Race to Nowhere is one documentary I recently referenced in a blog post on distribution and influencing change. While the topic isn’t marketing nor innovation oriented, it is an interesting one indeed. Makes me wonder about the Chinese or Japanese cultures too though, since they’ve traditionally been stereotyped as placing a high value on education.

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A group of peers and I discussed last month what we envisioned as the future of the green movement and a (more) sustainable society. While there was no definitive conclusion, there was a healthy bit of realism thrown on the table for us to chew on.

Social Media

Yes, it can be a great platform for collectively raising Awareness of issues through nonprofit/ngo/brand publishing, user-generated content & distribution, discussions, and word-of-mouth through blogs and other sharing options.

While awareness is good, Action is what marketers and change agents want to inspire. Real action that is. Not slacktivism that allows easy options like reTweeting a message, liking a Facebook page, or playing a trivia game that also donates rice to developing world kids. Social media for good should encourage meaningful calls to action, not just make people believe they’re supporting a cause through passive activity, thus making them feel better. That’s undifferentiated, non-competitive, non-memorable bs that all communicators should rise above. Know the difference and spread the word to those leading such campaigns. Because that energy people are devoting toward good intentions should be viable in the long run, not sapped dry like the large number of small business or new products that fail.

Secondly, it seems to me that at a certain point in media channel observation, there’s grows to be a echo chamber of recurring ideas. The media industry and budding passionate bloggers are the worst offenders. Top 7 tips to a stronger CSR, product launch, employee retention, energy savings, or vibrant garden anyone? That’s just a snapshot of advice article formats. Then there’s Twitter, Facebook, and other channels that are distributing these similar stories, along with providing pithy advice in 140 characters.

I admit that observing what other people in my smart acquaintance network are talking about or sharing can be really interesting, especially for case studies. But there are limits to both what we realistically have time to learn about, pseudo-interact with these folks with passive kudos and occasional mini-dialogue, and hell, what’s practical and meaningful in the long run.

Is this virtual dialogue and affinitive high-fiving helping make an actual difference in the world? I think 99.9% of the time it doesn’t. But participating is sure fun anyway. Is there a personal benefit at least? I think learning more about the world, various disciplines and cultures, and getting to know more “truly” interesting people that could be beneficial to our network somewhere down the line is important. But these same activities could also be accomplished by reading books and going to social events (much easier if you live in a big city).

To me, all these activities whether online or off, can serve to personally enrich oneself and others. Awareness, learning, interpersonal connection is important. But they don’t provide the type of change in the world that real work and action does.

With that said, what actionable benefit does social media serve for the future of green, csr, etc.? Well, the social streams work as word-of-mouth carriers of organic messages oftentimes with links, and sometimes calls to action. If those calls are directing people into a funnel for donations, sales, petitions, activity signups, pledges, content or software downloads, and anything else deemed as meaningful, then we can say social media is being utilized to a good extent.

Nonetheless, awareness is important if we want a large volume of intended action. And that requires promotion, listening, and outreach. PR. Buzz is good, especially if it helps significantly shape attitudes and opinions. But even so, that type of influential messaging still has an intended effect on the audience. Not all awareness campaigns do that well.

Can We Really Expect Others to Care about Sustainability as Much as We Do?

Ha! Well if we want to open that big bag of ethical behavior, we might as well talk about how human rights, fair trade & wages, gender/racial/age diversity in workplaces and public office, corruption, the educational system, healthcare, veteran care, privacy, and a massive slew of other topics that are calling for people’s attention and actions from the heart.

People have other priorities in life including work, personal health, finance, education, love, family, friends, recreation, and hobbies. Given that reality, I think it’s damn well impossible for individuals to have enough of an impact in their purchasing behavior, lifestyles, and any advocacy actions taken to influence the ecological/social impact of others, business, and government policies. Voting and community participation on a local level can have an influence there. But it’s still small.

