Behavioral economics…

Sales sand bagging defined by a Nobel laureate… who knew? 

I recently finished Thinking, Fast and Slow ©.  Amazon.com's summary (my highlights added); "Thinking, Fast and Slow, Daniel Kahneman, world-famous psychologist and winner of the Nobel Prize in Economics, takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think." 

Kahneman's tour was above my mind; but I was able to follow his practical examples on how we make everyday decisions.  One of his topics pertained to "prospect theory".  According to Behavioral Economics Outlines, prospect theory, "suggests that people view the outcomes of risky decisions not in overall terms, but as gains or losses relative to their reference point."

Risky decision making - now we're cooking.  I've never been comfortable making risky decisions.  My life has evolved as much from coincidence as it has from carefully thought through, decision making.  Nonetheless, things have turned out pretty darn good.  I might be a poster child for the saying from our Unknown Sage: 

            It's better to be lucky than good. 

Even so, I enjoyed the treatment of prospect theory though I need a better understanding of how "reference points" are established.  That's for another day.  Today I was able to follow their example of how we think and how we perform as related to a golf reference point: 

     Every stroke counts in golf, and in professional golf every stroke counts a lot.  According to prospect theory, however, some strokes count more than others.  Failing to make par is a loss, but missing a birdie putt is a foregone gain, not a loss.  Pope and Schweitzer reasoned from loss aversion that players would try a little harder when putting for par (to avoid a bogey) than when putting for a birdie.  They analyzed more than 2.5 million putts in exquisite detail to test that prediction.

     They were right.  Whether the putt was easy or hard, at every distance from the hole, the players were more successful when putting for par than for a birdie...

     If in his best years Tiger Woods had managed to putt as well for birdies as he did for par, his average tournament score would have improved by one stroke and his earnings by almost $1 million per year. 

                        Daniel Kahneman 

Making decisions and the outcomes of how we perform based on loss aversion vs. foregone gains is powerful, yes?  $1 million annually powerful for Tiger. 

Prospect theory applies to the sales profession, too.  Early in my career when someone asked, "How are you doing?" I coined this response:

            Nothing a deal or two wouldn’t solve. 

Now I chuckle every time I observe a behavioral economics based compensation plan that flies in the face of prospect theory.  On the one hand there are higher commission percentages for every deal turned in after achieving monthly, quarterly and/or annual quota levels.  On the other hand?  

It's not called loss aversion in sales; it's called "sand bagging."  That's when a sales rep trades foregone gains from higher, current commissions by waiting until next month, quarter and/or year to turn in a sales order (or two).  

I understand why the "What have you done for me lately" phenomena in sales can cause salespeople to sandbag to avoid winding up under quota in the future.  More powerful than the foregone gain of a few extra dollars in their comp plan.  Yep in sales, loss aversion screws up behavioral economics. 

                                                            GAP 

When life gets tough we could get a helmet… or… we could leverage the peace and share the power of a positive perspective.

High School Sweethearts…

We just returned from our fifty year high school reunion.   It was titled 50 +1 because our actual fifty year mark from high school graduation occurred in 2021.  Due to the pandemic, our gathering was pushed back one year to assure the best time possible could be had by all.  High school had such an impact on my life that I like to post this little ditty each October and reminisce about that joyful time. 

Fall; October; football; high school; Homecoming – do you remember your first high school sweetheart?  High school is a very special and memorable time for teenagers; it certainly was for me.  And I always enjoyed the autumn season when I was in high school – Homecoming; Halloween; dating; parties (most chaperoned, some not). 

Fifty two years ago, this very time of the year, I asked the prettiest girl in my high school out on a first date.  I guess it went well enough because here we are fifty two years later, and I’m still awe-struck by the glow of her beauty. 

