Making dough from the right behaviour

Fresh from a breakfast seminar with Tom O'Toole, I wanted to share some of his pearls of wisdom plus some behavioural insights.


Who is Tom O'Toole?
Tom O'Toole is known as the Beechworth Baker, a man who started a bakery in a country town in Victoria (population 3,500) which, over the past 28 years, he has grown into a multi-million dollar, multi-site business.  He is now sought out by businesses across the globe to learn his recipe for success.


Business is very straightforward for Tom.  It's all about staff and customers.  As he says, 5% technology and 95% psychology and attitude.


Here are some of Tom's pearls;


Staff training:  "What if we train them and they leave?" "What if you don't train them and they stay?!"

• Tom's first nugget was in response to small business owners who lament spending money on staff who then leave (loss aversion rears its head). Yes, it's a hassle if you invest in someone who then leaves, but you don't really have any other option.  Instead, focus on creating an environment that they don't want to leave.

Staff empowerment: "If you wouldn't buy it, then don't sell it"

• Tom recalls being torn between anguish and pride whenever he sees goods disposed of for failing to meet the standards of the staff member in charge.  Whilst he may have disagreed with their decision, Tom knows it was theirs alone to make.  This is where too many owners and managers undermine their own policies when it comes to the marginal, subjective decisions.  Overruling means undermining. 

Customer focus: "You're not making 200 pies, you're making one pie 200 times"

• Tom used this when training a baker who was making 200 pies.  Known as the "Drop in the bucket effect", it can be hard to focus on the outcome of our work when we are producing things repetitively and/or en masse.  In this case, it was easy to see 200 pies but forget the 200 customers that would each have an individual experience of their pie.

Accountability: "Anytime I have a problem in my business, it's within my four walls"

• In other words, stop blaming external factors.  Your competitor, the roadworks out the front, the weather...Known as "actor-observer bias", we tend to blame negative outcomes on things external to us whilst thinking positive outcomes are always down to us.

Pricing:  "Quality and service will be remembered long after the price is forgotten"
Tom tapped into a few very powerful behavioural principles here.

• First, there's what is called the "hedonic treadmill". This means we overestimate the joy we will feel from a purchase (eating this pie will make me happy for weeks), because we adapt very quickly and move on.  But the experience of service and atmosphere will be with us longer.
• Second, we have a "remembering" and "experiencing" self.  This means we are persuaded by not only the experience but our memory of it, 
• And finally, we self-herd.  This means we follow decisions we've made previously so because the memory of a great quality pie and great service will outlive the memory of cost, we will be more likely to buy a pie in future.

Personal growth: "Everything you want is just outside you comfort zone"

• A believer in raising the bar and constant self-improvement, Tom challenges our "status-quo" bias where we tend to stay in our comfort zone.

Leadership: "When you are placed in charge, take charge"

• We can often be scared to assert ourselves as leaders because that can mean failure is on our head.  This is classic "loss aversion" where the risk of losing is more persuasive than the benefits of succeeding, so acknowledge that's what is holding you back and try anyway.

Communication: "Everyone smiles in the same language"   

• In talking about language gaps he has experienced here and overseas, Tom keeps it simple; See similarities rather than differences. We can all smile, and that's the greatest bonding device you can have.  Behaviourally, Tom is using our tendency to seek patterns and commonality to overcome our tendency to demarcate.

A refreshingly authentic and animated presenter, Tom is the poster-child for smashing through lazy mediocrity by keeping it simple and getting it done.  As he says, "you can starve to death reading a cookbook".  Time to get cooking. 


PS Why not join the People Patterns mailing list?  Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.


Image from http://blogs.abc.net.au/victoria/2012/03/by-popular-demand-tom-otooles-inspiring-conversation.html

Price rises and salary reviews - how train tickets can show us how

I recently moved from an annual train ticket to a stored value, charge-by-trip system.  Where my previous experience had been that the annual cost was taken from my salary each fortnight (thanks to a system my employer provides), I now have to top up my card and see what value remains after each journey is completed.  The cost of course is the same as it's always been (and in fact a tiny bit less).  So what's the difference? After each trip I now have the personal cost brought top of mind.  If the trip has been bad, I'm resentful. If it's been a 'good' trip, I'm resentful because who likes paying for smelling unreliable service? 

The concept at play here is "adaptation", explored in Dan Ariely's Upside of Irrationality. We become desensitized to change - our emotions level out as the positive and negative perceptions of the change fade away.  Think about how excited you were when you bought that new TV, new car, new dress. The elation fades away as you adapt to the change.  Ariely describes this as the "hedonic treadmill" where we underestimate how short lived happiness through consumption actually is, and why 'keeping up with the Joneses' will only ever disappoint.

One of the lessons here is that when it comes to the annual pay rise, we'd be better off getting the increases in instalments. Why? So we can enjoy them more. Quarterly raises would mean you are reminded four times of your increasing worth to your workplace rather than just once.   (It would also benefit the business' bottom line just quietly....)

The converse is true and is why my train ticket has become very annoying.  Instead of me adapting to the annual cost and the pain receding to my memory, I am being interrupted every time I travel - I am not being allowed to adapt. 

The lessons for marketers? If you are increasing your prices, give serious consideration to larger rises less often - limit the number of times you remind them of what you are charging so that you give your customers time to adapt.  Think like an annual train ticket.

If you are rewarding your customers (Myer does this well with it's reward card), try doing so in instalments so the positive impact is felt more frequently. Think like a reward-per-trip ticket.

And if you are the new Victorian government, add this blog to the list of Myki ticket feedback!