CONTRAST

The Watergate example provides one illustration of the principle of contrast. We see and experience events in terms of what has just occurred. We economize on memory by tending to react primarily to what we have recently experienced. And what is good or bad, what is expensive or inexpensive, what appears reasonable or unreasonable, is profoundly af fected by what we have just experienced. The contrast effect is often used in sales situations. If a person comes into a clothing store to buy a suit and a sweater, the salesperson will sell the suit first. After purchasing the more expensive item, the customer will see the sweater—even an expensive sweater—as comparatively inexpensive. Conversely, if the less expensive item is presented first, the contrast principle suggests that the more expensive item will seem even more costly by comparison. Real estate people will use “setup” properties, properties that are both undesirable and offered at inflated prices. After seeing such a property, the prospective buyer is much more likely to react favorably to a nicer house offered at a high price—by comparison it is a bargain. Automobile salespeople are also masters of the contrast ef fect. It is particularly useful in selling extended service contracts. After spending many thousands on a new car, a few hundred dollars for an extended warranty “to protect your investment” seems cheap by comparison.²

The same psychological mechanism that makes it easier to sell an item that is framed to seem inexpensive can work to ensure that not much thought or attention is given to something that is, at the moment, only a small part of the organization’s operations. In the late 1960s and early 1970s, Xerox’s copier business was growing dramatically. Xerox was very profitable because of its virtual monopoly in the marketplace, and as a consequence, the corporation paid little attention to small products and small markets.³ Consequently, when the Japanese began to market low-end, inexpensive copiers at reduced prices, they were simply ignored. Xerox leased its machines, and therefore derived its revenues from selling copies, not copiers. The Japanese machines copied in such small volumes that they represented only a fraction of the rapidly growing and highly profitable copying market. By comparison with Xerox’s line of business, these small machines for smaller users were not worth thinking about. For much the same reason, corporate management had little time for the computer product ideas that came out of the Palo Alto Research Center. The presumed market and profit potential was small enough, compared to the main copier business, that few were willing to take these innovations seriously.

In these two instances at Xerox, the contrast effect worked against products for smaller markets or those with seemingly small market and profit potential. The contrast principle may, then, help to explain why it is so difficult for large, successful organizations to enter markets that, at least initially, seem small. Compared to their primary line of business, the markets seem not to warrant much attention. Often by the time market potential becomes clear, it is difficult to enter successfully, since other, smaller organizations have already carved out dominant positions.

The implications of the contrast principle for exercising influence are fairly straightforward. Since the order in which things are considered affects how they are viewed, agendas are important. Xerox, which missed some important opportunities in the personal computer marketplace, now lavishes attention on the Palo Alto Research Center, and products with what may be much less potential get a lot more time and attention. Compromises in governmental politics often occur after a series of unworkable proposals make the final proposal seem much more reasonable. We need to make sure that our proposals benefit by contrast with what has come before, and at the same time that they are significant enough to get noticed.

THE COMMITMENT PROCESS

Previous actions and events not only set the frame of reference by which we judge present possibilities, they also constrain our psychological freedom to take a different course. The principle of psychological commitment suggests that we are bound to actions that 1) we choose voluntarily with little or no external pressure; 2) are visible and public, so we cannot deny being responsible for them; 3) are irrevocable, so we cannot change them easily; and 4) are explicit in their implications about our attitudes, values, and subsequent behavior. ⁴

The process of commitment, in which a person is bound to some behavior or choice, occurs for a number of reasons and in a number of ways. One mechanism that binds us to our past behavior is the process of self-perception, in which we look to our own past actions as a guide to our attitudes and beliefs.⁵ If we choose a job that pays less than we could otherwise command and that involves a lot of hard work, it must be because we really like the job. And, if we like the job, how can we fail to do it diligently? This process of self perception, in which we learn what we want by our own behavior, explains why research has consistently indicated that things that are more difficult to attain are valued more highly. For instance, groups that are more difficult to join are more attractive than ones that do not require such severe initiations. As Aronson and Mills wrote, “Persons who go through a great deal of trouble or pain to attain something tend to value it more highly than persons who attain the same thing with a minimum of effort ⁶

