What Can Human Emotions & Irrationality Teach Us About Innovation?

Brain & emotions

What Can Human Emotions & Irrationality Teach Us About Innovation?

I WAS HOOKED when I first picked up The Laws of Human Nature by Robert Greene

Reading through the first chapter, it was like someone flicked a switch to a bright light inside of my absent mind – the kind of feeling I can only imagine cute babies feel when they hear for the first time.

Understanding human behaviour and the why behind the way we act is my version of crack. I remember listening to the chapters in my car, and each time I arrived at my destination, feeling like a kid being dragged away from their favourite sweet shop.

Just. One. More. Minute. PLEEEEASE!!

When you find a book you resonate with, you experience a strange emotion that I cannot find the word for. It is like excitement, interest, disbelief, aspiration and addiction all mixed into one.

The first chapter, “Master Your Emotional Self. The Law of Irrationality,” appeared of little interest to me. But when I dived into it, and after about the 3rd or 4th time of reading through, I discovered that this ‘law’ alone explains a considerable chunk of why we do what we do.

It is now no surprise to me that Robert Greene describes mastering your emotions as realising your most significant potential.

 

What This Article Is Really About

As you know, I am deeply invested in construction and technology. 

In our podcast, we explore innovation at great length.

Recently, I have been thinking deeply about innovation blockers in the world of construction. And human nature plays a considerable role – none more so than our irrational selves.

 

What Is Irrationality?

Irrationality is an action or decision not based on reason or sound judgement. It is usually characterised by emotions or other psychological factors influencing decision-making rather than logical or evidence-based thinking.

An example of this would be purchasing something you cannot afford, or do not need, simply because an expert salesman managed to rifle up your emotions and convince your irrational self that you needed that “0 to $100k per month, in one month” YouTube course.

We are mostly unaware of how emotions dominate us. They:

  • Make you veer toward ideas that soothe your ego
  • Make you look for evidence that confirms what you want to believe
  • Make you see what you want to see depending on your mood

This is clearly quite dangerous. 

If we cannot master our emotions, we continue to make bad decisions and experience negative patterns.

Before I became aware of irrationality and emotional decision-making, I had no idea how powerful and vastly it impacts our life. 

Now I can see it everywhere and in everyone.

 

You Are Irrational

We are all controlled by our emotions. And there’s not a lot we can do about it. 

In fact, irrationality is a function of our brain. If you are a human reading this (sorry, AI), you are a victim of your emotions.

Emotions originate from the limbic part of our brain.

This region is responsible for behavioural and emotional responses, such as the ‘fight-or-flight’ response – a vital survival mechanism for humans back in the day.

What is even crazier is that we have no conscious access to the origins of our emotions and the moods they generate. They just happen.

This is kinda scary. 

And it explains why we make bad decisions when we’re in such an emotional state.

But here is where you can gain the advantage.

By simply being aware that you are human and that you are irrational, you can do something about it. And if you’re like me, you will notice it in most people you interact with.

By being aware, you can counteract the negative impact of irrationality, avoid bad decisions, and think critically and rationally about a situation. This will give you a huge advantage other most people who have minimal idea of the role of irrationality and emotions in life.

Rational Vs Irrational Person

What Causes Irrational Behaviour? Cognitive Biases

Something that blows my mind further is the idea of cognitive biases. 

This is another concept that, once you become aware of, you cannot help but notice everywhere.

According to Verywellmind.com, a cognitive bias is “a systematic error in thinking that occurs when people are processing and interpreting information in the world around them and affects the decisions and judgments they make”.

If you want to go deep into the types of cognitive bias, check this infographic out. I had no idea there were so many until I found this. 

But for the purposes of this article, let’s look at a few of the most common ones (credit to BusinessInsider for this graphic): 

Business Insider - Cognitive Biases
Business Insider – Cognitive Biases

PS On the subject of innovation, I found this one… GUILTY!!

Pro Innovation Bias – When a proponent of an innovation tends to overvalue its usefulness and undervalue its limitations”…

 

Irrationality, Emotion & Bad Decisions

I hope by now you have a good understanding of, or at least awareness of, the impact of our emotions on behaviour.

Strong Emotion = Irrational Action

If you want to dive deep into this subject, here are a few of my favourite books on the subject:

You can go down a hole with the concept. But my key takeaway is to be aware and recognise how your emotions impact you.

 

 

So, What Does This All Mean For Innovation?

Now we are going to go down a deep hole…

Irrationality Actually Has A Positive Impact On Innovation

This article from Discover Magazine explains:

“If we hadn’t rubbed two flint stones together for no reason, we would not have discovered fire,” Sehat notes. Humans naturally get bored and frustrated with a routine, even if it is beneficial to them.

