5 (ish) Questions for Behavioral Economist Dan Ariely
When Dan Ariely agreed to be the first interview for INTELLECTS, we definitely hit the brainy jackpot (to us, such a thing exists). Dan is a Behavioral Economist, which means he studies the decision-making process of people and institutions as it relates to their economic habits. Basically, he knows us all a little better than we know ourselves. Intrigued? We suggest binging on the following: his Ted Talks, his latest bestselling book PAYOFF: The Hidden Logic That Shapes Our Motivations, his riveting doc The (Dis)honesty Project and then a bunch of his weekly advice columns in the Wall Street Journal. But first, read on to get his take on foolproof teambuilding, Amazon’s seemingly imminent world domination, and the sometimes questionable authenticity of Instagram influencers and celeb endorsements.
“I think that we treat credit as if it’s a limited resource. But giving people credit is incredibly important.”
With the emphasis now on building strong teams and working "collaboratively," how does one motivate a team to work together in a truly collaborative culture?
Dan Ariely: Teamwork has a few important elements to it. The first one is commitment to the team. The good news here is that we have the capacity to care more about other people in the team than we care about ourselves. For example, I was in some startups. I asked questions about—how likely are people to stay really late to work on their project, versus how likely are they to stay late to help other people with their project. The answer was that people were more likely to stay and help other people. They also felt more likely to be able to call their spouse and say, “Hey, I need to stay late because I need to help X,” than to call and say they needed to stay late to finish their own project. So we have this incredible capacity to care about other people. The second thing is credit. You know, in general, I think that we treat credit as if it’s a limited resource. But giving people credit is incredibly important.
How do you get people to care about the work and the team?
DA: We’re built on social relationships—that’s evolutionarily what we are built on—and they are still some of the strongest, most important relationships we have. So what does it mean? It means that it’s a team that is not just working together, but they care about each other, they know some things about each other’s family, they are there in times of need and so on.
With so many people working remotely, bypassing the standard cubicle 9-5 work, do you think people will become more or less productive?
DA: When working remotely, I think people become less productive. I think that when we meet over video or a phone we have the temptation to do something else at the same time, and we end up not focusing. If you work by yourself, it’s perfectly fine, but if you do any collaborative work, we fall for the attention tricks: we email, we text, we do all kinds of things and then we don’t pay attention. We also lose some of the capacity to care about each other, because much of the social fabric of organization is created not just by working together—it’s having coffee, sharing opinions. By moving to a more functionally efficient system I think we’re going to undermine some of the friendship underlying it.
DA: One example is to think about Zappos. They have this incredible environment at the workplace where people are there and fully engaged and listen to each other and so on. I’ve been to Zappos and the energy in the place, and the excitement and the camaraderie, are just incredible.
The way that people buy products now, there's a leaning towards making thoughtful purchases of bespoke products (that often have a “story” behind them) and also a massive boom, via Amazon, where anything you desire can be delivered to your front door. Do you think of these as two competing philosophies or simply a new standard for business and marketing?
DA: I think these are two different trends that are coming and companies need to be a bit more thoughtful about where they’re going to fit and where they’re going to belong. And on one hand increased competition, and on the other hand increased identity. You can’t not figure out which of those you’re trying, and it has to be authentic to everything you do. I don’t think that in general we buy more thoughtfully. I think there are a few things we buy more thoughtfully, things we’re buying to find identity and express ourselves and so on. But I think lots of things we’re paying less attention to, like what toothpaste we buy. In terms of the speed of delivery, speed is something I worry about. I think anticipation is incredible. If you could go on an amazing vacation would you go on it right now or in a few weeks? I think we need to do some things to nourish and cultivate and improve anticipation.
Do you think the rapid advancement of tech will hinder the next generation as much as it helps?
DA: No, I think technology is everywhere and I can see lots of things changing. For example, you don’t leave home without your phone. What other tech options are out there that are connected to something else? I can easily imagine that at some point you have a purse that you can’t leave home without, not because it’s the only beautiful thing that you have, but because it has some tech enhancements that make it incredibly useful. So I think we could embed tech in things that would make them more valuable. The other thing that is important is—where do we express our uniqueness and individuality? So you can say as long as you had books, you could show people what books you’re reading. Now that we have Kindle, other people don’t know what you’re reading. But it also means that there’s an essence to signaling or showing people what we’re up to that we can’t have in this world. So how do we compensate for that, and is there a way for fashion, for example, to take care of that.
The Instagram Influencer has become a powerful voice in the customer journey, but some would question the authenticity of a paid sponsorship. Does it make more sense in the age of authenticity for the company to focus on the satisfied shopper or the ultimate Influencer?
DA: I think right now there’s a mix. People are getting paid for their opinion and people kind of trust them but slightly discount them. The research basically shows that when people get paid for something we don’t discount them enough. Now I think what happens is that there’s a general reduction in the trust we have in authority—in reviewers’ authority, regular authority, movie critics, and so on. So we’ve moved to the social network. Not because the social people are so good at what they’re doing, but because we’ve lost trust in the other paths. That’s kind of the move from using reviews to using Facebook or even customers’ reviews on Amazon. In terms of celebrities, what happened is that when we follow them all the time there’s a sense of friendship we get. It’s not just a message from TV that Michael Jordan is telling us to buy this Nike, but we don’t see him anywhere else. If we follow somebody on Twitter or Instagram or Facebook, they penetrate our lives in many ways and there’s this—I think, obviously fake—sense of friendship that basically allows people to abuse it, get paid for opinions, and kind of confuse this sense of friendship and personality with paid advertising. I think it’s like the tragedy of the comments, that as long as a few people are doing it, they can get away with it, but at some point it will tip and people will stop trusting the whole pool. They will stop trusting everybody. But for each individual celebrity, right now, they take these deals but they’re hurting the trust in the whole celebrity issue. In the same way that some bankers destroy the trust in all banking, they’re doing the same thing.
“I like helping people take more risks and, with that, perform better.”
One last bonus question (since you’re the first INTELLECTS interview ever):
How does one set refresh and continually come up with—or motivate others to come up with—new ideas?
DA: Every year Intuit, one of my favorite companies, gives a big award to people who came up with a good idea that failed. I think that’s a wonderful idea because it’s not about saying it’s successful. Every time you try to get people to be successful there’s a chance of failure, so people are afraid of that. But if you say, “No, we just want to encourage ideas and if you think it’s going to work and it’s interesting, go for it.” So I like helping people take more risks and, with that, perform better.