likewise, defense attorneys don’t want their clients to go to jail but we’d all be better off if a few more criminals were off the streets.
• When it comes to race, religion or sex, we would do well to try to understand those who are not like us rather than focusing differences.

One thing I’ve learned over time is when I do try to understand the other side rather than just convince them of my rightness or their wrongness they seem to open up. People appreciate being heard and that leads to interesting dialog.

When it comes to Jim Tressel and the situation he finds himself in, only time and the revelation of more information will allow for a final decision. For most of us his situation will not impact our relationships with loved ones or the ability to put food on the table. No, it’s mostly fodder for social media, talk radio and debate at the lunch table. Having said that, it’s not insignificant if we allow it to change us in a positive way and I think one way is to make us stop and consider our own confirmation bias.

Brian, CMCT
influencepeople
Helping You Learn to Hear “Yes”.

Influencers from Around the World - The Happiness Hypothesis

This month's Influencers from Around the World article is from Cathrine Moestue. I introduced you to Cathrine last month along with Anthony McLean as new members of my Influencers from Around the World group. I know you'll enjoy Cathrine's exploration of reciprocity, especially those of you who are fans of The Godfather. I encourage you to reach out to Cathrine on Facebook and LinkedIn and Twitter.

Brian, CMCT
influencepeople
Helping You Learn to Hear “Yes”.

The Happiness Hypothesis

I don’t know if you have read The Happiness Hypothesis but if you haven’t, then I recommend it. It is an extraordinary book on the human condition and writing about such you cannot miss out on the work of Robert Cialdini, PhD. Dr. Cialdini is the most cited living social psychologist in the world today and famous for his book Influence Science and Practice, where he enlightens readers on the six principles of influence.

In The Happiness Hypothesis, Jonathan Haidt dedicates the whole of chapter three to one of the principles; the principle of reciprocity. He opens up the chapter and our understanding of reciprocity with a scene from The Godfather that I thought would give us a vivid understanding of reciprocity. Even though the scene is about "reciprocity with a vengeance" it is extraordinary how easy it is for us to understand this complex interaction in an alien subculture.

The opening scene of The Godfather is an exquisite portrayal of reciprocity in action. It is the wedding day of the daughter of the Godfather, Don Corleone. The Italian immigrant Bonasera, an undertaker, has come to ask for a favor; he wants to avenge an assault upon the honor and body of his daughter, who was beaten by her boyfriend and another young man.

Bonasera describes the assault, the arrest, and the trial of the two boys. The judge gave them a suspended sentence and let them go free that very day. Bonasera is furious and feels humiliated; he has come to Don Corleone to ask that justice be done. Corleone asks what exactly he wants. Bonasera whispers something into his ear, which we can safely assume is "Kill them." Corleone refuses, and points out that Bonasera has not been much of a friend until now. Bonasera admits he was afraid of getting into "trouble." The dialogue continues:

CORLEONE: I understand. You found paradise in America; you had a good trade, made a good living. The police protected you and there were courts of law. And you didn’t need a friend like me. But now you come to me and say, "Don Corleone, give me justice." But you don’t ask with respect. You don’t offer friendship. You don’t even call me Godfather. Instead you come into my house on the day that my daughter is to be married, and ask me to do murder for money.

BONASERA: I ask for justice.

CORLEONE: That is not justice; your daughter is still alive.

BONASERA: Let them suffer then, as she suffers. (pause) How much shall I pay you?

CORLEONE: Bonesera...Bonesera...What have I ever done to make you treat me so disrespectfully? If you had come to me in friendship, then this scum that ruined your daughter would be suffering this very day. And if by chance an honest man like yourself should make enemies, then they would be my enemies. And then they would fear you.

BONASERA: Be my friend. (bows) Godfather? (kisses Corleone's hand)

CORLEONE: Good. (pause) Someday and that day may never come, I will call upon you to do a service for me. But until that day...accept this justice as a gift on my daughter’s wedding day.

We intuitively understand why Bonasera wants the boys killed, and why Corleone refuses to do it. We understand that in accepting a "gift" from a mafia don, a chain, not just a string, is attached. We understand all of this effortlessly because we see the world through the lens of reciprocity. Reciprocity is a deep instinct; it is the basic currency of social life.

Bonasera uses it to buy revenge and Corleone to manipulate Bonasera into joining his extended family, the consequences of both will be detrimental. But we can learn how to use the principle of reciprocity wisely by first understanding it and second to practice becoming more of a "detective" of influence, not just a bungler or a smuggler. The extraordinary truth is that if we learn to use the principle ethically and understand how to properly invest in others, we will also be more effective in life.

Sounds interesting? I recommend attending a "Principle of Persuasion" workshop, or reading Cialdini’s book on Influence Science and Practice.

Zigong asked: "Is there any single word that could guide one’s entire life? The master said: "Should it not be reciprocity? What you do not wish for yourself, do not do unto others."
- Analects of Confucius

Cathrine Moestue, CMCT
Organizational Psychologist
MOESTUE CONSULTING