Why Incentives Can Get People to Do What You Want Ep 384

Alex Ramos, owner of acquisition.com, explores the nuances of leadership and influence in his discussion with Dr. Trevor Cashy. Ramos emphasizes that power, the ability to influence events or people, is not inherently good or bad; rather, it is the application of power that carries moral weight. He delves into the mechanics of behavior modification, contrasting the effectiveness of positive incentives with the limitations of punishment. Through practical examples, such as getting a child to clean their room, he illustrates how positive reinforcement and the removal of negatives can more effectively guide behavior towards desired outcomes. Ramos argues that this approach is not only applicable to business management but also to personal relationships, suggesting that reinforcing positive behavior can yield better results than punishment or nagging.

• Entrepreneurs must embody leadership and integrity to attract and build a team for a successful company.
• Leadership involves getting people to act in ways that align with the company's goals.
• Alex Ramos emphasizes the importance of understanding power and using it responsibly in leadership.

"We as entrepreneurs, must be leaders and good people so that we can attract good people, so we can build good companies."

This quote highlights the significance of leadership and personal values in entrepreneurship. It suggests that being a good leader and person is essential for attracting talent and building a successful business.

"Now, a big part of that is figuring out how to get people to do stuff."

Alex Ramos points out that a critical aspect of leadership is influencing others' actions to achieve desired outcomes.

• Power is defined as the ability to direct or influence events or people.
• Many people aim to become more powerful, which can be perceived negatively due to misunderstandings about the nature of power.
• Power itself is neutral; its ethical implications depend on how it is used.

"The definition of power is how to influence events or people, all right? So the ability to direct or influence events or people, that is the definition of power."

Alex Ramos provides a clear definition of power, emphasizing its role in influencing people and events.

"Power is neither good nor bad. What you do with it can be good or bad, right? It is just raw potential."

This quote clarifies the neutrality of power and suggests that it is the application of power that can have moral dimensions, not the power itself.

• Leadership is about persuasion and convincing others that following your direction is in their best interest.
• Effective leadership requires the leader to align their goals with the interests of their followers.
• Alex Ramos views leadership as a form of power that involves selling or persuading others.

"So you want people to do stuff, right? There's the component of persuasion in getting them to believe that it is in their best interest."

Alex Ramos describes the essence of leadership as the ability to persuade others that following the leader's guidance aligns with their own interests.

• Leadership involves both psychological persuasion and behavioral tactics.
• Alex Ramos introduces the concept of incentives as a means to influence behavior, discussing punishment and reward as tools.
• The conversation with Dr. Trevor Cashy on behavior and compliance informs this perspective.

"And I'm talking about incentives. So this is kind of the brass tax side. There's the persuasion, the soft side, which is still very important. The psychology side. The other side is kind of the behavioral side."

Alex Ramos differentiates between psychological persuasion and behavioral incentives, indicating that both play a crucial role in leadership.

• The concept of incentives is broken down into positive and negative reinforcements, such as rewards and punishments.
• A simple example is used to illustrate how incentives can be applied to influence behavior, like getting a child to clean their room.

"So you've got pluses and you've got minuses and you can add them. Or you could subtract them."

This quote introduces the basic framework of incentives, where positive (pluses) and negative (minuses) reinforcements can be applied to modify behavior.

• Positive reinforcement involves offering a reward for completing a task.
• A reward can be anything that is considered valuable or desirable by the person expected to complete the task.
• The use of rewards is a method to encourage desired behaviors.

"So you can add a good thing." "That is something that I can do. If you do the chore, I will." "Give you a cookie." "Simple. You do the thing, you get the reward."

These quotes illustrate the concept of positive reinforcement, where a desirable outcome (receiving a cookie) is offered as a reward for completing a task (doing the chore). The simplicity of the transaction is emphasized to show its effectiveness.

• Negative punishment involves the removal of a favored item or privilege as a consequence for not completing a task.
• This method is used to discourage undesired behaviors by taking away something enjoyable.
• The concept of "never skipping dessert" is used to highlight the significance of the punishment in this context.

"And so we could subtract something that they do have, that they like. Right. So if you don't do your chores, I will remove video games or you don't get to eat dessert."

