To kick goals in business, forget rationality

To kick goals in business, forget rationality

Imagine you are taking a penalty kick in a World Cup final. There are two things standing in your way of kicking the ball into the back of the net: the goalie and your nerve.

So where should you kick it? To the left? The right? Or straight down the middle?

To help you decide, know that 57% of the time the goalie jumps to the left of goal, and 41% jump right. That means the goalie stays in the centre only 2% of the time.

So where should you kick it?

The rational thing, quite obviously, is to kick to the centre because it has the lowest probability of being blocked.

So why is it then that only 17% of kicks are to the centre?

This was the question posed by Stephen Dubner and Steven Levitt in their book Think Like a Freak, in which they bring the quirks of human decision-making to life. And this example from the sporting field serves as a powerful illustration of why the rational arguments we make in business tend to fail time and again.

Turns out we’ve built our businesses for a type of decision-maker that doesn’t exist.

There are two key errors we’ve been making in how we engage clients, stakeholders, customers, investors, suppliers and staff.

1. We’ve assumed people are rational. If we were rational, then whether a vote is held in a school or church hall shouldn’t matter – but it does. If we were rational, it shouldn’t matter whether a number has decimals and commas in it – but it does. If we were rational, it shouldn’t matter what size plate we use for dinner – but it does. And if we were rational, we’d kick the ball down the centre.

2. We’ve assumed that what they say they want is what they actually want. Focus group participants used to tell me they’d use the White Pages phone book more if it included a schedule of bin days so they knew whether it was green waste or recycling week: Perfectly rational. But what they actually do to resolve this question is walk down their driveway and look to see which bin their neighbour has put out. Many Australians say they want to buy Australian goods and support Australian producers, but what happens when imported Italian tinned-tomatoes are only 99 cents versus the local version at $1.40?

So that leaves us with a problem. If how we’ve been taught to influence decision-makers is wrong, how do we get it right?

By starting with a new assumption.

People are irrational (or to be more polite, we have ‘bounded i.e. limited rationality’).

We are all – you, me, your client, staff member, CEO, accountant, supplier, personal trainer – subject to cognitive biases and mental short-cuts that influence our behaviour without us even being aware. By understanding these filters (a list of many of which are here) we can design our arguments to influence decision-makers more effectively and more consistently.

Oh, and why don’t people kick the ball down the centre? Because imagine how embarrassing it would be to kick the ball straight into the arms of a goalie who didn’t even have to move. Fear of shame trumps the allure of glory.

Here’s more on why rational arguments fail.

Bri Williams runs People Patterns, a consultancy specialising in the application of behavioural economics to everyday business issues.

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