Changing behaviour: loss aversion and the “Anti-charity”

Posted by Kevin Bishop - May 26, 2011
Filed in Changing behaviour

“If, when you think of one, you get a sharp intake of breath and start to feel a steely resolve inside to follow through, it’s probably the right one”.

What was my friend Toby talking about that would have such an impact on me?  The answer – an Anti-charity.

The concept of the Anti-charity comes from stickK a website started in 2007 by two Yale University professors, Dean Karlan and Ian Ayres.

During graduate school at M.I.T., Karlan and a colleague, John Romalis, made a wager to lose 40 pounds each and to referee one another so as to stay on target.  They created a contract to do this, and both signed up.  They also promised to pay each other $10,000 if they didn’t lose the weight by an agreed date.   If they both both failed, the one who failed by least would get $5,000.

They were using the concept found in behavioural economics called loss aversion.  Loss aversion refers to people’s tendency to strongly prefer avoiding losses to acquiring gains.  It implies that someone who loses $100 will lose more satisfaction than another person will gain satisfaction from a $100 windfall.  Some studies suggest that losses are twice as powerful, psychologically, as gains. (*1)

Happily, both Karlin and Romalis succeeded in shedding the pounds and in 2007 Karlin and some other colleagues launched stickK, a website based on this contractual approach to achieving tough personal goals.

Users set up a “commitment contract” where they agree to achieve a certain goal, such as losing weight, exercising more, quitting smoking, or conserving energy.  As part of the typical contract, an independent referee must be appointed to monitor whether the goal has been reached and to inform stickK.

And if the contract is broken?

When setting up the contract you can commit a certain amount of money to be forfeited if you don’t complete a task (i.e. $5 every time you didn’t go the gym when you committed too).  The money could go to a friend, a charity you choose, or the one that really got me interested was the money would go to an Anti-charity.

An Anti-charity is any organisation whose views you strongly oppose, or one which promotes values that are most contrary to your own.  As they say on the website;

“The purpose of an Anti-charity is to provide an added incentive for you to achieve your goal. By designating an Anti-charity as your recipient of stakes, you’ll certainly work that much harder to ensure that your money never falls into the wrong hands.”

So for example is you were:

  • a very happy smoker who was worried about the number of challenges of your right to smoke, the money could go to say the Non Smokers; Movement of Australia who are, according to their website, there; “Protecting the rights of the Non-smoking majority from tobacco smoke and from the tobacco industry’s propaganda“.
  • a practising Christian the money could go to the Atheist Foundation of Australia (or vice versa)
  • someone who was working to reduce the effects of climate change and educate others to do the same, your forfeited money could go to the US organisation ‘The Stop Climate Chaos Coalition’
  • a proud gun owner who believed in your right to keep and bear arms your Anti-charity could be the Educational Fund to Stop Gun Violence
  • a sports fan, and the money would go to your arch enemies supporters club (i.e. a supporter of Carlton footie club here in Melbourne and the money going to Collingwood, or to the NSW State of Origin fund if you were from Queensland, or to Celtic Football Club if you supported Glasgow Rangers).

When we first started using stickK, Toby and I decided to test a few things out.  His challenge was to cook himself a home cooked meal every night for three months.  Not that easy for an early 20s, single bloke, living alone, surrounded by takeaways.  For me it was about exercise and undertaking some form of it three times a week.

We started off setting up any forfeits we incurred to go to a charity.  However what we quickly found was that it had no impact on whether we did the task or not.  What was the worse outcome if I didn’t exercise, $5 would go to World Vision?  Didn’t feel like much of a punishment.

We therefore changed it to for the money to go to our Anti-Charity and that is where the conversation that started this blog came from.  When, as an Arsenal football (soccer) fan, Toby said the $5 could go the the Tottenham Hotspurs (Spurs) Supporters club (our arch enemies), I had the exact reaction he mentioned - a sharp intake of breath and start to feel a steely resolve inside to follow through.

