Charles Duhigg- Secrets of Communication (EP.394)

0:01Capital Allocators is brought to you by my friends at WCM Investment Management. To outperform the markets, you have to do something differently from others. In my 30 -something years investing in managers, there may be no one I've come across who does that as clearly and as well as WCM. I've seen it up close as an investor in their international growth strategy for the last five years. WCM is a global equity investment manager, majority owned by its employees. They believe that being based on the West Coast, away from the influence of Wall Street groupthink, provides them with the freedom to live out their investment team's core values, think different, and get better.

0:43As advocates of integrating culture research into the investment process and advancing wide moat investing with the concept of moat trajectory, WCM has delivered differentiated returns while building concentrated portfolios designed to stand out from the crowd. WCM is committed to defying the status quo by dismantling outdated practices, believing in the extraordinary capabilities of its people, and fostering optimism to inspire each individual to become the best version of themselves. To learn more about WCM, visit their website at wcminvest .com. and tune into this slot on the show to hear more about WCM all year long.

1:27This testimonial is being provided by Ted Seides and capital allocators who have been compensated a flat fee by WCM. This payment was made in connection with capital allocators testimonial and production of podcasts and does not depend on the success or level of business generated. The opinions expressed are solely those of capital allocators and may not reflect the opinions of others. Investing involves risk, including the possible loss of principle. Past performance is not indicative of future results. Please visit wcminvest .com for WCM's ADV and further information. Capital Allocators is also brought to you by Morningstar.

1:55What if data wasn't just a bunch of raw numbers, but a clear and decisive language to help connect investment strategies with long -term investor needs in a constantly evolving market landscape? Morningstar created that language, bringing order and utility to insight -rich data so you can prepare for your next opportunity, no matter the asset class or market. Visit wheredataspeaks .com to see what Morningstar data can do for you.

2:31Hello, I'm Ted Seides, and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation. Through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at CapitalAllocators .com. All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.

3:11Clients of capital allocators or podcast guests may maintain positions and securities discussed on this podcast. My guest on today's show is Charles Duhigg, a celebrated writer for The New Yorker and author of bestseller The Power of Habit. His latest book, Super Communicators, describes how to effectively communicate in conversation. Our conversation covers Charles' path to writing business stories and personal books and turns to his latest tour de force. We discuss the science behind connection, three types of conversations, methods to become a better communicator, and tools to navigate challenging conversations.

3:54Charles' book and words feel like unlocking a secret language that can help anyone connect better with others. and he embodies the archetype of the super communicator he describes. Before we get going, here's a shout out to all the investor relations and business development professionals. Your role is one of the toughest in the industry because unlike in many other industries, the functions of marketing, sales, and customer relations rarely drive purchase decisions in investing. It's often hard to know how to move the ball forward when allocators are busy and opaque about their process. So we decided to create a Capital Allocators University experience just for you.

4:40On December 3rd and 4th in New York City, I'll be joined by your peer and superstar Rahul Mutgal, branding expert Jen Procek, founder of Procek Partners, conference wizard Ron Biscardi, founder of iConnections, and investment leaders Sarah Samuels from NEPC, Dave Moorhead from Baylor and Shannon O 'Leary from St. Paul and Minnesota Foundation to help you learn best practices for understanding allocators, developing relationships with investors, and building a brand through workshops and peer discussions. You can learn more and sign up to join us at capitalallocators .com slash university. Thanks so much for spreading the word about our newest Capital Allocators University course for investor relations and business development professionals.

5:30Please enjoy my conversation with Charles Duhigg. Charles, thanks so much for joining me. Thanks for having me. I would love to hear about your background and path to writing from the very traditional journalistic background of Yale and Harvard Business School. I have to say when I graduated from HBS, I was the lowest paid member of my class that was working for the first six years. I was an editor on the Daily News when I was at Yale and then left and I started a company and lived abroad for a little while. And then after starting the company, realized that I really was not great at management, that there was a lot that I needed to learn.

6:05So I applied to HBS and I got in and went to business school. And about midway through the first year of business school, we ended up selling the company. So suddenly I had all this freedom and I spent the summer between first and second year, which as you know, we usually spend that summer interning at a place and trying to convince them to hire you. I went back to New Mexico where I'm from, and I spent the summer working for this private equity real estate group. I was trying to decide whether to go into business and politics in New Mexico or become a journalist. And I decided that if I ran for politics and I lost, that my life would feel unsatisfying.