I hope you enjoy this opening to Chapter XII True North of my book, The Peace & Power of a Positive Perspective © as much I enjoyed writing it: 

Dedicated to… a crisp night in October; with a slight breeze blowing through bare trees – waiting for the coming winter.   Close your eyes.  Can you smell remnants of autumn leaves burning? 

To winning the homecoming football game.  To being carefree. To a Saturday night party at the teenager’s house whose parents are away.  Can you hear the kids having fun in the kitchen; the basement; and the backyard, all to the beat of the Rolling Stones? 

To couches, blue jeans and sweaters.  To the floor lamp reflecting on her blond hair making it shimmer with silvery streaks of light.  To the nervous small talk of a teenage boy in the presence of a varsity cheerleader.  To the patience of the teenage girl sitting on the couch with the captain of the varsity basketball team.  Can you remember when you could actually hear your heart throbbing? 

To throw pillows, which come in handy when the small talk runs out – what else can a young boy do?  And to playful pillow fights; which lead to gentle wrestling and ultimately to that first kiss. Remember how delicate she felt in your arms – the hint of her perfume – the taste of her lips? 

To first dates – dinner and a movie.  To the movie Catch 22 and the Oriental Theatre in downtown Chicago.  To dating the prettiest girl in your high school; to falling in love; to asking her father’s permission for her hand in marriage.  Were you ever so nervous? 

To the tears welling up in my eyes even as I write this short memoire.  To all those emotions; all the happiness; all those hopes and all those dreams; some fulfilled, some yet to be; and all that I can remember today as if it just happened yesterday – that I will remember everyday, as long as I live.  How can someone be so lucky? 

To 1970 - and that Saturday night in October in Elmhurst where I kissed Debbie for the very first time.  And to the friend’s house whose parents were out – to their couch, their floor lamp, to their throw pillows; and to the Rolling Stones music.  Can you imagine being so young, so infatuated, and so in love? 

I still am.

GAP 

When life gets tough we could get a helmet… or… we could leverage the peace and share the power of a positive perspective.

Giving our best…

Football is my favorite sport.  A bit ironic I suppose, because football is the epitome of a time in my life that I did not give my best.  Actually, it was worse than that.  It was the one time in all my competitive pursuits (athletics or in business) that I quit.  I’ve lost many times; won my share too.  Quit?  Once.

I quit my high school football team two weeks into the start of my junior year season.  It was the only time in my life that my Mom told me I disappointed her.  I can remember going into the head coach’s office to quit as if it was yesterday.  Totally ironic, because after being a starter and co-captain my freshman and sophomore years, I was not even planning to play my junior year.  I planned to focus on basketball. 

Over the summer the coach called and asked me to reconsider.  I agreed, but when I showed up I wasn’t prepared to give my best.  He and his coaches weren’t prepared to coach me up either.  At the age of sixteen, I decided that quitting was my only escape.  I’ve regretted it to this day.  It’s not the not-playing that I regret; it’s the not giving my best.

I bet there have been special coaches and mentors who have had a positive impact on your life.  Coaches come in all shapes and sizes and use a wide variety of styles and techniques.  Some coaches resonate with us; others don’t. 

Here’s a 6 minute movie clip about high school, an underdog team, and their coach’s expectation about giving one's best: Facing the Giants

Probably not a technique that transfers into the business world today - but the message does, true?  Yes, the sporting world is different than the business world.  Nonetheless, we don’t have to go it alone.  Even the best-of-the-best have coaches.

In business, our favorite, Unknown Sage offers this:

Common misconceptions about coaching in the marketplace: 

“Coaching is primarily for correcting behavior” - If we only coach people when they do something wrong, we have missed the point.  It’s about building not fixing. 

“Coaching requires giving up power and control” – The manager relies more on influence. The person is still accountable. 

“Coaching takes too much time” – Coaching takes too much time if you don’t do enough of it and you don’t do it correctly.

“Coaching is soft stuff” – The manager who avoids soft stuff usually does so because it is so hard.  The work is easy; people are difficult. 

