Author Ori Brafman's book can help advisors help their clients avoid the perils of group dynamics.
Seems cuckoo; but it makes perfect sense, actually, that the Library of Congress catalogs the book, Sway: The Irresistible Pull of Irrational Behavior under both "Stupidity" and "Success".
Smart, successful people and companies often make really stupid decisions when they fall victim to hidden psychological forces -- sways -- that unconsciously influence behavior and undermine logic. So say "Sway" co-authors, brothers Ori Brafman and Rom Brafman.
By realizing that such devilish undercurrents have power over clients' investment decisions, financial advisors can help them make sounder ones.
"When you're in a situation that has a lot on the line and are being pressured to make a decision, you're much more liable to be irrational," says Ori Brafman, 33, also co-author of the bestselling The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations.
An expert in advising companies and armed services on how to strategically structure their organizations, Brafman is an in-demand speaker by firms such as Smith Barney, Microsoft and Amazon, as well as The Harvard Business School and the U.S. military.
In Sway, he and brother Rom, a psychologist, discuss the powerful, concealed forces that lead to distorted decision-making. These include loss aversion (because pain of loss is more intense than the pleasure of gain); diagnosis bias (labeling people, ideas -- stocks! -- based on an initial opinion); and value attribution (relying on preconceptions about the value of a person or thing).
Publication of Brafman's first book, Starfish -- detailing how networks with shared ideologies but without a central structure work successfully -- brought him impressive Department of Defense and FBI Counterintelligence consulting jobs on how to fight decentralized networks such as Al Qaeda.
From there, he began focusing on the ways decisions are made. "There are organizations that are very, very successful; but time and again their decision-making gets handled by sways," says the peppy Israeli-born, Texas-bred Brafman, who lives in San Francisco.
A man of many talents, with a BA in peace and conflict studies from the University of California, Berkeley, he has founded a handful of unique entrepreneurial enterprises, authored a New York Times bestseller and continues to earn kudos as a charismatic public speaker. Oh, he also won a Mustang convertible on TV's "The Price Is Right," starting with his spot-on bid for a pair of Santa and Mrs. Claus dolls. Apparently he had more than enough grace under pressure to resist the self-sabotaging power of sway.
"Ori is refreshingly enthusiastic about everything -- he just loves life," says Paul Butler, an owner and CFO of software firm ESi Acquisition. Brafman was keynote speaker at the company's conference of worldwide emergency-center managers two years ago. "He's very curious: As keynote speaker, he immediately set out to learn as much as he possibly could about our company."
A perfect example of the subversive force of "group dynamic" sway could be observed last fall when the securities markets nose-dived. Many investors panicked, pulling out all their money after viewing frenzied television reports and dire prognostications.
"One of the worst things people can do is make their investment decisions by listening to what they're saying on TV: 'The roof is on fire -- we're headed for a depression!' Sensationalism exacerbates people's irrationality," says Brafman. "But telling you to talk to a good financial advisor and take a measured, long-term approach doesn't sound sexy on TV."
Born in a suburb of Tel Aviv, Brafman came to the U.S. at age 9, when his dad decided to return to school for an engineering degree. The family settled in El Paso. "I had the craziest Israeli-Texan accent!" he recalls.
Knowing few people, Ori and brother Rom, two years older, grew closer learning to adapt to the new, different culture. The two brothers, who are writing another book together, work side by side in the same room. "We bounce things back and forth. Our interaction varies from highly collaborative to highly bickering," he says. "We argue over things all day long -- in Hebrew-English!"
In college Brafman showed a clear entrepreneurial bent as founder of Vegan Action, a company that would bring vegan chow to college dining halls nationwide. After graduation, he led a marketing campaign for U.C. Berkeley's Young Musicians Program for disadvantaged youth. Then, MBA in hand from Stanford Business School, he co-founded Courtroom Connect, wireless networks making possible the instant sale of transcription services. Brafman next co-founded Global Peace Networks, now consisting of 1,000 CEOs working on conflict resolution and economic development projects.
He began writing books just a few years ago. "I never expected to be an author," he says. "But it lets you follow what really interests you and translate that to a large readership, which, I hope, makes a difference in their lives."
He regards "Sway" as a tool to help, among others, financial advisors help clients. "It provides a framework of how people are going to behave in certain financial situations. In a crisis, they [tend to] overreact and make non-rational decisions."
But sways' dynamic, diverse influences strive to hold sway 24/7. People, the brothers Brafman write, "are constantly sending and receiving cues and subtle messages to and from one another -- swaying and being swayed -- even if our brain hasn't been let in on the secret."
Freelance writer Jane Wollman Rusoff is a Los Angeles-based contributing editor of Research and is the founder of Family Star Productions.