6:37Whereas if I went into journalism and it didn't work out as well as I had hoped, it would still be fascinating to me. So I decided to become a journalist. And luckily, it has gone well. So what became the focus of your journalistic work? So I always write about business. I really like writing about business. I like stories about business. Business is something that all of us do, and I think it touches our lives in a very visceral way. So a lot of my journalism for the New York Times and now for the New Yorker is rooted in trying to understand commerce and what capitalism means today. When I started writing books, though, one of the things I discovered is that I can take those same tools and I can apply them to topics that are much more focused on the types of questions that I just had about my life.

7:22A decade ago, I wrote this book called The Power of Habit about the science of habit formation. And it really started with me saying, if I'm so smart and I have all these fancy degrees, why is it so hard for me to go running in the morning? What am I doing wrong that it's hard for me to eat healthily? So I just wanted to understand, what do we know about the neurology of habit formation? And out of that grew this book. And similarly with this book, Super Communicators, it really started with me recognizing that although I was good at a number of things, I was not as good at communication as I wanted to be.

7:52And that was surprising because I'm a professional communicator. I would get in these dumb fights with my wife or they made me a manager at the New York Times. And I was good at everything except the communication part. So I thought, let me just see what researchers and scientists know about communication. And of course, it turns out we're living through this golden age of understanding communication like never before. So that's how it works. What did you find when you dove into research on communication? So the biggest thing that I found is that we are living through this golden age. Because of advances in neural imaging and data collection, we understand what happens inside people's heads when they communicate like never before.

8:27And for me, the pattern that I fell into with my wife that led me to this was I would come home from work after a long day and I'd complain about my day to her. And she would very reasonably offer a good suggestion, like, why don't you take your boss out to lunch and you guys can get to know each other better? And instead of being able to hear what she was saying, I would get even more upset. And I would say, you're supposed to be on my side. Why aren't you outraged on my behalf? And then she would get upset that I was attacking her. I think everyone literally in a relationship has had this experience.

8:52So I went to researchers and I said, what's going on here? Why does this pattern happen again and again? And they said, well, look, here's one of the big things that we've discovered. We tend to think of a discussion as being about one thing. We're talking about our day or our kids' grades or where to go on vacation next year. But actually, every discussion is made up of different kinds of conversations. And in general, those conversations tend to fall into one of three buckets. There's these practical conversations where we're talking about making plans or solving problems. But then the second bucket is there's these emotional conversations where I might tell you what I'm feeling, and I don't want you to solve my feelings.

9:27I want you to empathize. And then finally, there's this third bucket of social conversations, which is about how we relate to each other and how we relate to society and the social identities that are important to us. And what they said is, what we now know is that if you are not having the same conversation at the same time, you can't connect with each other. So when I was coming home, I was having an emotional conversation with my wife, and she was responding with a practical conversation. And those are both totally legitimate conversations. But because they weren't the same kind of conversation at the same moment, it was very hard for us to hear each other.

9:57And this has become known since then as the matching principle in neuroscience and psychology, that you have to have the same conversation at the same moment in order to connect with each other. But that's one of the big insights is that paying attention to what conversation is occurring and learning to recognize and match others and invite them to match you is really important. That's what makes us a super communicator. Are people naturally super communicators or is this something you can learn over time? Oh, you absolutely can learn it. It's a learned skill. We know this from experiment after experiment, much like reading.

10:31Anyone can learn to read and anyone can learn to be a super communicator. And what's interesting is that we are all super communicators at one moment or another because our brains have evolved to be so good at communication. Here's a good example. So if you came home after a long day and you wanted to call someone who you know would just make you feel better, just talking to them, do you know who that person is? Yeah, there's a couple of them. Tell me one of them. Oh, my wife. So when you're talking to your wife, she's a super communicator for you, and you're probably a super communicator back to her.

11:01And you probably do things like you ask each other deep questions, you prove that you're listening, you match each other, the type of conversation you're having, but you also reciprocate vulnerability and authenticity. So we do this very instinctually with a set of people. There are some folks who can do this with literally anyone. They can connect with anyone. And for them, it's not so much that they're special, that they're extroverts, or that that they're charming. It's that they simply recognize that what you're doing with your wife is a set of skills that you can use with any other person.

11:32The same way that we learn to read by reading nonfiction, that doesn't mean that we can't read fiction or we can't read cookbooks. Reading is a fungible skill. Communication is also a fungible skill. And once you learn the principles of what real communication is, you can use them with anyone. So any of us can become a super communicator. What are some of those core principles that are super communicators? One of the big ones is asking questions and asking the right questions. So people who are consistent super communicators, they tend to ask 10 to 20 times as many questions as the average person.

12:05And I mentioned that some questions matter more than others. And within psychology, these are known as deep questions. And a deep question is something that asks about our values or beliefs or experiences. And that can sound intimidating, but it's actually as simple as if you meet someone and you ask them, where do you live? And they say, oh, I live in the Heights? And you say, why'd you decide to move up there? Or what do you love about that neighborhood? Or you meet someone and you say, oh, what do you do for a living? They say, I'm a doctor. The most natural question is to say, oh, where do you practice medicine?

