Psychology:

With a better understanding of psychology, you can better appreciate the communication needs of others, rather than your own preferred ways of thinking and behaving.

It is also important to note that while the world around us is quickly evolving, the one thing that remains constant, is our psychology.  The same elements that motivated people 2,000 years ago, motivate people today.  When it comes to marketing, only the platform has changed.

To understand our world, is to understand human psychology and the behavioral sciences.  This is how and why basic sales principles permeate all industries…

“You are a human being.  Human nature is immutable.  It has been immutable from the first time man found himself on this earth.  Human nature will be the absolute same until Armageddon or a nuclear holocaust.  You are human, and the way you react to me, or you react to each other, or you react to anything, is no different than any other human being you are trying to deal with reacts.  If you sell to corporations, corporations have individuals, human beings making decisions.  Corporations are composites of human beings with hopes, desires, fears, and emotions, just like you.”

One of MY goals and responsibilities to you is opening, then dramatically expanding, your business world view, while enlightening your ideological/philosophical paradigm on the human condition.  Understanding the human condition gives you the ability to appreciate, motivate, navigate the world of divergent perspectives that we ALL must deal with every day.

If you look at mindset on the micro level, when it comes to your own success, having the right psychology is infinitely more important than anything else.  The biggest determinant in your success is your reason why.  Your reason why is what drives you, it is your passion.  If it is compelling enough, you will not accept defeat.  You also need what Napoleon Hill called a positive mental attitude.  

The Psychology of Business: Insights from W. Edwards Deming

Psychology plays a fundamental role in business and the workplace, influencing everything from leadership and teamwork to customer behavior and decision-making. Understanding human behavior is essential for creating systems that foster motivation, productivity, and long-term success. One of the most profound thinkers on the relationship between psychology and business was W. Edwards Deming, whose principles of quality management and continuous improvement emphasized the human element in organizational success.

Deming’s Perspective on Psychology in Business

W. Edwards Deming, known for his work in quality management and the transformation of Japanese manufacturing, identified psychology as one of the key elements in his System of Profound Knowledge. According to Deming, understanding how people think, learn, and react to systems is crucial for effective management.

He argued that many traditional business practices, such as ranking employees, merit-based promotions, and performance reviews, ignore basic psychological principles. Instead of motivating workers, these methods create fear, competition, and disengagement, leading to inefficiencies and reduced morale. Deming emphasized that businesses should focus on intrinsic motivation rather than external rewards or punishments.

Key Psychological Principles in Business

1. Intrinsic vs. Extrinsic Motivation

Deming believed that people are naturally motivated to do good work when they find meaning and purpose in their jobs. Traditional business models often rely on extrinsic motivators like bonuses, promotions, and rankings, but these can lead to short-term gains at the cost of long-term performance. A system that fosters collaboration, respect, and continuous learning helps employees stay engaged and motivated.

2. Fear and the Workplace

A workplace driven by fear leads to poor decision-making and suppressed innovation. Employees who fear punishment for mistakes may hide problems rather than solve them. Deming advocated for a “drive out fear” approach, where open communication and trust replace punitive measures. This psychological safety encourages workers to share ideas, take initiative, and contribute to overall improvement.

3. Systems Thinking and Human Behavior

Deming’s focus on systems thinking aligns closely with psychology. Instead of blaming individuals for poor performance, leaders should examine the system in which employees work. Most workplace problems arise from flaws in the system, not individual incompetence. By improving workflows, reducing bottlenecks, and eliminating unnecessary bureaucracy, businesses can create environments where people thrive.

4. Learning and Continuous Improvement

Psychology teaches us that people are constantly learning and adapting. Deming’s Plan-Do-Study-Act (PDSA) cycle encourages businesses to foster a culture of experimentation and continuous improvement. Employees should feel empowered to test new ideas, learn from failures, and refine their processes without fear of repercussions.