Our natural desire to avoid loss, coupled with the concept of the Anti-charity really resonated with me and did play a part in me exercising far more regularly.  The thought of paying out to a bunch of Spurs fans if I didn’t meet my commitments to exercise, had me reaching for the phone to make that squash court booking right then and there!

 

(*1) Kahneman, D. & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica 47, 263-291.

 

 

On narratives

Posted by Shawn Callahan - May 25, 2011
Filed in Business storytelling, Strategic clarity

John Hagel has written an interesting post on the importance of narratives in providing persistent context for our lives, organisations and society. The post is important because John is an esteemed thinker that business and institutions notice and heed. And it is also this reason that I’m prompted to write this reply because I feel there are some points requiring clarification.

If you’re like me you hear the term ‘narrative’ all over the place these days: “What’s the political narrative?” “We need a compelling narrative.” “Their narrative is unclear or even non-existent.” I’m certain most people have little idea what is really meant by the term. John begins to describe what he means by ‘narrative’ but, for me, it doesn’t go far enough, especially since most of his post is filled with the term.

A narrative must have a narrative structure. That is, it is told as a story. I realize this mixes up John’s experiences, story, narrative trajectory a little but please bear with me. For example, John comes close to giving us narrative structure when describing the Christian narrative when he says, “people are born in sin but have an opportunity for redemption through a Savior.” This is a statement rather than the narrative but anyone familiar with Christian ways will immediately fill in this statement with the stories that help us make sense of it. The narrative version of this statement is simply  ”people are born in sin but THEN have an opportunity for redemption through a Savior.“ Two events connected. Without the ‘then’ it’s not a narrative. Narratives, like stories, are made from events. Their connections infer causality.

People confuse their description of the narrative with the narratuve itself. And John does this when hs described the Christian narrative as a statement rather than a story. It is a natural tendency to give our narratives and stories shorthand descriptions. They make perfect sense for those people immersed in the narrative. But if you are not living the narrative or unaware of the big story then the descriptions make little sense.

John’s American narrative is close to being a one but just falls short when he says, “The growth of the United States critically hinged on a compelling narrative that we have a Manifest Destiny as fugitives from oppression to deliver freedom to the rest of the world …  As long as oppression exists in the world, this narrative mobilizes us to act and the future awaits to be defined.

The actual narrative requires a narrative structure something like: when America was established, the founding fathers welcomed the oppressed from around the world, they then fought to free themselves from oppression and over time they forged a culture that sort to deliver freedom to the rest of the world.

Now, my American narrative is quite an anaemic example and I’m sure just about anyone could suggest a better rendition. My point is simple, however, narratives require a narrative structure. Story structure provides a narrative with its power.

I understand John wanted to elevate narrative above stories and experience. But in doing so I think he inadvertently misrepresents stories. Firstly stories are not merely about plots and action. Stories are about people, events and something unanticipated (Jerome Bruner). Jay Callahan, the celebrated professional storyteller, puts it another way: stories are about people, events and trouble. You just can’t have a story without characters.

For me narratives are broad-brush stories. Narratives are stories without the moments. Of course academics will disagree. I opened The Cambridge Introduction to Narrative to see that “I took the car to work” is a narrative. But I find this definition unhelpful.

John’s defintion seems like a definition of life to me:

“Narratives, at least in the way I will be using them, are stories that do not end – they persist indefinitely. They invite, even demand, action by participants and they reach out to embrace as many participants as possible. They are continuously unfolding, being shaped and filled in by the participants.”

I agree that narratives invite action and reach out to embrace people. They are unfolding and are being shaped by people. But I disagree that they do not end. The US Cold War narrative is no longer with us and it has been replaced by the War on Terror narrative. As one ends another takes over.

