MBA1583 Must Read: How We Decide by Jonah Lehrer

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How We Decide is a book that explores the science of how we make good and bad decisions. It challenges what we think drives decision making. It challenges the idea that all the best decision making is rational. Rational decision making. Rather, this book explains that that's just not the truth. We make decisions not just with our rationale, but with emotion as well and has nothing to do with how smart you are or how rational you are. In fact, he actually explains how great decisions are made when we use both our emotional and rational capabilities to come up with a decision. This book is heavy. No, it's not a thousand pages long. What I mean by that it's that it's intensely researched. Every Point he makes is backed up a case study or five, right? Lots of case studies here. I learned a ton from this book. It changed the way I thought about decision making, which is interesting. And this is incredibly important as an entrepreneur because you're making decisions all day long. As a leader, you're probably making hundreds every week. And the better you're at that job making decisions, the better you're at leading your team. Not only that, you get to learn how other people in your business, your teammates, your managers, make decisions and how you can guide them in the right direction. We got a lot to cover in today's must read episode, so let's get into it. Let's get down to business. How We Decide is one of the most interesting books I've read this year. It's one of those books that makes you think. So it's not a really fast read because you're stopping every so often, I would say every three to four pages and contemplating what you just learned, contemplating what you're being really presented with. One of the things you learn early on in the book is that decision making is actually one of the most neuron intensive tasks you can do, meaning your brain is working really hard when you're making decisions. That's why a lot of us will feel really tired at the end of the day and we'll look at our to do list and say, I didn't really get a lot done. But in the process, you're making all these little decisions, people are asking you questions, and your brain is really being ringed out. You're getting really tired because it takes a lot of cognitive energy to, to make decisions. This takeaway alone is worth the book. And the reason why is you're like, okay, well, Mark, great. You get tired when you make decisions. What does that mean? Well, what it means is this is not sustainable. If you're making all the decisions right, you need to outsource. You need to delegate decision making to other team members. You need managers, really. You need people that can make their own decisions for their own department so that you are only making the biggest decisions. The ones that move the needle the most, move the direction of your business. A good way to look at it is you are the captain of the ship and you make the decisions that change the trajectory of your journey. Where your ship is sailing, right, that's really your focus. You should be making all the decisions that are going on on the ship. You shouldn't be worrying about what's for dinner or who's going to clean the mess hall or what's going on with the administration of who's doing what at what shifts and all that kind of stuff. You need to need to really move the ship. And these big decisions are tiring, but you are going to be relieved of all the smaller decisions that you're currently doing that are really fatiguing you. And that's why you need to build a great team and you need to empower them. You need to throw back at them. When they ask you a question, say, hey, what should we do about this? You say, what do you think we should do? Right? This is your call. You know, I don't even want to give you my take because it's just easy to roll with what I say. And I just made the decision for you. So you got to empower and you got to enforce decision making in your team, otherwise you're never going to grow. And that's one of the things that took me a long time to realize. If you're doing everything, you just can't scale. You're only one person, and one of the biggest jobs you do is make decisions. And if there's only a certain number of decisions you can make a day, only make the big ones and leave everybody else to make the other ones in power and delegate and make sure it's clear to the team who's making what decisions, or I should say, who's responsible for making what decisions. Another fascinating thing I learned in this book is the idea of negative bias and loss aversion. When we make decisions, we try to protect ourselves. We don't want a negative outcome. In other words, we're playing defense. You're not really playing offense. And this hinders us from making the best decision because we want to avoid bad news. And I want to be clear, the absence of bad news doesn't equal good news. So we're not making decisions based on a positive result. We're making decisions most of the time to avoid bad things from happening. And that's really what negative aversion is about. And you have to be mindful of this because sometimes we have a scarcity mentality. We feel like we need to hold on to what we have and we don't really reach out for more because of that. Now, loss aversion is related. Many people will make decisions based on not losing something versus gaining something. And he shares a whole bunch of great studies here and he talks a lot about credit cards because credit cards using plastic to pay for something, whether it's in person or online, has changed the way we spend money because we don't feel the loss of paying for something or loss of money, giving up money as much as we do when we pay with cash, because it's actually something we feel we see. And we see it's leaving our pockets, leaving our wallets, it's leaving our purses, and it's going out to the store or going to somebody else. So you'll actually see people will tend to buy more if they're paying by card versus they're paying by cash. Because the sting of losing money, loss aversion is really a powerful feeling, and we don't feel it as strongly when we pay with card versus cash. And this kind of takes us down the path where he talks about how emotions get involved with decisions. A lot of us will make decisions based on how we feel. And loss aversion is a feeling. It's not something that goes in our head really. It's something about, I don't want to feel like I'm losing something. Or maybe in your case, when it comes to offering a free trial or a money back guarantee, I don't want to feel like I'm taking a huge risk. This is a feeling. This is not a rational type of thing. This is a feeling of I don't want to feel like I'm making bad decisions. I don't want to feel like I'm going to regret this. In other words, they don't want to feel like a loser. They want to feel like a winner. They're making winning decisions. And just the mere fact of being a winner of that when people are buying your products and services, they're trying to avoid negative feelings, feelings of loss, feelings of feeling stupid or regret. If you know that exists, then you can work around it. You can change the copy on your website, you can change your policies, you can change your pricing, you change your model. So that you're addressing these, you're not pretending they don't exist. This is why freemium is taking off in the software world. When a customer is given a choice between choosing two softwares that they're looking at and one has a free trial or a free plan of some sort, some way to try it for free with very little friction, versus one that doesn't. That requires to sign up or to speak to somebody or to commit to a year, they will go with the one that allows them to try before they buy. Why think about that for a second? Because they don't want to have a certain feeling and that's why they make the decision they don't want to feel like they made the wrong move or they made the wrong decision or that they wasted their money. They don't want to look bad in front of their boss. These are all emotions. So this opens up another whole can of worms, right? What else are they making decisions on based on their feelings? In the buying journey, in the process of being a customer, in being a customer, someone who bought after they've bought, are they having buyer's remorse virus? Remorse is not something that we comprehend in our brain. It's not something that we calculate or experience in our head. We experience it emotionally. Man, I made a mistake. Ugh. There's emotion behind that. So what are we doing after they buy? To make sure they don't have those feelings? We have to replace them with other feelings. Feelings of confidence, feeling of gratitude, a feeling of, yes, I did make the right decision. One of the other things I found interesting about this book is it really challenges the idea of what most of us think is the basis of decision making is the basis of if somebody says yes or no. Most people think that when you offer them something and they have to decide, the first question they ask is, what's in it for me? Now, that is something people will consider, but it's not the only thing they consider. Many people will make purchases, will decide on things that are not in their best interest for other reasons. They think it might be fun. It's something new. There's a novelty to it. People make bad decisions all the time, and it's not a mistake. What I mean by mistake is that they consciously make this decision. And this challenges the idea that people only make decisions based on what's in it for me? What am I going to get out of it? You might think people are selfish to a fault, but that's not really the reality of the world or the world of nature. You know, a mother bird will feed its kids before it feeds itself. Or you might spend a little bit more on the gift you have to give in the office Secret Santa. Because you really want to give somebody in the office a great gift, a meaningful gift. You're not like, purposely breaking the rules of the spend limit because you're getting something out of it. You're doing it because it makes you feel good and there's nothing really in it for you by spending more.

