Leadership Jan 4, 2017
Podcast: Start the New Year Motivated for Success
Tips for achieving your personal and business goals.
This month’s Insight podcast is an encore broadcast from January 2015 that investigates how to get off to a strong start in the new year.
Blake McShane, an associate professor of marketing at the Kellogg School, explains that when faced with paying off multiple debts, those who tackle the smallest debt first are more likely to succeed in paying off everything.
Eli Finkel, a professor of management and organizations at the Kellogg School, cautions that relying on others to reach our goals can undermine our own efforts.
Miguel Brendl, an associate professor of marketing at the Kellogg School, underlines the importance of setting intermediate goals to avoid that motivational lull in the middle of longer tasks.
Finally, Sunil Chopra, a professor of managerial economics and decision sciences at the Kellogg School, explains why the best possible outcome for many retailers come January is to have nothing to do.
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JESSICA LOVE: Welcome to 2017. Two Januaries ago, we asked a number of Kellogg professors what advice they had for listeners looking to make changes to their lives. And it turns out, their advice is as relevant today as it was in 2015. So please enjoy this podcast from our archives. And at the very end, you’ll learn something that may forever alter the way you think about the ever-lengthening holiday shopping season.
JESSICA LOVE: Welcome to 2015. The new year is a good time to return that ill-fitting sweater and reckon with the damage you’ve done to your bank account over the holidays. It’s also a time for resolutions. Giving yourself goals is a great way to ring in the new, but a year is a long time. How do you stay motivated?
Speaker 1: When I have a long-term goal, what I do to stay motivated is to make sure that I have a core group of people that I can discuss these problems with to help me reflect and move forward.
Speaker 2: For me, when you have a goal, I just keep going and that’s it.
Speaker 3: Small daily goals, because for me, the big picture is kind of really overwhelming, like with New Year’s resolutions, stuff like that. Just tiny little goals that I can’t necessarily procrastinate on, because I will if I can.
LOVE: Hello and welcome to Insight in Person, Kellogg Insight’s monthly podcast, produced by the Kellogg School of Management at Northwestern University. I’m your host, Jessica Love.
This month, we look at what it takes to start off 2015 right. Whether you’re trying to save money, become healthier, or make your company more efficient, we’ve got insights to help you, so stay tuned.
BLAKE McSHANE: You know, like most things in life, when we find ourselves with a task to complete, whether it’s being mired in debt or anything else, a strategy to help us get out of that hole can really help.
LOVE: That’s Blake McShane, an associate professor of marketing at the Kellogg School. When McShane and his research colleagues started to delve into what makes people more likely to complete a task, a lot of strategies presented themselves.
McSHANE: One could proceed linearly, right? Just think about the beginning, the middle, and the end, and proceed in that direction, and lots of tasks lend themselves to that. Alternatively, you might think about tackling your toughest task first or, for that matter, your easiest task first.
LOVE: One common goal is to get out of debt, but juggling multiple accounts with varying principles, interest rates, and payment schedules can make coming up with a strategy a daunting task. The advice we hear time and time again is to pay off your highest interest debts first. This ensures that you pay the least amount of interest in the long run, but it turns out this perfectly logical advice may not always be the best. Here’s McShane again.
McSHANE: There’s another strategy, which has been called the snowball strategy, or the snowball approach to debt, which takes the idea of starting with your easiest task first. It says you should find your smallest debt, and first pay that one off.
LOVE: Along with colleague David Gall, McShane studied people who enrolled in programs with debt settlement firms. These firms negotiate with creditors on debtors’ behalf, often getting them to accept a much smaller lump sum than the amount they originally owed. Since the debt settlement firms handle the haggling, participants in this study had no control over the order in which their debts were paid off. Still, order mattered when it came to motivation. Regardless of interest rates, people whose smaller debts were paid off first were much more likely to finish the program and eliminate all their debt. So should people disregard interest rates when paying off debts and stick to a smallest-to-largest strategy?
McSHANE: We wouldn’t say that you should absolutely disregard the interest rate on your debt.
LOVE: But, McShane says, within a specific class of debt, like credit card debt or car loans, your interest rates are likely pretty similar, so going after the smallest debt first within a specific class of debt could be motivating.
McSHANE: Also, quite nicely, is that when you think of different classes of debt, usually it’s the very, very big ones that comes with smaller interest rates. So, for instance, your mortgage is typically your biggest debt that you have, and usually those have much smaller interest rates than something like a credit card.
LOVE: Why exactly is starting small a good choice for getting out of debt?
McSHANE: First of all, it’s the idea of getting a quick win. It makes you motivated, it makes you feel pumped, and you’re ready to continue doing what you’ve just successfully done. It also sort of instills confidence. You think that, you know, maybe when you start the task, you have no idea whether you can complete it, but the fact that you got a win made you say to yourself, “Hey, I can do this now.” I think in any long-term goal you might have, particularly one where partial progress is not so important, then this idea of focusing on checking items off the list can be really helpful.
LOVE: Many of us enlist the support of those around us when tackling long-term goals. If we set out to lose 10 pounds in 2015, we might make sure our family and friends know not to tempt us with sweets and French fries. It turns out this strategy can backfire.
Eli Finkel is a professor of management and organizations at the Kellogg School. His research points to a phenomenon he calls self-regulatory outsourcing. This means that when we work on reaching a goal with the help of another person, there is a risk that we come to depend on that person’s help so much that we let our own efforts flag.
ELI FINKEL: When people help us in a way that makes it clear that we don’t have to work as hard, we take that as a signal that in fact we don’t have to work as hard.
