Class Takeaways — The Human Factor

Hi, I’m Szu-chi Huang. I’m the Associate professor of marketing at Stanford Business School. Before my academic career, I worked at JWT Advertising Agency managing Asia Pacific Market. I have taught many courses at Stanford. And a topic that excites me the most is behavioral science, the human factor. There is so much to learn about how humans make decisions, how humans get motivated, and how humans connect with others. I have five key takeaways from The Human Factor to share with you today.

1. People remember examples, not statistics

As leaders, we tend to rely on data for our decisions, and we think that other people also will be motivated by the same data. As it turns out, most of our stakeholders are drawn to example. Salient top of mind examples become the guiding principles for their decision making. That is why people buy lottery tickets, even though the actual probability of winning the lottery is extremely low.

We were made to remember the examples of people winning the lottery much more so than thinking about the overwhelming examples of people who don’t win. So brainstorm ways to make your company’s message, the lottery in your stakeholder’s minds.

2. Decisions are difficult, so make it easy

As rational thinkers, we see pros and cons in everything and can easily find the best choice. But for many other people, these pros and cons are ambiguous. Therefore, every time they choose, they feel that they’re losing something. Decisions are hard for them, and there’s always a trade off.

So create a win-win option in the sense, leverage default selection, and think about how reference points can be used to make the choice easier. These elements help to resolve decision difficulty and make it easier for your stakeholders to come to conclusions.

3. Emotion is key.

Recent research has shown that while star ratings can predict the success of books, blockbuster movies, and restaurants, it is the emotionality underlying the reviews that explain these sales results. In other words, not all five-star ratings are the same. The ones with higher positive emotionality will lead to greater success, and vice versa for reviews that have strong negative emotionality in them.

Therefore, infuse your messages with emotion. The more emotional people can get about your product and your company, the more likely they will be motivated to stay with you through ups and downs.

4. Humans are social animals

We not only think about how we personally feel about a decision, we also care a lot about how others think about these decisions. Social influences are extremely powerful. And that is why we buy products to keep up with our peers. We follow so-called experts advice, and we watch TV shows that are rated well by others even when these others are strangers to us.

Successful leaders know how to leverage social forces so that people can be confident in their decisions and even become ambassadors for the brand. It is good to know that a decision is accurate, but it is even more important to know that others think that the decision is accurate.

5. Be mindful of context

Humans do not live in a vacuum. There is always a context. The context of our environment activates important goals, which shape our behaviors. By taking people from one context to another, we can therefore change the key drivers of their decision.

The context can be, one, the physical environment such as moving from your office to your home. Second, the cultural surroundings, like how many of us have moved from one country to another. Three, a social context. And, four, a temporal context.

My research has shown that sales teams behave very differently in the beginning of the month compared to the end of the month as they get closer to their sales goals. That is a powerful change in their temporal context. Staying static will make you ineffective.

Successful leaders are nimble because they understand how critical context is and how fast it can change. We can all become more effective leaders and communicators. The knowledge of the human factor can be learned. And with practice, we become better at leveraging these ideas.

When I moved from Taiwan to the United States and from industry to academia, I realize that the salient examples are different here. What people get emotional about is different and the social elements and the context are all completely different. So I had to relearn how I communicate, how I teach, and how I lead. It is certainly a challenge, but it has also been a very fun and fulfilling journey.

As a kid, I did not like school that much. I did not really like doing homework or taking exams. So definitely, I surprised myself by joining academia. But I think it evolves because at some point I started getting curious, and I realized knowledge is powerful. So that guided me back to academia to learn more, to get a PhD, and to become a professor so I can share the knowledge I learned with you all.