Commitment is also produced by generalized social norms that favor predictability and steadfastness. People who vacillate may be viewed as indecisive, whereas persistence is valued as a trait of leadership.⁷A person in authority may persist in a course of action simply for the sake of appearing to be a consistent and strong leader. Barry Staw and his colleagues have conducted research on consistency and escalation, often using an experimental paradigm in which subjects are confronted with a business case and asked to make an investment decision, for instance, allocating funds to research and development. Some subjects are then given information indicating that their past decisions are not succeeding, and are asked to make additional decisions. The studies often find that subjects facing failure escalate their investments, committing more resources to endeavors that aren’t doing well, in an attempt, presumably, to turn them around.

In a study that sheds light on the normative basis of commitment, people were given a case in which an administrator behaved in either a consistent or inconsistent fashion, allocated either many or few resources, and achieved either success or failure.⁸ The subjects had to evaluate the administrator and recommend the size of the raise that he or she should receive. As one might expect, all three conditions affected the perceived ability of the administrator: success, behaving consistently, and using the minimum resources were all positively associated with the evaluation given. The study used different sets of subjects—some were undergraduate business students, some were psychology undergraduate students, and some were students earning an MBA in an evening program, which meant they had full-time jobs during the day. Who did the evaluating affected the emphasis placed on consistency versus performance. Evening MBA students, the practicing managers, gave performance the smallest weight in evaluating the administrator; they also showed the greatest difference in their evaluations of consistent and inconsistent administrators. Practicing managers gave the lowest ratings of any of the groups to administrators who changed decisions. These results suggest that as one progresses up the organizational hierarchy, one develops a theory of leadership in which consistency and perseverance, particularly in the face of adversity, are valued. Such generalized social expectations about what constitutes effective management help to explain why many organizational leaders strive for consistency.

Consistency also serves to economize on cognitive effort. Once we have made up our minds and embarked on a course of action, if we are consistent and committed, we do not have to revisit the issue again. Consider the alternative. If we continually reevaluated all of our choices, it would be difficult for us, or our organizations, to do anything. There is a time for contemplation and decision, and a time for acting on that decision. Also, the value we place on consistency helps us to avoid rethinking past decisions, a process that might remind us things did not work out as well as we had planned or hoped. Reviewing botched decisions is unquestionably unpleasant, and in many instances, it is not even helpful, since we may not be able to alter the results.

Consistency, then, is a pattern of behavior that is: 1) valued by many people, particularly as an attribute of managers or leaders; 2) used to economize on information processing and decision making; 3) produced by a process of self-perception, in which we become bound to past actions and behaviors because we see them as reflecting something about ourselves; and 4) used to avoid confronting failures or problems with past activities. Consistency and commitment are produced by both intrapsychic and interpersonal processes.

One clear implication of this argument is that the best way to get something accomplished is to begin with any useful action, no matter how small. As long as it is done voluntarily, it will have committing implications. Thus, a door-to-door dictionary salesperson will try to get a prospective customer to look at the book and spend time thinking about it, an automobile salesperson will try to get a customer to test-drive the car (which is why many dealers resist giving prices over the phone; once you have made the effort to come to the dealership and drive the car, you are less likely to leave without buying), and why someone trying to sell a computer may offer it on a rental or trial basis.

The process of commitment means that once a project is under way, it is very hard to stop. I once saw a company test-market a new consumer product. After four months and a $1 million promotion budget, the product was doing poorly. At the meeting to review its fate, the product manager did not recommend that it be scrapped. On the contrary, he said, “How could we expect this product to succeed, given the lack of backing and financial support it has received? Up against entrenched competitors and established consumer tastes, we have not really given it a chance.” The firm proceeded to appropriate $10 million to give the product more time and more promotion—and some eight months later it was finally cancelled.

