Richard Branson has said that taking care of employees is one of the most critical things you can do in a business because how you treat them will reflect on how they treat your customers. And if your customers aren’t treated well, your profits, reputation, and everything else will go down.
So what can you do to really take care of your employees and make sure they feel appreciated?
1. Compensate Them Well With Salary
This is the most obvious so we’ll address this first.
As you’ll see later, there is a point where this becomes less effective.
For many lower-tier companies, employees aren’t paid well enough so simply giving them more money could really help out their financial situation and show that they are being appreciated for their time and work.
If your company gets large enough, there will be people paid close to minimal wage that are doing fantastic jobs. For these people, monetary compensation could mean a ton to them.
Sam Walton of Walmart did just this when he compensated many workers for extraordinary ideas that saved the company millions of dollars. Oftentimes, the ideas were very simple, like changing one little thing in the workflow around that were overlooked because they weren’t seeing it from the same level.
Even at high levels of income into the millions of dollars per year, there are some people who will be increasingly motivated by getting more money.
However, as you will see, you will quickly get diminishing returns if you try and just throw more money at the type of people who you really want to work for your company. These super achievers usually grow out of simply wanting money, oftentimes before even hitting six figures a year.
2. Create An Environment That Cultivates Their Strengths
In Dan Pink’s awesome book Drive: The Surprising Truth To What Motivates Us, we learn that many people are motivated by things outside of money. In fact, for creative professions, offering any type of monetary incentive (a $100 reward for example) makes it more difficult for them to come up with solutions.
It actually slows them down.
They ran numerous experiments to test this.
They found that monetary rewards and bonuses worked best for non-creative manual labor-type jobs.
What this means is that for creative-type individuals such as certain designers, programmers, employees at Google, and story-tellers, money alone is not enough.
Creating time in their work day, an environment, and lifestyle for them to perform to their strengths and be creative will really put them into a state of flow, happiness, and well-being that leads to greater results.
In the book Creativity Inc, I learned that Steve Jobs designed the Pixar campus in a way that forced intermingling and collaboration. He made you have to get out of your way and walk around to meet others in order to go to the bathroom.
Richard Branson creates an awesome environment by having the few meetings he does have in the beachy sands of Necker Island.
People love a tropical, sunny, exotic work environment after all. They save up for years to go on a 2 week vacation to such a place. Branson makes it a daily thing. Unfortunately, this isn’t feasible for every business. But maybe it can inspire some creative ideas of accomplishing a similar thing.
3. Show Appreciation In Cheap Ways
We’ll get to expensive ways later.
However, cheap ways of showing appreciation are often overlooked simply because they aren’t expensive and sometimes because they require more personal time and effort.
An example of this would be a hand-written card and a bouquet of flowers surprise delivered by you personally for an employee’s birthday. You cannot just throw a thousand dollars and outsource it away. You have to write it yourself and show up.
Cheap sometimes trumps expensive ways of showing appreciation because no one else is willing to put in the time. Also, everyone knows how busy you are and the time-value of your time.
To get the creative juices flowing, here are a few other examples of cheap but effective ways of showing appreciation: hand-baked and hand-delivered brownies or cupcakes, a personalized letter with a very well thought out list of books you’ve bought for someone, or a surprise free product hand-delivered by you.
Showing clearly that you spent an hour or more thinking and creating something can mean a lot more than spending 2 seconds to throw 1,000 dollars+ at an expensive gift.
This same concept works in terms of forming friends and in the love and relationship world.
4. Give Them Gym Benefits and Encourage Them To Exercise
This is precisely what the billionaire T. Boone Pickens did in his book, The First Billion Is The Hardest.
In his book, I learned that he built an enormous gym next to the workplace and encouraged his staff to exercise. He even started company-wide exercise competitions to further encourage it.
The results over the years were incredible. Their profits and productivity increased immensely.
This is not rocket science. Every year, there are more studies showing how the more fit you are, the better you are in numerous other areas: productivity, focus, energy levels, happiness, and so on.
See my article The Cyclic Effect for greater detail on this or this page at UsefulScience.org that lists pages of studies on the effects of great fitness. From my own studies in courses I have taken in Exercise Physiology, I have learned that you should REALLY do moderate to high intensity aerobic exercise over anything else.
Aerobic exercise is simply cardio like swimming, jogging, or cycling. Studies have shown that it has magnitudes higher impact on your health and longevity compared to anaerobic exercise like sprinting or weight lifting, which often only just increases your muscle mass.
Consider adding gym benefits to your list of employee benefits. And maybe some culture-building fitness activities or competitions.
5. Praise Them In Person
This kind of goes in line with the cheap methods I mentioned earlier but it deserves it’s own category.
Make sure to take some time to really show appreciation in person to people who deserve it, especially if they’re not used to seeing you that often if at all.
Go out of your way to praise them in front of their peers. A person can really feel special and appreciated when he is given recognition in front of others. Depending on the person, a physical reward might also be useful: a trophy, medal, bonus, watch, car, or flowers.
Try thinking outside the box. Maybe something non-conventional like a surprise dinner at a surprise restaurant could work even better.
Make sure you praise generously and saw their name a lot. People love it when you take the time to remember their first and last name, especially in a larger organization.
Finally, make sure that the praise is truly warranted. If the wrong person is praised or recognized, it could breed resentment in the organization from peers. If it is truly well deserved after examination, be generous with your praise.
6. Take Care of Their Personal Life and Overall Lifestyle
This gets into more expensive ways of taking care of your employee.
Even then, in the end, it may not be as expensive in the long run as straight salary competition.
I was watching an interview by the entrepreneur Neil Patel. He was recognized by Obama as one of the top 100 entrepreneurs under 30.
He said that one of his employees was offered over $200,000+ by a competitor but turned it down to keep working with Neil for around $80,000. He did that by taking care of his employee beyond work: taking care of their personal life and family problems.
Consider things that may be an issue or inconvenience to employees outside of work: family health issues, jugging responsibilities with children, or anything that might stress them out when they’re done with work.
If you can pay for that or find a way of fixing it, it could mean a huge difference.
Pixar Inc. has its own company daycare since most of the employees met and married through the company.
7. Create A Lifestyle That Works With Their Peak Performance Environment and Time
GitHub is an organization that does just this.
They understand that people are different: some people are morning people while others are night owls. They let people do their work when it’s most productive to them as long as it gets done.
This means that employees can work 5pm to 4am or 5am to 11am and 5pm to 9pm. It’s been very productive just as long as the work gets done, which they measure.
Employees have been extremely satisfied with this because of the freemetidom it gives them with their day-to-day. It also lets them do things on their terms.
Having said that, this can be taken too far and may only work for some organizations. Sometimes, collaborations and in person meetings are crucial. Therefore, people have to meet on the same schedule.
Best Buy rolled out a work from home option that many employees took up for many years. Eventually, they stopped the program as it wasn’t working effectively.
8. Transition Them To What They Enjoy
Happiness studies have shown that once a certain threshold of money is made per year, the amount of additional happiness per dollar earned rapidly diminishes.
One of the big drivers that many people look to after that certain threshold of money is passion or higher calling. They want a dream job that they can enjoy. Or they want to make a higher impact on the world: make a difference, save lives, change the world, or create something new.
Of course, you must keep in mind how the business makes money and what you employ people for, but once you do, see if you can reposition, promote, add new responsibilities, or move someone to a new position.
If you can keep an open ear to listen to what your employees enjoy more but don’t have as a responsibility yet and an open eye to see where they could function better, it could make for a great win-win situation when you find something that suits their tastes better because it allows them to perform better.
9. Strengthen Community, Family, Friends, and Relationship Bonds
Relationships like family and friends play a critical role in human happiness, oftentimes more than money. This goes back to looking to see how they live their lives outside of work.
According to the book Social by Matt Lieberman, forming a strong community at work and outside of work can really develop emotion resiliency, happiness, well-being, and other elements related to peak performance.
Make sure your employees have access to the time and resources to form these relationships with friends, whether its at a religious organization or informal social gathering.
10. Give Greater Access To Common Hobbies
This may not work for every organization as people could have hobbies all over the board.