“Our irrational behaviours are associated with our desire to do something different, […] it can be considered an integral part of our survival and progression,” says Sehat.

Then, we must also think about any of the greatest inventions resulting from someone’s irrational thinking. 

Imagine being able to communicate with our voice, wirelessly through a handheld device, to someone on the other side of the world. Well, thank you to Alexander Graham Bell for inventing the telephone. 

Then you have the aeroplane, the internet, electricity, vaccines, cars… and so on. These are all inventions that changed the world. And simply wouldn’t have been possible without an incomprehensible level of thought.

Steve Jobs sums this up nicely: ***STEVE JOBS IMAGE***

Steve Jobs - The People Who Are Crazy Enough

But For The Majority, It Is A Clear Blocker

Unfortunately, for the 99.9% of us who are unlikely to invent something that revolutionises the world, irrationality is a problem. 

Even more so in construction tech. 

Let’s look at one of the biggest gripes in construction:

Lowest Price Wins.

If you’ve been in the construction industry for a while, you know that every single project, the majority of projects are awarded to the bidder with the lowest cost. (Despite what Mr Ethical client claims – “We award our contracts to the best value”)… zzzzzzzzzzzz.

ethical business man

[I also want to use this as a shoutout to every marketing guru who claims your marketing isn’t good enough if you compete on price. Well, sorry, marketing man, not in construction!]

We are genuinely only competing on one thing in construction. 

And that is the cost.

This naturally attracts a ton of sneaky pricing tactics to make a bidder’s costs appear low (the perfect trigger for an emotional reaction) when in reality, they have mispriced in an attempt to win the project and recuperate the costs later on through contractual variations.

This lowest price becomes an anchor – another form of cognitive bias – and becomes engrained in the customer’s brain. 

From then, it becomes an uphill battle, where every reason this cost is inappropriate needs an explanation.

 

What This Also Means Is Exceptionally Tight Margins. 

There are varying percentages flying around, but it is well known in construction that the profit margins sit around, but generally less than 5%[1][2][3][4][5].

What money, then, is left for any form of innovation on a project?

The client already has a low price (at least they think), and their brain is set on what they think they should pay. It simply does not make sense that another contractor can be *that* much higher than the price now engrained in their head.

As a result, the innovative contractor who has priced the project appropriately and whose overhead is slightly higher does not stand a chance.

This brings up a key point for me: 

Your innovation needs to result in significant cost savings that can be passed upstream to the client.

Naturally, this is a very short-sighted view. But as humans, sadly, we are short-sighted.

The extremism around lowest price and what that means for our psyche is a crucial innovation blocker.

 

 

How Do We Get Around This?

Unfortunately, human nature is what it is. The way we react to certain situations is what makes us the most successful species on the planet. 

But knowing what we now know about irrationality, let’s explore some serious and not-so-serious ways of encouraging innovation in construction.

 

Demonstrate That Value Is Synonymous With Cost

In this clip, construction tech start-up advisor Justin Saehang of Almansor Group explains that value is synonymous with cost:

 

So yes, innovation costs. But what VALUE are you providing as a result? Is this saved labour time, gained labour time, and better project insights?

Justin’s statements are true, but I want to take this to the next level and say that value should far outweigh the cost. 

Why? Here are three reasons:

  1. Construction is also a very low-trust industry. Everyone is out to cover their own ass, and we are the industry with the most disputes – so much so, in the UK, we have our own court! So you claim to save me £x…? Prove it!
  2. It is tough to implement the value you add. Yes, your product might result in labour time savings, but this is no good if other project areas are prolonged, i.e. slow client decisions or inadequate design information.
  3. High risk – The consequences of getting it wrong can be astronomical. Your value adds need to work seamlessly and successfully.

In all, the value your product provides needs to be a game-changer. And you need to be able to prove it (using tools like case studies) and remove any doubt from a potential customer’s mind.

What are some of the ways that value can outweigh the cost?

This comes down to really understanding your customer and what they value. For example, if your product does speed up construction, what does that mean in terms of monetary value?

Is it £1, £1,000, £10,000 or £100,000? And are these sums enough that it makes sense for your customer to test your product on their site?

Then you need to ask – is money what my client actually values? Most likely, yes, but not all the time.

Based on my experience – a combination of chats on the podcast and my work in construction – I feel the industry is truly in need of game-changing solutions to the following:

  • Accuracy of design information
  • Labour shortages
  • BIM Implementation and accessibility for all
  • API/Marketplace to integrate the thousands of existing solutions
  • Progress tracking & re-work
  • Communication 

 

Tap Into The True Irrationality of People

Now for some darker arts…

Voldemort Laughing
Credit giphy

As we explained earlier – people are incredibly irrational. Their decisions are often based on their emotions. 