John’s list of the benefits of narratives is a good one:

  • stability and continuity in our lives. Narratives help to orient us
  • narratives motivate action by helping to make sense of the world around us
  • narratives also help participants construct meaning, purpose and identity for themselves, and
  • narratives help to ignite and nurture passion within us

But they hold equally true for stories. Narratives are a type of story. A big story. An explanatory story.

I totally agree that we need narratives and it’s important we understand the narratives that are currently in play and how they shape our understanding and response of what’s happening in our organisations and society. I just hope we can move away from talking about narratives as if they are more important than our experience and our stories. The experiences, stories, narrative trajectory bothers me because it feels like the old data, information, knowledge hierarchy which is equally unhelpful.

Narratives emerge from a combination of events and people deciding what aspects of those events they want to retell; what gets amplified. It’s much like history really, an emergent process. Regardless of what we do narrative patterns will emerge and only when we are mindful of these narrative patterns will we be able  to choose those patterns to nurture and the ones to disrupt.  Nurturing comes from retelling stories. Disruption happens when new stories are triggered that counter the narrative. If the disruption is big enough (think Egypt) then a new narrative is born.

 

Knowing your strategy. Sound familiar?

Posted by Shawn Callahan - May 24, 2011
Filed in Fun, Strategic clarity

Dilbert.com

 

Frank Zappa and Stories

Posted by Kevin Bishop - May 13, 2011
Filed in Business storytelling, Quotes

Frank Zappa Story Quote

Click to see larger version 800×600

 

Provide your example before your reasons—introducing PERP

Posted by Shawn Callahan - May 13, 2011
Filed in Changing behaviour, Communication

I want to expand a little on Mark’s post and on the communication structure we’re proposing. I hope you don’t mind, but let me start with how the idea emerged.

My first real job back in the 1980s was to work for Oracle Systems, the database company. One day my manager asked me to give a presentation to a group of customers who were coming in that afternoon. I went into the boardroom, sat up my slideshow and then realised I had no idea on how to give a presentation. I called my manager in and confessed by ignorance and he gave me a crash course. At the end of his instruction he suggested I join a Toastmasters club, which I did.

At Toastmasters a meeting often starts by the chair asking someone to give a little 3-minute impromptu talk on just about any topic the chair nominates. You have no time to prepare, you just have to talk. Thankfully Toastmasters provides some strategies to structure your response and one that I remember was called PREP: Point, Reason, Example, Point.

Wind forward to the 21st century. After working with stories for some time now we’ve learned that telling a story before giving a rational argument can be effective in helping your audience to really hear what you’re saying and perhaps even influence them in a new way of thinking. We came to this view after learning about the confirmation bias which tells us that if someone has a strong opinion, and your offer an alternative opinion, your attempt only serves to reinforce their strong opinion. Telling someone a story first, however, seems to loosen them up to hear your argument. We think this has something to do with the fact that stories provide a pull approach (the listener pulls the story to them) rather than a push approach (the teller pushes the information at the listeners).

So rather than Point, Reason, Example, Point (PREP) we are suggesting you should rearrange your responses to be Point, Example, Reason, Point (PERP); a small but significant change. And of course your example should be a story. And if you are uncetain what we mean by a story, please check out the story test.

This change to PERP will require us to change the way we present in organsations. The common approach goes something like this:

“Welcome everyone.

20 slides with lots of opinions, research, and clever argument.

“Now I would like to show you some examples.” Well, you’ve already kicked off the confirmation bias and if they felt strongly against the idea they are just digging in their heels.

How about:

“Welcome everyone. I would like to share a couple of examples that go to the heart of what we are facing and where we need to get to.”

You tell a couple of excellent stories

Now you make your argument.

 

Storytelling to make messages stick

Posted by Mark Schenk - May 13, 2011
Filed in Business storytelling, Communication

I’m reading an advance copy of Andrew O’Keeffe’s new book ‘Hardwired Humans: Successful Leadership Using Human Instincts’. I am looking forward to meeting Dr Jane Goodall when she launches the book on June 6.

