The Curse Of The Network Effect

Editor’s Note: Nir Eyal writes about the intersection of psychology, technology, and business for Dashboard.io and on his blog NirAndFar.com. Follow @dashboard_io and @nireyal.

Ethan Stock lived the Silicon Valley dream. He had recently sold his company to eBay and emanated the tanned skin and relaxed composure you’d expect of someone who just cashed a big corporate check. But as we sat across from one another in a Palo Alto coffee shop, I was surprised by what he said next. “Mediocrity is worse than failure, you know?” For seven years before the acquisition, Stock served as the founding CEO of Zvents, an online guide for local events. Though he was successful by anyone’s standards, I could tell he was a guy who, like me, had learned some hard lessons.

“Zvents grew incredibly well,” Stock told me. “We were the largest events site of its kind, providing local listing in hundreds of markets and attracting over 14 million monthly unique visitors.” Zvents had done what so many tech companies dream of doing, they cracked the network effect and built a business that increased in value with each new user. The more event organizers posted to the site, the more useful the site became to people looking for things to do. Both parties loved the site and Stock’s company was in the middle, connecting visitors to events they otherwise wouldn’t find.

“But I learned the network effect isn’t everything. In fact, it became a liability.” Stock’s words confused me. How could being in such an enviable position of creating a valuable marketplace be a bad thing? “Getting paid was a bitch,” Stock said, and he began to unravel how certain marketplace businesses like Zvents can succeed themselves to death.

The Expectation of Completeness

Marketplace businesses exist to connect two or more parties, typically the buyers and the sellers. Investors love these businesses because they tend to grow quickly and spawn winner-take-all companies. A long line of successful Silicon Valley startups have found success providing a place for people to connect and transact. Examples of these kinds of companies include industry titans like eBay and LinkedIn but also include some of today’s web darlings like Uber and Airbnb. “Marketplace businesses are great,” Stock told me. “But there is a fatal flaw in some businesses that can hogtie their ability to make money — the expectation of completeness.”

Stock explained how Zvents had planned to charge event organizers to list on their site. “Once we reached critical mass and it was clear we were becoming the market leader, we expected event organisers would start paying.” Unfortunately, reality fell short of expectations.

Like many marketplace businesses, Zvents was catering to users who expected to find a comprehensive listing of all local happenings. To keep users coming back, Zvents had to ensure it was displaying everyone’s events — an incomplete list would send visitors looking elsewhere.

“When we asked event organisers to pay up, they said ‘what for?’,” Stock said. But threatening to remove a listing was not possible, Zvents needed them all to keep site visitors happy.

So Stock’s team offered event organizers better ways to reach users like sponsored placements, which displayed the listing more prominently on the site. But the attempt to finally get paid largely fell flat. “We certainly created value for them.” Stock said. “We were sending people to their events. We just couldn’t capture very much of that value. I guess it’s the old saying, ‘why buy the cow, when you can get the milk for free?’”

Just Like Google

“Google is similar if you think about it.” Stock told me. The comment surprised me given the tremendous success of the search giant juxtaposed with the Zvents story. “They also create much more value than they capture.”

He was right. When searching on Google, users also have an expectation of completeness. They come to the site to find all relevant results, every time. If Google decided to only display listings from paying advertisers, we’d all switch to Bing.

When considering the collective value of all the clicks on un-sponsored links, the company does give away the vast majority of the value it creates. Indeed, Google appears to be “giving away the milk for free.” The difference is that Google’s market is not limited to local happenings as was the case for Zvents. Google’s market is much, much bigger. In fact, it’s everything.

By organizing “the world’s information,” Google skims a proportionally tiny amount of value from a tremendously huge marketplace. The absolute number of people who buy a sponsored placement is large enough to keep the company humming, even though it only monetizes a tiny proportion of the value created.

Implications

The Zvents story should give pause to marketplace businesses going after niches. The expectation of completeness, and the resulting inability to monetize, may help explain the challenges faced by companies like Foursquare, RedBeacon, and many industry-specific job listing sites.

One way around the problem of completeness is to facilitate the transaction itself. Companies like oDesk, Etsy and Uber, ensure they are in the middle of the money by processing the flow of cash. It’s much easier to justify taking a cut when you hold the gold, particularly when doing so adds convenience and security to the transaction.

Without the ability to collect a share of each transaction, marketplaces serving users who expect completeness face a difficult challenge. Two options remain: either cater to a very large market, a la Google, or monetize a large share of the value created. The network effect alone just isn’t good enough.

TL:DR

• Network effects are great but they don’t ensure a viable business model.
• Though they may prove successful from a growth and engagement perspective, certain marketplaces can be very difficult to monetize.
• Marketplaces where either the buyer or seller expects to choose from an exhaustive listing – so-called “complete” marketplaces – typically give-up far more value than they are able to capture.
• Unless they facilitate the transaction itself, these businesses often find themselves in a bind.
• Complete marketplaces must either cater to a very large market, à la Google, or position themselves to monetize a large share of the value they create.

Photo Credit: shutterstock

Temptation

Editor’s Note: Nir Eyal writes about the intersection of psychology, technology, and business at NirAndFar.com. Follow him @nireyal.

How do products tempt us? What makes them so alluring? It is easy to assume we crave delicious food or impulsively check email because we find pleasure in the activity. But pleasure is just half the story.

Temptation is more than just the promise of reward. Recent advances in neuroscience allow us to peer into the brain, providing a greater understanding of what makes us want.

In 2011, Sriram Chellappan, an assistant professor of computer science at Missouri University of Science and Technology, gained unheard of access to sensitive information about the way undergraduates were using the Internet. His study tracked students on campus as they browsed the web. Chellappan was looking for patterns, which not only revealed what students were doing online, but provided clues about who they were.

“We believe that your pattern of Internet use says something about you,” Chellappan wrote in the New York Times. “Specifically, our research suggests it can offer clues to your mental well-being.” Chellappan concluded that there was, in fact, predictive power in the data. He found students with early signs of clinical depression used the Internet differently and he could identify students most likely to face mental health issues simply by looking at how they clicked.

“We identified several features of Internet usage that correlated with depression,” wrote Chellappan. “For example, participants with depressive symptoms tended to engage in very high e-mail usage.”

Chellappan developed the technology in hopes of creating an early-warning system to identify struggling students. But his study raised another question, why do people with depression check email more?

Alleviating Pain

The answer may provide clues about why all of us use the products and services we do in our everyday lives. Psychologists believe people with depression feel negative emotions, like anxiety, more frequently than other people do. There is evidence that the depressed students in Chellappan’s study were using the Internet more because they experience negative mental states more often. To try and feel better, they turned to the web to boost their mood.

Finding ways to make ourselves feel better is not something only depressives do. We all seek relief from feeling bad and the brain is primed to help us learn where we can find escape. Just as we might take a Tylenol to relieve a headache, we turn to products to relieve emotional pain. In fact, these two biological processes are so closely linked that taking a Tylenol has been shown to ease both physical and emotional pain. The drug is effective in treating headache and heartache.

Having a pain to cure is a necessary prerequisite to using products. Recent neuroscience reveals the brain even adds pain to things that were previously pleasurable to push us to get what our bodies want. When temptation is activated in the brain, it induces a biological process that not only turns on the pleasure response, but also the body’s physiological stress response.