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Guys. How We Decide by Joe Nilira is a great book on how to understand the decision making process for anybody, especially your customers. Now, I have to say, it's not the complete guide on decision making. There are some things that are missing. I would also say if you're one of the people that get annoyed by, you know, several case studies to drill a point home, you're gonna find it hard to read this book. If you like that kind of thing and that really makes you engaged, you're gonna love this book. One of the things I would advise you to do, though, is to read the book, take a break and leave like 20 minutes after you drop the book or put the book down and take some notes and see what you just learned, how it applies to your own customers. What are some things that you can do, you can change on your website, in your business, in your copy that can help alleviate some of the, you know, pain points your customers have when making a decision to choose you. There's a lot of nuggets when you look at it in that perspective or when you look through that prism. This book is about decision making. It's not about decision making in business. So this is why it's important to do this. Still super helpful, but you have to come with that frame of mind. Thank you so much for listening to the $100 NBA show. I hope you loved today's episode. If you did leave us an itunes rating and review, we'd love to hear about your thoughts of the show, what your favorite episode is, what your favorite takeaway is. We read every single review and we'll give you a shout out. You'll enter our weekly random draw. Weekly free ride Friday to win a free ride to one of our programs. Just listen in on Friday to see if you won. It's that easy. Before I go, I want to leave you with this. An exercise I challenge you to do is to sit down for 15 minutes and I want you to walk through your day today, right? Say it's the end of the day and I want you to write down all the decisions you made. Every big and little decision you made in business. If you ran to the supermarket, did you pick up a bag of chips? Why? Why did you decide to do that? Write down the decision and then write the word why and write down why. Why did that happen? How did that happen? I want you to analyze your own decision making. How much was it emotional? How much was it just, we need celery so I can make this dish for dinner. And how much it was like, oh, look at this cool bath soap. I haven't seen this here before. Let's pop it in the car. Why did that happen? It's important for us to start with ourselves so we can understand decision making as a whole. This will also give you some insights on some of the things we talked about. But a lot of your decisions are not as rational as you think. Thank you so much for listening and I'll see you in tomorrow's episode. Take care.

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