Today I have none other than Jordan harbinger. In today’s episode, he shares the psychology hacks. He uses to be a better business owner and how it can help you become a better CEO
Adam: I’m so happy you went there because I didn’t know how far we could get into that. Obviously, the reason we bought you here is because we want to get some ways you can alter the way that you think. I got this great phrase, which is, “you don’t know what you don’t know.”
When you meditate on that, it’s kind of scary to think that if no one comes along and tells you something, you don’t even know where to look for the thing that you need, that’s going to completely change your life, you know?
What is unconscious incompetence?
Jordan: No, you’re right. It’s called Unconscious Incompetence. You don’t know what you don’t know exactly, and it’s sort of like a tree or ladder. After that is Conscious Incompetence where you do know what you don’t know. Usually in a specific area of course or level of expertise. Then it’s you don’t know what you do. To then-
Adam: It’s then its Conscious Competence.
Jordan: Yeah, and it goes all the way up the ladder until you’re very conscious of what you do and do not know.
Adam: Yep, then it actually finishes with Unconscious Competence where you don’t even have to think about it and you are naturally good. But that also means that because you’re not thinking about it, it starts a new level of unconscious competence.
Jordan: That’s right! Okay, it’s all coming back to me now. Yes, that’s right. It’s a cycle because yes, once you’re doing something, like proper mic technique, like right now. I’ve been broadcasting for over 12 years, so when I’m talking into a studio microphone on a radio station or the one at the studio I have in my house, what I do is I’m always on this microphone.
If I’m in this room and I’m on the phone using a headset, if I don’t pay attention, I start talking into the microphone and then I realize, “oh wait a minute. I’m on my AirPods. I’m on the phone. I’m not broadcasting.” So then I can sort of step out of here. But if I don’t see the microphone, I don’t just gravitate toward it.
But you start to realize, oh yeah, I’m not broadcasting, but I’m doing proper mic technique, not thinking about it. You start to see that since I’m not thinking about it, there are other things I’m doing with my body that I’m not paying attention to. When I take voice lessons, for example, my teacher will go, “Are you standing up straight? Or are you sitting?”
And I’ll go, “How do you know I’m sitting?” And she goes, “I can hear it in your voice.” And I’m just mind blown by the fact that she can tell by the way I talk. So that is an interesting cycle. I forgot what that’s called. Do you know, does that have a name?
Adam: I’ve never known the name, I know the system. A bunch of my psychology teachers taught me it, but I don’t know the official name for it. I’m sure it does, I’m sure someone’s named it.
What are the Four States of Competence?
Jordan: It’s called the Four stages of Competence.
Adam: Of course it is.
Jordan: On the other hand, it’s also called the Conscious Competence Learning Model, which I feel sounds more complex, therefore making it okay we didn’t know what it was called.
Adam: Yeah. I think that’s fine. Let’s go with that one.
Jordan: Yes. The Conscious Competence Learning Model, unconscious incompetence, the individual does not understand or know how to do something and doesn’t necessarily recognize the deficit in their knowledge. Conscious incompetence, you essentially recognize the deficit, so you know that you do not know. Conscious competence, the individual understands or knows how to do something, however, the skill or knowledge requires concentration.
Then unconscious competence, the individual has had so much practice with a skill that it has become second nature and can be performed easily. And the individual may also be able to teach it to others depending on how and when it was learned.
Adam: That model, I absolutely love. Just to bring it back to the Unconscious Incompetence, when you don’t know that something’s wrong, I found one of the fastest ways to level up is to use a psych hack, to go into your own psychology and take a simple win from somebody else and apply it. Suddenly you find things you didn’t think about before.
You’re now thinking, you’re asking the right questions, you’re in the right place and you start getting the success that seemed almost unobtainable before because you didn’t have that one piece of the puzzle.
I’ll give you an example. At this point in time, I spend most of my time coaching high-end executive CEOs, helping them improve and grow their business. I’ve been doing this for about 15 different companies, all earning seven figures or more, and whenever I work with them, they will give me a problem they don’t know how to solve.
Not only do they not know how to solve the problem because the information is missing, but they’re also Unconsciously Incompetent. They don’t even know where to go to look for the solution. They’re trapped in this cycle where they cannot get out until they’re given a piece of information that enables them to find the solution to that issue.
So it happened in my own business for a while. I was stuck trying to grow my audience. I was trying to grow specifically a Facebook audience in a very small niche. It was growing, but it wasn’t growing at a good rate. Then someone said to me, “have you ever considered having a minimum metric of growth?” And it was just something I’d never considered before. I was always just pushing for growth, but I never considered a minimal accepted amount of growth.
So the person said, “why don’t you just try to add a thousand new followers every single month, no matter what the cost, even if you spend more than the market average, why not gain a thousand followers a month and use that metric to improve from?” So instead of just gaining a couple of hundred followers a month, I focused on getting a thousand followers a month, and then my growth was great, but I was overspending on it. I was spending money on ads, all I had to do was refine my process until gaining a thousand followers a month was easy.