But for certain cultures, you may see large similarities: a ton of people love yoga, fashion, or rock-climbing. Perhaps, you can go out of your way to make sure that their enjoyment and access to these activities is heightened.
Maybe this could mean insider access to fashion shows or yoga events. Maybe this could be yoga or rock-climbing-themed giveaways.
Another thing you can consider is adding activities that science has shown improves success, cognition, focus, and a number of things. One of those was already mentioned: exercise. Another is meditation.
However, this could definitely be perceived the wrong way depending on the culture. If none of them value or understand meditation and you go about it the wrong way, it could just be perceived as another hindrance or duty that they have to perform on a daily basis.
According to the founder of Walmart in his book Made in America, taking care of your employees matters a lot because how you treat them is a reflection on how they will treat your customers. And what’s the benefit of treating your customers well? According to Warren Buffeett, the better you treat your customers, the more money you will usually make.
Now, I have a question for you. What’s the #1 lesson you learned that you can take action today to improve your employee care?
Oh, the frustration and stress that comes with information overload.
You feel like there’s so much to consume yet so little time.
How do you even begin to deal with all the articles, videos, books, and information out there?
I have felt this way many times before and it sucks. I feel overwhelmed because there is simply too much out there. I feel like I am missing out or not doing what I could be doing. I end up giving up because I can’t get to it all.
Today, I want to share with you some innovative strategies to deal with information overload.
You can listen to the audio version of this (with unmentioned bonus tips) through my podcast episode here:
1. Realize it’s okay and that you have the luxury to choose in this era
For centuries, useful information was a rare privilege. Those who were lucky enough got their hands on a single book over their lifetime. Then, the printing press was invented and books were available to the masses. And then, the Internet came along. We all of a sudden got access to millions of articles, podcasts, audio books, and videos.
What makes it even worse today is the fact that people churn out content to get attention. We now have to sift through tons of mediocre content to find a couple gems.
This is an era of abundance and now it’s more important than ever to choose carefully who you listen to. The most expensive advice (in terms of wasted time and money) is bad advice. You are doing yourself a service by cutting back on who you listen to but also choosing wisely.
You can find the exact person who has succeeded exactly how we want to and listen to him or her. We don’t need to settle anymore. If you wanted to be successful in the coffee industry, Howard Schultz has written books on how he grew Starbucks into a multi-billion dollar industry.
2. More important than saying yes is saying no
Even though I am in the personal development space, 99% of the content out there I do not read. Why? Because I know it is not credible and the dangers of taking bad advice is not worth it.
There are plenty of self help articles on “secrets of millionaires.” Yet 99% of them have no credibility. There is no proof, data, or evidence. It’s just a random stranger who probably made up the tips to get information. Therefore, I hit the delete button.
3. Choose based on results achieved rather than awards given (this includes best-seller lists)
While some books that are on the best-seller list because they truly produced a lot of results for readers, many books are there simply because they were good at convincing people to buy them. They were in the business of marketing and selling books.
4. Avoid advice supported by anecdotes or case studies
Random stories to support a point are good but an extensive review of a large population can be trusted more because it’s a larger sample size. A small sample can be influenced by chance or random outliers in the group.
5. Really examine the credibility of the person giving the advice
Ask yourself, “Is this person giving advice on something he himself is successful in?”, “Is he as successful as I wish to become?”, and “Is he successful at what I want to achieve?”
If not, maybe this isn’t the ideal person for you.
I have noticed that even successful people fall into the trap of giving advice in areas outside their expertise. There are plenty of interviews of millionaires I have consumed on YouTube or podcasts, and I am surprised to say that I have seen quite a few go off track and give advice in an area where they didn’t make their money in.
Everyone does this so make sure you only take the advice that you can trust. If a muscular man gives fitness tips, listen in but be careful when he starts moving into career advice. Same things goes for a man who made his money in real estate who is all of a sudden giving advice on nutrition or social media.
6. Go straight to the top and niche down
As hinted at earlier, you have the luxury of finding the absolute best at what you want to achieve. Here are some examples:
If I want to be the best basketball coach, I read the book written by the best coach of all time, Coach Wooden’s Pyramid of Success.
If I want to be a better discount retail distributor, I read the book by the best businessman of all time in that space Made in America because he went from zero to billions.
If I want to make it as an entertainer in the music industry or be a great music executive, I read the book Sing to Me by L.A. Reid, a music exec who has discovered more stars than possibly anyone ever to exist.
In the past, we couldn’t get access to these people so we were grateful to just get advice from any successful person. Times have changed. Don’t be afraid to find advice specifically from the industry you are in. By doing so, you can tune out less relevant advice.
Now, sometimes, you may still find advice from someone lower down useful. Maybe someone hasn’t made billions, but he is one step ahead of you and can give more specific tips on starting out. A super successful person could forget what it’s like or simply may not mention that in his book.
7. Get more bonus tips in my podcast episode
If you didn’t get a chance, listen to my podcast episode on this topic for bonus tips on dealing with information overload here:
There’s only a couple reliable ways you can listen to free self-help audio books:
Check it out at a library.
Find them on YouTube.
The library is great because you are often surprised by how extensive their collection is. New audio books that you don’t think they would have they sometimes do.
The downside is:
Sometimes, they still don’t have what you want.
You have to wait in line for it.
It might be old or used.
You can use it for a limited time before returning it.
Depending on where you live, your public library collection could be worse.
Having said that, the library is still an amazing resource. I have managed to save a ton of money by finding old and new books I would have otherwise had to buy. You can even request for them to buy a book and they sometimes will do it.
Now, let’s talk about the YouTube option. People will sometimes illegally upload the full audio book version of a book on YouTube. The downside to this is that it’s illegal and they often get pulled down after a time once YouTube detects it to be copyrighted material.
I do not recommend this method because it is illegal. But there are some gems on there that have not been taken down for some reason yet. In fact, I got into the personal development space by stumbling onto one of these videos years ago.
Finally, there are podcasts. These are free audio files you can download or play on your phone from iTunes. People host podcast episodes kind of like radio shows except each episode is more thoroughly prepared ahead of time.
While these are not technically audio books, they are sometimes better. When I get bored of listening to someone read a book or I run out of audio books to listen to, I will open a self-help or entrepreneur-themed podcast. I like them because:
They’re natural sounding and real.
They give modern, up-to-date information.
You get advice from authorities you can’t get anywhere else.
That’s why I decided to start my own podcast. I want you to be able to get advice and valuable insights while you are jogging, driving, waiting in line, or cooking dinner. With an article or video, it’s tough to do that because you have to stare at a screen and you cannot stare at a screen while you are doing your chores if you want to be efficient.
Without further ado, here is episode zero of Will’s Personal Development Podcast:
For the longest time, I felt like it was way too late to make an impact on the world and become successful.
I am ambitious. I wanted to be a world-class success for all of my life.
But pop culture made it seem like if you did not become a singer, actress, or tech entrepreneur by the time you were 21, it was over. More than a few times, I have talked to people my age – only to discover that they had the same mentality of resignation.
They would say, “It’s downhill from here.”
But then I got into personal development and did some research. I studied hundreds of the world’s most successful people and I was startled at what I found.
When I got a question from a reader who is scared that he’s too old to succeed – I had to jump in and respond.
Because here’s what I know for sure…
When you think it is all over, it’s really just the beginning of an incredible journey.
The author of the book The Snowball Alice Schroeder went through a mid-life crisis in the same way. Warren Buffett, one of the richest people in the world, sat her down and told her that when he was 50, he thought his life was over. That was it. He would keep running his company and that would be that.
Yet every year after that, his life has been even more amazing and fun. Even to this day, I follow his every move because he is doing some incredibly interesting things in business. As a fun fact, Warren Buffett made 99% of his wealth after the age of 50 (thanks to decades of persistent and the power of compound interest).
Here are some graphics that show people who became successful late in life (after their 40,’s 50’s, 60’s, and even 70’s):
Finally, for further reading. I suggest you check out the book Getting There, which profiles even more successful people and their detailed stories that took a while and went through a lot of failure before they succeeded. If you go through my link I get a commission at no extra cost for you.