Initial estimates for the movie Heaven’s Gate projected 69 days to shoot the film, and a budget of $9.5 million.⁹ A review by the budget analyst at United Artists indicated that a more accurate figure would be approximately $10 million, or $12 million if some of the extravagances built into the picture were not eliminated. The story of the making of the movie is, of course, a story of these budget estimates being revised gradually upward, as first there were final negotiations on the deal, and then production was actually undertaken. Once a psychological commitment had been made to make the picture, it was difficult to back down. Once millions of dollars had already been spent, it was even more difficult for United Artists to walk away from its investment with nothing, particularly if by spending just a little more money, it could produce a blockbuster hit.

Perhaps an even more dramatic example of escalating behavioral commitment was the decision to choose Isabelle Huppert, a minor French actress, as the leading lady. The director, Michael Cimino, wanted her but she spoke with an accent (a problem in an American western), and from the point of view of United Artists, she would not add any box office draw, a critical issue because the leading man, Kris Kristofferson, had limited name recognition and box office appeal himself. In part, however, because Kristofferson had already been selected, and in part because United Artists was increasingly concerned about budget overruns, the firm found it difficult to get a good replacement. Cimino played the United Artists executives beautifully:

Soon two United Artists executives were on the Concorde to Paris, on their way to meet Huppert:

Note that Cimino made the reasonable request that the UA executives just meet with his proposed leading lady, and so the two flew to Paris, rationalizing the trip as not really being a sign of indecisiveness. Flying to Paris to meet her was, of course, an important behavioral commitment. When the executives met with Huppert:

By this time they were feeling vulnerable—United Artists was at the time owned by Transamerica, and UA personnel felt pressured to show that they had good artistic sensibilities:

Bach and Field convinced themselves that they needed Cimino’s cooperation to make the film a success, that Huppert wasn’t so bad, and that they should trust Cimino’s judgment. But how could they rationalize the choice of a leading lady who was so clearly inappropriate in almost every way? Very simply:

This example illustrates beautifully, in one of the participant’s own words, how one proceeds along the slippery slope of commitment—from doing something almost reasonable, like simply talking to the prospect, to finally convincing oneself that a bad decision is nevertheless the right one. This is a process that unfolds over time, slowly, subtly, and almost imperceptibly.

It is important that the committing behaviors occur with little external pressure, for that way they say more about the individual’s own beliefs and values, and provide few external justifications for abandoning the action. Actions taken voluntarily, behaviors chosen when one faces possibly adverse consequences, are the most committing of all. This fact is well known by those who seek to build a committed, hardworking team of employees. Tracy Kidder’s book on Data General and the development of a new minicomputer provides a powerful illustration of the commitment process at work. The two project leaders, West and Alsing, needed to find people who were willing to sacrifice themselves and work hard for the project, which was competitive with a design effort going on in another facility in North Carolina. Alsing used a ritual called the “signing up” as a way of building commitment:

An earlier discussion showed how we can build alliances by doing favors for others, invoking the principle of reciprocity. Commitment also suggests that we can build alliances by getting others to do favors for us. If a person complies with my request for a favor, self-perception will tend to cause that person to think he or she likes me—why do a favor for someone you don’t like? A cycle may begin, in which I do you a small favor, and you feel obliged to repay me. But the very act of your doing something for me helps to commit you to me, and thus further cements the alliance and the relationship.

How did Jimmy Carter, the ultimate outsider, obtain the Democratic party nomination and eventually win the presidency in 1976? The answer is that he was a master at building alliances. He seized upon a simple strategy: “To build an outsider’s campaign, recruit some outsiders to run it for you.”¹⁶ Every Democrat who lost a primary election in 1974 received a personal letter from the then-governor of Georgia. Carter recognized that people who had lost were going to have a lot of time on their hands, and he wanted them to spend their political energies on his candidacy. His strategy was to bind people to him by identification with the campaign, getting them involved in working for his success.

