Persuasion: Universal Principles that Guide Human Behavoir

Dr. Robert Cialdini, Professor of Psychology and Marketing @Arizona State University, has written the most convincing evidence describing the principles which guide human behavior in the context of Persuasion.

In decision making, you would think that one would consider all the possible solutions and alternatives before making up their mind on a decision. In todays environment  the number of choices leads to an explosion of choices and alternatives.

Here are the 6 shortcuts we use to make decisions:
1. Reciprocity
People are obliged to give back to others the form of behavior, gift or service that they have received first.

Examples:
A favor for a favor.
Easiest way to get a smile is to give one first.
A waiter who gives you candy with the bill increases his tips by 14%.
Personalized and unexpected.

2. Scarcity
People want more of the things they have less of.
It's not enough to tell people about the benefits or uniqueness of your product, but also explain what they stand to lose by not purchasing your product.

Examples:
Concord flight sales doubled when it was announced that it was no longer economical to fly.

3. Authority
People follow the lead of credible and knowledgable experts.

Examples:
Physicians display diploma on the wall.
Customer testimonials. Science says it doesn't matter if the person giving testimonial is related or has something to gain from the testimonial.

4. Consistency
People like to be consistent with the things they have said or done.

Examples:
Ask for small commitments prior to asking for a bigger one. Consider newsletters which lead to subscribers purchasing product down the line.
Voluntary, public and active commitments in writing.
When patients write appointment details

5. Liking
People prefer to say yes to people they like.

3 Factors of why people like you:
Similar to you.
Complement you.
Cooperate with you on mutual goals.

Examples:
Exchanging personal information, similarities or interests before getting down to business.

6. Consensus
People look to actions and behaviors of others to determine actions of their own.

Examples:
75% of the guests who stayed in your hotel room re-used towels. Think about how this will affect your behavior.

Employing these costless shortcuts in an ethical manner will considerably increase the chances of persuading someone by your request. 

http://www.influenceatwork.com

Influence at Work is a great resource I recommend you read.

The Problem Interview

Case Study of Product, Market, and Customer Validation

As you start out on a new venture, whether it be a product or service you seek to sell, it is crucial to understand your customer's point of view before coming up with a solution. Many entrepreneurs fail because they start out with a solution prior to defining a problem. This ultimately leads to a product which no one wants to use.

One of the ventures I have co-founded is to disrupt the higher education space. Here are some thinks we considered during the problem interview:

Product Risk: What is the problem/frustration? What are the top 3 problems?

Market Risk: Who is the compettion? How do customers solve the problem today?

Customer Risk: Who owns the pain/frustration?

My co-founder and I identified a group of 10 customers from three segments and conducted a face to face group interview/discussion. Here is the script we followed...

Welcome:
Thanks customers for participation. Begin telling them the about your product and the problem as you understand it, and see if it resonates with them.

Customer Segments:
How old are you?
Do you take courses online?
etc...

Tell Your Story:
Tell a story which includes use case about the problem/frustration you are going to solve. Does this resonate with you?

Problem Ranking:
Prioritize problems from customers point of view. This will help focus your efforts during product development by working on the most desired features first.

Explore Customers Views:
No script is needed for this. A heart to heart talk about how big of a problem is this and what the customers are currently doing about it. Understand the workflow from cradle to grave. Clearly identify 'must-have', 'nice-to-have' or 'don't-need'.

Wrap Up:
Thank customers for their participation and follow up with demo.

Document Results:
I would recommend having someone document your results. This is very important as you will likely forget some comments which can be extremely valuable in the future, especially if you pivot.

Ash Muarya has a book titled "Running Lean" which talks about this in further. Ash was the former CTO and friends with my Entrepreneurial Operations professor Kyle Murphy. Kyle has taught me critical skills about operations & execution of newly created ventures.

Social Network Analysis: Centrality, Closeness

I've been hacking at social network analysis concepts using some sample data from livejournal.com. I will have another post with code snippets of this analysis, but here are some concepts I've learned so far during my analysis:

The data gathered from livejournal is done using a BFS like algorithm called Snowball Sampling.

Snowball Sampling:  uses a small pool of initial informants to nominate, through their social networks, other participants who meet the eligibility criteria and could potentially contribute to a specific study.

Pseudocode:

# start with central node

# get friends of central node

# for every one of friends:

#     sample friends of friends

#     For every friend of friend

#        sample friends of friends of friends

*Date is stored in Pajek format using simple text file. Python NetworkX library contains useful methods of analysis, including Pajek output support.

Though there are advantages & disadvantages to Snowball Sampling, humans have a limited sense of perception in social networks. This phenomenon is known as Horizon of Observability. In other words, we have a good idea of who are friends are, but less insight to friends-of-friends,  and considerably or almost no knowledge of friends-of-friends-of-friends.

One of the first approaches for analyzing social networks is to measure power, influence or other characteristics of people based on connections. 

Degree Centrality: # of connections that a node has.

Closeness Centrality: How close is this node to celebrity nodes (lower distance to high degree individuals).

Boundary Spanners: Nodes who act as bridges between 2 or more communities that wouldn't be able to communicate with one another.

Eigenvector Centrality: A node is central to extent that node is connected to others who are central. In other words, a node is high on Eigenvector centrality is connected to many other nodes who are connected to many others.

PageRank is similar to eigenvector centrality, but the algorithm scales much beteter to very large networks which change over time. PageRank is an iterative process, knows as anytime algorithm.