The Psychological Impact of Deming’s Principles in Business

Organizations that apply Deming’s psychological insights see improvements in employee engagement, job satisfaction, and overall business performance. Here’s how:

• Higher Retention Rates: Employees are more likely to stay in environments that support their growth and well-being.
• Greater Innovation: A culture that values learning and improvement leads to more creative solutions.
• Improved Customer Experience: Happy and engaged employees provide better service, leading to customer satisfaction and loyalty.
• Reduced Waste and Increased Efficiency: When people work within well-designed systems, errors decrease, and productivity rises.

Final Thoughts

Psychology is not just a soft science; it is a critical factor in business success. W. Edwards Deming recognized that businesses are human systems, and understanding human behavior is key to sustainable growth and quality improvement. By embracing intrinsic motivation, removing fear, focusing on systems, and encouraging continuous learning, businesses can create environments where people—and profits—flourish together.

Incorporating psychological principles into business is not just about being ethical or compassionate; it is about achieving real, measurable success in the long term. As Deming famously said, “It is not enough to do your best; you must know what to do, and then do your best.”

A few psychological insights:

Understanding human psychology in the workplace and business can give you a competitive edge in management, marketing, negotiations, and leadership. Here are some key insights:

1. Decision-Making & Cognitive Biases

• Loss Aversion: People fear losses more than they value equivalent gains. Use this in sales by framing deals as avoiding loss rather than gaining benefits.
• Anchoring Effect: First impressions or numbers set expectations. In negotiations, the first offer often dictates the final deal.
• Confirmation Bias: People seek information that supports their beliefs and ignore contrary evidence. Leaders need to challenge their assumptions.
• Paradox of Choice: Too many options overwhelm people and lead to indecision. Simplicity sells.

2. Motivation & Productivity

• Intrinsic vs. Extrinsic Motivation: Money alone is not enough to drive performance long-term. People seek purpose, autonomy, and mastery (Daniel Pink’s framework).
• Hawthorne Effect: People perform better when they know they are being observed or valued. Recognition and attention improve productivity. People perform best when they believe management cares about them.
• Job Satisfaction & Performance: Happy employees are more productive, creative, and engaged. Toxic environments reduce effectiveness.
• Psychological Safety: Teams thrive when employees feel safe to express ideas without fear of ridicule. Google’s studies found this to be the #1 factor in high-performing teams.

3. Leadership & Influence

• The Pygmalion Effect: Higher expectations lead to better performance. Leaders who believe in their people elevate them.
• Reciprocity Principle: People feel obligated to return favors. Being generous and helpful builds influence.
• Authority Bias: People trust perceived experts and leaders, even if they aren’t competent. Build credibility to gain influence.
• Social Proof: People follow the crowd. Testimonials, reviews, and case studies build trust in business.

4. Customer Psychology & Sales

• Pain vs. Pleasure: Customers buy based on emotional needs, then justify with logic. Tap into their problems and desires.
• Scarcity Effect: People place higher value on things that are limited or exclusive. Create urgency in offers.
• Endowment Effect: People overvalue what they own or feel attached to. Free trials and personalization increase perceived value.
• Framing Effect: How you present information changes perceptions. Saying “95% success rate” sounds better than “5% failure rate.”

5. Conflict & Negotiation

• Emotional Intelligence (EQ): Recognizing emotions in yourself and others helps in resolving conflicts and managing people effectively.
• Mirroring & Rapport: Subtly mimicking body language and speech patterns builds trust and connection.
• BATNA (Best Alternative to a Negotiated Agreement): Always have a strong backup plan in negotiations to avoid desperation.

6. Change Management & Resistance

• Status Quo Bias: People resist change due to fear of uncertainty. Breaking changes into small steps makes them easier to adopt.
• The Sunk Cost Fallacy: People stick with bad decisions because of past investments. Leaders must recognize when to cut losses.
• Dunning-Kruger Effect: Incompetent people overestimate their ability, while experts underestimate theirs. Training and feedback are essential.

Another major influence in motivation/persuasion, is what Tony Robbins calls the six human needs:  

1. Certainty
2. Uncertainty or variety
3. Significance
4. Love and connection
5. Growth
6. Contribution

We all crave these needs, just not in this particular order. Some of the needs are more important than others. Look for the patterns in people. The only way to influence someone is by knowing what already influences them.