Consider a 2005 study which looked at the physiological response of women exposed to images of chocolate. Researchers observed that the women experienced a subconscious reaction of alarm similar to seeing a threatening animal in the wild. The women, who had identified themselves as “chocolate cravers,” described feeling not only pleasure at the thought of consuming the chocolate, but also agitation, angst, and a feeling of a loss of control in the face of their desire. For these women’s brains, temptation was stressful.

Since the 1950s, researchers have explored how the brain’s reward system compels behavior. Our understanding of the complex circuitry shows that pleasure and pain work together. Once the brain learns something good is about to happen, it induces a craving we feel as stress. The fastest relief from this discomfort is to get what we want.

Exaggeration and Fear

Companies, of course, are masters of temptation. If marketing is defined as, “the process of communicating the value of a product or service to customers,” then implicit in this practice is accentuating the positive aspects of what being sold. This technique is used not only in hawking goods, but is also found in nature. Animals have been tricking each other by accentuating desirable traits for millennia. The process is called “super-normal stimuli” and it is a key to enticing action by creating the stress of desire.

Another way products induce intense desire is through a certain kind of fear, particularly our innate need to have as much as the next person. The phenomenon is exhibited with a simple experiment conducted by Frans de Waal, a primatologist at Emory University.

In the study, de Waal rewarded two capuchin monkeys with a cucumber when they completed a simple task, in this case, handing a rock to the researcher. When both monkeys were given the same reward, they completed the task as prescribed.

But when the researcher gave one monkey a grape while offering the other the standard cucumber, the results were very different. The stiffed monkey, who was perfectly content just seconds before with his cucumber, began shrieking, baring his teeth, thrashing in his cage, and pounding on the table to show his anger. Known in the vernacular as FOMO, or “fear of missing out”, marketers utilize this inborn trigger to incite pain akin to what the capuchin monkey felt in de Waals cage.

Marketers tasked with increasing consumption of their company’s products have a difficult job; they are often charged with manufacturing desire. To do that, they need to find the customer’s problem, their pain, in order to alleviate it. Without the biological basis spurring our desire, there would be no sales. So marketers must at least accentuate, if not induce, a level of discomfort to make us crave their wares.

Like in the undergraduates in Chellappan’s study exhibiting signs of depression, we all seek to escape feeling bad. The products and services that provide immediate relief are those we come to depend upon most.

Photo Credit: Orofacial

Are Viral Loops Or Viral ‘Oops’ Driving Your App’s Growth?

Editor’s Note: Nir Eyal writes about the intersection of psychology, technology, and business at NirAndFar.com. Follow him @nireyal.

Recently, MessageMe announced it had grown to 1 million users in a little over a week’s time. The revelation captured the attention of envious app makers throughout Silicon Valley, all of whom are searching for the secrets of customer acquisition like it’s the fountain of youth. “Growth hacking” has become the latest buzzword, as investors like Paul Graham profess it’s functionally that matters.

Clearly, everyone wants growth. To someone creating a new technology, nothing feels better than people actually using what you’ve built and telling their friends. Growth feels validating. It tells everyone the company is doing things right. At least that’s what we want to believe.

Good Growth, Bad Growth

Sometimes viral loops drive growth, because the product is truly awesome, while in other cases growth occurs for, well, different reasons. As an example of good growth, it’s hard to top PayPal’s viral success in the late 90s. PayPal knew that once users started sending money to each other, mostly for stuff bought on eBay, they would infect one another. The allure that someone just “sent you money” was a huge incentive to register.

PayPal nailed virality. Both sides of the transaction benefited from utilizing the platform and a classic network-effects business was born. In order for users to get what they wanted, they had to open an account and the product spread because it was useful and viral.

However, sometimes viral loops are less about the customer’s interests and more about short-term greed. When the product maker intentionally tricks users into inviting friends or blasting social networks, they may see growth, but it comes at the expense of goodwill and trust. When people discover they’ve been tricked, they vent their hatred and stop using the product. Unfortunately, we’ve all encountered the ways companies drive growth in deceptive ways known as “dark patterns.”

Viral Oops

Good and bad growth is relatively easy to identify. What is harder to decipher is the gray zone in between. A “viral oops” occurs when users unintentionally invite others, but when they look back on what happened, they blame themselves, not the app.

When MessageMe pre-selects everyone in my contact list as a default, I’m likely to think that only those who are un-checked will be invited. However, the opposite is true. With two taps, my list of hundreds of contacts gets swamped with a notification email personalized from my email account.

Could users really make such a mistake? After all, the send button is clearly labeled with the number of people who will be invited. I am also well aware of the convention that a check mark means the contact is selected and not the other way around.

However, say I was not in UX businesses? What if I were a tech novice living outside our little Silicon Valley bubble? What if I were slightly far-sighted? Or perhaps if English were not my first language (it isn’t)? Or maybe if I were attempting to make a quick decision while outdoors and couldn’t clearly see my dim screen? In any one of these scenarios, I could have easily triggered a viral oops.

The surprising math of viral growth reveals it doesn’t take many users to make this kind of mistake. Only 5 percent of users screwing up can get an app to a million downloads in two weeks, assuming the average user has 200 people in their contact list. The assumptions are for illustrative purposes (see note at bottom) but the point here is to show how powerful exponential growth can be, whether or not it is intentional.

Who Really Gets Tricked?

Admittedly, a careful review of the interface would reveal the user’s mistake. It’s hard to fault MessageMe. Though my requests for an interview were not returned, I assume their intent was not to trick anyone.

However, the example illustrates what makes the viral oops so troublesome. It is impossible to look into the minds of customers while they use an app. For all I know, MessageMe users intend to send the app to every single one of their contacts. But how would the app maker know if it was done in error? They wouldn’t.

A viral oops not only deceives the user, it fools the developer.

Unlike an intentionally deceptive technique, where the user gets angry and stops using the product or uninstalls the app, with a viral oops, users blame themselves. They’ll most likely keep the app and move on with life. With no metric indicating the user’s unintended mistake, the app maker is none the wiser.

A viral oops not only deceives the user, it fools the developer. There is no way to know if the invite was sent in error. Without an understanding of why users share the app, developers are liable to gloss over significant shortcomings that must be addressed for the app to achieve long-term success. Given how easy it is for us fallible humans to believe convenient truths, it is too enticing to interpret growth as validation instead of a mirage.

MessageMe just happens to be the latest hyper-growth app making headlines; I could have picked any number of other cases. In researching this article, I discovered multiple examples of the viral oops in companies large and small, and I’m sure the comments section will uncover others.

Developers should make sure they know why people are sending invitations to others and not be guided by growth for its own sake. App makers would be wise to be particularly careful in encouraging people to invite others before users really know how the app works. For example, prompting invites at first login is a remarkably common and potentially specious practice.

For creative people working on exciting new technologies, growth feels great. But we should be cautious of using techniques that have a high likelihood of being viral oops instead of viral loops.

–

Note: The virality math assumes a starting base of 1,000 users and a daily cycle time of 1 with a 10% invitation acceptance rate.

Thanks to Jules Maltz and Max Ogles for reading previous versions of this essay.

