Influence

Monkey See Monkey Do The Factors That Influence Us

Sanjeev

Sanjeev

Cialdini wrote a  seminal book that laid out the 6 basic principles of Influence, i.e. how we get influenced by people. These are:

6 Basic Principles of Influence
  • People return favours. Make sure you don’t wave off what you do for them, just log it up in the ledger. Use it to build the basis of friendship: “Oh this is what friends are for”.
  • People do things when they are committed. This can start as a small activity, then it grow. People do something when they are already doing it.
  • Social proof. People do things when they see others doing them.
  • People do business with or listen to people they like.
  • People are influenced by experts. People are influenced by people in the author

Declaimer: This article written was originally in April 2015, and some of the data points may be outdated.

However, under conditions of uncertainty, people display different behaviors. The first is to be frozen into inaction, scared of what they might lose. They need to be reminded of the cost of their inaction. Notions of loss are more powerful than notions of gain. Another behavior pattern that people display under conditions of uncertainty, is to externalize responsibility. You might have heard people blaming the Govt for their own flawed investment decisions. Losses in past bear markets always happen because the Govt is a thief, haven’t you noticed?

Now these are independent events.

Now these are independent events. The Govt may or may not be a thief, I don’t know, but your losses happened because you have not understood how to handle uncertainty. The first thing we do to handle ambiguity is to look for authority: the ‘expert’, usually somebody with a loud voice, who is constantly seen in the media. The public reinforcement of his image makes him out to be an ‘expert’, who influences the behavior of the hoi polloi.

A common mistake is to confuse/ see people in authority as people who are in authority. I have often seen this in my family, at weddings, where the rich man of the family finds himself being asked for advice on what academic course a teenage son should take, where he should take up a job, or who he should marry. It always strikes me, that just because somebody’s shop is selling more jewelry, he gets to influence the course of history, the gene pool that will take my family forward…. a bit much, don’t you think?

The process by which a crowd/ group of people anoints someone as an ‘expert’ is flawed at best. I have seen this best in Board meetings of large companies. Often, these Board meetings, which are called to consider multiple aspects of a complex issue, end up ‘converging’ everyone into a simplistic argument, which states the obvious. Members of the Board are more worried about protecting their reputations than in making good choices. They don’t want to be seen to ‘diverge’ or dissent, in the interest of conforming to the group; mostly, power dynamics decide the course of action. Most members are too busy figuring out which way the wind is blowing and will vote to reinforce the leader’s thought process.

Another pattern that decides group behavior is ‘herding’, i.e. bunching up with your peers, in the interest of conforming. Weak-minded members are more prone to do this; look for the retired PSU Banker, the so-called ‘independent’ member of the Board, who is most prone to behave like this. He is half-asleep at the table, and only wakes up shortly after the major shareholder has spoken, and speaks up to reinforce the consensus with a “hear!!! Hear” before he goes back to sleep again. This explains 50% of the NPAs in the Indian Banking System.

Another factor at play in influencing people is advocacy

Another factor at play in influencing people is advocacy. If a third person is speaking well (or ill) about a person, he carries greater credibility than if the said person speaks for himself. Personal certification does not carry the same weight as an independent award, qualification, or even some media coverage. We all like to think that we are impervious to the pernicious influence of media, but that is completely untrue. The media, even if unfairly, continues to exert a huge influence on our lives, our thinking, and our behavior.

The same advocacy, if done by ourselves, with the same facts, creates jealousy and disliking. It is seen as braggadocio and causes us to be disliked. Remember, business is done with people we like and can be friends with. If we don’t like a person for any reason, we don’t want to associate with him and we tend to reject his influence. Donald Trump is an example of a celebrity we like to hate. Would you take marriage counseling, for instance, from Donald Trump?

Readers may have noticed the backlash in the media when Deepika Padukone talked about depression. The underlying reason was that she is not seen as ‘one of us’….more like a poor little rich girl, who doesn’t have the same problems as us. If you are an ethnic minority, it might be a good idea to focus on values rather than surface-level similarities like skin color and racial background.