“Coaching is laissez-faire management” – Freedom in the workplace, actually just about anywhere, is rooted in strict discipline. 

“Coaching is simply being a good cheerleader” – A good manager has the courage and inner strength when needed to tell people the truth. 

“Coaching is like therapy” – To be a good manager and coach one does need a basic understanding of human behavior and motivation, but therapy has no place in your relationship with the people you are leading.

Coaches enjoy occasional accolades, too.  The best I ever heard was a tribute to Bum Phillips, former head coach of the then, Houston Oilers.  It was once said of Bum:

He could take his and beat yours - and then he could take yours and beat his. 

As a coach, he was able to get his players to give their best; they had no quit.  Imagine – what could we accomplish if we committed to giving our best? 

GAP

When life gets tough we could get a helmet… or… we could leverage the peace and share the power of a positive perspective.

Is your world flat?

It’s been 11 years since I ventured out into the social media world for the very first time.  I know I wasn’t the original “explorer”, but it was still a big move for me.  Permit me to share an updated, slightly wordsmithed post from back in the day - beginning with 

People told Columbus the world was flat.  He didn’t insist it was round.  He got in a boat.  

                        3Com Advertisement 

How cool was that!  No debate; no argument; no headlines; no hype.  They said, “Impossible!” he said, “Get me to a boat!”  Then Columbus got in that boat (funded by an original venture capitalist); and proved his point.  

What a stellar example of commitment to success!  “Hey Chris, the world is flat you know.  If you go out there, you’ll sail right off the table into oblivion.”  “That’s OK”, he might have said, “I think we’ll be all right.”  He wasn't alone: 

What about you?  What are “they” saying you cannot do?  Do you agree with them?  Are you staying close to shore keeping land in sight to make you feel secure?  Or are you looking out across the vast ocean and on to your future?  Are you debating – or are you doing?  Where are you turning for the fuel to maintain your positive, can-do attitude?  

     It’s hard to beat a person who never gives up. 

                        Babe Ruth 

If you’re reading this, then you’re in my boat.  Welcome to The Peace & Power of a Positive Perspective©.  The next time you’re having one of “those days”, filled with too much negativity from “them”, come back aboard for a little positive reinforcement. 

It is the 21^st century after all.  Some people today might say, “Gary; Linked In, Face Book, Twitter are fun and all; but a vehicle for ongoing business-to-business, business?  Impossible!”  Well, what do I know?  

I spent over four decades of my career trying to perfect professional selling skills.  You know – permission-based prospecting; discovering the customer’s goals; presenting solutions… Remember?  Are any of those skills relevant today? 

Or have we in the sales profession shifted to Likes, TikToks, Tweets, and other, electronically-impersonal means of getting ink and contract to meet and money to change hands?  Were professional selling skills important only when the world was flat?  Well, what do I know? 

Best-selling business author Jim Collins wrote this: 

     The Tyranny of the OR vs the Genius of the AND.  

To me, it’s not social media – or – the old way.  I think social media is important.  I also believe that building trust still plays a key role in the customers’ success; and in turn, our success.  I would like to believe that knowing what you’re doing is still critical to a salesperson’s achievement.  Being a product expert + a technology expert + a competitive expert + a businessperson are the key characteristics our customers value.  But, what do I know? 

Similar to Christopher Columbus, no one can predict ahead of time what changes the online world will bring to the future of the sales profession.  I’m certainly not going to argue about it.  I’m just getting in my social media boat and setting sail – I believe I won’t fall off the face of the earth. 

I hope you join me for the voyage and visit https://gpokorn.blogspot.com/ often.  Bring a friend!  After all: 

No sense in being pessimistic.  It wouldn’t work anyway.    

                        Unknown Sage 

Here’s to the New World.  Thanks again Chris! 

                                                            GAP 

When life gets tough we could get a helmet… or… we could leverage the peace and share the power of a positive perspective.