Jordan: This is like dollar cost averaging in a way in investing. Have you ever heard of that term?
Adam: I have, yeah I have. But you should explain it anyway for the listeners in case they don’t.
Jordan: I will, yeah. So essentially what this is is people go, “oh man, I should have bought Amazon last year. I thought about it, now it’s really high.” Then a year from now, they go, “oh man, I thought about buying it the year before and last year now it’s even higher. Oh, I’m so stupid.”
So what dollar cost averaging is, and this is great for crypto too, because it’s always going up and down, and people are always trying to time Bitcoins. “It’s low, oh crap. It wouldn’t even go lower. Oh my God, it’s 10 grand.” Dollar-cost averaging is let’s say time interval, let’s say for crypto could be a week or a day and for regular investments, it might be every month. For me it’s every month or so, what I do is I will buy index funds or mutual funds every single month.
Therefore, since I’m buying every single month, whether the market’s low or the market’s high, what happens over a period of time, over years, is my dollar cost average is an average price between all those ridiculous highs and all of those super low lows. So you end up buying by definition in the middle because it’s the average.
So you go, “oh, okay. I did pretty well” because when you try and time things, you end up trying to beat the market. Oh, I bought it and it was low every time. Oh wait, I actually only bought it when I thought it was going to be low, but it ended up being high.” You end up paying more trying to beat the market or the same amount than you would.
If you just said every third Tuesday of the month, as long as it’s raining, I’m going to purchase some stock. If you do that, you will end up in the same place or better as something like 51 or 60% of the market. It just doesn’t matter because you’re taking what is essentially a random occurrence according to most of us because we can’t predict market behavior. In fact, nobody really can. We’re just playing roulette and I’m going to pick a random number and I’m going to play every minute and it’s going to be a different number every single time you’re going to win.
Sometimes the odds and rules are stacked against you. But if the odds were about 50-50, you would still end up right on the average. That’s the way that you guarantee that you end up on that average. So dollar cost averaging stops you from wasting money and stressing out about when you buy. That sounds kind of like what you’re saying with purchasing these specific followers, you’re saying it might be expensive, but I’m going to get them anyway so I get this one metric in place, which is getting the growth and then you optimize for the cost of each because you’ve already figured out how to make it grow.
Adam: Dude, exactly! And this is what I love, what you just gave is exactly that. It’s a psychology hack specifically for anyone who’s maybe scared of investing but might want to put their toe in the water, and I’ll double down on it. I’ll tell you one of the best investing tips I ever got from Warren Buffett, which was an amazing lesson.
It’s, buy what you know. So if you don’t know what stock to buy, buy the companies that you know, that way, if you like the brand and you’re buying the product, you’re a supporter of it. Chances are if you like it, it’s probably going to keep growing. So if you know it and you like it, buy it.
Jordan: That makes sense, and here’s the thing. People go, “Warren Buffett, he can beat the market. What the heck, I don’t understand what Jordan’s talking about.” Yes, okay. So what Warren Buffett has done is he’s gone. “Hmm, all right. I want to beat the market and I want to beat it in investments of companies.”
So Warren Buffett isn’t necessarily just going, “Hey, I see this APM stock getting really good.” He’s going, “I’ve read 187 books in the last quarter about artificial intelligence on the blockchain and talked with every expert in every company in that niche. So I’m going to buy this company that makes video cards because every AI computer they want and build uses video chipsets. Since they’re all going up in value and funding and they’re getting interest, they’re going to need more of these chips.”
So he’ll buy that company and then people will go, “whoa, how did you know that that was going to happen?” The answer is he’s 99.99% in the 99.99 percentile. So he’s 20000% more educated than other people, even laymen in that field or bottom rung in that field. He knows more about that market than pretty much every single person in the world because he’s gotten a decent education from top-level executives or experts in the field from different angles.
So he doesn’t just talk to the president and CEO of HP, Hewlett Packard. He talks to every single person in the printer business that understands the macro of that market and then goes based on what I know now they’re going to need a hell of a lot more toner stuff, so I’m going to buy the company that manufactures toner.
Adam: Yeah, exactly because he’s buying what he knows and that’s exactly this concept of unconscious incompetence. He bypasses it continuously by reading about things he doesn’t know which opens up all these crazy possibilities. I had one recently that was crazy. I decided I don’t know anything about running conventions. I know a lot about events, but not about conventions. I don’t know if you follow trends, but right now there’s actually a lot of money in conventions.
A lot of people have been running events for a while, but conventions are a higher profit event. So I realized, I knew nothing about conventions but a lot about events. So I wanted to level myself up, and the way I did it was I announced a convention. I said I’m going to run a convention in one of my niches, and I have no experience or a lot of knowledge.