Knowing this, here are a few tactics you can use to either help sell your solution or get people excited about innovation in construction.

These points are based on a book I mentioned earlier – Predictably Irrational by Dan Ariely.

Use Pricing Decoys.

One of my takeaways from the book is the idea of pricing decoys. In the book, he uses the example of a The Economist using three pricing subscriptions:

  1. An internet-only version for $59
  2. A print-only version for $125
  3. A print and internet version for $125

Which one would you go for?

Number 3, right? Why would you pay the same for a print-only version? The clever people at the Economist knew this. And purposefully priced options 2 and 3 the same, so people were more likely to choose what the Economist wanted to sell… Option 3.

You, too, can apply this to your product.

Consider introducing a similarly priced but comparatively worse option when presenting costs for your product or solution. Naturally, your irrational client will compare both, and if they are like most people, they will pick the solution you want to sell them.

 

Use ‘Free’

The most powerful word in marketing. FREE.

If you can use this word, use it. People love free.

When we see the word free, we instantly get excited. And a strange type of fear comes over us (known as loss aversion – a cognitive bias) as we worry that we might miss out on something. “I NEED IT JUST BECAUSE IT IS FREE”!

This fear then makes us jump at the ‘free’ opportunity without considering the potential downside:

“Free marigolds worth £1.99 when you buy this latest and best stain remover – £5.00!”

You might need the marigolds, but you might not need the stain remover. The stain remover will probably sit amongst the many other cleaning products for a few years before you decide to throw it away. 

Expensive pair of marigolds, huh?

 

Sexually Arouse People

wait what gif
Credit giphy

 

In one of Dan Ariely’s other studies, he found that sexual arousal strongly impacted judgement and decision-making.

Time to add “sexually attractive clothing” as a requirement to your next sales rep job…

But it doesn’t have to be a sexual form of arousal. It can be any type of emotional arousal that gets your target into a state whereby they are no longer in control of their actions.

Ok – that sounds manipulative and extreme. But nearly every marketer is battling to make you feel highly emotional in an attempt to buy their product… 

Find a problem, agitate it by whirring up your emotions, and offer the solution. Copywriting 101.

Onto a serious point – many problems in construction get people going. You only have to listen to some people in our podcast speak passionately about the issues and challenges we face.

My personal gripe – half arsed information. And then blaming the contractor.

Or LOWEST PRICE WINS. 

 

Summing Up: What Irrationality Means For Innovation

Irrationality can create roadblocks. The lure of low-cost solutions can blind us to the long-term benefits of investment in innovation. 

That being said, these behaviours, when managed properly, can pave the way to new approaches and groundbreaking innovations.

The essence of this transformative journey lies in shifting our focus from a narrow, cost-driven perspective to one that truly appreciates value. We must remember that while innovation comes with a price tag, it also brings significant, often far-reaching, benefits that can transform the face of construction. 

It’s a matter of viewing these initial costs not as an expense but as an investment towards a more efficient, sustainable future.

In parallel, the unpredictable aspects of human decision-making can be tapped to drive innovation. Pricing strategies, leveraging emotional responses, and presenting ‘free’ options can all stir interest and engagement. It’s a fine line between manipulation and strategic persuasion, but if navigated carefully, these tactics can make a significant impact.

In essence, fostering innovation in construction requires a balanced and integrated approach. 

It demands marrying economic considerations with a deep understanding of human psychology. And most importantly, it calls for a willingness to challenge our innate biases and embrace new ways of thinking.

Recognising and confronting our irrational tendencies is not a silver bullet. But we can all make a huge difference by being aware of irrationality. 

I, for one, have enjoyed the benefits of awareness. It allows me to think more critically and view the world optimistically, but with a good level of scepticism to not be governed by my irrational tendencies.

 

Lowest price wins in construction

 

FOOTNOTES:

  1. https://gobridgit.com/blog/profit-margin-in-construction/#:~:text=However%2C%20according%20to%20industry%20experts,a%20notoriously%20low%2Dmargin%20business.
  2. https://www.payapps.com/uk/blogs/maximising-margins-in-construction
  3. https://proest.com/construction/tips/average-profit-margin/
  4. https://www.freshbooks.com/hub/estimates/average-profit-margin-for-construction-industry
  5. https://www.nextinsurance.com/blog/typical-contractor-overhead-profit-margin/

Need help making better decisions? Try https://rationale.jina.ai/