Business & Design are the real influencers. Politics is too slow, and the decrepit average mindset of American conservatives on sustainability issues and climate change is snail’s pace to change due to the unfortunate cognitive “positioning” with Al Gore (bless his soul), and the associated “leftist” connotations it triggers there. (By the way, I’m apolitical in case you’re wondering). Plus, there are too many other issues on politicians’ plates and little time to spare for green issues.

The American Lifestyle and Footprint

Compared to other nations, it’s huge. While I’ll be quick to admit that our population density per square mile is very low in comparison to other countries like Germany and China, and that this entails much higher carbon footprints in addition to other ecological inefficiencies of suburban lives and car cultures, our history and way of life is also very much to blame. The manufacturing powerhouse nation that fostered easy home ownership, cheap food, convenient living based on too-easy credit, old agricultural policies, throwaway/open-loop material systems is now realizing the limits to growth. Increasing senior populations, fewer deaths, fewer babies, increasing personal debt, higher cost of education, and an inflation rate growing faster than income should eventually force this nation into smart growth mode. Somehow, I’m afraid that the American culture is in a state of denial about this, and it’ll take a very long time for meaningful change to happen.

What I’m more afraid of though, is the ecological impact that the aspired American lifestyle will have on the rest of the developing world. Part of me believes that increased natural resource demand is simply going to force higher prices around the world, and the Western countries are going to have to adjust appropriately as a result of the macro political/economic force that BRIC’s collusion and their individual foreign direct investment is going to have on global economics.

As average wages rise abroad, so will the price of imported goods. This should theoretically encourage operational efficiencies and new ways of running a profitable enterprise. Secondly, I believe Americans will gradually awaken to the impact that over-consumption has on personal debt and savings levels. Personal & familial health and finances are the key factors that will influence behavior change. Seems logical. At the same time though, I deeply believe that easy credit and the unhealthy lifestyle of most Americans in terms of nutrition and exercise, will continue giving people a reason to indulge in the present and neglect the morrow.

Hope

Engineering and Design serve mankind to innovate better processes and outcomes. Disseminated knowledge of discoveries, applications, successes, and failures inspire designers to change their approach, and investors to contribute funding.

Just how people like to do what others are doing where it concerns maximizing happiness, businesses like to copy what others are doing to increase revenue and lower operating costs. Case studies emerge, they end up in MBA programs, books, and the media. Management consultancies like McKinsey, Deloitte, KPMG, and other agencies will analyze & optimize. Some will innovate and become pioneers.

If we’re looking just at the materials economy, smart companies are realizing savings from nonvirgin/upcycled procurement, and recycling or selling scrap. Waste Management is putting a LOT of money into this industry, while investors scratch their heads and competitors continue investing in landfills. Startups like RecycleMatch are addressing the B2B marketplace, while RecycleBank is fairly rewarding people for the lost monetary value in their trash.

The Access economy is another one that confers the same benefits to participants, without the high cost of ownership (purchase price, depreciation, non-utility).

I imagine a future of green of continuous positive change. One where Design is the beacon, and Business the engine.

Ready for some more cognitive psychology? While you’ve probably heard from me or others how too many choices confuse or slow us down, Barry Schwartz who wrote “The Paradox of Choice”, has some more insights to share in an amusing way.

What makes us happy? Societies flourish and people are most content when they are faced with fewer choices and more constraints. We are tortured by the idea of having it all.

In my opinion, people deserve guidance. Constraints also force rational real-world thinking upon us, while also inspiring creativity to think inside the box.

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My buddy John Marshall Roberts goes off in poetic flair in this video piece about human psychology over the course of time. Neat and philosophical.

Awesome book I read early last year on behavioral economics, which according to Wikipedia

“…use social, cognitive and emotional factors in understanding the economic decisions of individuals and institutions performing economic functions, including consumers, borrowers and investors, and their effects on market prices, returns and the resource allocation. The fields are primarily concerned with the bounds of rationality (selfishness, self-control) of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory.”

Here are the chapter notes, as written by Chris Yeh with some editing and additions of my own:

Influencing Decisions by Adding Inferior Choices

In considering options before deciding, we always seek to draw comparisons, and we are often unaware as to how seemingly irrelevant factors such as the simple presentation of options (like timing), actually influence what we select.