Letting someone do you a favor commits that person to you. Once people have invested in your project, in your candidacy, in your career, they will not want you to fail, and therefore may make extraordinary efforts on your behalf. Thus, we often observe efforts being made to save pet projects and pet candidates, in either corporate or national politics.

How can we counteract the principle of commitment, when we need to get others to change their behavior? To change behavior, individuals must be unbound from their past. One way to do this is to suggest that they were not really responsible for their past decisions—they faced external pressures or information that naturally led them to act as they did, but now, the situation is different, and they are free to do something else. What you should not do is to attack directly, and to ask, “How could you have done something so stupid?” When asked this question, most of us will state the myriad reasons we had for doing what we did. We may not convince the questioner, but we are quite likely to convince ourselves.

One of my favorite examples of the unbinding of behavior occurs in the movie Twelve Angry Men. After a court trial, the members of the jury convene in the room in which they are to deliberate. A straw poll is taken, and eleven jurors publicly vote guilty. How can Henry Fonda, the protagonist, change their minds? He argues that although the evidence makes the defendant appear to be guilty, perhaps the defense lawyer did a poor job. After all, he was only a public defender, and may not have enjoyed handling this unpopular case. Fonda says at one point, “The evidence indicates he is guilty; maybe he is; I’m not sure.” Then, he asks only if they have doubts about the verdict—he does not have to prove that the defendant is innocent, only that there is some reasonable doubt. Most important, he gets their commitment, not necessarily to change their votes, but at least to talk about the case for an hour. After all, a boy’s life is at stake, and there is no harm in a little discussion before they reach a verdict. Because of the way Fonda’s character frames his argument, the jurors do not have to admit that they were misled, only that the defense lawyer did a poor job. Furthermore, their agreement to talk commits them to examining the evidence in more detail, and thus creates the opportunity for Fonda to involve them in the discussion and act out critical testimony.

Direct attacks, by contrast, almost always backfire. When Frank Lorenzo of Eastern Airlines was fighting the machinists, he wanted to have the National Mediation Board declare the bargaining at an impasse, so that after 30 days there could be a strike or a lockout, and he could proceed to hire low-cost replacements. His peremptory treatment of the board, however, only made it more committed to its policy of encouraging further negotiations. The chairman of the board was Walter Wallace, and Wallace and the NMB refused to budge:

Lorenzo had begun by trying to meet with Helen Witt, the chairwoman before Wallace, even before a mediator had been appointed. Wallace felt as though he’d been circumvented. Lorenzo got Frank Borman and William Usery, the mediator who had worked out an equity-sharing deal in 1983, to lobby Wallace and the board. He organized a “group called PEACE, for Positive Employee Action Committee at Eastern.” ¹⁹ Lorenzo had “Tom Matthews, Eastern’s labor-relations executive, send a blizzard of letters to Wallace, outlining the airline’s case. The letters accused the board of dragging its feet.”²⁰ Eastern management curried favor with the press, who editorialized against the board. But Wallace, who was due to retire in a year, was merely irritated by all the pressure.

In spite of Wallace’s basically pro-business stance, he was so angered by Lorenzo and his heavy-handed tactics that he was to delay for almost two years the showdown that Eastern management had wanted. Pressure had merely hardened the resistance of the National Mediation Board, and had served to make it more committed to its decisions.

SCARCITY

How things look to us also depends on how scarce they are. It is often difficult to value something objectively. However, if many others want it, then we assume that it probably has value. The popularity of the item may be signalled in its price or its comparative unavailability. Thus, price and scarcity—which are, of course, often related because of the operation of the forces of supply and demand—are used as indicators of value or desirability. The scarcity principle, like many of the other principles of interpersonal influence, helps economize on information processing. Do we want a Honda Accord, or a Mazda Miata? If they are scarce, if dealers are charging premiums over list price, then of course we do! If they were available in large numbers, they would not be as desirable. Or consider the example of the selectivity of university graduate schools. In published rankings of graduate business schools, one of the factors often tabulated is how selective they are—how many people apply compared to the number of available slots. The greater the scarcity of admission slots, the better the reputation of the school, and somewhat ironically, the more numerous the applicants. Thus, the rich get richer, so to speak, simply because of the desirability associated with scarcity.

