Loss Aversion

The pain of loss is felt so deeply at an emotional level that we tend to go out of our way to avoid this feeling at all costs. Amos Tversky and Daniel Kahneman demonstrated this experimentally with testing. This is referred to as loss aversion, the act of trying to remove or reduce the sensation of loss with the aim of making gains. This persuasive force is so powerful that sometimes we base important decisions on it, without a more rational thought to the consequences.

Of course the advertisers and marketing types all are aware of this force and use it to their advantage when they feel they want to play some persuasion games. They like to get you to take free gifts and have things sent to your home to try, and return if you are unhappy, how often have you returned that item you had delivered? Think also about gambling and the power of the casinos to help people keep putting more money down to just make back all those losses.

It has been suggested by Kahneman and Tversky that this force is twice as powerful as the feeling of gain, and that makes it very effective and important in peoples decision making. It has also lead to belief that people generally over valuing things they already own, more than their material worth. Some have questioned the actual existence of loss aversion, and I am sure that it does not always apply in all instances, such as small pay off situations, situations that have large delays and non competitive scenarios. However, I definitely believe that there is something to the idea and have certainly experienced the sensation first hand in watching my money on the stock market or deciding to give old stuff to a donation center.

The power of ownership and the feeling of lose are definitely not good feelings and although we can over come them with rational thinking, we all know we are not always in control of those decisions consciously. Next time you order a product online or receive a gift from a company and realize that it is not quite what you wanted, ask yourself why you don't want to send it back, is it because of the inconvenience, or just maybe you don't want to loose out having something you now own.

7 things you need to find your flow moments

How many times have you sat down to do something and suddenly you look up at the clock and time seems to have slipped away from you and suddenly you realize that you have spent hours working on something but it felt like 10 minutes of time passed. Time flies when you are having fun, is how my mum would summarize this effect. Well it seems that these moments can be attributed to being in a certain mindset and when certain conditions are met these moments are repeatable.

Mihaly Csikszentmihalyi a Hungarian psychology professor has studied these moments of "flow" as he calls them and has outlined the criteria for them to occur. Here are 7 things that will help you find your flow moments.

1. The task has to have a chance of being complete-able
2. You should have time set aside for concentrating on the task without distraction
3. The task needs to have clear goals, so you know what you are aiming to work on
4. It helps to have immediate feedback, so you know how things are progressing
5. Having deep but effortless involvement, will help reduce worries that may inhibit progress
6. You need to have a sense of control over the outcome of what you are working on
7. It helps to not have a conscious reminder of time, then time will cease to have meaning.

Flow moments facilitate concentration, by making everyday activities distinct and meaningful from normal everyday activities. They also make control possible giving a sense of self fulfillment. These moments are very similar in characteristics to what Daniel Pink, would refer to as "Drive" the motivational factors for intrinsic desires in performing any cognitive tasks. Daniel suggests in his book, that people are inspired to work harder at cognitive tasks when they are aiming to fulfill 3 fundamental needs, mastery, purpose and autonomy. This to me falls inline with what finding flow is all about. That sense of being inspired to increase ones level of mastery, with a sense of control and with some guiding purpose.

Flow moments require:

1. Rules (not too open ended)
2. Require learning new skills (mastery)
3. Set up goals ( have purpose)
4. provide feedback (sense of achievement)

This concept is nicely summarized visually in a couple of graphs. The first show the channel of flow, between anxiety of a task being to hard, but challenging enough to make us work at it, and boredom from a skills stand point that the task it too trivial that it doesn't challenge us enough and is uninspiring.



The other graph shows a more granular break down of the states of mind that occur around the flow channel.



So next time you start into a project and the time disappeared all too quickly, thin to yourself what made that happen and how you may go about making it happen again. Try to make every working moment a flow moment and your sense of purpose and self fulfillment will surely grow.

Driving motivations at work

I occasionally have to interview people for new roles in the company and some of my questions revolve around what motivates you to do your job. Interestingly the answers are all over the board from the obvious things like being at the cutting edge of technology to working as part of a team. These answers of course are mostly a response to the situation and the nature of the interview. The thing I am most curious about is that once the first few weeks are over, what then are the real motivations in your career as the long hours get longer and the projects get harder and more involved, what then motivates you to get out of bed and be energized to come up with just one more idea, to add to the hundred or so you have already worked on. Daniel Pink, thinks he might just have the answer. In his book, "Drive - The surprising truth about what motivates us" he puts forward three important motivations that he believes are at the base of what leads to real motivation and drive.