Given three choices:

• A
• B (very distinct, but equally as attractive as A)
• A- (similar to A, but inferior)

We will almost always choose A, because it is clearly superior to A-.

Say we are trying to decide on a vacation between two choices:

• Paris trip with free breakfast
• Rome trip with free breakfast

We cannot decide between the two because maybe we love Paris and Rome equally.

But adding the option of a slightly lower priced Paris trip but without the free breakfast, the better Paris option now looks a lot better, and marketers have artificially created a premium offering, and distracted us from the Rome option.
So by adding a third option (an “A minus” version of one of the options), we’ll pick the A version, over the equally attractive B version.

Example: When Williams-Sonoma introduced bread machines, sales were slow. When they added a deluxe version that was 50% more expensive, they started flying off the shelves. The first bread machine now appeared to be a bargain.

Fallacy of Supply and Demand

Anchoring, the act of creating or adopting an attachment, has a major long-term effect on our willingness to pay.

Herding: Assuming that something is good (or bad) on the basis of other people’s previous behavior.

Example: Starbucks itself is a case of producing a new anchor.  Howard Schultz made Starbucks as different as possible from the traditional coffee shop to convince shoppers to establish a new anchor, rather than saying, “This is a fancy, expensive Dunkin Donuts.”

Knowing the impact of anchoring, you should train yourself to question your repeated behaviors.  You should also pay particular attention to the first decision in a long stream of decisions.  It may seem like it is just one decision, but that first decision may have impact on future decisions for years to come.

The bigger picture is that supply and demand are not independent; supply-side variables like MSRP can impact willingness to pay.  Price “memory” can also have a major impact. Doubling the price of milk and halving the price of wine would have a major short-term impact, but it’s unlikely to have a long-term impact on consumption patterns. And if you induced amnesia about the previous prices, it might have nearly no impact at all.

“Free” Drives a Lot More Demand than a Penny

Why we often pay too much (in opportunity cost or time spent) when we pay nothing.

Zero/free is a source of irrational excitement.  This is called the “zero price effect.”

Ariely, Shampanier, and Mazar conducted an experiment using Lindt truffles and Hershey’s Kisses.

• When a truffle was $0.15 and a Kiss was $0.01, 73% of subjects chose the truffle and 27% the Kiss.
• When a truffle was $0.14 and a Kiss was free, 69% chose the kiss and 31% the truffle.

According to standard economic theory, the price reduction shouldn’t lead to any behavior change (relative price and expected pleasure should be equal between the two experiments).

The same experiments were conducted with Kisses going for $0.02, $0.01, and free…and free again made a huge difference.
Ariely’s theory is that for normal transactions, we consider both upside and downside. But when something is free, we forget about the downside.

“Free” makes us perceive what is being offered as immensely more valuable than it really is.

• Humans are loss-averse; when considering a normal purchase, loss-aversion comes into play.
• But when an item is free, there is no visible possibility of loss.

Example: Amazon’s free shipping

• After Super Saver shipping was introduced, Amazon saw sales increases everywhere except for France.
• It turned out that the French division offered 1 franc ($0.20) pricing instead of free pricing.
• When this was changed to free, France saw the same sales increases as elsewhere.

Example: People will wait in line for absurdly long times to get something for free.

Free is one of the most powerful ways to trigger behavior.

The Cost of Social Norms

Why we are Happy to do things, but Not when we are Paid to do them.

Clark, Mills, and Fiske theorize that we live in two worlds; one where social norms prevail, and another where market norms make the rules.

• Social norms such as reciprocity are warm and fuzzy, with no explicit quid pro quo.
• Market norms are explicit and hard–you get what you pay for.

Example: The AARP asked lawyers to participate in a program where they would offer their services to needy employees for a discounted price of $30/hour. No dice. When the program manager instead asked if they’d offer their services for free, the lawyers overwhelmingly said they would participate.

• Conclusion: Market norms drive out social norms.