12:34But if instead you ask, oh, what made you decide to go to medical school? Those are deep questions because what they do is they invite the other person to talk about their experiences and their values. And they don't seem like overly intimate questions. They don't seem like weird questions to ask. But when we ask deep questions, what it does is it gives someone else a chance to tell us who they really are. And if we listen to what they're saying, we can figure out what mindset they're in, what conversation they want to have. But equally, when we reciprocate that, when we say, oh, that's interesting.

13:04You went to medical school because you saw your dad get sick. I actually became a lawyer because my uncle got arrested when I was a kid. When we reciprocate that authenticity, what it does is it makes us feel closer to each other. In fact, it's basically hardwired into our brains. We can't help it. So that's one of the first skills is asking questions and in particular, asking deep questions. What are the next most important skills? Well, once we've asked those questions, what we need to do is we need to prove that we're listening to the other person. That's why this reciprocation is so important is because we've all been at the situation where we're at a party and someone asks us a question like, where'd you go on vacation?

13:40And we realize within 10 seconds, they don't care where we went on vacation. They just want to tell us where they went on vacation so they can brag about their yacht. So when we reciprocate, when we prove that we're listening by asking follow -up questions, by sharing something about ourselves, in a conflict, there's a method known as looping for understanding that's incredibly powerful. Study after study has shown that it's the best way to resolve a conflict. It has these three steps. Step one is you ask a question, preferably a deep question. Step two is you repeat back what you heard the person say in your own words.

14:11prove to them that you've been listening to them. And then step three is you ask if you got it right, which in a conflict, that third step, which is the one we usually forget, is incredibly powerful because what we're doing when we ask, did I get that right? Is the other person might say, no, you didn't get it right, which is useful to know. More likely, they're going to say, yeah, I think you got it right. And what we're actually doing is we're asking them for permission to acknowledge that we were listening. So the second thing, proving that you're listening, that's really, really powerful and really, really important.

14:40And then the third skill is basically just to think a little bit more deeply about the conversation you're having. The goal of a conversation is to connect with the other person. And what we find is that people who are super communicators, if you were to ask them, for instance, have you always been good at communication? What they say is no. When I was in high school, I had trouble making friends. So I really had to study how kids talk to each other or my parents got divorced. I had to be the peacemaker between them. People who are super communicators are super communicators because at some point they just had to think half an inch deeper about how communication works.

15:15And it's that paying attention to how communication works, showing the other person that you want to connect with them. That's the thing that makes us into a super communicator. There's an interesting balance and you're asking a question, you're looping for understanding, but then at the same time you mentioned reciprocating. There are times where, as you mentioned, someone asking you about where you went on vacation just so I could tell you where I went on vacation. How do you figure out the balance between what's real reciprocation and what's just talking over someone so you can be talking and not listening?

15:45I think the right way to think about it is, are you trying to expand the spotlight on this person or are you trying to steal the spotlight for yourself? Reciprocation doesn't always mean talking about yourself. So if someone said to me, last week was really tough because my aunt passed away. The exact wrong way to reciprocate is to say, I understand exactly what you mean. I had a dog that died seven years ago. It left me a wreck for a month. That doesn't feel like I'm reciprocating or I'm listening. That feels like I'm trying to steal the spotlight. But if I was to say, oh man, I know how hard that can be.

16:17Tell me about your aunt. What was she like? That's an act of reciprocation because I'm emoting. I'm showing them that I'm listening and that I want to learn more and that I understand that this person was important to them. So there are some times when talking about yourself is really powerful. You became a doctor for this reason. Interesting, I became a lawyer for a similar reason. That doesn't feel like I'm trying to steal the spotlight. It feels like I'm trying to relate to you to find this thing that we have in common. The truth of the matter is that the question you asked is a tough one because there is no perfect formula that's really easy to apply, except to say what's really important in a conversation is authenticity.

16:53So if I'm authentically interested in you, I'm going to know when to reciprocate and how to reciprocate pretty easily. If I'm just looking at the conversation with you as an opportunity to talk about myself, the other person's going to pick up on that almost immediately. If you take those three principles and then apply them back to this three types of conversations, someone thinking a little bit more about what's happening in the conversation, you use the example with your wife of someone's sharing something emotionally, you're trying to give a practical solution, and that doesn't go well. When do those other three types come into conflict?

