Six months ago when I started working for MaRS I had the opportunity to use the Go train for the first time. I was happy to leave behind my road-rage-filled 404 nightmares. Now I sit back relax and enjoy two activities: reading to my heart’s content and observing human behavior.
“Human behavior on the train?” you ask. That’s right, it’s the best place to observe the mass behavioral disorders that affect us all — disorders that entrepreneurs can take advantage of.
Routines are everything: almost all passengers park in the same row in the parking lot, they take the same train at the same time every morning, they sit in the same carriage and sometimes in the same seat (!). Some are chipper morning people, bright eyed and bushy tailed and others look like death warmed over (I am somewhere in the middle). God forbid you should by mistake sit in a spot that is occupied by four best friends who always sit together, you’ll be stared to death or even be asked to move to another seat (although that’s only happened to me once so far).
Dealing with entrepreneurs on a daily basis, I can appreciate how the behavioral disorders — good and bad — can affect their success. And I recently read “Predictably Irrational” by Dan Ariely which talks about the findings in behavioral economics that help explain why we do the things we do.
Ariely addresses three main things in the book and explains implications of those points for entrepreneurs.
- People overvalue what they have which makes it difficult to find a buyer.
- Options distract us from our objectives. The desire to keep one’s options open and failure to focus is why some companies do worse than others who focus on one product or market.
- The power of price. Entrepreneurs can use pricing strategy to make money from the irrationality in human behavior.
Another well known behavioral economist is Daniel Kahneman, currently a professor at Princeton and 2002 Nobel Memorial Prize winner for Economic Sciences. He is known for his publication and research in cognitive biases, behavioral economics and prospect theory. Behavioral economics is related to behavioral finance and evolved to a separate branch of economic and financial analysis. It applies scientific research to human and social, cognitive and emotional factors to better understand economic decisions. To better understand consumers, borrowers, investors and how they affect market prices, returns and the allocation of resources.
Entrepreneurs have to ask themselves, “Is there something in my behavior that is a detriment to my success?” Behavioral disorders will show up in every aspect of your life. For example, if you have trouble finishing what you start, it will show up everywhere from your eating habits to your business plan. Be aware of this and be ready to compensate for it.
As my fellow blogger Claude wrote in his blog, there may be pill to make you an entrepreneur but I wonder if there will ever be a pill to normalize our behavioral disorders. But that behavioral disorder may be the difference between “no money” and attracting that Angel investor.
Be your authentic self staring back at you every day in the mirror: just pick up that book or even that business plan and finish it.
Usha Srinivasan provides market research intelligence to entrepreneurs in Ontario. Her areas of expertise include technical and market research in environmental and building technologies as well as water and wastewater treatment and management.