The concept to keep in mind that he suggests is that when it comes to manual tasks that require not much thinking, such as factory labor and piece work, that can be learnt and repeated easily, then money is the most powerful motivator. Raising production levels is done easily in this instances with more money. The real problem comes when the task at hand requires more thinking skills or creativity, then it seems that money actually to a point gets in the way. At first, money can produce more effort, but once the monetary amount gets to a certain high level for the subject then their performance starts to deteriorate and they have more of a mental block as a result of the monetary award available. Now don't get me wrong, I am not advocating reducing people's salaries, I think people should be paid for their skills manual or mental. In fact, if the amount you earn is less than you would wish then most likely this would also affect performance because you feel unappreciated. So I think the point is to take money of the equation first, give people what they want within reason.

The question is really what are the intrinsic motivations for those of us that have the luxury of thinking jobs that challenge us not for survival but because they want our thoughts and knowledge. This is where Daniel has some very interesting ideas and insights. Let's look at each of these.

1.Give People Autonomy
This first point is all about being in control of your destiny, nobody likes to be told what to do. So allow people to solve problems in their own way. Of course there maybe constraints on a project, but allow the individual to solve it in their way. Giving them more a sense of achievement and control.

2. Allow them to become Experts
Most people want to learn and through learning become better at what they do. Especially in the realms of business, development and creativity people that have these kinds of jobs want to get better at what they do. It fills in some of the needs to grow as an individual and have a sense of challenge. This is part of what finding what Mihaly Csikszentmihalyi would call "Flow" those moments between challenge and skills that make the time speed by as they are neither to boring or too hard.

3. Give them Purpose
Finally there is purpose, which is basically following on the concepts of Maslow's Heirarchy of needs, which I wrote about here. Purpose in this case is all about achieving self fulfillment. Working on something that is going to have an impact on other people or make you feel better about yourself is a huge motivator for an individual or a group of people.

And there we have it three guiding principles to having a more fulfilling career, and maybe making a company or manager have more satisfied workers and colleagues. I think all three of these concepts are grounded in very real psychology and they make a lot of sense when you think about them. People fortunate enough to be a wealthy country are no longer thinking about work to make money anymore and are looking for something higher on the needs ladder that leads to greater satisfaction. These three ideas are a great step in the right direction.

Maslow's Hierarchy of Needs

Most of our decisions are a result of intrinsic motivations that we have through our day to day life. Some we are aware of and many appear to affect us on a deep unconscious level. These motivations and needs can be the desire to eat and be healthy, to the desire to look good and be accepted by our peers. In 1943 Abraham Maslow proposed a theory of human motivation that he placed into a hierarchy with basic physiological needs such as breathing, food and water that are needed for survival at the bottom of the structure to self actualization, and self esteem at the top.

 

This diagram can prove helpful in understanding the importance of motivation when making decisions for a given situation. The real value for design in this diagram is that when planning a new product or promotional piece, then you are more able to think clearly about what needs you may be addressing and how important they are to the individual. Very often you want a new product to solve a particular problem, and that may be a motivation lower on the needs hierarchy suggesting it is fundamental desire of many to be healthy for example, but then you want to attach aspiration imagery and language that appeals to a higher need for a product to allow the user to achieve a higher level of creativity or self esteem. The concepts Maslow put forward are guides to the things that are important to us, after the basic needs are met it is important to understand the importance of the higher needs for us to ultimately become more self fulfilled and reach a transcendent state of being. The goal of reaching all that you can be is the concept in this diagram, once all things lower in the hierarchy are resolved then you can become yourself. The concept has received criticism about being very ethnocentric, as it doesn't express the differences of social and intellectual needs for those born into individualistic society and those raised in a collectivist society, where the acceptance and community will outweigh the needs for freedom and individuality. It is most definitely about the individual, which makes sense considering Maslow was from the United States and lived in an individualistic society. None the less it does give a insight into some motivations of people and especially consumers from many parts of the World that are mostly looking for self fulfillment. The flow from survival, comfort and psychological needs into self actualization and transcendence is an important part of understanding the motivations we have in given situations, it also goes a long way to explaining some of our habits and how external influences can affect our decisions. Also, as you browse the hierarchy of the diagram, you see how friendship, family and respect have lead to such social networking sites as facebook and twitter not to mention how blogging itself is helping in our need for creativity and self actualization.

Manfred Max-Neef argued against this concept and put forward an extension of human needs that looks more like this table below, Max-Neef believed that there is no hierarchy of needs but rather trade offs towards satisfaction. He also suggested that our needs are few, finite and classifiable and not like Maslow whose hierarchy suggests the needs are infinite and insatiable. Max-Neef argues that poverty for example, may result from any of these needs being denied or unfulfilled.

