The NewYork Times recently published an article titled Settling for Par: Pros MoreLikely to Play it, Safe. The story details how PGA Tour professionals, including Tiger Woods, lose millions due to the same risk intolerance that affects business owners.
Specifically, the article discusses a forthcoming study from Wharton School professors Devin Pope and Maurice Schweitzer. They analyzed data from 1.6 million putts made by 200 golfers from 2004-2008, using data the Tour records on each ball's green location, accurate to the nearest inch. (These guys must be a hoot at faculty parties.)
What did they find? Surprisingly, "even the world's best pros are so consumed with avoiding bogeys that they make putts for birdie discernibly less often than identical-length putts for par." Meaning, fear of failure keeps even the greats from trying as hard as they can. The difference, 3%, is enough to cost the average golfer one stroke per tournament. And for the top 20 pros, that means $1.2 million less prize money per year. Even Tiger Woods showed the same effect.
We've said before that pain is a better motivator than gain. Economists even have a name for it: "loss aversion." As the article says:"
The psychological preference to avoid a perceived penalty (losing a stroke relative to par) rather than go for a perceived gain (gaining a stroke) has some benefit. Golfers tended to leave their conservatively stroked birdie putts slightly closer to the cup than more aggressively missed pars--leading to their making their follow-up shot more often. But that temporary gain was far outweighed by the overall cost in strokes."
That's some powerful insight, from a statistically significant sample of some of the world's top performers! So how can you put the study's findings to work in your business? Consider these points:
- When you make business decisions are you more concerned about pain then pleasure
- What about your customer's? Do you need to emphasise the pain that they will avoid by using Your product or services?
Bottom line here: your clients hate pain more than they love gain. Use that knowledge whenever you can to build your business and make sure that you don't fall into this trap.