Photo Credit: Mel B

This Will Be The Last Article You Read

Editor’s Note: Nir Eyal writes about the intersection of psychology, technology, and business at NirAndFar.com. He is the author of the forthcoming book “Hooked: How to Drive Engagement by Creating User Habits”. Follow him on Twitter @nireyal.

If the Internet had a voice, I am fairly certain it would sound like the HAL 9000 from 2001: A Space Odyssey. 

“Hello, Nir,” it said to me in its low, monotone voice. “Glad to see you again.”

“Internet, I just need a few quick things for an article I’m writing,” I’d reply. “Then it’s back to work. No distractions this time.”

“Of course, Nir, but while you are here, won’t you look at what Paul Graham just wrote?”

“No, Internet,” I’d resist. “I’m just here to find some specific information. I can’t be distracted.”

“Of course, Nir,” the Internet would say. “But this article about LOLCats addiction is related to your work. Give it a click, won’t you?”

“Interesting.” I’d say hesitantly. “Just a quick read and then it’s back to work.”

Three hours later I would realize the time I’d wasted clicking and curse the Internet for sucking me into its mind vortex yet again.

Ironically, I research and write about seductive technology and yet I struggle to resist its temptations. Much of my work is written for entrepreneurs and designers looking for ways to boost user engagement with their products. The rest of my writing is intended to increase awareness of the habit-forming potential, and at times, unintended consequences, of an increasingly connected world.

But just as having an understanding of how illicit drugs work does not necessarily prevent addiction, I find myself just as susceptible to the illusive pull of the Web. I’ve written about methods for preventing unwanted tech intrusions in the boardroom and even the bedroom, but I found myself struggling with distractions at the desktop, making it difficult to achieve the concentration I needed to work. Indeed, research suggests even small interruptions increase mistakes and degrade performance.

For knowledge workers like me, our work and play display on the same screens. Computers and phones allow us to do our jobs, but also give us instantaneous access to boredom-relieving entertainment. In fact, most of the top 25 websites in America sell escape from our daily drudgery.

Online content is habit-forming because it follows what I call the “hook framework,” a four-step user flow composed of a trigger, action, reward, and investment. To end my own bad habit of spending too much time wandering the Web, I had to break the hook, ensuring I didn’t pass through its four alluring steps.

The No-Read Rule

Fortunately, I found my antidote in the venom. Ironically, the sites that syndicate my essays — perhaps where you are reading this right now — depend on you not doing what I did, hoping you’ll continue clicking from article to article, racking-up their ad revenue. But to end my own habit, I strung together several technologies to end the behavior pattern that kept me chasing intriguing headlines.

The first thing I did was set a new rule for how I consume content. My rule is to never read online. Of course, I still need to read things I find on the Web, I’ve just time-shifted how I do it.

I signed up for Pocket and installed their browser extension. When clicked, Pocket scrubs the text of what I’d like to read and saves it for later. I made sure the Pocket button is conspicuously visible on my web browser to act as a reminder of my “never read online” rule.

I replaced my old action of reading essays with the new action of saving them for later. Thus, my temptation to digest the content wasn’t thwarted, it was satisfied knowing it was safe and sound, waiting for me until later.

Content As Reward

Next, I used the Pocket Android app to provide access to the content at just the right time. But here’s the kicker: I do not do the reading. I let the app read it to me.

The app’s text-to-speech capabilities are astounding and the HAL 9000 voice of the Internet has been replaced by a British chap with a cheery disposition. Unfortunately, as far as I can tell, the Apple iOS version does not have text-to-speech but on my Android the audio plays commercial-free while I’m working out or driving. Listening this way also has some surprising benefits.

I’ve discovered that checking off articles from my queue is decidedly satisfying, similar to the tiny pleasure of clearing unread messages from my email inbox. Getting through my list of articles acts as a small reward encouraging me to hit the gym more often and saving me the time and temptation of reading at my desk.

The IFTTT Stitch

However, reading at my desk had perks which at first I found lacking in Pocket. For example, I often saved articles to Evernote or shared to social networks like Twitter, but doing so at the gym required too many time-wasting steps. To solve this dilemma, I recruited another brilliant technology. IFTTT (If This Then That) stitches together dozens of apps to communicate easily together. For example, every time I mark an article as a “favorite” in Pocket, it instantly saves to my Evernote account. The IFTTT recipe is available here. When I’d like to share an article I’ve just listened to with any number of social networks, all I do is send it to Buffer, which concurrently fires off another IFTTT recipe.

De-Triggered

This simple solution involved no coding and I’m sure you can think of ways to customize these tools for your own needs. My hack is just one method for conquering the seductive draw of reading “just one more thing.” On the Web, where distractions and temptations are boundless, we need new tools to help us do our best work. By replacing my previous actions with a more thoughtful behavior, I’ve increased my productivity and kept HAL’s seductive call at bay.

Disclosures: As of the time of publication, I have no financial or personal interests in any of the companies mentioned.

Image credit: NirAndFar.com and Apple Ad

Tech Is Making Meetings Worse, It’s Time For Digital Hat Racks

Editor’s Note: Nir Eyal writes about the intersection of psychology, technology, and business at NirAndFar.com. He is the author of the forthcoming book “Hooked: How to Drive Engagement by Creating User Habits”. Follow him on Twitter@nireyal.

The first thing Don Draper does when he gets to his office is give his busty secretary a suggestive wink. The second thing he does is take off his fedora. Finally, depending on the severity of the previous night, he completes his morning routine with a stiff drink.

What can we learn from Don’s habits? First, that scotch and submissive secretaries always equal drama. But what of that fedora? There’s a lesson there, too.

As any Mad Men fan knows, it was once popular for men to wear hats everywhere they went — except, that is, when they stepped indoors. When a gentleman went inside, he removed his hat and placed it on the nearest rack. It was a required social norm, a sign you were ready for business.

Though hats have long gone out of fashion, the custom should be a guide for how we adapt to the increasing pervasiveness of personal technology. It’s high time we started doing with our digital devices what well-mannered men did with their fedoras. We need a digital hat rack.

It seems that whenever people meet in person these days, they do so while separating their attention between the people in the room and the devices in their hands. Somehow, it has become socially acceptable to digitally masturbate in each other’s company. You might say, “but I’m taking notes or responding to an important request!” No you’re not, you are digitally dicking around.

The Addicted Society

Trouble is, we’ve become societally addicted to using our devices at all the wrong times. To illustrate how addiction works and to make the parallel clear, let’s again look at our friend Don. At first, Don drinks “to take the edge off.” Booze is the solution to ease his worried mind and perhaps conscience. As with all addictions, over time, the solution becomes the problem. Under the influence, Don makes increasingly poor decisions in his professional and personal life. To escape the stress or the real world, Don continues to imbibe and the cycle of self-destruction continues. This makes for great television, but in the real world, it’s not pretty.

The addict’s path offers lessons to why we can’t stop our technological indiscretions and why we’ll never be able to kick the habit. The real reason we use our phones, tablets, and laptops in meetings is to escape our reality, much as Don does, because reality is uncomfortable. Meetings can be tense, socially uncomfortable, and very often, exceedingly boring. Meetings are hothouses of discomfort that any rational person would want to escape given the opportunity. Our technology gives us the perfect way to be there, but not.