“People are willing to work free, and they are willing to work for a reasonable wage, but offer them just a small payment and they will walk away.”

Companies that try to market based on social norms (“like a good neighbor…”) but fail to follow through (e.g. like imposing nuisance fees), end up in a worse position. Consumers take personal offense when a relationship framed as a social exchange turns out to be a market one. This is one of the risks and consequences to be wary of when employing social marketing.

“If you’re a company, you can’t have it both ways. You can’t treat your customers like family one moment and then treat them impersonally (or worse, as a nuisance or competitor) a moment later when this becomes more convenient or profitable. This is not how social relationships work. If you want a social relationship, go for it, but remember that you have to maintain it under all circumstances.”

If you think you need to play rough, don’t waste money making your company the fuzzy feel-good choice. State what you give and what you expect in return–it’s just business.

“If companies want to benefit from the advantages of social norms, they need to do a better job of cultivating those norms….It’s remarkable how much work companies (particularly start-ups) can get out of people when social norms (such as the excitement of building something together) are stronger than market norms (such as salaries stepping up with each promotion). If corporations started thinking in terms of social norms, they would realize that these norms build loyalty and–more important–make people want to extend themselves to the degree that corporations need today: to be flexible, concerned, and willing to pitch in.  That’s what a social relationship delivers.”

“A salary alone will not motivate people to risk their lives. Police officers, firefighters, soldiers–they don’t die for their weekly pay. It’s the social norms–pride in their profession and a sense of duty–that will motivate them to give up their lives and health.”

“Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but often more effective as well.”

Influence of Arousal

Why Hot Is Much Hotter Than We Realize

Ariely and Loewenstein conducted an experiment on Berkeley undergrads (Ariely tried to do this at MIT, but couldn’t get the necessary permissions).  They asked them a series of questions, then had the undergraduates stimulate themselves to a state of sexual arousal, and asked them to answer the same set of questions. The results show that people simply don’t realize how different their decision-making is during a state of arousal.

Implication: Someone may promise to just say NO, but that promise is less likely to hold up during a state of emotional excitement.

Procrastination and Self-Control

“We have problems with self-control, related to immediate and delayed gratification. But each of these problems has potential self-control mechanisms. If we can’t save from our paycheck, we can take advantage of our employer’s automatic deduction option; if we don’t have the will to exercise regularly alone, we can make an appointment to exercise in the company of our friends. These are tools that we can commit to in advance, and they may help us be the kind of people we want to be.”

How can these principles be used to improve health care?
Charge a $100 deposit, refundable when the patient shows up on time rather than procrastinating.

Repackage procedures so that they are predictable and easily done.

Example:

• Ford had issues getting customers to come in for regular maintenance. Many of the parts needed servicing at different times, and the intervals differed by vehicle.
• Then Ford noticed that Honda had lumped all service needs into one of three intervals: 6 months/5,000 miles, 1 year/10,000 miles, and 2 years/25,000 miles. It was suboptimal from an engineering standpoint, but it made it easy to tell customers when to come in.
• Ford imitated Honda, and within 3 years, was achieving the same results.
• Why not make comprehensive physicals simple?  Then layer in a financial penalty for missing them.

What about a self-control credit card that let you decide in advance on certain restrictions on your spending? (Only $60/month on entertainment; no candy between 2 and 5 PM)

Why We Overvalue What We Have

The “endowment effect” means that when we own something, we begin to value it more than other people do.

There are three fundamental quirks of human nature:

• We fall in love with what we already have.
• We focus on what we might lose, rather than what we might gain.
  • When thinking about selling something, you think about all the things you’ll miss, rather than the hassles of ownership.
• We assume that other people will see the transaction from the same perspective as we do.

Peculiarities of ownership:

• The more work you put into something, the more ownership you begin to feel for it (The “IKEA effect”)
• We can begin to feel ownership even before we own something (The “eBay effect”).
  • This is why trials and money-back guarantees work so well! People hate to downgrade.
• These ownership quirks apply to ideas as well as things…which is why we end up with ideologies that no longer seem rational.