Scarcity as an influence principle also relies on the theory of psychological reactance.²² “As opportunities become less available, we lose freedoms; and we hate to lose the freedoms we already have. . . . whenever free choice is limited or threatened, the need to retain our freedom makes us want them (as well as the goods and services associated with them) significantly more than previously.”²³ The term reactance comes from the fact that “when increasing scarcity . . . interferes with our prior access to some item, we will react against the interference by wanting and trying to possess the item more than we did before.”²⁴

There are many everyday examples of the scarcity principle at work. Suppose you have been looking for a house and have finally seen one that you like, but it is not perfect and you are having trouble deciding whether you want it. Your decision will be facilitated mightily if the real estate agent tells you that another offer is coming in. Faced with the prospect of no longer being able to freely decide whether to purchase the house, many people will make an offer. Also, you will now have information that indicates others like the house as well, thus validating your judgment. Many sales techniques make use of the scarcity principle in setting deadlines and cutting short supplies—something will be available only for a limited time, or in a limited quantity. The scarcity principle means that the country-and-western song entitled, “The Girls All Look Prettier at Closing Time,” actually has social psychological (as well as possibly alcoholic) foundations to support its theme. Shakespeare’s “Romeo and Juliet” illustrates the power of scarcity to induce passion. Some people argue that the attractiveness of long-distance relationships or of extramarital affairs is enhanced by the operation of the scarcity principle in both situations. Because restricting access makes it more desirable, censorship of messages, books, or information actually increases demand. This latter effect causes problems in jury deliberations in which some information is ruled to be inadmissible, and the ruling comes only after the information has been heard. The jurors are supposed to disregard the information, but reactance theory suggests that when told to do so, they will actually consider it more.

The scarcity principle can explain the dynamics of the process through which Apple Computer and Steve Jobs hired John Sculley from Pepsico—Sculley, the same person who would ultimately force Jobs out of the company. In 1982, Apple decided that it was really in the consumer products business, and retained Gerald Roche, president of Heidrick and Struggles, a head-hunting firm, to help it find an appropriate president. Eventually Sculley emerged as a serious contender. A description of the recruiting process indicates that it was his aura of being unavailable, but still not out of the question, that helped get him the offer:

As with many of the strategies of power we have seen, this example shows the applicability of more than one principle. Scarcity made Sculley attractive to Jobs, and escalating commitment made Jobs more and more eager to convince him to join the company.

The scarcity principle has a number of applications, the most fundamental being that what you advocate should always appear to be scarce. If you are looking for a job, you should appear to be in high demand. If you are pitching a proposal, the proposal should only appear to be feasible for a limited time, after which the opportunity would be lost. Even better, someone else should be on the verge of taking advantage of it. In this regard, the use of deadlines is important. The scarcity principle also has obvious implications for pricing. Sometimes, the higher the price, the greater the demand, which at first glance would appear to violate normal economic assumptions. But high price often signifies scarcity, and as a consequence, desirability. The more desirable the product, the greater its success in the marketplace.

HOW ISSUES ARE FRAMED

We have seen that how things are viewed depends on the context—what they are compared to, whether there is a committing history of action, whether they are perceived to be scarce. In much the same way that pictures are framed, questions and actions are framed, and the context in which they are viewed and discussed determines what gets done. Establishing the framework within which issues will be viewed and decided is often tantamount to determining the result. Thus, setting the context is a critical strategy for exercising power and influence.

Several examples help to make the point. A friend who once worked at SRI, a consulting firm, on a project for Merrill Lynch when Donald Regan was CEO, talked about his experience with the implementation of the Cash Management Account (CMA). When Merrill introduced this idea in the 1970s, it was a tremendous innovation. SRI had done a study showing how profitable and successful it was likely to be—it would permit the firm to capture a lot of business by offering an integrated system of check writing, credit cards (VISA), money market funds, and traditional brokerage services. It would generate substantial interest income and also generate more business for Merrill Lynch’s money market funds.