Need	Being (qualities)	Having (things)	Doing (actions)	Interacting (settings)
subsistence	physical and mental health	food, shelter, work	feed, clothe, rest, work	living environment, social setting
protection	care, adaptability, autonomy	social security, health systems, work	co-operate, plan, take care of, help	social environment, dwelling
affection	respect, sense of humour, generosity, sensuality	friendships, family, relationships with nature	share, take care of, make love, express emotions	privacy, intimate spaces of togetherness
understanding	critical capacity, curiosity, intuition	literature, teachers, policies, educational	analyse, study, meditate, investigate,	schools, families, universities, communities,
participation	receptiveness, dedication, sense of humour	responsibilities, duties, work, rights	cooperate, dissent, express opinions	associations, parties, churches, neighbourhoods
leisure	imagination, tranquillity, spontaneity	games, parties, peace of mind	day-dream, remember, relax, have fun	landscapes, intimate spaces, places to be alone
creation	imagination, boldness, inventiveness, curiosity	abilities, skills, work, techniques	invent, build, design, work, compose, interpret	spaces for expression, workshops, audiences
identity	sense of belonging, self-esteem, consistency	language, religions, work, customs, values, norms	get to know oneself, grow, commit oneself	places one belongs to, everyday settings
freedom	autonomy, passion, self-esteem, open-mindedness	equal rights	dissent, choose, run risks, develop awareness	anywhere

Successful Crowdsourcing Requirements

As part of a project I am working on at the moment I am thinking carefully about how it might benefit from crowdsourcing the content for the site. I can't talk too much about the project right now, but I can share my discoveries about crowdsourcing so far. As I mentioned in a previous post I recently read the book by Jeff Howe, and in a previous post I had found a few key motivators to crowdsourcing on the web. Jeff, kindly puts a summary at the end of his book that extends this list, with the following observations that he made on crowsourcing and what makes it work. His key discoveries for successful crowdsourcing include:

Picking the right model. 

As outlined in his book, which I don't plan to repeat fully here I suggest you buy and read it yourself, he talks about the different models of crowdsourcing that exist, including crowd creation, collective intelligence and crowd voting. Each of these has different goals and needs from the crowd, and some projects require one of these approaches and some require all three.

Pick the Right Crowd.

Picking the right group of minds to tap into is of course important to any endeavor as you want to have the product of their efforts to be inline with your needs and goals.

Offer the right incentives.

offering the right incentives of course falls inline with the right crowd and right model. Some crowds are inspired and work to impress peers and some work to make money, each crowd can be motivated by different things, so it is important to know what motivates your crowd, and allow those motivations to shine and work in your site.

Don't assume the crowd is your new workforce.

It seems that it is easy to fall into the mindset that crowdsourcing is going to save you time and effort and reduce the need for fulltime employees. But as Jeff explains, often the content they produce needs guidance, and filtering, by someone professional in the area of the crowds domain. Crowds also don't always show loyality if they feel cheated and any attempt to think of them as substitute works will back fire.

Dumbness of crowds or the benevolent dictator

This is an extension of the previous principle, crowds are not always very good at self organizing and often need guidance from a guide, or principle that helps focus the crowds efforts.

Keep it simple

The way to think about crowds is to see them as many different people with many different skills and more importantly with various amounts of time available to work on their projects. So as such breaking problems or tasks that are of different sizes ideally smaller the better, is more likely to yield results. Those that have an hour to spare can use it, and those that have 5 mins can also take part in the collaborative efforts.

Sturgeons Law

This is simply that most of the content(+90%) that people of such varing degrees of ability will produce will be less than satisfactory. But 10% will be amazing and above average. The task of course is to get as many people invloved as possible to increase the amount of great work produced.

10% Rule to aid Sturgeons Law

Allow the crowd to sort through the content themselves voting the best up to the top and allowing the bad items to fall to the bottom of the fish tank. The 10% concept comes from the view, of Bradley Horowitz that approximately 1% of a crowd produces something, 10% votes and comments on it and 90% will just consume it. So the 10% is a valuable asset to getting the best of the crowd.

The community is always right.

This simply suggests that the community can be guided, but in the end you are a follower to the crowds wants and desires. After all, if the community feels ignored or pushed, then they will just leave for something else.

Ask what you can do for the crowd.

It is important for crowd to be considered as individual people, they are going to have needs, wants and desires. Your job as a crowdsorcerer  is to put in place those things that address the crowds Maslow needs, if you want to really see success then work with the community you create.

So there you have it a nice summary of some considerations for crowdsourcing efforts. I have already begun to rethink how my project might benefit from some of this advice. Time will tell how successful it becomes. 