The Solution is the Problem

Unfortunately, by mentally teleporting through our devices, we make things worse. Like alcohol to a drunk, the solution becomes the problem. Sherry Turkle, an expert on the psychological effects of technology, observed in her book, Alone Together, “students whose laptops are open in class do not do as well as others.” It is reasonable to assume that digital distractions produce similar negative results in the boardroom. As numerous studies have demonstrated, we are terrible at multitasking. Our brains are awful at absorbing information when we’re not paying close attention.

Under the guise of getting things done, we play ping-pong with our messages, sometimes to people in the same room. Of course, this only generates more emails, not better ideas. Furthermore, watching others use their devices escalates an arms race of perceived productivity. People look busy, even if they are just checking Facebook. The impression that someone else is being productive while you’re not, increases our stress levels as we consider our own flooded inboxes.

Most corrosive however, is the fact that less attention means worse outcomes. When people use their devices during meetings, even just for a quick sec, they eventually rejoin the conversation, aware that they may have missed something while they were mentally away. They fear revealing that they were not paying attention and tend to shut down. Thus, otherwise valid concerns and bright ideas are never discussed. Their lack of participation only serves to make the meeting less productive, less interesting, and more boring. Conveniently, to escape the discomfort of being not only bored, but also increasingly paranoid, more device usage ensues and the cycle continues.

Digital Prophylactics

The first step is to admit we have a problem. The machines are winning. We don’t have the will to resist Pinterest when we should be participating or Instagram when we should be interested.

The allure of connectivity is just too seductive, no matter how damaging to our relationships and businesses. As it became more persuasive, technology became increasingly pervasive; entering the places in our lives where we are least likely to assert self-control.

Studies suggest that our brains’ abilities to resist temptation markedly decrease during times of stress and fatigue, both of which are common in the workplace. Unfortunately, the trend toward an increasingly addictive future is inevitable, and unless we develop a new set of norms, things will get worse.

What we need are what I call “digital prophylactics.” Most people think of condoms when they hear the term, but a prophylactic can be any “course of action to prevent disease.” Likewise, new norms are needed to protect us from socially unhealthy behaviors. These are otherwise known as “manners” but that sounds much too uptight. So instead of grumbling, “Where are your manners? Put that iPhone away!” perhaps we’d do better by proclaiming, “Hey, we need some digital prophylactics in here!” That would surely get everyone’s attention.

It’s time for a change. Here’s a proposal for establishing new customs similar to the hat rack of yesteryear:

The Digital Hat Rack

Every conference room should have a charging station just out of everyone’s reach, perhaps in the center table or near the door. When people congregate, they plug-in their devices on their way in just as easily as they would have hung up their hats.

Of course, leaving one’s phone at your desk is fine, but just in case someone reflexively picked it up, the charging station gives them a convenient and functional place to leave their devices. Now, instead of sparking the desires of others to use their device as part of the productivity arms race discussed earlier, anyone attempting to use their phone in the meeting will receive cold stares of contempt from their disconnected colleagues.

As for laptops, iPads, or any other digital doodads, they’re off limits, too. Just as the brim of Don’s fedora covered his face, screens create physical obstructions and barriers between people. They should be left outside.

But to save anyone from being the device cop, consider printing this sign and placing it wherever you designate a device-free zone.

OK, You Can Have Just One

Surely there are specific exceptions based on the business, but for the most part, the only things attendees really need in a meeting is paper, pen, and perhaps Post-its.

I will admit that the one thing lost in a no-device meeting is the ability to record and quickly distribute notes and action items. However, I’m often surprised by how few of my clients actually record meeting minutes despite everyone in the room being on a keyboard. Perhaps people assume sending notes is unnecessary with everyone busily typing. But of course, it’s a facade, and all the more reason that recording and distributing notes is a good company habit.

At the start of each meeting, designate a note taker who utilizes the one permitted machine in the room. Project the notes on a screen to ensure everyone’s contributions are properly recorded. It’s then the note taker’s role to distribute the meeting minutes afterwards.

Worth A Try

Perhaps you’re getting squeamish about saying bye-bye to our digital pacifiers. That’s okay. Start slowly. Perhaps ask a few colleagues if they’re willing to give the idea a try? Start with one work week, just five days, and see how it goes. At least use this article to start a conversation. Forward it. Here, I’ve even pre-written a tweet at this link (assuming that is, you are not in a meeting right now).

I should mention that I’m no advocate for superfluous meetings. In fact, I find organizations generally have far too many of them. However, if a topic is important enough to require participants be physically present, let’s ensure everyone is really there, in both body and mind.

Clearly, technology is evolving much faster than our ability to adopt new cultural norms. Devices have infiltrated every facet of our lives and have not given us time to adapt. It’s time to become aware of the cost of our new digital habits and gain control over them, or we will soon discover they have control over us.

Photo credit: BrettRed for NirAndFar.com

Tech Is Making Meetings Worse, It’s Time For Digital Hat Racks

Editor’s Note: Nir Eyal writes about the intersection of psychology, technology, and business at NirAndFar.com. He is the author of the forthcoming book “Hooked: How to Drive Engagement by Creating User Habits”. Follow him on Twitter@nireyal.

The first thing Don Draper does when he gets to his office is give his busty secretary a suggestive wink. The second thing he does is take off his fedora. Finally, depending on the severity of the previous night, he completes his morning routine with a stiff drink.

What can we learn from Don’s habits? First, that scotch and submissive secretaries always equal drama. But what of that fedora? There’s a lesson there, too.

As any Mad Men fan knows, it was once popular for men to wear hats everywhere they went — except, that is, when they stepped indoors. When a gentleman went inside, he removed his hat and placed it on the nearest rack. It was a required social norm, a sign you were ready for business.

Though hats have long gone out of fashion, the custom should be a guide for how we adapt to the increasing pervasiveness of personal technology. It’s high time we started doing with our digital devices what well-mannered men did with their fedoras. We need a digital hat rack.

It seems that whenever people meet in person these days, they do so while separating their attention between the people in the room and the devices in their hands. Somehow, it has become socially acceptable to digitally masturbate in each other’s company. You might say, “but I’m taking notes or responding to an important request!” No you’re not, you are digitally dicking around.

The Addicted Society

Trouble is, we’ve become societally addicted to using our devices at all the wrong times. To illustrate how addiction works and to make the parallel clear, let’s again look at our friend Don. At first, Don drinks “to take the edge off.” Booze is the solution to ease his worried mind and perhaps conscience. As with all addictions, over time, the solution becomes the problem. Under the influence, Don makes increasingly poor decisions in his professional and personal life. To escape the stress or the real world, Don continues to imbibe and the cycle of self-destruction continues. This makes for great television, but in the real world, it’s not pretty.

The addict’s path offers lessons to why we can’t stop our technological indiscretions and why we’ll never be able to kick the habit. The real reason we use our phones, tablets, and laptops in meetings is to escape our reality, much as Don does, because reality is uncomfortable. Meetings can be tense, socially uncomfortable, and very often, exceedingly boring. Meetings are hothouses of discomfort that any rational person would want to escape given the opportunity. Our technology gives us the perfect way to be there, but not.

