Month / April 2012

Note: I’m proud to have co-authored this post with Jason Hreha, the founder of Dopamine, a user-experience and behavior design firm. He blogs at persuasive.ly

Yin asked not to be identified by her real name. A young addict in her mid-twenties, she lives in Palo Alto and, despite her addiction, attends Stanford University. She has all the composure and polish you’d expect of a student at a prestigious school, yet she succombs to her habit throughout the day. She can’t help it; she’s compulsively hooked.

Yin is an Instagram addict. The photo sharing social network, recently purchased by Facebook for $1 billion, captured the minds of Yin and 40 million others like her. The acquisition demonstrates the increasing importance–and immense value created by–habit-forming technologies. Of course, the Instagram purchase price was driven by a host of factors including a rumored bidding war for the company. But at its core, Instagram is the latest example of an enterprising team, conversant in psychology as much as technology, that unleashed an addictive product on users who made it part of their daily routines.

Quick: what’s the biggest bottleneck in your company? Yup, we both know it’s the Information Technology department. Let’s face it, nobody likes IT people. For all of their technical wizardry, IT is where good ideas go to die. We follow their onerous documentation requirements and patiently wait in line through endless backlogs, yet somehow IT still can’t seem to get their work done.

Hating the IT department is a common sentiment in almost every company big enough to have such a group. But the truth is, it’s not the IT people’s faults. In fact, a despised IT department is a symptom of a CEO who doesn’t understand psychology. It is a corporate dysfunction for which management, more than anyone else in the organization, is responsible.

 The truly great consumer technology companies of the past 25 years have all had one thing in common: they created habits. This is what separates world-changing businesses from the rest. Apple, Facebook, Amazon, Google, Microsoft, and Twitter are used daily by a high proportion of their users and their products are so compelling that many of us struggle to imagine life before they existed.

But creating habits is easier said than done. Though I’ve written extensively about behavior engineering and the importance of habits to the future of the web, few resources give entrepreneurs the tools they need to design and measure user habits. It’s not that these techniques don’t exist — in fact, they’re quite familiar to people in all the companies named above. However, to the new entrepreneur, they largely remain a mystery.

It’s time to abolish the reference check. The unpleasant process of calling up a job applicant’s former boss to gab about the candidate’s pluses and “deltas” is just silly. Maybe if we all just agree to stop doing it the practice will go away, like pay phones and fanny packs. Instead, I’ve learned a better way to hire that leverages a universal human attribute—namely, the fact that we’re all lazy.

What’s my beef with reference checks? They don’t accomplish the job we intend them to do. In a startup, you can’t afford to hire B-players. But reference checks, which are intended to do the screening, fail to eliminate these candidates who are just so-so. This happens because the person giving the reference has no incentive to say anything but good things about the candidate. Telling the whole truth, warts and all, could expose the former boss to a defamation lawsuit. But legal action aside, no one likes to speak poorly about an ex-colleague. It’s bad karma and just feels icky.