I did an interview with the author of Getting There. You can watch the video here:
Now, I’d love to hear from you.
Have you ever been tempted by doubters or your own negative thoughts because you thought that it was too late to succeed? Where were you and what happened specifically?
Leave a comment below and let me know.
And, share as much detail as possible in your reply. Many ambitious people come here every day for motivation and knowledge. Your story may be exactly what they need to reach the next level.
Important: share your thoughts and ideas directly in the comments below.
Thanks again for reading, watching, and sharing with such emotion.
Recently, I took a Crossfit free trial session. It lasted 3 days and at the end, they gave each of us a free PVC pipe to practice with.
It was cool! I felt like a ninja.
There were no strings attached and there was no hard sale pitch at the end. Just a simple statement of the price. Now, selling hard isn’t always a bad thing, especially in an industries where the average person is too scared to even consider selling. But this was an industry where I have been sold harder too and phone called, so it did stand out.
I have gone to several gyms and martial arts demos to try it out over the years and the pitch at the end was usually long and overly pushy.
It was the first time I tried Crossfit and it was cool to see that they spent 3 hours of their manpower teaching us and then they gave us a free toy with no strings attached.
And for once, the toy wasn’t something useless like a “free pen” or “free hat.” I could actually use this PVC pipe to stretch my shoulders and do the drills they taught me. It was relevant to what they taught.
Quite frankly, not enough people do this. They’re unwilling to spend money on the front-end to get people in the door. Maybe they are scared strangers will take their stuff and run. And there is a small grain of truth to that.
You don’t want to just throw money wildly at someone in hopes they will buy. That will waste you money. But a strategic use of money is a great way of capturing the money you are leaving on the table.
Marketing legend Jay Abraham says that you should be more than willing to lose money on the front end if you make it back later on. This means that you may be losing money on the initial advertisement, but you make it back in time because you have calculated how long the average customer stays with you (it’s called average lifetime value).
Pizza delivery chains do this all the time. They lose money on that first $5 Pizza deal. But it gets you in the door to trying it out. And then you end up returning for years to buy more pizza.
Understanding this strategy will help you find your optimal marketing method for the highest impact.
He’s done this numerous times himself. He let a radio station mention his product and keep all the profits ($3 a sale) for his advertisement because he knew that they would come back time and time again to buy more once customers tried it out.
Tony Hsieh, author of Delivering Happiness and the man who sold Zappos for $1 billion, said in his book that lifetime value of a customer isn’t fixed in time like most financial equations make it seem. He believes you can make it longer by taking care of the customer more and overdelivering.
You gotta care more than others.
This Crossfit event really got me thinking. Their cheapest individual package is $200 a month, which isn’t cheap. Yet I think the free gift might have tipped people over the edge to show that they cared.
I saw someone sign up on the spot for 6 months afterward.
Arguably, their gift could have been even better than a free pipe. The pipes probably cost them a couple bucks from the Home Depot next door.
If you want a simple, no-brainer method of dramatically improving profits, reputation, branding, and culture in the long run, this is it:
Delight your customers by taking the extra mile to care more.
It seems so obvious but you’d be surprised how few organizations and people actually do this. Some may think that they do this. But you just have to survey the customers to realize that they aren’t that impressed.
There’s a gas station I drive by almost every day. I stopped going there to fill up my tank and have purposefully chosen to go to the one next doors. Why?
Because one time, I went in and the owner was incredibly rude to me. His body language, facial expression, and everything showed that he didn’t want to be there. He looked at me like I was an idiot for not memorizing my gas station number before I walked in. He treated me like I was stupid when I interacted with him.
That’s the opposite of delighting your customers. And it left an impression.
In a recent event, Warren Buffett said that you might not remember the price of your first car, but you remember the feeling you got after you bought it: may you didn’t want to go to the same place again because the salesman was a dick or you loved it and wanted to tell your friend.
He went on to say:Do as Jeff Bezos does: always seek to delight your customers over and over.
While most people do the bare minimum, Jeff has constantly moved heaven and earth to drive down the price of his products at Amazon and increase delivery speed against impossible odds. By taking care of the customer, the customers took care of him (by making him one of the richest people in the world).
Many of the best, long-lasting businesses are defined by this philosophy.
And the best part is it’s so simple.
Now, a related concept that is worth talking about is economic goodwill.
What is economic goodwill?
Economic goodwill is the intangible loyalty, reputation, and trust you build with your customers that you cannot measure with numbers that leads to extra profits.
This is a vital concept in business that accounts for a large percentage of Warren Buffett’s profits in business.
For example, Warren noticed that See’s Candy was doing up to 4 times more profit as their competitors with the same amount of factories and assets.
Now, this was unheard of and the numbers just didn’t make sense. Up until this point, Mr. Buffett was a numbers guy. He compared working capital (the value of equipment you’re using that you own) to the amount of profits you made. He didn’t really care about or know the importance of going above and beyond for the customer. He assumed one piece of machinery in a factory always had to produce the same amount of goods and profits.
It lead to one of his greatest discoveries, and something that he said he would have made him much more money if he had learned this earlier in his life.
The truth is that there is much more than raw numbers and statistics to a great business.
On paper, the numbers may look pretty good, but there are intangibles that turn a business from a good business to a SPECTACULAR business.
See’s Candy had built a reputation that made customers loyal and more than willing to pay more for the same candy compared to their competitors (Hersheys’ and Coca-Cola are other great examples. The knock-off versions are literally the exact same ingredients for a fraction of the price.)
Let’s take Warren’s first big investment, a company called Berkshire Hathaway. It’s his biggest regret, but the numbers seemed awesome: he bought the entire company for much, much less than the market price of the machinery.
What this means is that he could have bought the company and immediately closed down the company and sold all the factory equipment and parts for much more than he paid for the company.
The numbers were good and the price was cheap, but it turned out to be a huge flop because of things he didn’t account for: the employees thought of him as this horrible take-over guy who wanted to destroy their jobs, so he decided to try and turn around the company instead. But then the company started struggled for many years because the industry was suffering and nothing could be done about it. Even though he hired one of the best managers in the business, you just couldn’t compete with companies overseas who could do it for much cheaper.
So why was See’s candy different?
Because they went above and beyond the standard.
Their customer service, their branding, the quality of the candy, and the extra things they did added to a greater end result.
Do you know of anyone in your industry that has conversion rates that abnormally high?
It’s because they actually care and they go the extra distance.
Kimra Luna has an online business. Compared to the industry standard, she gets an incredibly high open rate on her emails and conversion rate to sales on her webinars. Why is this the case? Because she went the extra mile: She did dozens of free webinar presentations with no pitch at the end just to help others. She spent her entire day for months answering every single question people asked her over Facebook and email. And these were people she paid thousands of dollars to acquire through Facebook Ads.
Now, that doesn’t mean you should run to Facebook and spend your money because that’s risky and you can lose a lot of money. The point is that she went the extra mile.
I was reading Creating Magic, a book by a highly successful manager of tens of thousands of employees at Disney. He talked about how some of the best hospitality businesses would go beyond the extra mile: They would listen in on conversations of the guests and if they heard that someone was getting married or graduating college, they would sense a bunch of flowers, a personalized card, and maybe even a card for a free massage.
This creates incredible amounts of customer appreciation that’s hard to measure. This customer may tell their friends, may tweet about it to who knows how many Twitter followers, might post that on her Instagram that has 50 thousand followers, or might come back to that hotel 10 more times than she would have.
Or maybe do nothing at all but tell her mother.
…who might recommend her group of friends. Who knows?
A few more quick examples:
In the well known book E-Myth Revisited, Michael Gerber talks about how he visited a hotel and told them what type of coffee he liked. Every single time he visited a hotel in that chain after that, no matter where it was in the country, he would enter the room and the exact coffee he like would already be brewed and everything he liked was already set up: the fireplace was on, the orientation of the chairs, the ironing board was out, and so on. And he never asked for any of this.
This is why people are willing to go to a different store and pay multitudes more for Hershey’s chocolate if it’s out of stock. Even when there’s plenty of nameless store brand chocolate there.
This is why people will do the same for Coca-Cola versus store brand Coke.