One of the human instincts, ‘emotion before reason’ tells us that emotions play a huge role in our decision making. We jump to conclusions and the conclusions we jump to are normally negative. This has lots of implications in the workplace for communication and leadership. Andrew provides an example of this.

A small business is owned by a husband and wife and employs eight workers. One Monday morning just after 9am the couple made an announcement: ‘Could everyone please stop work. We have some important news.’ They asked the employees to immediately join them in the kitchen at the round table they use for lunch and tea breaks. The workers stopped what they were doing and filed into the kitchen with puzzled looks on their faces. Such an impromptu staff meeting this early on a Monday was unusual. When everyone had gathered the husband began. ‘Thanks everyone. We have some important news.’ He paused to let his wife continue. People tensed.

So, what do you think is going to happen?

‘We’ve had a terrific quarter financially,’ she said with a big smile, ‘and we want to share our success with you!’ The husband waived eight envelopes. ‘These are for you,’ he said, ‘one each. Inside your envelope is five hundred dollars! Now, you can take your envelope, but on one condition-that you leave work right now, spend your money today and come back at 3 o’clock and show the rest of us what you bought.’

Almost invariably people assume the worst when they are reading or hearing this story. The business is about to fold, or the couple are separating are common reactions. We don’t remain in a neutral state waiting for the story to unfold and we normally assume the worst. Humans are hardwired to screen for pain and danger first.

So, be leaders need to be aware that people are primarily emotional, not the rational beings we assume them to be in a work context. They will always jump to conclusions and that these conclusions will often be negative. Effective leaders are acutely aware of the primacy of emotions as they seek to relate to and influence others.

I have written this blog post to demonstrate one of the key story patterns we advocate in helping get your message across clearly and helping it stick. We use the acronym PERP: Point, Example, Reason, Point. In this post, para 2 is the Point, paras 3,4 and 5 are the example that illustrate the point, para 6 provides the Reason (the logic, rationale, evidence) and para 7 reiterates and expands upon the Point.

Give this method a try when you are next faced with getting your message across. We’d love to hear back from you on how it goes.

 

Using a story structure to encourage clicks

Posted by Shawn Callahan - May 12, 2011
Filed in Business storytelling

A nice storytelling cliff hanger to get us to click. From NeuroCooking

Save Rock Creek Hills Park!

Posted: 08 May 2011 02:26 PM PDT

We have been writing here less often, NeuroCooking friends, because another topic has been occupying us lately, a great deal really, since the night of April 28th, when, out of the blue, something shocking and terrible happened.

In fact, …

* * * * *

On second thought, we would prefer not to go into the matter here. However, we would like to take the opportunity to direct your attention to it.

And so, please, might we direct your attention to:

http://SaveRockCreekHillsPark.org

And to the facebook page “Save Rock Creek Hills Park”.

Thank you for your understanding, and your interest.

 

Thanks to Kevin Bishop for the link.

 

Special offer – storytelling skills workshop

Posted by Mark Schenk - May 9, 2011
Filed in Business storytelling

Last few days….

Leaders can dramatically improve their ability to inspire, influence and engage both staff and customers by tapping into the natural power of stories.

We haven’t run our Storytelling for Leaders workshop publicly for several years and have focussed on delivering it internally for clients. This month represents your only opportunity in 2011 to learn this vital leadership skill from Australia’s original business storytellers.

public_workshop_SBL_banner.jpg

Here are the locations and dates – click on the appropriate link for more information and to register:

For this week only we are offering a two-for-one deal for registrations finalised before 5pm this Friday (13 May 2011). Contact people@anecdote.com to take advantage of this offer. This offer only applies to two people attending from the same organisation and cannot be used in conjunction with other offers. Everyone already registered is also able to access this offer.

 

Tom Peters on Stories and Leadership

Posted by Shawn Callahan - May 6, 2011
Filed in Business storytelling, Leadership, Quotes

Tom Peters Story Quote

Click to see larger version 800×600