The Key to Lasting Business Success: Understanding Human Nature

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Business is always changing, but people are not.

Without understanding this, business success can feel random.

Your work-life or business can feel overwhelming.

With things changing so fast, how do I adapt?

We get confused when a product isn't selling, or why a product is selling, and another one isn't.

We get exhausted by what feels like total entropy at work, especially as it relates to the aspect of people and relationships.

"If only people were more like computers!"

^That's what some people think about their customers, co-workers, employees, etc. They want them to behave, perform, and be consistent.

That being said, there are some patterns we can learn.

And, if we understand these patterns, we align ourselves with success.

And when you break from these patterns and structures, you misalign with human nature, so you align with failure.

I'm going to dig into why and how you can build a better understanding of human nature, but first, let me give you a bit more context:

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Human nature is the only client I have.

This is something I've discovered as a coach to founders and entrepreneurs.

Alongside my work with clients, I have been building a map of sorts, one that I continue to build; with different insights, problems, and stuck points I hear clients tell me about. I've mapped out the territory, so I can more easily spot where someone may be stuck.

Alongside this process, I work alongside and see inside ~8-12 companies at any given time. I get to see all types of different experiments run in real time.

I'm seeing stuck points, attempts to break from them, and how these actions play out. And of course, I'm trying to help raise the pace of growth and decrease unnecessary stress or effort.

The specifics of the problem are infinitely unique.

The person I'm working with is infinitely unique.

The solutions are unique and completely specific and custom.

But the general patterns of human nature are constant.

Let's use a very practical example:

Imagine a highway that takes 30 minutes to get somewhere.

Then, a new bridge is built, that gets you to that same spot in 5 minutes, rather than 30.

Do people use this new bridge?

The answer above is obviously YES.

The better question though is why?

Humans are impatient. Maybe that's the lesson.

Or maybe it's that they value their time.

Or maybe instead it's that they value novelty.

Whatever your conclusion might be, this is an example of a simple observation about human nature that you can make every day.

I'm not rejecting or getting upset about people using the new bridge over the old bridge.

Instead, I'm simply noting what the deeper human need is that's driving this action...

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Understanding Human Nature and aligning with it leads to better outcomes

While I continue to dive deep into this area, I have other reasons for wanting to learn more and getting a clearer sense of the underlying structures of human nature...

1. I believe this is a lasting way to grow my business regardless of trends. I believe it leads to a higher % of success in any business, as almost all of the lessons carry over. This means these insights, once gained, can be taken with you and applied elsewhere. It's not a fad, hack, or trick.
2. I believe it will help me grow lasting relationships.  I want to build more lasting friendships and know that many of the mistakes I make here are due to misunderstandings!
3. It makes life easier and more simple. When you align yourself with the reality of human nature and what works around human nature, you make all of your efforts easier because you’re no longer going against the grain.

Building this understanding for yourself isn't exactly easy.

You might be thinking... I can barely get my own work done, how am I supposed to see and think about everyone else too?

Or, What about luck? Or randomness, or chaos?

While not easy, and not a perfect end all be all solution, I'd ask if the current way you're doing things IS easy?

If it is easy, and it's leading you to results, then great.

If it's hard, and not giving you results, then we don't want that either, and you might be open to doing something hard in a different way that produces results, rather than doing what's hard your way without getting the results you want.

Learn and align yourself with human nature, and learn how to navigate the world.

Paul Graham says,

"I recently told applicants to Y Combinator that the best advice I could give for getting in, per word, was:

"Explain what you've learned from users."

The best way to learn about human nature is from the people around you. For people in business, this means observing the reality of what your customers want, do, say, and struggle with.

The beauty of business is that it involves all types of important and complex human emotions and needs, including money which can be a great way of understanding human motivation.

This is also true in relationships, including business relationships:

“Remember that in great partnerships, consideration and generosity are more important than money.”
― Ray Dalio, Principles: Life and Work

Here's a Ray Dalio quote on partnerships, which ultimately is an observation about human nature, which is that money is a short-term way of viewing how humans think about relationships.

And ultimately understanding the very basics of business:

And here's a good quote from Kunal Shah on understanding markets by understanding human motivation.

How to develop a better understanding of human nature

1. Values alignment: Align yourself with values that matter to you, and you will attract others whose values align with you, too.

For example, there are levels of values, which also align with levels of energy (per Hoffman), which likely align with values that attract success.

It's a sliding scale. For example:

Love has higher energy than hate.

Kindness has higher energy than spite or guilt or shame.

Define higher values, and then align with them, and you will more easily attract success.

2. Incentives: Always (Charlie Munger quote) understand incentives. Ask, what would their incentive be to do that?

One practical way I see this all of the time in companies is in compensation packages and structures.

People may work for less money, but for how long, how unhappy would they be, what if the money expected gets cut in half?

If the incentive package is not properly built, it's like a bridge that was poorly constructed, eventually, it will crack and break.

This is not personal, this is simply the faulty design at work.

3. Status: People are status-seeking.

This was a brilliant insight by Kunal Shah: "The more status a product provides, the higher margin the business."

Once again we have another sliding scale.

A Harvard degree has more status than Starbucks.

A Starbucks coffee has more status than a Kleenex box.

And here's his brilliant insight:

There's more margin the higher up the status ladder people perceive your brand or product.

3. Observe yourself: Meditation is good for this, notice what you like.

A big way that I pick up on trends is I observe myself.

I know I’m an early adopter, so what I’m curious about is likely something that’s just starting up (not always, but often).

In finance and investing, I track my own emotions as a gauge for how the market may be feeling, and then I can ask whether or not I'm playing into the wrong actions from that emotion.

4. Observe how decisions and actions play out.  

Every time you make a decision, you can see how it turns out.

See if what you think will happen, happens. One thing I advise clients to do is to lay out what they imagine will happen in a scenario, with people, a conversation, or even with a decision. Afterwards, compare how closely the actual outcome resembled your imagined one.

This isn't to shame yourself, but rather to notice, and to learn.

You can also do a "decision review" – which is a practice of looking back at past decisions and asking how they went.

5. Begin to define your own principles: This is all Ray Dalio and others are doing. They are observing and then coming up with their own principles, there’s no reason you can’t either.

Label what you learn and turn it into a principle. For maximum benefit, see how that principle generalizes across fields.

To recap:

• Business is always changing, but people are not.
• So, to be persistently successful is to understand human nature.
• Human nature aligns itself with certain activities, and certain values, for a reason. Don't push against the river, see and notice it and work with it.
• Align with higher values (such as love), align with higher status (such as Harvard), and you're more likely to align with success.
• Observe yourself and others with curiosity, not pre-judgment.

I'm in the business of understanding human nature. I think many people are, they just don't know it.

So, what have you learned here? What challenges do you face, and how might they relate to forcing something into poor alignment?

As always, reply and let me know how I can help,

xx David