After the SRI presentation, Regan went around the room getting comments from the other senior executives. They all saw problems. The operations vice president noted that it now cost the firm many dollars to process a transaction. That was fine when the transactions were securities purchases and sales, in which the commissions were large. When the transactions were deposits in money market accounts, check writing on such accounts, and similar things, they would have to be able to process them for only cents per transaction. The systems simply were not able to handle the task. The legal vice president noted that the cash management account idea would in effect turn the firm into a bank, making it subject to much more stringent regulation than it faced as a securities firm. It would have to get charters, regulatory approvals, and so forth, and this would be difficult, given the resistance of potential competitors. The marketing vice president noted that banks were currently some of Merrill Lynch’s best customers. They would certainly be offended if the firm became a competitor, and consequently might take much of their business to other securities firms. And so it went around the table, each senior executive stating valid and sensible concerns that showed why the CMA idea simply wouldn’t work.

Regan then turned to the vice presidents and said, “The objections that you raised were good ones. However, I decided to go ahead. So, the question now becomes, how do you solve the problems you described so articulately?” A funny thing happened. With the issue now framed not as, should we do this? but rather, we’re going to do it, so let’s solve the problems, the same vice presidents, sitting at the table, quickly began to come up with solutions for the problems they themselves had articulated. One suggested beginning in Colorado, because of its particular banking laws and relationships. Another suggested letting banks actually process the checks and the transactions, thereby giving them business and helping to solve the company’s operations costs problem. Once the question was reframed, the discussion and attitude changed accordingly.

Because the framing of an issue can decide its outcome, it is important to be early in the process of setting the terms of the discussion. The ability to write intelligent memoranda, which then affect how issues are viewed and discussed, can be used effectively in a strategy of influence. McGeorge Bundy, national security adviser in the Kennedy administration, had that skill and used it to advantage:

Two other examples, both from U.S. government policy toward Vietnam, also nicely illustrate the point that decisions often depend on how questions are framed. In the early 1950s, when the French were fighting to retain Indochina, the question arose as to whether the U.S. government should aid the French, who were, after all, a colonial power. Many in the government thought we were harming our interests by helping another country to hang on to its empire. However, that was not the way the issue came to be framed:

Note that not only was the decision affected by how the question was asked, but once the United States began helping, it became committed by that very behavior.

Later on, when the United States was more directly involved, the issues were frequently framed not in terms of whether policy was wise, or whether the United States should be in Vietnam, but rather, whether we were winning. ²⁸ The underlying assumption, the so-called domino theory (if Vietnam fell to the Communists, the rest of Indochina would fall as well) was seldom examined directly. Rather, the issue was always framed in terms of the viability of the current South Vietnamese government, whether U.S. aid was effective, and whether progress was being made.

As these examples illustrate, the frame of an issue is often constructed through the questions that are asked. Do the questions emphasize potential risks, or gains? The costs of something, or the possible benefits? Do the questions assess what is innovative, what is important? The framing of issues also results from the kind of information that is collected and the matters that the information systems emphasize in their data collection and reporting. It is difficult to frame proposals in terms of quality, for instance, if no data about quality are regularly being produced in the organization, and if questions about quality are seldom raised.

Because decisions and actions inevitably have multiple components, which can be viewed along multiple dimensions, the ability to set the terms of the discussion is an important mechanism for influencing organizational behavior. Yet, we often show little foresight or consciousness about how frames of reference are set, and how the questions asked and data gathered tend to determine the outcomes of choice and action. We are, unfortunately, not as sensitive to the context of organizational activity as we should be. Decisions and activities are not begun anew each day. We need to be aware of history—the history of commitments, of past choices that set the context within which present events are evaluated, and of the set of cognitive lenses that affect what we see and how we see it. Being skilled at both recognizing and using these ideas provides great leverage in getting the things that you want accomplished.