Scarcity or Abundance

Not enough, or more than you need.

It’s generally one, or the other.

Are you working for the money, with grand plans for what you will do when you one day finally have “enough”?

Or are you just happy to be here, every day, because you can’t believe they are paying you to do what you’d happily do for free?

Are you waiting until you have the money you think you need, before you start living the life you want?

Or, do you look each day for new ways to increase the impact you can have with the resources you already have available to you?

Do you believe that the only way for you to win is if other people lose?

Or, do you view life as a chance to collaborate, and strangers just as friends who you haven’t yet had the chance to meet?

In some sense, wealth is a mindset.

And since a mindset is something which is free for each of us to adopt, then why not choose the way of thinking which ensures that you will always have more than you need. The approach which says “I love what I do!”, “I love finding new ways to contribute!” and “tomorrow is a new chance to do it all again!”.

Love vs Lock In

Economists love to talk about “scarcity” and the fact that we live in a world of limited resources.

However, in the digital world this need not necessarily be the case.

Phil Libin of Evernote is of the view that if you’re in a traditional industry like minerals extraction or transportation, then customers will either go for your stuff or your competitors stuff, but almost certainly not both. And so it’s more or less a zero sum game.

However, Libin believes that in the world of technology it’s really not zero sum. There is room for people to use multiple products. It’s not a scarcity based economy. If anything, it’s a love based economy. It’s an economy where the affinity that people have towards your products and towards your brand controls how much money you make. If you’re in the technology industry it’s a mistake to think about the world in terms of scarcity.

Libin believes that while the tech world does lend itself towards having one business dominate in a particular segment (for example, Google in search), this is only because the tech world is becoming more of a meritocracy than it’s ever been. Libin asks, quite reasonably, why would you use the second best product when you can use the best?

The problem with Libin’s view about meritocracy (apart from the fact that it seemingly contradicts his view that there is room for everyone in Silicon Valley’s love based economy) is that it’s only a half truth. One of the strongest forces that enable (or inhibit) many technology companies are network effects. Companies that have lots of users can be extremely valuable because users benefit from each other rather than from anything that the company itself provides.

A case in point is Facebook. There is not a month that goes by that I don’t consider leaving the network, or don’t talk to a friend who is thinking about doing the same. But people typically return when they realise that, despite Facebook being a horrible and pointless waste of time, everybody else they know is on there too.

Network effects can protect incumbents long after their time has passed and this explains not only the persistence of Facebook but also that of other technology products including Microsoft Office and Whatsapp.

The technology industry may not be a zero sum game, but nor is it quite the meritocracy that Libin would have us believe.

The Power of Persuasion

How can you get what you ask for? How can you significantly increase the chances that another person will say yes to your request?

ROBERT Cialdini, best-selling author of Influence: The Psychology of Persuasion, gives an insightful talk on how you can persuade people to do what you want.

As a tenured professor, Cialdini jokes that academics are people who are not satisfied by something that works well in practice, until they’ve tried it out in theory.

But after acknowledging the weakness that academics tend to have for pointless theorising, Cialdini goes on to provide 6 practical principles that we can implement immediately in our personal and professional lives to become more persuasive and influential.

The speech above is well worth watching but, if you don’t have a spare hour, just read our dot-point summary below.

Cialdini’s 6 Principles of Persuasion

Influencing the behaviour of others can be difficult and is, in some sense, an art-form which can only be learned through the trial-and-error of life experience.

Despite this, there are some techniques that research has shown can be used to increase the likelihood that people will do what you ask them.

Cialdini provides us with 6 Principles of Persuasion:

  1. Scarcity – Scarcity adds value. By artificially limiting supply, you can make your offering more attractive. This applies equally in the world of business and the world of dating. Cialdini gives an example of a beef wholesaler who was able to increase her sales of beef by telling customers that there would be a shortage of beef in a few months time. And in the world of dating, if your dating experience is as ludicrously hapless as your author’s, you may have noticed that the appealing girls (or guys) tend to be the ones who are already in a relationship. This is no coincidence. We want what we can’t have since scarcity adds value.
  2. Exclusivity – People are attracted to exclusive offerings. Clubs, schools and universities are all more appealing if they are able to develop an aura of exclusivity. Cialdini builds on his “beef wholesaler example” by explaining that when the wholesaler informed customers that her intel about the impending beef shortage was from an exclusive source, people responded more positively and bought more beef. It was the same offer, but its exclusivity made it more persuasive.
  3. Authority – People respond positively to authority figures. Cialdini explains that authority can be established by demonstrating expertise and trustworthiness. This can be done by first bringing to the surface a weakness in your offering, and then presenting your strongest arguments which overwhelm the weakness. By presenting information in this way, it helps to demonstrate your expertise and trustworthiness, and thereby establish you as an authority figure.
  4. Consistency – People are more willing to act consistently with what they have already said or done. Cialdini provides an example of a telephone receptionist whose job was to take restaurant bookings. Faced with the problem of “no shows” (that is, with customers who make a booking and then fail to turn up), the receptionist was able to dramatically reduce the issue by adding two words to her parting remarks. Instead of telling the customer “please call if you want to cancel your reservation” she changed her closing remarks to instead ask them “will you please call if you want to cancel your reservation?” After giving a verbal promise, customers were significantly more likely to fulfill their booking.
  5. Consensus – In deciding what to do, people often take their cue from the behaviour of others. This phenomenon is known as “social proof” – prevalent in ambiguous social situations where people imitate the actions of others in an attempt to adopt appropriate behaviour. Cialdini gives the example of a telly marketing company which exploited this behavioural quirk by getting the presenter to change the closing remarks of her pitch from “Operators are waiting, please call!” to instead say “If operators are busy, please call again!” The second form of words suggests that the operators may be busy, implying that lots of other people are interested in the offer. The number of calls went through the roof.
  6. Affection – People prefer to say “yes!” to people that they know and like. You can help people like you by focusing on the similarities between you, emulating their thinking and behaviour (imitation is the sincerest form of flattery!), and by paying compliments where they are due.