A great influencer in our environment is ethical behavior. It is a given that human beings tend to mimic each other, it is part of our herding instinct. Given that, it is easy to see how ethics quickly tends to determine the culture of a place and drive behavior. The same Indian with his attitudes to petty corruption and civic indiscipline in Delhi, turns into a model citizen in squeaky-clean Singapore, physically and metaphorically speaking. We have that famous example of ‘zero tolerance’ in New York, which found that following up on broken windows in city centers brought down crime rates in general.

The same is true at the micro-economic level of the individual or the firm. An organization that promotes dishonest behavior among its employees, will find itself run entirely by dishonest people. While the honest will be driven out, the Frankenstein created by the people left behind will hollow out the organization from within. Someone, please explain this to the Pakistanis.

Group dynamics is a very powerful influencer of the behavior of group members. Most groups have an ‘authority’, either appointed by a command-and-control mechanism, or by peer review. In peer groups, like on the internet, knowledge is what gives authority to a select group. In both cases, once anointed a leader, you benefit from the ‘halo effect’, i.e. if one particular aspect of your argument is appealing, people like to extrapolate this to the other features of your argument. So even “knowledge authority” can lead to distortions in crowd behavior.

Once leadership is established in a group

Once leadership is established in a group, other patterns will kick in. Disagreement will be suppressed for many reasons: some will want to avoid disagreement as a general principle. A desire to look competent may cause people to suppress comments they feel others will find foolish. This happens in peer groups, where junior members are cowed down by the superior knowledge of “knowledge authorities”.

This means that all group dynamics tend to push a group towards ‘convergence’ of opinion, which to most of us, has come to indicate the very identity of a group. We don’t expect to a group to be fractious and chaotic (look at how we react to the chaos in Parliament, for example). The downside of this is that a preference for agreement biases any decision taken by groups. In the interests of pursuing agreement, the level of discourse tends to trend down to the lowest common denominator. Conclusions made by groups are always obvious, and finer nuances are always ignored. You can never get a group to evolve a philosophy.

Those of us who judge Modi harshly, because he is riding roughshod over the lesser elements of that larger group called Parliament, would do well to remember these principles of group dynamics. Rarely do you hear an observer of group dynamics (often the leader) ending a meeting on the discordant note that “I did not hear any disagreements. This meeting was unsuccessful”. Mostly, we expect groups to be ‘orderly’, which means that we want to see the convergence of thought processes.

Lastly, the largest, most fractious group of all, is the market. Nowhere else do you see as much chaos and volatility. This adds to the quality of the process…an ‘orderly’ market that is guided by a single player, or a set of players, is going to be a distorted market. Take the Dollar: Re market, ‘guided’ by the RBI: how accurately has it valued the Re, do you think?

Table of Contents

Share:

Facebook
Twitter
Pinterest
LinkedIn

Leave a Comment

Your email address will not be published. Required fields are marked *

On Key

Related Posts

Scroll to Top

As a participant in the Dr Mentoring Program (DMP) four years ago, I can say with confidence that the program has been instrumental in shaping my approach towards managing operating cash flow and developing strategies for becoming a successful doctor entrepreneur.

Under the guidance of Mr. Sanjeev Pandiya, a seasoned ex-CFO of many listed companies like SRF, Jindal Steel, and Haulonix, the program provided us with invaluable insights into the financial aspects of running a medical practice. From understanding the basics of accounting and financial statements to learning about cash flow management, the program covered all the essential concepts required to successfully run a medical practice.

Moreover, Mr. Pandiya’s expertise and guidance helped us develop a strategic mindset to approach our profession as entrepreneurs. We were taught how to think outside the box and innovate to create unique offerings and build a brand that sets us apart from the competition.

Overall, I can confidently say that the DMP has had a profound impact on my professional growth as a doctor entrepreneur. The program’s emphasis on financial management and strategic thinking has equipped me with the tools to build a successful and sustainable medical practice. I would highly recommend this program to any doctor looking to enhance their entrepreneurial skills and take their practice to the next level.

Regards,

Dr Yatin Shinde
Indapur

Career Guru

Registration Form

Join Weekly Webinar

Please fill this form to get the invitation for my weekly webinars that I conduct for our community. In these sessions I talked about wide range of subjects like investing, personal finance and answer the questions you might have. 

Join The Community

Please fill this form below to join this community of like minded individuals with a common objective ,to build a 3-dimentional understanding of the investing world.