Centrality metrics are point-measures on the network. It does not tell us why a high centrality visionary is surrounded by followers, or what forces bring or tear people apart. Inorder to understand those concepts further, we need to consider deeper point measures such as cliques and clusters. 

The 4 Hour Chef

Tim Ferris has a new book called "The 4 Hour Chef" and here are some summary notes.
Whether you think Tim is a snake oil salesman or a self promoting guru, I find his work interesting.
In the spirit of his work, here's a 1 page summary.

Acronym DSSS
Deconstruction:
What are the LEGO blocks? LEGO blocks being the units of work for a goal.

Selection:
Which 20% of the blocks will give me 80% of the outcome I want?

Sequencing:
In what order should I learn the blocks?

Stakes:
How do I set up real stakes to guarantee follow-through?

Acronym CaFE
Compression:
Can I encapsulate the most importnat 20% into easily graspable pieces?

Frequency:
How frequently should I practice?

Encoding:
How do I anchor new material to what I already know?

I recommend you read all of Tim's books, they are thought provoking with creative, real life stories.

Scalability : A Case for Cloud Computing

Scalability is the ability of a system, network, or process, to handle a growing amount of work in a capable manner or its ability to be enlarged to accommodate that growth. It impacts performance and efficiency of your system.

Scalability can also impact business if you're cloud application can't handle users beyond a certain threshold.  Moreover, reducing the latency between your customers and business can improve user experience, thus; encourage repeat usage/visitors.

Hardware resources which can impact your ability to scale include:

• CPU

• Memory 

• Disk (capacity & throughput)

• Network Bandwidth

Node: Physical server, virtual machine, or cluster of servers

Data Node: Contains data used by application

Compute Node: Contains application code logic

There are 2 approaches to scaling:

1. Vertical Scaling (Scaling Up) : increase overall application capacity by increasing resources in existing node

1. Horizontal Scaling (Scaling Out) : increase overall application capacity by adding new nodes

Vertical Scaling is often less complex, as you're throwing more hardware at the problem.

Horizontal Scaling is more complex, and architecture focused.

For more detailed account of Scalability...I suggest you look at Cloud Architecture Patterns Develop cloud-native applications by Bill Wilder

Business School....On Hold

I have made the decision today to put Business School....On Hold and pursue a graduate program @Stanford emphasizing in Mining Massive Data Sets. 

This decision is primarily based on:

• Entrepreneurship: One of my reasons for enrolling in b-school was to learn about idea generation, incorporation, finance, marketing, operations, and strategy for new ideas or early stage ventures. Upon completing the Entrepreneurship track @Pepperdine Graziadio School of Business and Management, I have gained practical experience in forming my own startup.
• Maker vs Manager: I love to work with people to create and deliver products. 
• Leadership vs Management: My volunteer experience in non-profit world has taught me to lead with action, and inorder for you to act, one must be informed with practical working experience. I believe that technical leadership requires you to keep your skills sharp, and management simply is too distracting from this goal.
• Opportunity Cost: The world of computer science has changed since I finished my graduate studies @USC in 2007. The amount of data has been growing exponentially, distributed systems require new algorithms and open source technologies. There's too much fun happening in this space, and I'm fascinated by what the future holds. 
• Higher Education is broken: Higher education is expensive, long and is not preparing students for the jobs of today or tomorrow  I find myself spending 3 hours a night on Coursera & Udacity, learning about machine learning, distributed systems, and parallel programming. 
• Networking: There are two life changing events in life...the people you meet and the books you read. Meetup is a great tool to network with professionals in your industry. I attend a few meetups a week, connecting and collaborating with intelligent/sincere people.
• Focus: The biggest ingredient to failure is lack of focus. Focus on one thing, be great at it.

Looking back at my experiences in business school, it's been a great learning experience  I simply want to accelerate my learning and fail faster.

Best Career Advice I Ever Got

Bud Caddell, an awesome strategist, gave me the best career advice I've ever got. Whether you are an entrepreneur, intrapreneur  or need some guidance with rest to career paths, use this to help you figure out what your next steps are.

It's summarized in the diagram below:
"What you do well" + "What you want to do"  => Learn to Monetize
"What you do well" + "What we can be paid to do" => Say No!
"What you want to do" + "What we can be paid to do" => Learn to do this better!

Graziadio's Business Case Competition

My team and I participated at the annual Graziadio's VCLL Case Competition 2012 earlier today. 

Case competition requires rigorous strategy setting and financial analysis, plus time management and persuasive presentation. But the impact of management decisions on all stakeholders- from investors to employees to the environment- takes center stage in the Values-Centered Leadership Lab, a student-driven organization at the Graziadio School of Business and Management (GSBM) that promotes hands-on leadership development and collaboration.

Though we didn't win the competition, here are some take aways from today:

• Since you have less than 2.5 hours, assign leads for Situational Analysis, Financials, Implementation and Recommendation...you will run out of time
• Start preparing presentation materials early
• Address alternative solutions...be mindful of the impact of current solution and be able to explain the opportunity cost of alternatives
• Prepare Risk Analysis Management 
• Be clear about your strategy, communicate clearly what you propose to do when
• Include a PEST (Political, Environmental, Social & Technological) Analysis
• Include Porter's Five forces analysis
• Socially, Environmentally, and Ethically Responsible (SEER) Business Strategy Analysis
• Make sure to allow enough time for judges questions...Do not be defensive about your presentation!
• Know who you're audience is...assume it's the company in case study & address them accordingly

References:

SEER

PEST

Porter's Five Forces