And if you look at the double-blind taste test studies, Coke tasted about the same, if not worse, than a store brand.
Those results are stunning.
As a quick but important note, economic good will has to be constantly updated or it will erode. Without branding and marketing, Coca-Cola would not stay on top.
Also, realize there’s many ways of creating economic good will. Take your pick: reputation, strategic location, branding, customer service reputation, connections, and so on.
This is why a company like Coca-Cola is worth much, much more than its proper, equipment, and inventory when a store brand is not. There’s something else going on than the numbers tell you.
So although numbers are important, stop focusing solely on statistics.
Also, remember that your extra contribution doesn’t have to be so massive.
It can be simple:
An extra compliment and smile after every customer service exchange.
Sam Walton of Walmart did one small tweak like this and it did wonders.
He came up with the idea to get thousands of his employees to start going up to customers, smiling at them, and asking if they need to be helped. It’s a standard nowadays, but small things like that can tremendously improve performance, service, and profits.
How to use Fish Hooks for unexpected rewards:
You can do this in your life, just for networking:
In the book the Education of a Value Investor, the author, Guy Spier, learned to use what he calls “fish hooks.” By sending out small gifts and gestures, you do infinitely better than others and are kept at the top of their mind.
In his case, he sent out kind, personalized emails or letters to awesome people he met the night after a networking event. No one else bothered to do this and it kept him in their minds.
They’re called “fish hooks” because not everyone reciprocates. Most of the things you send out mind not get any response. But occasionally you do, and that means a world of difference. This exact tactic is how he formed a great relationship with money manager, Mohnish Pabrai, which ultimately lead to a dinner with Warren Buffett.
It’s also called a fish hook because it opens you up to spontaneity: you have no idea the full extent of what that might lead to because you cannot predict it. One kind gesture or gift you send out can lead to a whirlwind adventure, a dozen meaningful connections, thousands of dollars in profits, or an incredible time doing something you never knew about.
The cool thing is:
It can be inexpensive.
Look at this holiday card Guy sent me:
It’s festive, personalized, with custom photos of his family, and folds out.
Yet, it may have cost him a few bucks to send out, especially in bulk. And the mailing is fully automated. And yet it works because no one else is bothering to do this.
In fact, this is a small example of a fish hook in action. Without him knowing of it, I am writing of what he did, thus letting visitors of this blog become aware of him AND maybe prompting a few to buy his book. He had no idea of the positive consequences of this.
So will you start taking action RIGHT NOW?
How will you add some extra value?
If you don’t have much money to spend, no excuses. Guy Spier’s letter could be further personalized, but would require some manual labor from the source. How about going a little further with personalizing something? You could write a long, personalized letter about how much a person means to you every holiday season. No one does that.
I’m going try and do that myself. How can I add some extra value to you?
I’m going to share with you one central concept mentioned by billionaires to help you succeed in business.
It’s simple and yet no one really emphasizes it. In fact, if you quizzed any business owners, they couldn’t give you an instant answer (even though they should).
What is it?
I call it the priority hierarchy:
Customers first, then employees, then investors.
A lot of billionaires are very clear on who they should serve and take care of first and foremost. And I think it’s central to the success of their business.
Here’s what average and mediocre businesses do:
They don’t care about any of this. They treat everyone the same: horribly.
They treat their employees, customers, and everyone else really bad.
They don’t bother to read articles like this.
You’re not like that. Good for you!
Now how do we understand this to operate on a higher level?
According to billionaire Jack Ma of China’s Alibaba..
“It’s customers No. 1, employees, two, and shareholders, three. It’s the customer who pay us the money, it’s the employees who drive the vision, and it’s the shareholders who when the [financial] crisis comes, these people ran away. My customers and my people stayed.” –Jack Ma, UpStart Business Journal
Watch the video starting at 4:35 to see:
But here, we see other successful billionaires telling you to put employees first.
Let’s see what AsiaAir has to say:
“Employees come number one. Customers come number two. If you have a happy workforce, they’ll look after your customers anyway.” -Tony Fernandes (net worth $650 million)
“If the employees come first, then they’re happy. A motivated employee treats the customer well. The customer is happy so they keep coming back, which pleases the shareholders. It’s not one of the enduring green mysteries of all time, it is just the way it works.” -Herb Kelleher, founder (net worth $2.5 billion)
“Put your staff first, customers second, and shareholders third” – Richard Branson
Watch this video (notable time stamps are 0:43 and 1:42):
Danney Meyer (net worth $350 million) says this:
“When you really take a perspective that the customer comes second, which is counter-intuitive in a society that always puts the customer first, you also end up attracting stronger employees over time, which increases the odds that your technical and your emotional and hospitality performance are going to be competitive.” -Danny Meyer
Let’s continue. What does the chairman and billionaire CEO and founder of Starbucks have to say?
“We built the Starbucks brand first with our people, not with consumers. Because we believed the best way to meet and exceed the expectations of our customers was to hire and train great people. We invested in employees.” -Howard Schultz, net worth $2.9 billion
Vineet Nayar, former CEO of HCL Technologies, wrote a Harvard Business Press bestseller called “Employees First, Customers Second.”
He argues employees should come first in the video below:
And finally, we have one of the richest people in the world, Jeff Bezos of Amazon. In the book The Everything Store, it’s clear as day that he puts customers first before employees. Even though the company was already making millions, he blew up when he found out a TV was bought for a break room without his permission. Hundreds of his C-level executives have left the company after only a couple years because there was no work-life balance, just 60+ hours a week of work.
Yet Jeff made it a point to make the customers the happiest they could ever be. He kept driving down prices for the goods he sold on Amazon.com even to a point where the customer wasn’t making money. He drove down the “Free shipping with a $100+” offer all the way to $25 and he intends to get it even lower.
Warren Buffett has applauded Jeff and said that he’s “changed the world” because he’s constantly went out to please the customer.
“All he thinks about is he wants the customer to have a smile on their face.” -Warren Buffett on Jeff Bezos
See Warren talk about it in the video below for details:
So is it employees first, customers second or customers first, employees second?
Well then, which ones right? Should you value customers first? Or employees? Or something else?
First off, let me commend you for even caring. You are thinking and looking to execute on a higher level. You will do better than others.
From all this information and other advice from other billionaires and successful people I’ve absorbed, my humble theory can be explained with this hierarchy:
Customers >= Employees > Shareholders and Owners in it for the long term > Any investors who will leave you the instant it seems like things are going wrong.
Customers and employees both matter. How you treat them both impact the bottom line immensely. If you’re looking for some excuse to treat or neglect one group, you’ve got it all wrong. Just take care of them both.
I used a greater than or equal to sign for “Customers” because you can hit a cap of treating your employees too well when they don’t deserve it.
I agree with Jeff Bezos’s frugality (maybe not to his extreme) because a lot of billionaires have achieved similar wealth by being frugal yet efficient.
I listened to an episode of The Marketing School podcast where the host, Neil Patel, said that he managed millions of dollars for one of his clients. And this client literally could have got the same advertising results with $2 million rather than the $5 million they spent. They voluntarily chose to waste $3 million in budget just because the marketing department wanted that budget.
Compare this stupid company to Jeff Bezos’s frugality. Of course Jeff is going to win. Frugality and efficiency matters because it’s not about how much money you have but how you use it. Movies, for example, with a fraction of the budget of other movies have performed much better in the box office because they used what they had more efficiently.
As explained by studies and books like Drive: The Surprising Truth To What Motivates Us by Dan Pink, money becomes less of a motivating factor as you give more. It becomes increasingly less effective and costly to pay someone hundreds of millions of dollars to go to work. They should be motivated by an internal motivator beyond money to perform at the highest of levels. Therefore, I think taking care of employees hits a cap before customers.
As long as you’re focused on things customers actually care about, you can usually keep raising the bar on how much you delight your customer. Amazon will never hit the point where you can order everything you want on there for free and get a free massage with it. But they are moving towards it by constantly lowering their prices on quality items.
But again, it’s just my theory. Which one is not nearly as important as simply taking care both groups as much as you can.