Didn’t know what I was doing, got a vendor to donate the room so I didn’t have any costs for the room itself. I ran a convention and I didn’t know if it would be a success or a failure. Now Jordan, between you and me, depending on how you measure this event, it was either a success or a failure. If you look at net earnings, I probably lost two and a half thousand dollars.
So there was an amount of loss there. However, during the event, when I realized that we weren’t going to net positive, I brought in a film crew and I had the film crew interview all of the public speakers that came to the event. In return, we generated 66 private videos from that event. On average, in this particular niche, we produced 150 videos a year. So we did 66 in four days instead.
So when you talk about loss, sure, I lost two and a half grand, but I also got six months of video production done during that time, which saved me hundreds of thousands of dollars. Then because I ran this event and we made it look like a success, even if it wasn’t, we took videos of the talks, we had about 50 attendees and we’d crowd them into every shot so it looked busy.
The largest competitive event in Texas convention reached out to us and said they were having difficulties with their partners. They had a personal issue and one of the partners wanted to sell his ownership in this huge convention. That’s the biggest in Texas in the same niche. So they reached out to us and said, would we buy it off them? We ended up in negotiation with the partner that was staying on board, he was a minor partner who owned 33% of the business.
We bought out the major partner who took a discount, he just wanted to get out because he was tired of arguments with his partner. Now coming up this August, we are going to be running the largest convention in Texas for this specific niche with an expert who’s run it for the last 10 years.
Jordan: It sounds like a win. There’s a logical fallacy that I like to apply very selectively when I look at things that otherwise have gone wrong. It’s called “Shooting the Barn” or the Texas Sharpshooter fallacy.
Adam: I love this, by the way, the fact it’s “Texas” is killing me.
Jordan: Yes, it’s really called the Texas Sharpshooter and when you’re going for a Ph.D. or you’re writing some sort of scientific journal paper, they don’t like it when you do this, but it applies well to life. So what this is, is you look at the data that you got from your experiment in science, and it’s crap, this shows a different conclusion than the one I wanted.
But if I look at the data from these very specific subsets and I sort of compartmentalize that, it gives me the conclusion that I want. The reason scientists hate it is because imagine you’re looking to say, “smoking doesn’t cause cancer.” So you shoot all these holes in the side of the barn. That’s the Texas Sharpshooter thing. Then you draw a circle around the ones that you want and say that was the target.
Everything else that fell out, you just ignore it. You draw the target where the most holes are in the side of the barn. That’s bad because then you go, “well if I ignore all the people that had other health issues like this person was hospitalized for the flu 10 years prior. Maybe it wasn’t the smoking that killed him. Maybe it was that flu.” You get rid of that and then you just go, “well, in that case, everybody else was just killed by random other diseases and smoking. We can’t really attribute that to being the cause of death.”
That’s what bad scientists that are biased will do, and that’s why the Texas Sharpshooter fallacy is bad. However, in life, it’s great because you go, “well, I lost a bunch of money on this convention, but it would’ve cost me three, four times as much to get this many videos produced and it would’ve taken a lot longer. So I’m coming out on top”, and it’s like, okay, well that wasn’t what you set out to do, but the byproduct was just fine. So in that way, I’m sort of happy saying, “look, it’s a little bit of a logical fallacy because we didn’t hit the target that we wanted, but we can draw a different target that’s equally or greater in value, and I think we’re fine with this.”
Adam: I love that and I want to address it because I think that’s really powerful. I do that with every project on purpose, but I go in with the goal to remove unconscious incompetence. I ask myself, “What is the financial value of removing a block that I don’t know exists?”
Knowing that I don’t know anything about running conventions and daring to run one, I calculate that the cost of removing that block is two and a half grand. That’s how I go about removing my unconscious incompetence. But I always try and stack it thinking, “What else can I win as part of this process?”
Jordan: Yeah, that makes sense. I like the idea of hacking anything, but I also like the idea of being sneaky about it. Here’s the thing we didn’t talk about in this particular example. There’s something to be said for tricking yourself into becoming a little bit happier, as long as you’re not diluting yourself in a way that’s going to harm you down the line. Does that make sense?
Adam: Yeah. I love that. That’s right. That’s exactly it.
To listen to the full episode of the most comprehensive podcast about strategically building and growing your business, the S.M.A.R.T way, click on any one of these platforms and subscribe!
Links
- Jordan Harbinger show
- Moby
- MTV Award
- Reid Hoffman
- Eric Schmidt
- Mike Tyson
- Mark Manson
- Benjamin Hardy
- Network Effects
- Xbox
- Willpower Doesn’t Work, Discover the Hidden Keys to Success
- Texas Sharpshooter Fallacy
- Warren Buffett
- Bitcoin
- Dollar-cost averaging
- The Conscious Competence Learning Model
- Four stages of Competence
- Jordan Harbinger