The Solution is the Problem

Unfortunately, by mentally teleporting through our devices, we make things worse. Like alcohol to a drunk, the solution becomes the problem. Sherry Turkle, an expert on the psychological effects of technology, observed in her book, Alone Together, “students whose laptops are open in class do not do as well as others.” It is reasonable to assume that digital distractions produce similar negative results in the boardroom. As numerous studies have demonstrated, we are terrible at multitasking. Our brains are awful at absorbing information when we’re not paying close attention.

Under the guise of getting things done, we play ping-pong with our messages, sometimes to people in the same room. Of course, this only generates more emails, not better ideas. Furthermore, watching others use their devices escalates an arms race of perceived productivity. People look busy, even if they are just checking Facebook. The impression that someone else is being productive while you’re not, increases our stress levels as we consider our own flooded inboxes.

Most corrosive however, is the fact that less attention means worse outcomes. When people use their devices during meetings, even just for a quick sec, they eventually rejoin the conversation, aware that they may have missed something while they were mentally away. They fear revealing that they were not paying attention and tend to shut down. Thus, otherwise valid concerns and bright ideas are never discussed. Their lack of participation only serves to make the meeting less productive, less interesting, and more boring. Conveniently, to escape the discomfort of being not only bored, but also increasingly paranoid, more device usage ensues and the cycle continues.

Digital Prophylactics

The first step is to admit we have a problem. The machines are winning. We don’t have the will to resist Pinterest when we should be participating or Instagram when we should be interested.

The allure of connectivity is just too seductive, no matter how damaging to our relationships and businesses. As it became more persuasive, technology became increasingly pervasive; entering the places in our lives where we are least likely to assert self-control.

Studies suggest that our brains’ abilities to resist temptation markedly decrease during times of stress and fatigue, both of which are common in the workplace. Unfortunately, the trend toward an increasingly addictive future is inevitable, and unless we develop a new set of norms, things will get worse.

What we need are what I call “digital prophylactics.” Most people think of condoms when they hear the term, but a prophylactic can be any “course of action to prevent disease.” Likewise, new norms are needed to protect us from socially unhealthy behaviors. These are otherwise known as “manners” but that sounds much too uptight. So instead of grumbling, “Where are your manners? Put that iPhone away!” perhaps we’d do better by proclaiming, “Hey, we need some digital prophylactics in here!” That would surely get everyone’s attention.

It’s time for a change. Here’s a proposal for establishing new customs similar to the hat rack of yesteryear:

The Digital Hat Rack

Every conference room should have a charging station just out of everyone’s reach, perhaps in the center table or near the door. When people congregate, they plug-in their devices on their way in just as easily as they would have hung up their hats.

Of course, leaving one’s phone at your desk is fine, but just in case someone reflexively picked it up, the charging station gives them a convenient and functional place to leave their devices. Now, instead of sparking the desires of others to use their device as part of the productivity arms race discussed earlier, anyone attempting to use their phone in the meeting will receive cold stares of contempt from their disconnected colleagues.

As for laptops, iPads, or any other digital doodads, they’re off limits, too. Just as the brim of Don’s fedora covered his face, screens create physical obstructions and barriers between people. They should be left outside.

But to save anyone from being the device cop, consider printing this sign and placing it wherever you designate a device-free zone.

OK, You Can Have Just One

Surely there are specific exceptions based on the business, but for the most part, the only things attendees really need in a meeting is paper, pen, and perhaps Post-its.

I will admit that the one thing lost in a no-device meeting is the ability to record and quickly distribute notes and action items. However, I’m often surprised by how few of my clients actually record meeting minutes despite everyone in the room being on a keyboard. Perhaps people assume sending notes is unnecessary with everyone busily typing. But of course, it’s a facade, and all the more reason that recording and distributing notes is a good company habit.

At the start of each meeting, designate a note taker who utilizes the one permitted machine in the room. Project the notes on a screen to ensure everyone’s contributions are properly recorded. It’s then the note taker’s role to distribute the meeting minutes afterwards.

Worth A Try

Perhaps you’re getting squeamish about saying bye-bye to our digital pacifiers. That’s okay. Start slowly. Perhaps ask a few colleagues if they’re willing to give the idea a try? Start with one work week, just five days, and see how it goes. At least use this article to start a conversation. Forward it. Here, I’ve even pre-written a tweet at this link (assuming that is, you are not in a meeting right now).

I should mention that I’m no advocate for superfluous meetings. In fact, I find organizations generally have far too many of them. However, if a topic is important enough to require participants be physically present, let’s ensure everyone is really there, in both body and mind.

Clearly, technology is evolving much faster than our ability to adopt new cultural norms. Devices have infiltrated every facet of our lives and have not given us time to adapt. It’s time to become aware of the cost of our new digital habits and gain control over them, or we will soon discover they have control over us.

Photo credit: BrettRed for NirAndFar.com

Ways To Get People To Do Things They Don’t Want To Do

Editor’s Note: Nir Eyal writes about the intersection of psychology, technology, and business at NirAndFar.com. He is the author of the forthcoming book “Hooked: How to Drive Engagement by Creating User Habits.” Follow him on Twitter @nireyal.

A reader recently asked me a pointed question: “I’ve read your work on creating user habits. It’s all well and good for getting people to do things, like using an app on their iPhone, but I’ve got a bigger problem. How do I get people to do things they don’t want to do?” Taken aback by the directness and potentially immoral implications of his question, my gut reaction was to say, “You can’t and shouldn’t!” To which his response was, “I have to; it’s my job.”

This gentleman, who asked that I not disclose his name, is the corporate equivalent of the guy the mob sends to break kneecaps if a worker doesn’t do as they’re told. For the past decade, he has run the same methodical process of cajoling, and at times threatening, people to do things they don’t want to do. “It’s really unfair and mean. I know it is,” he said. “But people have to comply or else people get hurt.”

This man is an identity and access management auditor at a well-known public accounting firm. Not exactly Good Fellas, but high-stakes nonetheless. His Fortune 500 clients pay his firm to ensure managers complete lengthy inquiries involving hundreds of employees collecting thousands of pieces of information, usually on tight deadlines. “Ever since Sarbanes-Oxley, these user access reviews just have to get done.”

Though the auditor’s job is unique, getting others to do uninteresting tasks (specifically those that are infrequent and involve work done outside normal responsibilities) is a common challenge.

A Shot in the Arm

I pondered this question and searched my mental database for examples of companies I’ve worked with or could reference as case studies. But instead, I thought about the last time I saw someone willfully doing something they didn’t want to do; my four-year-old daughter came to mind.

We had recently taken her to the pediatrician for a final round of shots before kindergarten and, to our surprise, she left the doctor’s office with a spring in her step and a smile on her face. To a child, there are few things more terrifying than getting stuck with needles, and it was the closest equivalent I could think of to completing the auditor’s “user access reviews.”

What made my daughter’s visit to the doctor so painless helps illustrate three tactics anyone can use to get people to do things they don’t inherently want to do.

1. One Prick At A Time

When the nurse stepped into the examining room, my daughter knew something was up. On a small tray, she carried four intimidating syringes. But instead of showing them all to my daughter, she thoughtfully kept them out of view. At the appropriate time, she reached for a needle, one by one, careful to consider how her actions would be perceived by my daughter. She tamed the instruments of toddler torment through what designers call progressive disclosure; to the nurse, it was just considerate common sense.