The big issue is that most businesses do not go to great lengths to take care of their customers and employees incredibly well. It’s mediocre at best. They might think they’re doing a great job. But you don’t need a sophisticated survey to tell that some of them aren’t as delighted after spending money with you as they are when they buy from Amazon or Apple.
So, for most people, the emphasis should just be on finding out what really matters for these groups and doing your best to satisfy them. If they’re being paid minimal wage, money matters. If they’re already being paid millions, maybe you want to fulfill their other problems (work-life balance, fulfillment, etc.).
Google (Alphabet Inc.) has been known to take care of their employees on an incredible level. They pay for day-care, massages, gourmet food, gourmet coffee, huge salaries, bonuses, benefits, and more. There is great truth in what Sam Walton of Walmart said in his book Made in America: if you treat your employees right, they will treat your customers right.
And Warren Buffett has said that generally speaking, when you treat your customers right, they will take care of you (which means you’ll make a lot of money). It’s a trickling effect. It’s not rocket science; it’s actually quite simple.
Frugality is Important But There’s A Difference Between Being Cheap and Being Efficient
I believe that Bezos has gone a little too far in sacrificing employee enjoyment in the pursuit of profits. If he took some more time to take care of his employees, he’d find he would make more money anyway.
As far as Google, I think they may have cap of spending too much on materialistic items to please their employees. You get diminishing returns when you do that and eventually you start wasting excessive money on tiny improvements in satisfaction when it could have been put to better use.
Warren Buffett has mentioned in his shareholder letters that he frowns upon banks that make a lot of money, then start spending it on fancy, expensive, unnecessary decorations in the bank. Do you really think that a$500,000 marble table will help close the sale more than a $10,000 one? Quite frankly, most people can’t tell the difference between them anyways.
These banks ended up losing a lot of money in the long run because of this philosophy. Although he is talking about furniture rather than people, the central concept of being the most efficient with your money is the same.
How To Put Employees First: 3 Surprising Tips on Taking Care of Them
1. Give Them More Money
This is the most obvious and the one that most people jump to first. They give employees bonuses and raises. As mentioned, Dan Pink shows that this clearly helps for people who make very little money and work manual labor.
But what’s startling is that it loses its effect as you start making a lot more money or when you are engaged in a creative work focused on your own fulfillment. The truth is that most of us hit a point where we have enough and we look to other motivators and goals.
2. Give Them Others Benefits and Higher Standards of Living
You can do what Google does and really spend money so that their lifestyle and standard of living is better. Money is just a means to an end and often one of their goals is to have a more pleasant life.
Many companies kill two birds with one stone with a company gym membership. They pay for something that their employees would have paid for anyways. Plus, it encourages exercise, which improves people’s productivity, focus, energy levels, longevity, health, attractiveness, and many other factors important to career success and networking.
In T. Boone Pickens’s book The First Billion Is The Hardest, he said that he made a point to make fitness a priority for his company. By doing so, their profits, happiness, and productivity increased dramatically.
3. Give Them Work That Fulfills Their Passion and Purpose. Improve Their Work-Life Balance
Many people have finally gotten rich only to realize that they have lose their sense of purpose. They ask questions like, “Is there all there is?” and “What’s my purpose on this Earth?”
When people make enough money, they start looking to other motivators like what interests them, what they have the most fun doing, and what fulfills a bigger mission. I have read a few stories of ex-Google employees. They were paid incredibly well with all the amazing benefits mentioned. But they chose to leave because these higher purpose motivators were not in place.
To retain and cultivate the best talent, you need to work to satisfy these. Naturally, many companies define higher purpose values. From there, they attract people who align with these. You can go a step further by encouraging employees to a job that fulfills them more or shift them around yourself.
Sam Walton was great at doing this. He would move around C-level executives to completely new roles if he didn’t feel something was right. He embraced change.
Ideally, you want employees that love what they do so much that they work 20 hour days 7 days a week for you excitedly. But that doesn’t always happen. Women have children they want to spend time with, for example. Another way of taking care of employees more is really seeing what matters to them and letting them have that flexibility.
Sheryl Sandberg, founder of the #LeanIn movement and female billionaire of Facebook, said left work at 5pm every day because she cared about spending time with her children so much. She proved that she could still make her company into something great without spending all night at her start-up company.
Step into the shoes of an employee and a customer to see how they experience things and go above and beyond to make it better.
The Real Money Is In The Follow-Up. Here’s What This Means and Why.
I had heard about the power of checklists from a couple successful businessmen and references to the book The Checklist Manifesto. Despite that, I did not use checklists for a long time.
After I finally read the book, I finally did because it showed great extensive detail on the results of using checklists across numerous industries.
The Checklist Manifesto dilemma is that numerous things I talk about on happiness or productivity don’t ever get exercised because they’re “too common sense” or you don’t really understand the importance of them.
This is like the story in the book, The Happiness Advantage, where a guy starts arguing with the author of the book in a lecture, saying that all the happiness stuff he says is common sense. After the talk, his coworkers went up to the lecturer and told him that he is the most toxic, negative guy in the organization.
It’s interesting how people think they’re doing things they aren’t.
So the point is: nurture your customers and employees.
I will do my best to prove the importance of this with examples.
Richard Branson (again see the video above) explains this simply:
If the person who works at your company is appreciated and treated well, they’re going to be smiling and happy, and therefore, the customer will have a great experience.
The inverse is true, if you don’t give the employee the right tools, don’t appreciate or treat them well, the customer will be treated in a way where they don’t want to come back.
As you can see, how you treat your employee bleeds down to your customer.
Hal Rosenbluth, author of The Customer Comes Second, grew his small family business into a global leader that has grossed over $6 billion (among other awesome things). One of the big points he stresses is that putting employees first will directly impact the well-being of the customers:
“… if you genuinely want to put customers first, you must put employees more first.”
“Care about your people and they will care about your business. Forget that and watch profits go down the drain.”
So directly or indirectly, your employees matter a ton.
Or you can run it in reverse: if you make customers your #1 priority, to give them the best experience, you have to treat your employees well so they treat your customers well.
Arguably, I can see why Branson favors employees first.
There are definitely businesses that start mistreating their employees for a better customer experience: maybe telling their employees they have to go above and beyond by massaging their customers feet and walking them to the door.. but at the same time, underpaying and under-appreciating the employee for doing so.
My take is that you can do both. You can really treat your employees and customers well. And that will come back in time with greater profits, which will allow you to treat your customers and employees even better.
Obviously, it gets tougher to do the larger a business becomes because it gets bloated and bureaucratic. And maybe there’s too many people to really keep an eye on.
However, I think for most businesses, there’s always room for great improvement.
There’s always stuff you can do. Virgin Airlines has gotten pretty large and yet they’re still doing pretty well in terms of customer and employee care.
Google is known to this day for providing gourmet catering, massages, and all sorts of perks to its employees. And its one of the largest businesses in the world.
As a special note though, there is a danger of over-spending on frivolous stuff and sending your business to bankruptcy. Click here to see the article where I talk about that. My conclusion was that you should avoid it if it is just pampering the higher-up executives, clearly an exploitation of cash, and the results don’t produce some level of measurable return (acknowledging that there are some un-measurable intangible’s). An example would be CEO’s and top executives spending the business’s cash on personal vacations to golf courses on a monthly basis.
Also, take a look at TV show Undercover Boss where the CEO disguises himself as a low-level employee to learn what it’s like and uncover hidden mistakes. These things work well and it’s a nod at what Sam Walton of Walmart would do back in the day.
Speaking of Sam Walton, let’s see what he has to say about this.
First off, if you don’t know, Mr. Walton grew Walmart from one store into a multi-billion dollar company and he’s arguably made more money than anyone in the history of mankind if you adjust for inflation.
According to Sam Walton:
“The way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising. Satisfied, loyal, repeat customers are at the heart of Wal-Mart’s spectacular profit margins” -Sam Walton, Made in America
Sam Walton goes to great depths in his book about how important it is to hire A very similar method to what I’ve talked about already. Check out his book Made in America for great details.
The point is, he would also agree that customers and employees should really be taken after and appreciated. Both of these elements are critically important.
So how do you take care of an employee?
