The Game with Alex Hormozi - Why Incentives Can Get People to Do What You Want | Ep 383

Episode Date: April 27, 2022

Being a good entrepreneur and leader ATTRACTS good outcomes. Today, Alex (@AlexHormozi) talks about how you can get people to do what you want them to do through incentives. Learn how to properly decide on what incentives and punishments you can implement to gain success.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(0:45) - Getting people to do things through incentives.(2:21) - Properly giving incentives: the plus and minus.(4:54) - Incentives drive behavior, punishment avoids desired actions.(7:06) - Positive feedback improves performance.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

We as entrepreneurs must be leaders and good people so that we can attract good people so we can build good companies. Now, a big part of that is figuring out how to get people to do stuff. Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. How to get people to do the things you want. And if you don't know what the definition of power is, by the way, the definition of power is how to influence events or people. all right so the ability to direct or influence events or people that is the definition of power and so most people want to become more powerful. And the thing is that that word makes you feel queasy on the inside. It's because you have a very poor definition of power. Power is neither good nor bad. What you do with it can be good or bad, right? It's just it is just raw potential. Okay? So in this video, and if you don't know who I am, by the way, my name's Alex Hermosio, I own acquisition.com. It's a portfolio of companies that for $100 million a year. And I make these videos because a lot of people are broken. I don't want you to be one of them. All right? And I also have a lot of fun doing this. And so that is why I make it. So you want people to do stuff, right? There's the component of persuasion.

in getting them to believe that it is in their best interest. That is fundamentally what leadership is to get someone to believe that doing the thing that you want them to do is really just get them to want to do that. That is what it is. And so a lot of leadership is power, which is a lot of power, if you sound in the definition, is selling. But today, I'm not talking about selling. I'm talking about incentives, right? So this is like kind of the brass tax side. There's the persuasion, the soft side, which is still very important.

The psychology side. And the other side is kind of the behavioral side. All right. And so this is adapted from a conversation that I had with my closest friend, Dr. Trevor Cashie, and we were talking about behavior and getting humans to comply. All right. And so what I want to talk to you about is the ways to do that. All right? And so a big part of that, if my little do-dad will start working, that's what she said. We're going to make a little boxy-do. Okay. So if it's not a perfect box, deal with it. So you've got pluses and you've got minuses.

and you can add them or you can subtract them. So what this means is that we have a combination of both punishment and we have reward, all right? Stuff that people don't want and stuff that people do want. So for example, and I'm going to give a simplistic reasoning to get someone to do something. So we'll use a simple one, which is how do you get your kid to clean their room? This is a simple example that you can extrapolate to whatever it is

that you want someone else to do. Okay? So you can add a good thing. I can give you a cookie. All right? That is something that I can do. I can if you do the chore, I will give you a cookie. Simple. You do the thing. You get the reward. Awesome. The next thing that we could do is we could subtract a negative. You get no cookies. All right. So they don't get to have dessert anymore, which would be impossible because you can never skip dessert. It's like not in this family. Right. And so we could subtract something that they do have that they like. Right. So if you don't get to have, right? So if you don't, you don't do your chores, I will remove video games or you don't get to eat dessert, right? Makes sense. So those are two things that we can do with a positive now, or a reward. On the reverse of this is that we can add a negative. So we can say, I will spank your ass. I'm going to add a negative. I'm going to spank your ass if you don't do your chores. Oh no, that sucks, right? But I'm going to add something that wasn't currently in your life that you will not like. All right? As we add a

negative, okay? The fourth thing that we can do, and I'll get to how you can think through these in a second, is we can subtract a negative, okay? So I plan on spanking you every day and I can remove spanking. Or let's say there's something that you don't like doing, which might be like you're expected to do the dishes, right? You don't have to do the dishes or let's say you don't like a, you don't like riding the bus, right? So you don't like riding the bus, I'll drive to school. That's kind of like taking away negative and adding a positive. Ah, right? And so we can do no dishes, which would be subtracting a negative. All right?

So think about these in this way. These are things that people want to avoid. And these are people, things that they want, right? Here's what's kind of interesting about all of this stuff. Incentives drive behavior. There's tremendous amount of documentation on that. Hopefully, you're not going to fight that point with me. All right?

But here's what's interesting. Hey, guys, real quick, for those of you guys who are $100 million offers fans, I love you. I added in a lost chapter that has never been released. I'm releasing it now. transparently, I'm doing that to build hype for $100 million leads, but you will have the unreleased chapter. It talks about your first avatar and how to segment customers to make more money. You can get it by going to acquisition.com forward slash leads. It's both free in exchange

for your email so that I can email you when we launch $100 million leads and so that you cannot miss out on it because last time I sold out for like eight straight weeks really fast. So that is my way of making sure that y'all get first dips. When you create punishments for people, people do anything to avoid the punishment, which may not mean doing the thing that you want them to do. So, for example, if your child sneaks out at night, right, and then you punish them for sneaking out, the incentive is not necessarily to stop sneaking out. The incentive is to stop getting caught, right? It encourages criminal behavior.