The quote explains negative punishment by describing the removal of privileges (video games or dessert) as a consequence for not performing expected behaviors (chores). The idea is to create a disincentive for non-compliance.

• Positive punishment involves adding an unpleasant consequence in response to an undesirable behavior.
• This form of punishment introduces a new, negative experience to discourage certain actions.

"But I'm going to add something that wasn't currently in your life that you will not like." "As we add a negative."

These quotes discuss positive punishment, where an adverse element (spanking) is introduced as a consequence for not completing a task (chores). The concept is to add an unpleasant experience to deter the behavior.

• Negative reinforcement involves the removal of an unpleasant factor as a reward for completing a task.
• It can also be seen as a combination of taking away a negative and potentially adding a positive.
• This method is used to encourage behaviors by promising the cessation of something disliked.

"So I plan on spanking you every day, and I can remove spanking." "Or let's say there's something that you don't like doing, which might be like, you're expected to do the dishes, right? You don't have to do the dishes." "So you don't like riding the bus. I'll drive you to school."

The quotes explain negative reinforcement by offering examples where an unpleasant task or experience (spanking, doing dishes, riding the bus) is removed as a reward for compliant behavior. The speaker also suggests that this can be coupled with a positive (driving to school) to make the incentive even more appealing.

• Incentives are a powerful tool for driving behavior.
• There is significant documentation supporting the influence of incentives on behavior.
• The idea is that people are motivated by rewards and will act to obtain them.

"Incentives drive behavior. There's tremendous amount of documentation on that." "Here's what's kind of interesting about all of this stuff."

This quote highlights the fundamental principle that incentives, whether positive or negative, are effective in shaping behavior. The speaker emphasizes the well-documented nature of this concept, suggesting it is a well-established fact in behavioral studies.

• Marketing strategies often include the use of incentives.
• The speaker is using the release of an unreleased chapter to build hype for an upcoming product.
• Customer segmentation is a technique to increase profitability by targeting specific customer groups.

"I'm doing that to build hype for." "It talks about your first avatar and how to segment customers to make more money."

The quotes indicate the use of incentives in marketing, specifically, offering a free unreleased chapter to generate interest in a new product. The mention of customer segmentation implies a strategy to tailor marketing efforts for different customer groups to maximize revenue.

• The concept of avoidance behavior is based on the idea that people will go to great lengths to avoid punishment.
• Punishments can be designed to ensure compliance with rules or expectations.

"When you create punishments for people, people will do anything to avoid the punishment."

This quote sums up the discussion on punishment by stating that the fear of punishment can be a strong motivator for people to act in a certain way. The implication is that the avoidance of negative consequences is a significant driver of human behavior.

• Punishments may deter unwanted behavior but don't necessarily encourage desired behavior.
• Incentives are more effective in directing behavior towards desired outcomes.
• Negative reinforcement over time can lead to degraded performance.
• Positive feedback generally results in improved performance.
• The approach to incentives and punishments has implications for systems like the judicial system.

It encourages criminal behavior. It encourages people to find new and ingenuitive ways to do the thing they want to do, which is their incentive, their plus side, and figure out a ways to avoid the downside.

This quote explains that punishment may inadvertently encourage individuals to become more creative in avoiding consequences rather than ceasing the undesired behavior.

Here's what is kind of interesting about this, is that with punishments in general, you get people to avoid the behavior, but you don't get them necessarily to do what you want them to do.

Alex Ramos highlights the limitation of punishment as a tool for behavior modification, emphasizing that it doesn't inherently guide individuals towards the desired behavior.

And so I saw that through this lens, which is we can direct people's behavior far more effectively with positive incentives than we do with negative stuff, which has huge implications for the jail system and the punitive system.

Alex Ramos suggests that positive incentives are a more effective means of behavior modification than negative consequences, which has broader implications for societal systems of punishment and rehabilitation.

Sprays in any direction that's just away from the thing, whereas incentives directs it towards what you want.

Alex Ramos uses a metaphor to describe how punishment causes behavior to scatter in any direction away from the undesired action, while incentives guide behavior towards a specific goal.