17:28Well, they always come into conflict when we're not having the same kind of conversation. So in Super Communicators, in the book, there's a story about Netflix and this controversy that they had at Netflix over race. And one of the things that they found is that when some people came into conversations about race within the company, which was a very polarized conversation, one of the executives had used the N -word in a meeting and it had just set off this firestorm that lasted for months. Some people came to it as a very practical conversation. Oh, here's where it's appropriate to use the N -word and here's where it's not appropriate to use the N -word.

18:00And other people were coming to the conversation saying, no, this is really emotional for me. When I hear that word, it makes me feel like I don't belong here. It's inherently offensive. There's never a right time to use it. And I think what's important there is it's not like either of those conversations were wrong. It's not like either of those conversations actually had to be in conflict with each other. It's that if two people are having those conversations at the same time with each other, it's almost impossible for them to communicate. Because one person is saying, look, this matters to me is a really emotional issue.

18:30It might even be a social conversation. This is about how I relate to the company. This is about the social identities that are important to me. And the other person is saying, oh, no, this is just a practical question. It's just a question of what do the rules say about when it's appropriate and when it's not appropriate. It feels to both people, the other one isn't listening to them. It's not that these conversations come into conflict. It's that if you're not having the same conversation, then conflict can grow very easily. So how about the social conversation piece? How does that play out?

18:58So a social conversation is when we're talking about how we relate to each other or how other people relate to us or just our social identity. Tell me what you do for a living. I guess I'm a podcaster at times. How do you feel about that? Because you haven't been a podcaster your whole career, but now you are a podcaster. When you're at a party and you meet someone and you say, I'm a podcaster, how do they react? There's a way that eyes light up that they don't. If you say you're an investment manager, that's for sure. Okay. Okay. So what's interesting is when I ask you what you do for a living, you introduce yourself with an identity, a social identity.

19:31I'm a podcaster. You could say I'm an investment manager, but I've been spending more time doing podcasts and X and Y and Z. But the identity of being a podcaster seems important to you because people light up when you tell them it. It seems more interesting to you to be a podcaster than to be an investment manager. So if we continue to this conversation, it would probably be a social conversation because what we're talking about is not necessarily just what the activity of podcasting is like, but how you see yourself in the context of how you spend your time. And I'm certain you went to HBS and I went to HBS, and that's a social identity that's probably important to both of us.

20:04It's not the only social identity and it's not the most important one, but we're trying to figure out what overlapping experiences did we have? How do we see ourselves and see the world? What people do we know in common that help us understand who the other person is. Now, these social conversations, as I mentioned, there's a story about Netflix in the book. There's also a story about a CIA officer trying to recruit an asset. These social conversations can feel scary sometimes when we're talking about politics or race or sexual orientation or really any number of things. And they get scary usually when we tend to focus on just one social identity.

20:40I had this experience recently. I was in a meeting and one of the guys in the meeting with me was African -American. And the issue of policing came up. And someone else in the room was like, well, you know, Jim, as a black man, how do you think about policing? And I was just thinking to myself, poor Jim, you just got pushed into this corner where it's, you're the black guy in the room. You need to represent all black voices. And we know that this happens all the time. This happens to us. This happens to other people. So the right way to have these social conversations is to not avoid the fact that Jim is Black and that he probably has different experiences than the rest of us, but rather to acknowledge that all of us contain many, many social identities.

21:16We all contain multitudes. So I jumped in and I was like, Jim, I'd love for you to answer that question, but I also know you're an attorney and you probably think about policing as an attorney in a different way. And you're a father. And I know that you coach Little League and we're on a bunch of committees together. You wear all these different hats. Tell us what you think about policing, given the fact that you see it from so many different perspectives. At that moment, what's happening is that Jim is being invited to actually express who he is. We are acknowledging all the different social identities that all of us carry around within ourselves.

21:49And when we push someone into a corner and we say, oh, you're just one social identity, you're just the woman in the room or the black guy in the room or the investment manager in the room, that doesn't feel good. And in fact, we have this automatic instinct to push back. But when we say to someone, you have a bunch of different identities, tell me how those identities mix together to create who you are and how you see the world. That feels like an invitation to be authentic and to say something meaningful. We're going to take a quick break in the action to tell you about SRS Aquium. Want to make sure your M &A processes aren't stuck in the past?

22:25Partner with a company that's been defining the future of dealmaking for nearly two decades instead. When it comes to M &A innovation, SRS Aquium has reshaped the way that deals get done, streamlining processes for maximum efficiency and minimum headaches. Professional shareholder representation, online M &A payments, digital stockholder solicitation, SRS Aquium pioneered each and continues to set the bar for game -changing innovation. So leave the days of disjointed deal management behind and define your future with SRS Aquium, the smartest way to run a deal. Learn more at srsaquium .com. That's S -R -S -A -C -Q -U -I -O -M .com.