Show appreciation (written notes, thanking them, in-person meetings, small gifts, etc.)
Give them the proper tools to do what they do. Make sure they’re the right tools.
Look after them.
Make and keep them happy. (See my article on The Cyclic Effect on the great importance of happiness)
Get the right employees in the first place. If you hire someone who’s toxic or wrong for the job, it’s not worth it to go above and beyond. It’s draining and they may affect your other hires. See this article for details.
Let’s look at one last example.
The airline industry is very, tough, competitive industry.
Many airline businesses make hundreds of millions in sales, but after accounting for costs, they often lose money.
It’s interesting because some people say that in order to make a ton of money, you have to provide a lot of value.
I think it’s more right to say that you have to provide a lot of value and intelligently capture some of that value in an ethical, win-win way.
“Creating value is not enough—you also need to capture some of the value you create.” -Billionaire Peter Thiel from the book Zero to One
So it’s interesting that I keep hearing about Southwest Airlines. They’re definitely not the only airlines to jump off the page (Turkish Airlines is another).
But there’s only a few that do.
In the book Start With Why, the author talks a lot about the success of Southwest Airlines.
Apparently, it’s one of the most profitable airlines in history.
It also got a ton of customers sending in checks to help it out after September 11th because of how good it has been to them.
Southwest really cares for its customers and employees as well.
In the book Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success, the authors let us look behind the curtains of the nation’s largest domestic carrier. And what we find, is employees first.
We put our Employees first, then our Customers, then our Shareholders. Many companies feel you have to appease the customers or shareholders first, but Southwest Airlines has the magic formula that makes us an admired company: Happy Employees=Happy Customers=Increased Business/Profits=Happy Shareholders! We believe that, if we treat our Employees right, they will treat our Customers right, and in turn that results in increased business and profits that make everyone happy.
Southwest seems to get it.
They also understand that you don’t have to spend large amounts on employees to do it right:
“Many companies may ask what is the best way to treat employees right? They say they don’t have the money to do much, but really…how can they afford not to? Their employees can be their best and most cost-effective source of advertising, and you don’t have to spend a fortune. While Southwest does save and plan for Companywide celebrations, we also realize that a little can go a long way in making an Employee feel special as a person, and not just a number in work force of 35,000 Employees. A card or hug/handshake and a sincere verbal thank-you from a Coworker or Leader can go a long way in making an Employee feel appreciated. These actions are simple, don’t take much time to do, and don’t cost much money.”
Investing in your employees seems to pay off for Costco. They pays their average worker $20.89 an hour, much more than their biggest competitor, Sam’s Club.
In complete alignment with the benefits listed in the book Good To Great, this has lead to much lower turnover and saved costs on recruiting and hiring.
“Costco’s employees generate nearly twice the sales of Sam’s Club employees. Costco has about 5 percent turnover among employees who stay at least a year, and the overall rate is far lower than that of Walmart. In turn, the reduced costs of recruiting and training new employees saves Costco several hundred million dollars a year.” source
In the book Make More Money by Making Your Employees Happy, a study is cited that was done across 26,000 employees across numerous types of businesses, big and small. They found that companies that effectively appreciated their employees had a return on equity and assets that were triple the firms that didn’t.
What’s unanimous seems to be putting shareholders last.
I think what they mean by this is that shareholders are usually mean to represent corporate or large organization investors. They may have their own motives and their own opinions.
But the core to business success starts with appeasing the customers and employees, which will in turn bring incredible profits and appease the investors.
The issue is when you start listening to shareholders that will leave you when the going gets tough or gives you advice on how to run your company that is wrong or misguided.
This is one of the big reasons Richard Branson bought back one of his companies and turned in private again after making it public with an IPO to investors.
As a special note, Warren Buffett (and his mentor Ben Graham) sometimes talks about the importance of valuing shareholders. This may seem contradictory, but what he means by shareholders are usually not the stakeholders that represent money managers or large funds. He usually means the common man who’s invested in a very small percentage of a business through a stock for his or her retirement fund. And he’s usually talking about businesses that are clearly using the cash generated from a business selfishly rather than distributing it back to shareholders. This gets a bit complicated and is beyond the scope of this article (and beyond my expertise). It gets into stuff like using cash for greater growth rather than distributing it through dividends (a case-by-case basis for what is right or wrong) versus spending profits on fancy cigars and unnecessary private jets for the CEO’s and billing it as “business expense” rather than distributing it to shareholders through dividends.
TREAT YOUR EMPLOYEES AND CUSTOMERS WITH TREMENDOUS AMOUNTS OF RESPECT AND APPRECIATION.
GIVE THEM AN INCREDIBLE EXPERIENCE: GREAT SERVICE, PRODUCTS, AND THE PROPER TOOLS.
If you go above and beyond to care for and nurture them, the profits will come back to you many times over.
Recommended documentary: Crocodile on the Yangtze
If you have the time, I highly encourage you to check out the documentary on Alibaba, Crocodile on the Yangtze. You really see the economics and history of how Alibaba beat its 800 pound gorilla competitor Ebay. They did it through understanding the differences in culture and making it completely free for its users to capture market share at the cost of burning money for many years. I don’t recommend this for every business, but it seems to be a common thing among the most successful tech and social media companies. Many businesses try to monetize too quickly
Recommended books: These are relevant books on this topic: Made in America by Sam Walton, The Virgin Way by Richard Branson, and Creating Magic
Hollywood is one of the most competitive places on the planet.
Everyone wants to be there.
There is a ton of incredible talent willing to put in the hard work to get ahead.
That’s why I was just as surprised as everyone when Forbes announced that Dwayne (The Rock) Johnson is “the world’s highest paid actor.” (I would have never guessed.)
And, is this actually true? Forbes is pretty reputable. Maybe they meant the highest paid actor (of 2016). Or they meant the “highest paid actor (in America for the current month).”
I’ve heard the Chinese film industry is on fire, and there are some actors who are just making a killing on the global level.
No matter what, he has accomplished a huge feat.
I’ve done research on The Rock and I found that he wanted to join the WWE as a professional wrestler when he was young. If you’re not familiar with it, it’s a 100-million dollar business built on fake wrestling and story lines.
He wanted to do so against the wishes of his father because back then, the WWE was tough to make money in. His father reacted in frustration when The Rock told him he made up his mind when he came of age. He thought the Rock was throwing his life away.
The Rock had decided on his passion against all the “practicality” that his father pushed forward. And it paid off. He became one of the most well known WWE wrestlers and then was one of the few to transition into the film industry.
He kept pushing hard in film, and years later, he’s the highest paid film star.
Now, I’m not suggesting that you should chase a passion that has no practical chance of making a ton of money. I just think it’s possible that what everyone else tells you is “practical” is sometimes wrong and wealth can come in strange ways.
What’s the most obviously incredible part about this is that The Rock isn’t the best “actor” in the world. When we think of the best actors, we think of sophisticated Academy Award winners who act out incredibly difficult, complex, emotional, off-the-wall characters.
The Rock does simple, family-friendly movies. A lot of action. A lot of simple lines. And he’s the highest paid actor.
A lot of people might look at this with negativity but I feel inspired by it.
I KNOW how competitive and tough the acting industry can be. It’s not easy. For him to beat out all the thousands of actors out there is no simple feat.
It’s motivating to know that you have a chance to reach such great heights even if you don’t have the most sophisticated acting skills. I’m sure he worked really hard for it. In fact, I know he did. I saw a YouTube video of him describing his diet for Hercules. It was incredibly strict: tons of lean meat packed in a container to consume.
The Rock posted an Instagram photo to his 59 million followers giving thanks and giving advice on success. It’s really worth the read:
Here’s what he said (repeated if you can’t read the embed):
“The wolf is always scratchin’ at the door” was the first thing I said when we found out from @forbes I was officially the world’s highest paid actor. Well, actually the first thing I said was “Aw shit!”, then I said the wolf part.
Receiving news like this will always serve as my anchoring reminder to continue to work even harder. We not only want to “embrace the grind”, but take the grind to new levels.
I learned a few invaluable lessons a long time ago that can help all of you guys out there succeed at whatever it is you’re doing.
