Getting to "Yes" by Robert Cialdini

Robert Cialdini is an expert in the field of influence and persuasion. His contribution to the study of successful sales and marketing tactics is well recognized.

Cialdini provides a framework outlining why people are influenced to behave in a certain manner.

If you have done sales or marketing for any length of time, I am sure you will recognize the truth in his fascinating findings, which I have listed below.

6 key principles of persuasion

Reciprocity - People tend to return a favor, thus the pervasiveness of free samples in marketing. In his conferences, he often uses the example of Ethiopia providing thousands of dollars in humanitarian aid to Mexico just after the 1985 earthquake, despite Ethiopia suffering from a crippling famine and civil war at the time. Ethiopia had been reciprocating for the diplomatic support Mexico provided when Italy invaded Ethiopia in 1935. The good cop/bad cop strategy is also based on this principle.

Insofar as free samples, a fascinating insight: the scientific observation that free samples can often "cheapen" the value of the product they are intended to sell. In other words, if the product is not of value enough to sell on it's own merit, there must be a reason, IE others don't want it. Subliminally, this indicates that since others don't want it there must be a problem with it, and if others don't want it the product must be undesirable.

It's a play on the principles of "social proof", outlined below, and it's also an interesting twist on the "scarcity" angle. And, it has significant implications for those making pricing decisions, namely that reducing the price may not always lead to improved sales. Reducing the price indicates to the public that a product is not in demand and is therefore not socially desirable, and can in fact hurt sales.

Commitment and Consistency - If people commit, orally or in writing, to an idea or goal, they are more likely to honor that commitment because of establishing that idea or goal as being congruent with their self image. Even if the original incentive or motivation is removed after they have already agreed, they will continue to honor the agreement. For example, in car sales, suddenly raising the price at the last moment works because the buyer has already decided to buy. Cialdini notes Chinese brainwashing on American pow's to rewrite their self image and gain automatic unenforced compliance. See cognitive dissonance.

Social Proof - People will do things that they see other people are doing. For example, in one experiment, one or more confederates would look up into the sky; bystanders would then look up into the sky to see what they were seeing. At one point this experiment aborted, as so many people were looking up that they stopped traffic. See conformity, and the Asch conformity experiments.

Authority - People will tend to obey authority figures, even if they are asked to perform objectionable acts. Cialdini cites incidents such as the Milgram experiments in the early 1960s and the My Lai massacre.

Liking - People are easily persuaded by other people that they like. Cialdini cites the marketing of Tupperware in what might now be called viral marketing. People were more likely to buy if they liked the person selling it to them. Some of the many biases favoring more attractive people are discussed. See physical attractiveness stereotype.

Scarcity - Perceived scarcity will generate demand. For example, saying offers are available for a "limited time only" encourages sales.

Golden quotes: "consistency is the last refuge of the unimaginative", and "the best way to ride a horse is in the direction it is going". In other words, don't try to change a stubborn personality all at once; get into their thinking and "steer" them in the direction you want to take them.

Selfish Gene Theory REDUX

There is a train of though in genetic theory known as the "Selfish Gene" theory. This theory was first put forward in a popular format by Richard Dawkins in his book of the same title, back in the 70's.

The argument is that genes are entities unto themselves, and use the human body as a host to provide a survival machine for the gene until it can replicate through breeding.

Essentially, this theory argues that it is incorrect to think that there is a purpose in life beyond survival, and that said purpose is in fact governed by genes seeking to protect their future at the expense of the organism in which it is hosted. In other word genetics determine an organism's behavior, and this behavior will always favor the future of the gene.

Nonetheless, "A body doesn't look like the product of a loose and temporary federation of warring genetic agents who hardly have time to get acquainted before embarking in sperm or egg for the next leg of the great genetic diaspora. It has one single-minded brain which coordinates a cooperative of limbs and sense organs to achieve one end. The body looks and behaves like a pretty impressive agent in its own right."

The selfish gene theory casts an interesting light on human behavior, and is a perspective well worth considering.

Latticework Thinking

Ever wonder where truly original creative thought originates? Some of the best thinkers in history have striven for a lifetime to master multiple and diverse disciplines in the sciences and arts, and were themselves originators of profound and revolutionary mental concepts. Benjamin Franklin used this method, and utilized a finely developed creative thought process leading to a lifetime filled with huge accomplishments in such diverse areas as business, science, civil governance, and politics.

Uniting mental models from separate intellectual disciplines in the arts and sciences creates a latticework of understanding which helps to disambiguate complex problems and permit insightful decisions. Having these mental tools at your disposal allows one to see the interconnectedness of multiple areas, thereby creating superior intellectual results. Successful latticework thinking is akin to the scientific phenomenon referred to as emergence. Essentially, emergence refers to the manner in which patterns arise from the combination of multiple but seemingly unrelated areas.

Some of today's most successful business people use latticework thinking to attain disambiguation and therefore superior intellectual results. Charlie Munger, Warren Buffet's partner, is a big advocate of latticework thinking and has said that this is the key to his success in business and investing. Indeed, one of his favorite sayings is: "To a man armed only with a hammer, everything looks like a nail."

Mastering divergent mental models allows one to avoid the limitations of the "man with a hammer" conundrum. Disciples of latticework thinking commit to a lifelong process of learning and discovery in the arts and sciences. Those interested in pursuing latticework thinking would be wise to to start by reviewing the biography of those who have successfully applied it, such as Munger and Benjamin Franklin.

If you view yourself as a thinker, latticework thinking is worth thinking about.

Investing for the Common Man

Some of the best ideas in investing are readily available from those who have profited the most by it. Warren Buffett, Prem Watsa of Fairfax Financial, and Bill Gross of Pimco are among those who make their investing philosophies available to the public, and they are worth following if you are an active investor.

Buffett in particular has a gift for making the complexities of investing remarkably simple. A disciple of the legendary Benjamin Graham and his value-based investment methodology, Buffett has one particular tenet that serves the average investor well, namely: "Most people should not try to time the market, but instead invest in the market over time with planned and consistent purchases of low cost index funds. If you really want to do it the other way (buy low and sell high) and you know a thing or two about business, be fearful when others are greedy and greedy when others are fearful. The extent of your investing success will depend to a large measure on your ability to profit from the manic-depressive follies of Mr. Market and his emotions on any given day".

Mr. Market, of course, refers to a mythical character embodied in the market prices quoted daily. Mr. Market has incurable emotional problems, and is at times euphoric quoting you high prices because today he sees only the favorable factors affecting business. At other times he is depressed and wants to give you his business at at a low price since he sees nothing but trouble ahead.

Buffett's wisdom and the "Mr. Market" analogy is elegant in it's simplicity and easy to implement. Doing so reduces the risk of over-investing when Mr. Market is happy, and under-investing when Mr. Market is sad. Planned and consistent periodic purchases of index funds reduce the significant risk of over-investing in individual securities when they are over-priced, and saving your large purchases of individual quality stocks that you understand for periods where they have declined for no good reason reduces market timing risk. This strategy allows you to profit from market circumstances rather then being a victim of them.