Staging tasks into small conquerable chunks is so basic yet so underutilized. Who wouldn’t take the time to ease a child’s fear with a little well-planned parsing? Yet in the office, it is all too common to lob large complex requests at our colleagues and be surprised by the ill-will we get in return. In the auditor’s case for example, he admitted that his clients start by sending long memos accompanied by even longer spreadsheets detailing the entire tedious task. No wonder their emails are met with contempt.

Managers pushing down tasks know all the level of details and tend to think everyone else should, too. But that’s just not the case. Most users just want to know what to do next, and flooding them with too much information induces stress and fear. Having the forethought to appropriately stage the work can reduce this fear, which ironically, in both children and adults, is often much worse than the prick of the needle itself.

2. Reduce The Pain With Progress

In the auditor’s case, his requests were particularly painful because they were too infrequent to become skill-building routines. Whereas many tasks become easier with time as people improve their abilities, corporate fire drills are dreaded for many reasons. For one, they distract workers from their regular duties. They often require learning new processes or hunting down long-discarded information. And worst of all, they can last for an undefined period of time, providing little visibility into when the pain will end.

Just as parsing tasks into smaller chunks can make a job seem more achievable, providing greater insight into the progress made is another way to reduce cognitive stress. In the pediatrician’s office, the thoughtful nurse asked my daughter to count to five as she administered each shot, giving my daughter an idea of how long the pain would last and creating a sense of control.

For years, game designers have utilized mechanisms to track advancement. Progress bars help players understand where they are in the game just as tracking and estimation tools could help workers better plan their work. These tools help inform how much time the next task should take and its relative place in the entire job. Providing a sense of progression is a form of feedback and is a key component of making unpleasant tasks more manageable.

3. Get Out The Treasure Chest

To our amazement, even after receiving four shots, my daughter left the doctor’s office without shedding a single tear. The nurse used staged disclosure and eased the pain through progress indicators, but the final secret sat just outside the examination room.

There, on her way in, my daughter ogled a mysterious box she knew was filled with prizes. “After your visit,” the nurse told her, “you’ll get to pick anything you’d like from the treasure chest.” Offering prizes for the completion of certain tasks is effective in both children and adults, but beware, there is risk in rewards.

Numerous studies have shown that extrinsic rewards — incentives that are separate from the activity itself — often backfire. Reinforcing behavior this way tends to extinguish the pleasure of doing something for its own sake. For example, studies of children rewarded for doing activities they already enjoyed — like playing drums or drawing pictures — resulted in less motivation to do the activity later on.

Where long-term behaviors are the goal, more purposeful incentives are better. Self-Determination Theory, as espoused by researchers Edward Deci and Richard Ryan, contends that people are motivated by deeper psychological needs for competence, autonomy, and relatedness. Clearly, making sure people know why their work matters is always the first step.

But while motivating through meaning is preferred, there are circumstances when prizes are in fact appropriate. When it comes to tasks people don’t want to do, specifically infrequent and uninteresting assignments, utilizing extrinsic rewards is safe because there is no existing behavior to de-motivate or extinguish. Shots in a four-year-old’s arm and the boring, routine work doled out by the auditor qualify as just such occasions.

What are appropriate rewards? Like everything in design, that depends on the person. Making a game out of the task doesn’t necessarily mean giving away points and badges if the user doesn’t find those incentives appropriate. However, utilizing other incentives, particularly those awarded with an element of variability, can be highly encouraging, just as long as they’re used only in this very specific condition and not as part of day-to-day operations.

Better Behavior Design

Unfortunately, the corporate norm remains drawing up a long list of what needs to get done and throwing it over the email wall to be completed … or else! There will always be tasks people don’t want to do. But there are better ways to motivate others, principally by designing conditions where people actuate themselves.

Fundamentally, people resist being controlled and both the carrot and the stick can be tools for unwanted manipulation. Instead, designing behavior by putting in the forethought to appropriately stage tasks, providing progress indicators, and finally, offering celebratory rewards under the right circumstances, are easy ways to motivate while maintaining a sense of autonomy.

Whether in the doctor’s office or the corner office, it is the job of the person inflicting the pain to do their utmost to ease it. Not doing so is intellectually lazy, whether to a kid or to a colleague. Considering how the receiver could more easily comply with the request is at the heart of inspiring action.

Photo Credit: Corey Ann

Escape From Message Hell

Editor’s Note: Nir Eyal blogs about the intersection of psychology, technology, and business at NirAndFar.com. He is the author of the forthcoming book “Hooked: How to Drive Engagement by Creating User Habits.” Follow Nir on Twitter.

We are caught in an endless cycle of messaging hell and the pattern is always the same. First, a new communication system is born — take email or Facebook, for example. Ease-of-use helps the product gain wide adoption and reach a critical mass of users. And then things turn ugly.

Some crafty entrepreneur figures out how to exploit the system and starts building a business around it. He reaches millions of people and opens the floodgates to countless others who seek to emulate his methods. Inevitably, the messaging channel is deluged with crap, clogging the pipes of what was once an efficient mode of communication — again, email or Facebook.

Notification Noise

The latest messaging onslaught is hitting the notification systems on our smartphones. Those little red badges hovering over our app icons and urgent graphics along the top of our screens incessantly remind us of some task that needs doing. They crowd out real priorities with bits of tiny triviality. Notification spam has many up in arms, but the flood of distractions continues.

This is the story repeated ever since telemarketers started ruining dinners across the land. It was not until federal legislation effectively put them out of business with the Do Not Call Registry did they stop their pestering.

To date, platforms have been responsible for policing spammers on Facebook, Twitter, Android or Apple’s iOS. But keeping exploiters out is only half the challenge. The real problem is keeping the channels useful as they grow. Exhibit A:
Exhibit B – A Google search for “I hate email” returns 586 million results, more than twice the results for “the Beatles.” Very scientific, I know, but you get the point.

The irony is that the more efficient the communication channel is, the more overcrowded it becomes. No one seems to like email and dozens, perhaps hundreds, of startups have tried to fix it. And yet no one has. Email is just too easy, and the easier something is to do, the more people do it. As a result, even companies that want to deliver valuable content must fight in vain for attention between emails from Nigerian heiresses and offers for cheap pharmaceuticals.

What Works?

There is a hierarchy for the kinds of messages we respond to. If you’re a company trying to get noticed, it is useful to know what gets people’s attention.

First, we respond to messages from our past selves. A calendar reminder set the day before is likely to be acted upon. An emailed “to do” from oneself is rarely ignored. Technology that can time-shift the delivery of information to when the user needs it most has massive potential.

Next time I’m shopping, tell me my body measurements. When I’m in the vicinity of doing a task, like dropping off that package at UPS, let me know there is a store nearby. When I’m about to meet a friend for lunch, remind me they bought last time so I can make sure to pick up the tab.

What Robert Scoble calls “contextual computing” and Om Malik calls “predictive computing,” will have the power to cut through the clutter as long as the messaging feels as though it was sent from the user to the user.

Next on the hierarchy, we respond to messages from close contacts. The need for social cohesion is a key motivator of our everyday lives, and we act upon authentic prompts from the people most important to us. The current messaging morass is in large part due to our obligation to respond to everything sent to us from people we know, even if the reply is the banal but obligatory “thanx” or “ttyl.”