Greatness is never achieved alone. Surround yourself with hungry, brilliant individuals who not only buy into your philosophy, but who are all willing to work just as hard as you. Power of teamwork. And don’t ever forget where you came from. I was evicted at 14yrs old and completely broke by 23. Every day I wake up as if that eviction notice is right around the corner waiting for me.. which is why I always say, “the wolf is always scratchin’ at the door”. He’s scratchin’ cause he’s hungry and never satisfied. We embrace and respect our past (even if it was f*cked up), but we never let it define our future. Let’s stay hungry and chase that greatness. I will now jump in my pick up truck, go to work and figure out whether or not I need psychiatric therapy for this damn wolf that’s become my best friend.
One thing I do know is that there is something that ties all successful people together. I saw Jim Carey on that list and I smiled. Because I know he is really into self-development and followed a lot of his principles to get from a high school dropout receptionist to where he is now.
If Jim and The Rock can reach such heights from that far down, I think you and I can achieve our own dreams.
Is “Always Scratching” A Healthy Behavior?
My first reaction to this news and his Instagram response was a feeling of partial awe and partial worry and skepticism.
The awe part has been explained. But why was I worried and skeptical?
Because I do not think this is a completely healthy approach, nor the best approach. I listen to dozens of interviews of successful people every week and I have been doing so for a few years. I say this not to brag but to give context. You see, a common pattern I have found from these people is that many say that they wish they did not sacrifice so much family time or their own health in pursuit of money.
Brian Tracy is a great example. He is a multi-millionaire, peak-performing salesman, motivational speaker, and a thought leader in the personal development industry. Today, I was going through his book Flight Plan and he admitted that there were pros and cons to having a “poor person’s mentality.”
The pros were that you were more motivated, worked harder, and made more money. The cons were that you could not relax, have a good time, and take time for your health or family even when you have already made an enormous amount of money. This is because you are constantly worrying about money because you have been wired to do so since you have grown up without it.
Will Smith even went on Oprah with his family to talk about how he had to rid himself of this “scarcity mentality.” He made more money than he could ever spent but still went to sleep at night worried that he would be broke. It was illogical but the programming was still there.
Here’s what I will do and this is my suggestion to you. I have a sign up that says, “The Wolf Is Always Scratching” to remind me to keep on track and work hard. But I also make it a point to make sure that my health is in order, that I have an abundance mindset, and that I take time to relax on my own and with my family.
The Rock has been a motivational real-life legend. It’s a tough, competitive world, especially in Hollywood. There are so many actors and musicians that had one-hit wonders. I never would have expected Dwayne Johnson to be the one to persevere and become such a well-known brand. In fact, he is one of the most followed pages on Facebook.
Now, I want to challenge you. Will you do what I did right now and put the words “The Wolf Is Always Scratching” somewhere big so it will remind you to stay on track everyday? When you read it, keep working hard, keep moving towards a better feature, but make sure it does not ruin your health in the process.
It tells the story of a man called Eugene, who recently suffered from some brain injuries. This caused him to have a short memory (1 minute or less) and therefore, he could not function like a normal human being.
The crazy part was that scientists studied him and found that he still somehow able to go for a daily walk around the neighborhood and remember where his house was.
Warren Buffett said that forming great habits are one of the great keystones to success. He said they are easier to form when you are younger so it is better to start early.
That’s what lead me down a path to learn how to forge good habits and improve bad habits. After all, Mr. Buffett is one of the most successful businessmen in history and are lives are based around habits. We are creatures of habit.
But how do you actually form and change habits?
Most people fail at this because they try to change their habits based on their family’s (or Uncle Joe’s) bad advice and hope for the best. And nothing changes. They fail to go to the gym consistently. They still eat junk food when they get home or do drugs. They still watch an hour of TV a day even though they know it’s bad for them.
And they give up trying.
Instead, let’s turn to science to see why it’s so hard to change habits. Because this book reveals new techniques on how you can actually change habits. I’m going to show you how today.
The Science Of Forming Habits
Let’s get back to Eugene’s story:
Eugene could barely function on his own. Yet his morning routine stayed the same because of his ingrained habits. This is because habits are behaviors that are bodies make automatic (like muscle memory) so that we do not have to think consciously about them to make them happen, which frees us up to think about other issues.
This is a great time saver. Think about when you first drove a car. The first time, you were worried about everything from the steering wheel to the brakes. After a while, everything becomes automatic.
That’s what happened with Eugene. They found that he was able to remember how to walk around the neighborhood everyday, cook breakfast, and find his house because of a key process to habit formation:
Triggers. These two elements are the core to forming (or breaking) any habit.
Despite his memory loss, Eugene saw visual cues that reminded his body of where to go next even though his memory was blank.
He woke up and went on a walk because his body wanted to, not because he really thought about it.
He was clueless when experimenters asked where his house was throughout his walk. But his body unconsciously followed visual cues around the neighborhood that lead him back home.
They tested this by removing one or two triggers (such as certain trees or areas of the neighborhood). And it was true. He could not complete his walk.
They tested this theory again with a card game experiment involving Eugene.
The card game was a memory exercise that required flipping over the card to confirm if you were right.
Despite his horrible memory, he was able to score very well in the game.
Scientists discovered the biological process for how a habit is formed…
Write this down. This is how habits are formed:
Triggers (also called Signs or Cues)-> Routines -> Reward -> Repeat until habit forms.
Triggers and signs are the things that cause or trigger a habit before it begins or while it’s happening: an itchy fingertip might trigger the habit of biting your nails. Signs are things that occur during your habit: a daily habit of walking the neighborhood has expected signs that are the same each time: the same trees in the same places and the same houses or smells.
If enough triggers or signs are missing, the habit will not awaken or form.
A standard routine repeated over and over with key triggers and signs with a expected reward at the end ultimately creates a habit.
Scientists found that we form habits to be able to use our brain power for other things. They also found that the body cannot tell what is a good or bad habit.
How did they find this and what does it mean?
They used rats. They wired their brains up with tons of wires and found that after repeating a routine numerous times, the level of brain activity needed goes down incredibly.
It makes sense.
When you’re first driving a car, you’re focused on getting everything right: backing up so you don’t hit anyone, making sure the brake is off, pushing the pedal down slowly, and so on.
Overtime, it’s so second-nature you can be thinking about other stuff while you do it.
Habits are formed so that we can better user our cognition for other stuff. The body knows its a daily task so it puts it into autopilot.
But because of the process they are formed, routine->triggers -> reward, bad habits can seem in as well. The body can’t tell the difference.
How To Form Good Habits
To form good habits, you must have the right triggers, the same routine, and make sure there’s a reward.
Experiments show that triggers, also called visual cues or signs, are really important.
If you take enough of these aways, the habit won’t be formed.
Eugene experienced this with his walk.
Also, they found that every morning, Eugene would get mad when his wife would leave for work without saying anything to him. Even though he forgot why a couple minutes later, that anger followed him for a long time.
By changing one of the signs that are part of the routine, Eugene didn’t have the anger anymore. In this case, they made his wife talk to him briefly before she left, even though he would forget it minutes later.
For you, this could mean just making sure that small things like the route you drive to the gym or the routine before you stretch is similar.
The final piece of habit formation is rewards and repeating.
Having an expected reward at the end constantly is needed to start forming the habit into something permanent. In Eugene’s card game experiment, this could be as simple as a quick mental confirmation that you were right.
And, of course, repeat until it forms.
Set Things Up To Be No-Effort
The most classic example is setting yourself up in the morning so that working out is no-effort: your gym clothes are laid out right in front of you when you wake up, your bag is packed and ready, and you’re ready to get up and go.
It works. By eliminating the friction and work so you don’t become daunted or overwhelmed by excuses or laziness, it can make things a lot easier.
If you want to write more blog posts, having the computer and browser set up so that it’s easy access to immediately log in and start writing eliminates obstacles and barriers that allow your motivation to decline. An example of this would be waiting 7 minutes for a computer to boot up because you have an old computer.
Reward Yourself More Each Time
Increasing the rewards and making sure you reward yourself each time you create a habit will further cement the habit and motivate you.
The reward doesn’t have to be related to the habit.