Crowdsourcing motivations

Came across this nice list of motivational concepts that help power crowdsourcing efforts. Found here. Seems  many of these are, of course, powered by psychological concepts on human motivation and engagement, but also interesting to note a few of them fall into the realms of game mechanics and gamification of tasks, such as, leaderboards and badges. Of course, it is no real surprise when you consider that fundamentally the crowd is the same group of people in both cases, only in a different context of effort.

1) Monetary Compensation: The company outlines what you need to do to make money. You do it. You make some money (the amount varies widely). Rinse and repeat.

2) Points and Rewards (Non-Monetary Compensation): You do something good or you contribute in a certain way and you get some quantifiable but not directly monetizable reward. Many companies have some type of “points”. Keeping score matters here (see below for more on this). Sometimes these rewards in the end are monetizable either by exchange (turning them in for prizes) or indirectly monetizable (using points to get access to more of the system).

3) Leaderboards and Competitive Standing: Many companies let you know where you stand against your peers. Leaderboards usually reflect you standing using some other form of motivation (earned money, earned points, badges, etc.). What’s key is that you understand from the physics of the system you’re using how to positively affect your leaderboard status. Leaderboards are always public. This plays to people’s desire to compete publicly.

4) Badges and Goal Completion: The system you work with defines levels of achievement or specific goals to complete and you are awarded something (even just a graphical badge) that denotes your accomplishments. Necessary in this motivation (like leaderboards) is that the badges are publicly viewable (this is the boy scout badges concept and is basically the way Zynga learned to dominate the social gaming industry) and a core part of Foursquare’s philosophy.

5) Reputation: The system has some mechanism (usually a combination of all the other things I mentioned above) to help you express to others (and self evaluate) what your reputation is in the system. Foursquare uses the Mayor concept, Zynga uses a ranking system for player titles and Mahalo uses a martial arts belt system. All of these approaches make it easy for someone to understand that someone has a general standing greater or less than them.

6) Community: You can participate in and communicate with a community of similar people interested in similar things.

7) Collaboration: You can work collaboratively with other people on something larger than you could create yourself and the results are publicly (or at least partially publicly) on display. Your group effort is visible.

In another blog post, here are are some of the suggested things we are learning about crowds.

What we’re learning about the crowd:

1)    The crowd needs information about itself. Game mechanics has included this mechanism publicly, in the form of leaderboards, because it encourages people to compete with each other.

2)    The crowd needs information about its goals. These goals are applicable at both at the individual level and the group level. This is a very subtle point because crowd mechanics gets interesting when some individuals in a crowd are hitting the goal – but some are not.

3)    The goals need to be realistic. At Trada, the goal is an advertiser’s CPA. If this CPA is simply unattainable (you can’t get a 50% conversion rate to sales for visitors are your website on a $1000 product) then everyone loses. We’re learning a lot about making sure the advertisers’ goals are achievable as part of the “social contract” that exists between the crowd and its patron.

4)    There need to be known group incentives that are substantive compared to individual incentives. For example, a “group win” should not pay someone 1/100th of what they make when they win individually. As much as possible, the group win should be more lucrative than an individual win.

5)    Group wins, like individual wins, must reinforce a very small set of core incentive principles. In Trada, the CPA is king and almost all the rewards, achievements and levels are a reflection of this. Group rewards must be based on and reinforce the same core incentive structure.

6)    Groups must be able to anonymously socially regulate themselves. We call this the “shoulder tap” – a mechanism where someone in a group can effectively say to someone anonymously “please check your work, it’s way above the goal”. This form of social regulation goes on all the time around us. As a matter of fact, I’m writing this from the ‘quiet car’ on an Amtrak train to NYC. A “shhh” on the quiet car is an example of social regulation and in most cases is anonymous enough that someone in the group is willing to do it.

7)    There must be a rules-based regulator that can be called to enforce group behavior.  Any group must know that there is a 3rd party regulator (e.g. the SEC, Wikipedia administrators, CJ’s network quality group) that has the power to enforce, in a non-subjective and rules based way, final arbitration policy when someone’s behaving badly in the group (including the patron – e.g. the advertiser – in our model).

As I dive deeper into crowdsourcing, I am curious about the future of global collaboration and people sharing problems and approaches to solving those issues, especially large problems around health, environment and technology. I also like the idea of diversity of minds to generate different angles of addressing the problem being tackled. I think crowdsourcing has the potential to change how people work together and work towards the future of innovation. Of course, I appreciate it is not going to work in all instances, but I do think that for content generation and sense of community around issues and knowledge it is proving to very powerful. This investigation will be on going.