It encourages people to find new and ingenuitive ways to do the thing they want to do, which is their incentive, their plus side, and figure out a ways to avoid the downside, right? Here's what is kind of interesting about this, is that with punishments in general, you get people to avoid the behavior, but you don't get them necessarily to do what you want them to do. Ah. So if you want someone to do something,

it's much easier to incentivize that if you do the thing, right, you get this. Because incentives direct behavior. Punishments force people to avoid anything that will give them the punishment. It's subtle, but hopefully you're picking up what I'm putting down.

The reason that this, I think, is very interesting is that when you look at, so Jim Collins wrote a lot of the best management books that are out there. And what's interesting is if you follow, his career, it seems like he went from super, super quantitative to more qualitative. Now, he still did quantitative to arrive at his qualitative decisions, but he talks about how leadership is such an important part of building great businesses. And we know that great people build great

companies. Okay. And so we, as entrepreneurs, must be leaders and good people so that we can attract good people so we can build good companies, right? Now, a big part of that is figuring out how to get people to do stuff, right? And so based on the research that he had that he had presented, which I thought was really fascinating is that over time, if you have negative reinforcement, performance degrades, right? It's always critical feedback, always critical feedback, always negative, only talk to somebody when they do something wrong, right? On the flip side, if you have positive feedback by a large majority of the time, performance improves. Isn't that interesting? And so I saw that through this lens, which is we can direct people's behavior

far more effectively with positive incentives than we do with negative stuff, which has huge implications for like the jail system and the punitive system and all that stuff, is like people just find ways to avoid punishment. They don't necessarily do what people want them to do. Because punishment, the activity sprays in any direction that's just away from the thing, whereas incentives directs it towards what you want. And so if we think about this within the context of managing people and get them to do the things that we want them to do, right,

then it makes more sense for us to think about an activity rather than a single outcome into as many, many, many, many, many incremental steps as we possibly can, and then incentivize those many steps. And the incentives don't necessarily need to be monetary. In fact, most of times, they don't need to be monetary. They need to be things that people can perceive as positive outcomes, which many times is just status and feedback, which is just great job, awesome stuff.

You did that thing yesterday, and it was great. Like, you just reinforce the things that they are doing that are good, right? And we reinforce, and then now that they realize I did this one thing, not anything to avoid something, but I did this one thing and I got this cookie. Well, I want to do that one thing again and they get another cookie, right? And we reinforce behavior. And so I like this process of thinking, and Trevor and I talk about this a lot because it gets around the hullabaloo of trying to figure out what's going on inside of people's heads. Right. And what we have instead are circumstances and the outcomes, right? And then we have our incentives and all of these things we can measure. We can say, I saw that we were in the circumstance, which you can measure. We inserted this incentive. And then they did this outcome, yes or no, right? Whether they felt inspired or whether they psychologically loved, we don't know. And we never will know because not everyone even knows how they're feeling. And whether they answer questions is not necessarily even true, right?

We have no idea. But if we can just measure the conditions, then we can start directing behavior in the right ways. And so I thought this was a fascinating topic for getting others. And this applies to spouses, how to get your spouse to do the stuff that you want them to do? Well, it certainly doesn't come from nagging them all the time, right? All they're going to do is try to avoid being nagging. Hmm, interesting, right? And so this gives you four boxes to look at. This one, this box over here, this guy and this guy, those are things that you can't really direct people's behavior as much. Whereas this guy and this guy, you can direct people's behavior to the singular outcome that you're looking for and you continuously reinforce those behaviors such that they start doing them without even thinking about it because it has been so reinforced. Right. And so instead of trying to think, how do I have an amazing marriage? It's how can I condition this person to stay married to? me. Kind of interesting. Little flip for you. So anyways, Mosy Nation, this is the kind of stuff

that I do geek out on and I think it's really interesting. I hope you enjoyed it as much as I enjoyed making this for you. This is how you get people to do shit. You can think about it in the terms of soft side in terms of persuasion, but you can also think about it in terms of the hard side of what are the reinforcements that we're going to use, either positive or negative, and are we going to add positives? We're going to remove positives. We're going to add negatives or remove negatives so that we can accomplish what we want together. So lots of love, Boise Nation. Let me know if you like this stuff in the comments. Bye! Thank you.