This video shows that once the habit is ingrained, you can keep doing it even if you take away the reward.
Sandwich New Habits in between Familiar Habits
Radio stations found that people are much more likely to adopt and like a different song if it is played in between very familiar, well-known songs.
Butchers had a hard time selling intestines and liver until they packaged it as “the new steak” since people were familiar with steak.
Gyms found that people were more likely to keep paying for membership when people form relationships with the employees, go with friends, or make friends at the gym. (source of all of these come from the book Power of Habit)
People are more likely to adopt things that they are familiar with. Add new habits in between a group of familiar habits to adopt them.
The key takeaway: Wrap a new habit you are trying to form within familiar routines. A great example is to form a place of friendship and a social community at the gym to go more consistently.
Believe You Can
In the book The Power of Habits, they assert that belief that you can change a habit is important. Many people fail to form great habits and get rid of bad habits because they truly don’t believe they can.
The book points to case studies where belief helped people push through when other things failed: a football team winning the Superbowl (the highest level championship) and attributing it to their belief and people breaking alcohol and health habits by forming social communities where they could convince each other to believe.
Form Social Groups To Keep You Accountable
One of the biggest things they have found to help with habit formation is finding a group of like-minded people you can meet with at least weekly to hold yourself accountable, help you believe, and develop habits together.
In the studies they examined, they have found that when all else fails, the one thing that has helped them create good habits is a social community.
When All Else Fails: have A Higher Calling or Purpose
Other than social groups, the one other thing they found that got people through to forming good habits was a higher purpose, calling, or a traumatic personal event like a divorce or death that motivates them to change. While you can’t perform the last one, you can do the others even if you’re not religious.
In the book, they have a case study of a man who was addicted to crack and alcohol. Despite a lot of treatment and years of work, he still relapsed when he thought he was cured.
Although he was atheist, he was encouraged to look to a higher religious calling to help him. He looked to a higher outside force outside of his control (it wasn’t exactly a religious one. Just some unknown force), despite believing it was preposterous.
It actually helped him change his addiction.
Alcoholics Anonymous is a well known national organization. It has 2 million members and 115,000 groups as of 2014. The crazy thing is that it has one principle you must follow in its rules that goes against any science: you must give yourself to a religious or higher calling. Perhaps there is something here because it has helped many people overcome their alcohol addiction.
Giving yourself to a higher power that is out of your control may help with neurological networks in your brain that give you greater belief, hope, and persistence to keep going.
How To Improve Bad Habits
Bad habits can never be erased from our neurological wiring once we obtain them. However, we can replace them so that when we get the same triggers and signs (itchy fingers), we do something other than what we were used to (biting our nails).
To break bad habits, you want to look to replace the routine with good habits.
The book The Power of Habit has found that those who broke bad habits did so by keeping the cues and rewards the same, but just changing the routine.
So if you bite your nails, do something else with your hands instead. If you drink too much soda, drink something else instead. Reward yourself with the same feeling though: a pleasant sensation in your mouth (seltzer water) or an easy feeling in your fingertips (massage your fingers).
The message is simple: Keep the same reward and cues because you are used to them, but change the routine.
A huge part of habits is the craving. When the craving kicks in, change the routine so that you work towards the same rewards with a different cue.
An example would be: when you crave nicotine from smoking cigarettes, look to doing different routines like nicotine patches.
Form Keystone Habits First
What is a keystone habit?
Keystone habits are habits that when formed, make it easier to form other habits. Therefore, you want to form these first.
One of the best keystone habits is a daily habit of exercise. I have found it useful to aim low initially with a habit of just 10 or 15 minutes every day or every other day so I don’t burn out with a goal that is too big.
Exercise works great as a keystone habit because of all the science that has proven to start happening when you become more healthy: you have more energy, you are happier, you get more done, and so on.
Other keystone habits include daily goal-setting (writing down your goals), food journaling, and meditation.
To illustrate, food journaling is useful because it helps you eat better, which improves your health, which improves your focus and energy, it improves how much you can exercise, it extends your life, and changes your long-term food routines.
The Baby-Step Method
This method is exactly as it sounds. Have infinitely small goals.
I have constantly been burnt out after setting large goals. Add that on with wanting to over-achieve, and you burn yourself out.
Example: I plan to go to the gym for an hour after not going for over a year. I get there, feel great, an hour is up, and then I want to “over-achieve” and end up staying 2 more hours. I end up feeling alright afterwards but the next 2 weeks shows that I have somehow been burnt out: I don’t return to the gym again.
Any fitness guru will tell you that consistency beats killing yourself once a month or once a week.
What has worked for me is baby-steps: I set a mini-goal of 10 minutes at the gym every other day. It’s so small and easy that I can do it and it helps me stay consistent.
You can’t expect to jump from working out zero times a week to immediately working out 7 times a week for 3 hours each.
Jerry Seinfield is one of the most famous comedians in history. What people would be surprised to know is that he is also very financially successful, with a net worth of around $820 million, primarily through re-runs of his show Seinfield (one of, if not the, most successful sitcom in history).
According to the Chinese Zodiac, it’s the Year of the Monkey. And therefore, I’m forced to wear red at all times.
This is because you “supposedly” have more bad stuff happen to you when it’s your year. And since I was born in the Year of the Monkey, I have to wear at least some bit of clothing that is red at all times “to protect myself.”
It’s kind of like St. Patrick’s Day but a year-long, Chinese version.
But this doesn’t mean I disagree with all superstitions. China has had thousands of years to perfect their weird, super-bitter-tasting medicine and acupuncture healing. Perhaps there is some truth to their idea of “the worse it tastes, the more likely it will heal you.”
Thousands of years of history versus these Cherry-flavored American children’s pills. Your pick (having said that, I hate bitter stuff so I would prefer the flavored pills if I knew they were equally as healing).
It’s funny though. Because I experienced a lot more bad events than usual these last two weeks:
I recently ran into a deer, destroyed parts of my car, had my backup car’s engine fail on me, and had my car flooded.
But I still choose to look at these as minor setbacks because I was not hurt and I am still healthy. Plus, I’m not going to say this “proves” this Chinese superstition because it could just be confirmation bias at play.
So what’s the point of this story?
There’s one random point and a second point that will benefit you.
First, the dumb one:
I will be wearing red at all times (most likely a piece of fabric as a bracelet or anklet).
I am doing this because I believe in this. I am because my family does and they say you should not argue with thousands of years of tradition.
Also, because it’s kind of cool and there’s no downside.
Second… (and this is the reason that might help you.)
It’s because it’s a good way to practice forming habits and setting reminders for yourself. I will put a reminder on this piece of cloth each time I wear it. It’s probably going to be, “Are you moving closer or farther away from your goals?” but I am still deciding because I want something more specific.
Each time I see the red cloth on my wrist, it will jolt me back into doing something productive if I am not and realign me towards my long-term goals.
Also, it’s a good chance to practice what I learned in the book The Power of Habits. Basically, the book says that you should have a trigger (red bracelet), a routine (work towards your goals), and a reward (haven’t decided on it, but Brian Tracysuggested a healthy snack).
Basically, I am using a red ribbon as a reminder to:
Form a productive new habit.
Act as a reminder to reward myself when I do the habit.
Keep myself aligned with my biggest goals and avoid distraction.
Reinforce the positive behaviour. (I tried to research if the positive or negative reinforcement works better out of curiosity. But all I could find were articles that only had opinions or had something to sell you based on what they said. Let me know if you find a good study.)
In conclusion, I have turned a neutral event (you must wear red) into a positive one.
I challenge you to do the same thing. Maybe you can follow along with me in this challenge even if this isn’t your Zodiac year. Cut a piece of red fabric and wrap it around your arm.
Set a routine and reward for your red bracelet. Start making it a habit to wear at all times.
Let me know if you do, I’d be excited to hear about it.
P.S. There is a lazier way of doing this “Red challenge.” Just choose a color and tell yourself that each time you see this color, you remind yourself to do something. That way, you don’t have to wear a bracelet or anklet.
It’s up to you how you do it, but I recommend the actual bracelet because it’s more physical and keeps you going. But either is better than nothing.