• Good leadership is crucial for building successful businesses.
• Attracting good people is essential for entrepreneurs aiming to build great companies.
• Jim Collins' research indicates that leadership style can significantly influence company performance.

The reason this I think is very interesting is that when you look at, so Jim Collins wrote a lot of the best management books that are out there. And what's interesting, if you follow his career, it seems like he went from super, super quantitative to more qualitative.

Alex Ramos discusses Jim Collins' career trajectory, observing a shift from a quantitative to a qualitative approach in his management books, which underscores the importance of leadership in business success.

And so based on the research that he had, that he had presented, which I thought was really fascinating, is that over time, if you have negative reinforcement, performance degrades.

Alex Ramos references Jim Collins' research, which found that negative reinforcement can lead to a decline in performance over time, highlighting the importance of positive reinforcement in management.

And so if we think about this within the context of managing people and getting to do the things that we want them to do, right, then it makes more sense for us to think about an activity, rather than a single outcome into as many, many incremental steps as we possibly can and then incentivize those many steps.

Alex Ramos suggests that breaking down activities into incremental steps and incentivizing each step can be a more effective management strategy for achieving desired outcomes in a business context.

• Positive outcomes often do not need to be monetary but can be perceived as status and feedback.
• Reinforcing good behavior with positive feedback encourages individuals to repeat those actions.
• Continuous reinforcement can lead to automatic behavior without conscious thought.

"They need to be things that people can perceive as positive outcomes, which many times is just status and feedback, which is just great job, awesome stuff. You did that thing yesterday, and it was great."

This quote highlights the importance of non-monetary rewards, such as praise and recognition, in reinforcing positive behavior.

"And we reinforce. And then now that they've realized, I did this one thing and I got this cookie. Well, I want to do that one thing again. And they get another cookie, right? And we reinforce behavior."

The quote explains the process of reinforcement where a 'cookie' symbolizes a reward for a positive action, which encourages the repetition of that action.

• Circumstances and outcomes are measurable, unlike internal feelings or psychological states.
• Incentives can be inserted into measurable circumstances to influence outcomes.
• Directing behavior is more feasible when focusing on conditions and incentives rather than trying to understand internal thought processes.

"We can say, I saw that we were in this circumstance, which you can measure. We inserted this incentive, and then they did this outcome, yes or no, right?"

This quote emphasizes the measurability of circumstances and outcomes and the insertion of incentives to guide behavior.

"Whether they felt inspired or whether they psychologically loved, we don't know, and we never will know because not everyone even knows how they're feeling."

The quote reflects the difficulty in measuring internal states and feelings, which are less reliable for influencing behavior than measurable actions and outcomes.

• Behavior can be directed by focusing on certain 'boxes' or factors that are controllable.
• The process involves reinforcing desired behaviors to achieve a specific outcome.
• The strategy is applicable to various relationships, including marital ones, by reinforcing behaviors instead of using negative methods like nagging.

"People'S behavior to the singular outcome that you're looking for, and you continuously reinforce those behaviors such that they start doing them without even thinking about it because it has been so reinforced."

This quote discusses the idea of directing behavior towards a desired outcome through continuous reinforcement, leading to automatic behavior.

"How do you get your spouse to do the stuff that you want them to do? Well, it certainly doesn't come from nagging them all the time."

The quote implies that negative reinforcement, such as nagging, is not effective in directing behavior compared to positive reinforcement strategies.

• The discussed behavioral techniques are not limited to one context and can be applied to various aspects of life, including personal relationships.
• The approach is a blend of soft (persuasion) and hard (reinforcement) techniques.
• The choice of reinforcement can be positive or negative, and the goal is to achieve a common objective.

"So instead of trying to think, how do I have an amazing marriage? It's how can I condition this person to stay married to me? Kind of interesting. Little flip for you."

This quote suggests a practical approach to improving a marriage by conditioning behaviors rather than focusing solely on abstract concepts like love or happiness.

"This is how you get people to do shit. You can think about it in the terms of soft side, in terms of persuasion, but you can also think about it in terms of the hard side of what are the reinforcements that we're going to use, either positive or negative?"

The quote explains that influencing behavior can be thought of in terms of both persuasion and reinforcement, with a focus on the types of reinforcements used to achieve desired behaviors.