Rise And Fall Of The Machines

Finally, the least effective method is messages from machines — the lowest use of technology-enabled communication. A call-to-action from a pre-filled auto-responder has the smallest chance of getting our attention because people learn to sniff out and avoid inauthenticity.

Marketing messages using various persuasion techniques come and go in a constant game of cat and mouse. Users learn quickly what’s real and what’s fake and they become more annoyed the more often they associate a company with a message they didn’t ask for. Pasting a friend’s name or face on a message may be effective for a while, but when users figure out what’s going on, they move on. Eventually, messages are deleted without being opened, lists get unsubscribed from, and apps are uninstalled.

Cluttered communication channels, whether real-world post office boxes full of junk-mail or their digital equivalents, contribute to our collective frustration. In order to save apps from themselves and users from daily annoyances, companies must find ways to send useful notifications, or not to send them at all.

But companies now have an opportunity to provide the ultimate authentic messaging, namely information we choose to send ourselves. By shifting the delivery of the message to the most appropriate time and place, where it is most likely to be acted upon, new technologies will become indispensable solutions we can’t imagine living without.

Photo credit: banspy

Follow Nir on Twitter.

Mass Persuasion, One User At A Time

Editor’s Note: Nir Eyal blogs about the intersection of psychology, technology, and business at NirAndFar.com. He is the author of the forthcoming book “Hooked: How to Drive Engagement by Creating User Habits.” Follow Nir on Twitter.

“Successful entrepreneurs recommend reading this article about the persuasion techniques companies use to drive engagement.”

Scratch that, how’s this? “Tons of people are tweeting this article. Find out why.”

OK, here’s one more. “This article will only be on the TechCrunch front page for a few hours before fading into the information abyss.”

Perhaps your preference for one of the opening lines above is a matter of taste, but for companies leveraging the explosion of personalized data, it’s very big business.

Marketers are increasingly personalizing their products and services to meet their customers’ changing needs. But customization used in conjunction with powerful persuasion techniques is arming marketers with new weaponry to boost customer engagement and drive profits.

The tools of influence, such as authority (seen in the opening line), social proof (second line), and scarcity (third line), have been used to persuade consumers since Edward Bernays launched the public relations industry during the first World War. Bernays, the nephew of Sigmund Freud, applied his uncle’s theories of the human subconscious to drive consumer behavior. Back then, marketers, including tobacco companies and the CIA, hired Bernays to shape public opinion and influence the masses.

Bernays, and the PR and advertising industries he spawned, sold consumers goods and ideas by tapping deep into the human psyche. For example, Bernays engineered demand for cigarettes among women by associating smoking with the desire for independence and freedom from male domination.

More recently, Robert Cialdini’s research and subsequent book, Influence, popularized the use of “the psychology of persuasion.” But the business of influence has always been limited by its inability to customize for the individual. Messaging was one-size-fits-all, and it was delivered through mass-media channels, first in print, then over the airwaves.

A/B Testing Is So Yesterday

That’s all changed now. Today, companies are able to test messaging in real-time, trying dozens of variants to discover which ones create the desired behavior most efficiently. But so-called “A/B testing,” which is designed to find the best solution for the average user, is rapidly being replaced by far more sophisticated methods designed to optimize on an individual, per-user basis.

Mass customization, of the kind used by Amazon to predict which products to offer based on past behaviors, is increasingly supplemented with “personalized persuasion,” whereby the psychological technique used to appeal to the customers is tailored to increase the intended action. Companies not only customize their experiences to give customers what they want, but they also keep tabs on users to present their messages exactly how the user wants it.

Adaptive Marketing

A recently published study in Personal and Ubiquitous Computing demonstrated how matching the right persuasion technique with the right customer outperforms traditional methods. The study tracked the results of an email campaign run by an unnamed company selling a product similar to the Fitbit or Nike Fuel band.

Users wore their devices throughout the day to track movement and calories burned. They then uploaded their data by connecting the device to their computers. Doing so gave the wearers insight into their fitness levels and prompted them to take steps to improve their health.

However, shortly after customers started using their devices, the company noticed something was going very wrong. Users stopped connecting them. With no data uploaded, customers weren’t getting the results they wanted and that meant no advocates to spread the word about the benefits of the product.

To try and solve the problem, the company crafted four emails urging customers to connect and upload their data. They sent a standard email message to a control group and also sent alternate versions that simply substituted a short paragraph utilizing one of three persuasion techniques, similar to those applied in the opening lines of this essay. From there, they tracked how users responded.

Interestingly, when a randomly selected group of users of the service was asked which message they thought would be most effective in persuading people to action, they picked the email below, which employs the authority persuasion technique.

Dear <name>,

How are you doing? We hope all is well. It is 3 days since the last time you connected your Activity Monitor.

Experienced coaches recommend frequent uploads of your activity data. This will help you to gain more insight and be more active!

We would like to remind you to connect it to your PC soon and stay in touch.

Sincerely,

<the company>

Although most respondents predicted this email would be the most effective, it performed much worse than expected. So much for the wisdom of the crowds.

In fact, the test concluded that the best performing messages were those tailored to the user’s preferred persuasion method. For example, if the customer performed the intended behavior (i.e. plugging in the device) after receiving a message using a scarcity persuasion technique – “connect now before it’s too late!” they would receive future messages using that same technique.

This form of personalized persuasion outperformed other test groups. After the system learned the customers’ preferences, the messages tailored to users beat the response rate of the standard email by nearly 20 percent. Improvements like these add up to huge returns when applied to marketers sending millions of messages.

Too Much of A Good Thing?

But the field of personalized persuasion is in its infancy and marketers and researchers are still learning the limitations and rules of the practice. For example, a study appearing next month in the International Journal of Internet Marketing and Advertising reveals some non-obvious truths about the application of the tools of persuasion. Namely, that when it comes to the tools of influence, more may not always be better.

The study’s simple experiment compared click-through rates on Google text ads attempting to influence people to take a mock survey. The study tested the use of multiple persuasion techniques per ad, such as social proof, authority, and scarcity, versus an ad with only one of the techniques used.

For example, while one ad might say, “There are only 18 hours left to participate in this study.” Another said, “Only 18 hours left, & Professor Ford recommends it. 100s took it.” Averaged over multiple trials with similar ads, the study concluded that the click-through rate of the single-method ads were double that of those using multiple persuasion techniques.

Talk To Me

Though the test was basic, the implication that companies may be subjecting users to persuasion overload is an important consideration for marketers. It appears that adding too many persuasive arguments may arouse suspicion and increase the likelihood the ad will be scrutinized. Potential customers may also find this approach to be too mentally taxing, whereas using just one clear persuasion method may be more easily understood.

Finally, according to Maurits Kaptein, one of the authors of the fitness device study and founder of Science Rockstars, a company specializing in persuasion personalization, “Marketers are realizing that people are more than numbers. We are all different and have certain aversions to particular techniques more than others. By throwing everything at a customer, companies may be increasing the odds that any one user sees something they don’t like.”

By singling out one persuasion strategy per person, companies are addressing customers in the way that best suits the user. In the age of increasing personalized data and a greater understanding of the tools of persuasion, companies will no longer need to communicate with customers as an amalgam of an “average user” that doesn’t actually exist. Instead, by marrying psychology and customer data, smart companies will give customers more of what they want: someone who speaks their language.