To counteract the endowment effect, try to view all transactions as a non-owner. This explains the efficacy of the question: “Assuming you hadn’t done X, would you still do it now?”

Why Options Distract Us from Our Main Objective

We feel compelled to preserve options, even at great expense, even when it doesn’t make sense.

“What we need to do is to consciously start closing some of our doors….We ought to shut them because they draw energy and commitment from the doors that should be left open–and because they drive us crazy.”

Even when you get down to two doors, choosing is still difficult.

“Choosing between two things that are similarly attractive is one of the most difficult decisions we can make.”

When we focus on the similarities and minor differences between two things, we fail to take into account the consequences of not deciding. Flip a coin and move on.

Why The Mind Gets What It Expects

Previously held expectations can cloud our point of view.

When we believe something will be good, it generally will be good, and when we think it will be bad, it will be bad.  But does finding out the truth after the experience change one’s mind?

Stereotypes: Not only do we react differently based on stereotypes of others, we react differently based on stereotypes about ourselves.

Shin, Pittinsky, and Ambady conducted an experiment on Asian-American women.

• A first group was asked questions related to their gender, then given a math test.
• A second group was asked questions related to their race, then given a math test.
• The second group did better on the math test than the first.

The Power of Price

Why a 50-Cent Aspirin Can Do What A Penny Aspirin Can’t.

The placebo effect is well-known and real.  It’s not just a matter of fooling oneself; placebos can actually trigger endorphins and opiates and other biological reactions that actually change body and experience. What is interesting, however, is that price has an impact on perceived efficacy. Extremely low-priced (but quality) items will be seen as possibly untrustworthy.

Given the Opportunity, Many Honest People will Cheat

Experiments were conducted at MIT, Princeton, UCLA, and Yale with similar results, so it’s not just that Harvard students are crooks.

Once tempted to cheat, students didn’t seem to be influenced by the risk of getting caught; even when we have no chance of getting caught, we still don’t become wildly dishonest.

“We care about honesty and want to be honest. The problem is that our internal honesty monitor is active only when we contemplate big transgressions, like grabbing an entire box of pens. For little transgressions like taking a single pen, we don’t even consider how these actions would reflect on our honesty.”

Ariely conducted an experiment on MIT’s communal refrigerators:

• When he slipped in a 6-pack of Coke, all the Cokes had vanished within 72 hours
• When he left a plate containing 6 $1 bills, no one *ever* took any of the money
• Would you feel bad about taking a pen for you child?  How about taking $0.10 from petty cash to pay for a pen for your child?  The two are economically identical, but get very different reactions.

“Cheating is a lot easier when it’s a step removed from money.”

Overall, cheating is not limited by risk; it is limited by our ability to rationalize the cheating to ourselves.

Summary

“We are all far less rational in our decision making than standard economic theory assumes. Our irrational behaviors are neither random nor senseless–they are systematic and predictable.  So wouldn’t economics make a lot more sense if it were based on how people actually behave?  That simple idea is the basis of behavioral economics.”

Great list from Stanford University’s Persuasive Technology Lab. See my notes for each point below the slides.

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Great list! Here are my thoughts on each:

1. Relying on willpower for long term change
   Willpower is temporary energy. You’ll need deep rooted values and personal aspirations to sustain that energy. But drive alone is not enough. We need direction, otherwise we’ll get burnt out. And if the change requires a lot of exerted effort (cognitive, emotional, big time slots), we’ll lose inertia. So forget about willpower, and rely on aspiration and values for energy. Focus then on direction, and the path.
2. Attempting big leaps instead of baby steps
   Some folks can be REALLY motivated and ready to commit to big change, including dropping strong attachments and habits. But they’re exceptionally rare. Just like in life where we overestimate difficulty and temporarily forget about habits, obligations, and realistic constraints (time, money, access, other), big leaps are naive and have demoralizing after effects. Seek and achieve little successes, and iterate.
3. Ignoring how environment shapes behaviors
   You’ve probably heard the old wisdom nugget about the friends we choose and spend time with say a lot about ourselves. Well, it’s kind of the same for behavior. How can a person expect to lose weight through exercise unless they concurrently decide to change the food in their kitchen, and not eat big portions like family members, roommates, and peers? How can a very messy desk not influence a person’s feeling of self-control and being “caught up” (completion)? Changing the context can greatly promote desired behaviors.
4. Trying to stop old behaviors instead of creating new ones
   Stop thinking about tattooed elephants wearing bandannas!
   Trying to stop bad activity through cessation alone is unsustainable. We need to focus on what works. For example, bad personal habits and moping around depressed are usually handled by doing something else instead, like chores, exercise, and other activities. Focus on action, not avoidance.
5. Blaming failures on lack of motivation
   Just like #1, willpower and drive alone don’t cause failures. Look at the the environment, the number of tasks and the effort required for each, the directions given, goals established, and obstacles hindering progress.
6. Underestimating the power of triggers
   Triggers are codified response points in space and time, often based on conditional situations. Like all in life, good behavior has a beginning and end. Direction implies not only goals, but timing as well.
7. Believing that information leads to action
   General information produces awareness. Great information will also stimulate desire, call upon people’s values, and provide direction. Although I’ve diversely defined “information”, sociological and environmental conditions like peer pressure and path design are quite influential when it comes to action.
8. Focusing on abstract goals more than concrete behaviors
   Goals can be big or small. Their achievement relies on carrying out the behavior(s). But the bigger the goal is, the less intuitive people are in what needs to be done. Define and execute. Iterate. Progress check. Continue.
9. Seeking to change a behavior forever, not for a short time
   Similar to #2, but with an absolutistic mindset. The harder the change is, the more resistance people will display. If they don’t live up to the high behavioral expectation, then they’ll be demoralized and perhaps feel shame. Not a good situation to set up. Focus perhaps instead on short time period in terms of what’s actionable now and within the next week or three months.
10. Assuming that behavior change is difficult
    Difficulty is a qualitative judgment of effort required based on task/behavior requirements versus our capabilities. No matter what’s being asked of people, if it’s rational, desirable, and people are motivated, with a clear and sensible process, behavioral change is possible.

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Neat animated excerpt from Carl Honore‘s presentation at PopTech 2007. As quoted from the full 22min video,

“In this busy, hectic world, speed often trumps quality of life. Best-selling author and Slow Movement purveyor Carl urges us to slow down and alter our culture of speed and its negative effect on our happiness.”

In going through my books lately, I came across The Traveler’s Gift. It’s a heartwarming tale where the main character, being sad and getting in an accident, travels time to meet mostly famous world leaders who impart important life principles to live by. Summarized, here they are. I purposely leave them brief for self-reflection:

1. By accepting responsibility for my past, I free myself to move into a bigger, brighter future of my own choosing.
2. I will seek wisdom from media and friends that’ll bring positive change and healthy beliefs in myself and my future.
3. I am a person of action. Doing nothing and dwelling is not an option.
4. I have a decided heart. I am passionate about my vision for the future. My course is charted and my destiny is assured.
5. Today I will choose to be happy. I will greet each day with laughter and smile at every person met. I am the possessor of a grateful spirit.
6. I will greet this day with Forgiveness to myself for any previous pain, and to all others who unjustly criticize or don’t not ask to be forgiven.
7. I will continue despite exhaustion and focus on results. I am a person of great faith. I will persist without exception.

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Understanding why people make decisions and their subconscious motivations and potential cognitive biases or distortions, is the basis of behavioral economics as Pam Cohen explains in this interview with me. Applied to sustainability, companies want to maximize their return on investment from projects undertaken, and so she steps in with causal modeling and scenarios to help firms realize the highest potential financial and social/environmental impact.

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Following decades of systemic accumulation of plastic debris in the ocean, society is now seeing its effects on aquaculture and ecosystems. Listen to Doug Woodring of Project Kaisei describe the organization’s history and mission, how they’re collaborating with partners to conduct further research, and their goals and activities in raising global awareness into current situation at hand.