Loss aversion refers to people’s tendency to prefer avoiding a loss to gaining something.
What this means is that people avoid taking chances if there is a possibility of losing something. There are a lot of studies on loss aversion that show that the gain has to be at least twice as big as the loss or even bigger for people to take that chance. This means that the pain of losing 100$ is perceived as bigger than the pleasure of gaining 100$, and it can be surpassed only by a possible gain of 200$ or more.
This is why you will always see the people fighting for the status quo being more active than the people who want change. When reforms, reorganizations, changes in companies or society are about to take place, the people who have something to lose will be more involved and will fight harder than the ones who could have something to gain, even if the ones gaining are a lot more or the gains outweigh the losses.
People fall in love with what they own, with a certain level of comfort and the false illusion that they can always preserve it. That’s why, the next time when you want to do something that involves changes that will affect certain people in a negative way, be ready and expect a strong resistance.
The good news is that this can be trained. People who take risks more often, either by the nature of their job, or by choice, will end up having a lower loss aversion.
Change, innovation and success mean taking risks, and this goes against our very nature.
There is a group of people that seem to be famous for nothing really. They haven’t done anything of real value for society, they don’t do any hard, important work, they haven’t invented or innovated anything, yet they are world known.
These are usually the kind of people who create buzz around them, but not by doing anything worth while, but by creating scandals and gossips. They make the front page for their new fight with some other “star” of the same value, for their new car, their new affair or their new divorce.
On the other hand, there are people who have done something meaningful, who bring innovation and change, but never really make it to the front page. And when they do, they never try to stay there for long. For them it’s more important to focus on the work than to create buzz.
You can choose to create buzz around you, even if there is nothing valuable to mention, or you can focus on the important work and only then manage the buzz created.
It’s up to you to become famous for your work, or just to be famous for being famous.
Keeping it real doesn’t mean losing your creative side, forgetting about innovation, or to stop dreaming. It means that you have to stay in touch with your self, to be in constant touch with the environment and the people around you.
The most important things you will be able to achieve when it comes to business, success, and costumer interaction are strictly related to how well you understand reality.
Everything you do depends on your environment and the better you know it the more will you be able to use it in your favor. Once you know it in a high degree you will be able to anticipate it. This is when you will be able to create change, drive innovation, and lead people.
Knowing the people around you and your customers can give you the extra edge you need to succeed. Understanding the needs of your customers and clients allows you to offer them better services, better products and higher customer satisfaction. Anticipating your customers’ and clients’ needs will make a huge difference in the experience you will be able to create.
That is if you are not a Sci-Fi writer or a surrealist. Then it’s perfectly fine to go all out.
A lot of people try to predict and control things that are about to happen. It’s important for their personal life, for their business and for others around them who depend on that.
Doctors try to predict how the disease will evolve and what actions you must take, the weather channel tries to predict how the weather is going to be like and if you should get an umbrella or not, the CEO tries to predict how the market will evolve and how the clients will react in order to take the best possible decisions.
These are all things that can be predicted to a certain degree, but concerning yourself with what disease you might suffer at 80 when you are 20 is a long shot. It’s as crazy as trying to predict how the weather will be next summer because you will buy tickets for your vacation. At the same time, CEOs try to control every single aspect of their business and plan everything for the next 5 years denying the unpredictability of markets.
Some things are highly unlikely to predict and thus impossible to control. Focusing on controlling them is just a waste of time, and it would be better to focus your energy on what can really be controlled and make sure that it will turn out the best.
P.S. This is one reason I hate the classic question in job interviews: “Where do you see yourself in 5 years?”. The truth is I cannot know and no one can. Think of what people would have said 5 years ago, before the economical crisis, and what the reality is now.
There are a great deal of studies and research regarding multitasking and the efficiency or better said the inefficiency of it.
I won’t debate this, even though it’s clear that one will be more efficient focusing on a sole activity rather than trying to do several at the same time. My concern is about how you can avoid having to multitask and focus on only one activity.
In our modern society we are constantly in a rush, always on the run, with a need to always be connected and up to date. This makes it extremely hard to direct your attention on a single task or event. Constant interruptions, urgent tasks, high priority emails, people that need your immediate attention are always present.
It’s extremely difficult, if not impossible, not to be interrupted. Thus, the only option you have is either to stop what you are doing every single time you get interrupted, or to start multitasking.
Since multitasking is becoming a necessity and avoiding it is not an option anymore, the best solution you have is to get used to it, practice it and increase your ability to multitask.