LOVE: In one study, Finkel looked at women in romantic relationships who wanted to lose weight. One group of women was asked to think about how their partners help them with their weight-loss goals. Another group was asked to think about how their partners helped with their career goals. Afterwards, both groups were asked how much time they plan to spend working out the following week. It turns out that the women who thought about their partner’s help with weight loss planned to work out less than the women who thought about their partner’s help with their careers.
FINKEL: Because you can think about how somebody else might help you achieve that goal, it frees you up to think about or to use your resources, your goal-pursuit resources, on other goals rather than that goal. Then, consequentially, it has this ironic undermining effect, such that thinking about how somebody else helps you achieve a weight-loss goal actually makes you lazy.
LOVE: That doesn’t mean you shouldn’t enlist people to help you achieve your goal. It’s all about how they approach their role as supporter.
FINKEL: The crucial distinction is the way we offer help, and in particular, when we offer help to other people, do we offer it in a way that promises to substitute for their own effort versus promises to support their own effort? A husband might make sure he does all the healthy cooking to help his wife lose weight, for example, but the better way to provide social support, and to help people achieve their goals, is to mention, “I’m here, I’m hanging back, and you can count on me if you need it, but I’m not going to be intrusive. I’m not going to get in the way or take over the pursuit of the goal. I’m just going to be here to support you and encourage you.”
LOVE: If you’re someone who sets incremental goals to help you achieve big ones, you’ll be pleased to hear how you can trick yourself into taking that next step. Kellogg School associate professor of marketing Miguel Brendl has found that how we measure our progress toward a goal can impact motivation.
MIGUEL BRENDL: We need to take a step back and ask, “What motivates people?” One thing they do is they constantly ask themselves, maybe not consciously, but in the background somehow, “How valuable is it to take the next step?”
LOVE: He finds that, while pursuing a goal, we make continual calculations. How much is the next step going to accomplish compared to how far I’ve already come or how far I have left to go?
Let’s say you have a goal to run ten miles. After you run the first mile, you calculate what that second mile is worth. One mile to run versus the one mile you’ve already finished. That ratio is 1:1, meaning that second mile is pretty valuable. At mile nine, you make the same calculation, but this time you focus on how close you are to finishing. Since you only have one mile to go, the value of that last mile is very high. This knowledge pushes you to the end.
BRENDL: This is just perception. You know, we normally think of in motivation is, “How much willpower do I have to force myself to move on?” It’s not about willpower; it’s just perception of the sizes of things.
LOVE: Switching your perception of your progress from how much you have completed to how much you have left works well at the beginning and the end of a task. But in the middle, you’re far from both ends and that next step doesn’t seem so valuable anymore.
BRENDL: We call it, “stuck in the middle.”
LOVE: The way to get unstuck, Brendl says, is to set sub-goals for yourself. Let’s say your 2015 resolution is to save $8000, so you need to squirrel away about $650 a month. In January, no problem. You’re super motivated. February is probably pretty easy too, but what about when you get to July? By then, you’ve saved nearly $4000. That next $650 doesn’t feel as valuable compared to either the $4000 you’ve saved or the $4000 you have left to go, so you set yourself a sub-goal to get past that $4000 hump.
BRENDL: Maybe they could reward themselves and say, “okay, if I hit $5000, I’m allowed to go out and have a nice dinner.” Then they will be focused on that and they may save a little less because they spent the money on the dinner, but then are more likely to save the entire goal.
LOVE: We’ve been talking about ways you personally can accomplish your goals in the new year. But how about retailers that have their own goals, like selling out all of the holiday merchandise they stocked? If you walk into the mall this week to use up those gift certificates you got for the holidays, you’ll probably notice some stores packed with 50 percent off signs, return-seeking customers, and scrambling employees, while others appear almost completely dead. The dead stores probably did a much better job of managing the holiday rush: they better predicted total customer demand and, more importantly, just what customers were demanding. Here’s Sunil Chopra, a professor of Managerial Economics and Decision Sciences at the Kellogg School.
CHOPRA: It’s relatively—relatively speaking—easier to prepare for a total demand that will arise and the total need for staff, because total sales become much more predictable. What is much harder to do is figure out which are going to be the winners and losers because you have so little time to react if you guessed wrong.
LOVE: That’s right. Retailers’ biggest challenge isn’t volume but timing. People like to lament how the holiday shopping season seems to stretch longer and longer each year. We generally chalk this trend up to retailers wanting people to spend more. This is undoubtedly true. But the biggest benefit to a longer holiday shopping season for retailers may be that they have more time to get the right products into the store. Here’s Professor Chopra again.
CHOPRA: What you’d like to do is, as early as possible, get a sense of where the market is going. Waiting till Black Friday to have your first taste of what Christmas shopping is going to look like is too late, because you’ll have less than four weeks to react and arrange for supply if you guessed wrong. It’s impossible. On the other hand, you run in early November, late October—so the earlier things move, I get a second chance to react, which corrects my predictions quite significantly. Because from a retailer’s perspective, the best possible outcome after the holiday rush is that they have nothing to do.
LOVE: This program was produced by Jessica Love, Fred Schmalz, Emily Stone, and Michael Spikes. Special thanks to Kellogg School of Management faculty Miguel Brendl, Sunil Chopra, Eli Finkel, and Blake McShane, as well as Northwestern students including Jose Martinez and Elizabeth Frieda, who shared how they stayed motivated. You can stream or download our monthly podcast from iTunes or from our website, where you can find articles on debt consolidation, motivation, and supply chain management, in addition to plenty of other business insights. Visit us at insight.kellogg.northwestern.edu. We’ll be back next month with another Kellogg Insight podcast.
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