Photo credit: ogimogi

Follow Nir on Twitter @nireyal

Where Have The Users Gone?

Editor’s Note: Nir Eyal writes about the intersection of psychology, technology, and business at NirAndFar.com. He is the author of the forthcoming book “Hooked: How to Drive Engagement by Creating User Habits”.

Step 1: Build an app. Step 2: Get users hooked to it. Step 3: Profit. It sounds simple and, given our umbilical ties to cell phones, social media, and email inboxes, it may even sound plausible. Recently, tech entrepreneurs and investors have started to look to psychology for ways to strike it rich by altering user behavior. Perhaps you’ve read essays on how to create habit-forming technology and figured you’d give it a shot?

Well hold your dogs Pavlov! Though I’m an advocate for understanding user behavior to build high-engagement products, the reality is that successfully creating long-term habits is exceptionally rare. Changing behavior requires not only an understanding of how to persuade users to act — for example, the first time they land on a webpage — but also necessitates getting them to behave differently for long periods of time, ideally for the rest of their lives.

The good news is that that companies that accomplish this rare feat are the ones associated with game-changing, wildly successful innovation. Google, Apple, Twitter, and Android come to mind. As we enter a world where, according to Paul Graham, everything is becoming more addictive, the companies that successfully form and control habits in the future will come to dominate the industries of tomorrow.

Habits or Hype?

But claiming that habits are the keys to success is a tall order. If people like me provide ready-made formulas and guidebooks on how to create habits, why isn’t every company that alters user behavior succeeding?

Zynga, an enterprise whose business model depends on hooking millions of people to its games, is hemorrhaging users, employees and investors. What makes some habits stick while others die like virtual cows on their way to slaughter?

Turns out that like any discipline, habit design has rules and caveats which explain why some products change lives forever while others create fleeting fads.

Habits are LIFO

New behaviors have a short half-life as our minds tend to revert back to our old ways. Experiments show that lab animals habituated to new behaviors tend to regress to their first learned behaviors over time.

This helps explain the overwhelming evidence that people rarely change. Research shows that nearly everyone who tries to lose weight gains back the pounds within 2 years. Two-thirds of alcoholics who enter a rehabilitation program will pick-up the bottle and their old habits within a year’s time.

Old ways die hard and new habits smother easily. To borrow a term from accounting, behaviors are LIFO — last in, first out. This presents an especially difficult challenge for product designers trying to create businesses based on new behaviors.

Keep ’em Guessing

If long-term habits are so hard to create and new behaviors are the ones most likely to be abandoned, how do product designers stand a chance of becoming part of users’ daily lives? The answer lies in the reason users start using the product in the first place: rewards.

In nature, things are relatively predictable — fire is always hot — so our brains drive us to figure out how things work. Thus, habits are just a way for the brain to improve reaction time by not thinking as much. “Hmm, last time I touched the fire, it hurt. I won’t do that again.” In fact, much of what we do every day is habit, requiring little or no conscious awareness.

We’re fine flying on cognitive autopilot. That is, until we encounter something new. When the unknown threatens our safety, we feel fear. But when we know we’re ok, this temporary uncertainty is experienced as novelty, and our brains can’t get enough of it.

For example, watch a baby’s first encounter with a dog. Not only is it incredibly cute, it is a demonstration of the mental wiring which makes us inherently curious. “What is this hairy monster in my house?” the baby must think. “Will it hurt me? What will it do next?” The child is filled with questions, uncertain if this creature will cause it pain or bring pleasure. When it’s certain the dog isn’t a threat, the baby experiences delight, exploding in a burst of infectious giggles.

Until one day, the kid learns enough about the pup to predict its behavior. Suddenly, the doggy is no longer entertaining and the child’s attention moves on. Now he is occupied with dump trucks, fire engines, bicycles and candy — things that stimulate the senses in new ways. Poor Rover is left all alone.

To keep our attention, products must have a degree of novelty. Without variability, users figure out the patterns and tire of the experience. As Tadhg Kelly wrote about Zynga users, “Their play brains start to realize that they are seeing the same frames again and again, with the same actions and the same constraints. So [the games] become instantly boring.” Though the Zynga “-Ville” franchise was novel, even addictive at first, once players figured out the larger game mechanics, they moved on.

Machines vs. People

But not all habits have the fleeting life span of FarmVille-style games. In fact, many products do form long-term behaviors. What differentiates World of Warcraft or Facebook — products that retain engaged users for years — from bygone fads like Pac Man or Tamagotchi, which hooked users for a while, but quickly lost their grip?

A distinction can be drawn between rewards that are infinitely variable versus those which have finite variability. Products with finite rewards are built to be experienced the same way. Even an addictive video game always operates under the same rules. Of course, the maker can alter the dynamics of the game, changing aspects of play based on the users’ actions, but the fundamental rules, the mechanics, remain the same.

The game is a constructed system, a machine, and if it is a single-player game, it will be enjoyed, completed, and discarded. Even bestselling books, movies, and music follow the same usage pattern. Once these products are made, they don’t change and become nearly worthless after their mysteries are revealed. Their variability is exhausted when the game is completed, the last page of the book is turned, or the lights come up in the theater.

Nearly all of us have played a slot machine, but ultimately, we figure out the rules and patterns and come to understand that the game is designed to take our money, so we move on. Addicts however, those who form uncontrollable and often detrimental obsessions, are the exception rather than the rule. And while businesses should never try and encourage addiction, the fact is that like slots, technology products with finite variability do not form long-term habits in most users.

However, some products are built to be infinitely variable. These products involve rewards users find novel for long periods of time. For example, few things are more fascinating to people than other people; we always want to know more. Whether communicating with loved-ones or keeping up with celebrity gossip, we love the infinite possibilities endemic to the human experience.

Even World of Warcraft, the legendary multiplayer online role-playing game, is more about collaborating with others than completing the game. Though users can play aspects of the game alone, it requires characters to work together in groups to overcome major challenges. World of Warcraft players spend hours strategizing and socializing, both on and off-line. It’s more than a game; it’s a tribe.

Even a bad experience will not stop people from using products with infinite variability. Early iPhone users cursed AT&T for years, even heckling Steve Jobs on stage to show their displeasure. But few could bear to abandon their “Jesus phones” because compared to rivals, the iPhone and its accompanying app ecosystem was a panacea of limitless possibilities.

Facebook users revolted multiple times when the company made changes to its interface. But they never left in any significant numbers, helping push the social network to over a billion users. Of course today, Facebook has lost some of its luster as it grapples to control user behaviors migrating to mobile, a massive disruption to its business model.

No Guarantees

No business can ensure customers use its products forever. Our consumption habits today will inevitably be replaced with new behaviors in the future. But it is important to recognize that products, which leverage infinite variability tend to be pushed out by disruptive innovations whereas finite variability business fizzle out by themselves.

Habits do not ensure perpetual users, but short of a disruptive change, they provide an opportunity to form a sustainable competitive advantage. The products that become a facet of users’ everyday lives will remake the web. By understanding the kinds of rewards systems that create long-term habits and the rules of habit design, companies can improve lives while building lasting businesses.

— Follow Nir on Twitter @nireyal.

Thank you to Maurits Kaptein of Science Rockstars and Max Ogles for reading versions of this essay.

Photo Credit: Mustafa Khayat