SUMMARY KEYWORDS
recession, clients, people, scarcity, scarcity mindset, survival mode, literally, talking, mindset, thinking, breathing, decisions, option, business, money, state, adapt, realize, slashed, point
SPEAKERS
Alastair McDermott, Alistair McBride
Alastair McDermott 00:01
I’m seeing the word recession, appearing in my social media timelines. And it’s come up in conversations I’ve had with my coaching clients recently. And recession is a real fear. But the fear can also have a toll on our brains a real cost. And it can put us in what some people call a scarcity mindset. And that scarcity mindset can actually impair our decision making, which leads us to make choices that actually do lead us into scarcity, which becomes the self fulfilling prophecy. So what can you actually do about that? So I spoke with my friend, Alan McBride, about this. And when I realized the value of the conversation that we were having, I interrupted him and asked if we could hit record, and then just kind of restarted the conversation a little bit. So this is our own unfiltered live conversation as we recorded it, as we talk about the topic of scarcity mindset, and practical steps in dealing with it. So this is a unfiltered, raw take on just some things about scarcity mindset. And what you can actually do, what changes you can make in your business that may be able to help with that. I was talking to a coaching client this week, and he used the term like, I feel like I’m drowning, when he was describing this, so and that can, you know, that can mean a lot of different things. But for so just in this context, we’re talking about the scarcity mindset, when people have fears of recession, you have maybe you have clients who say no to projects when you thought they were going to go ahead with them. So and one thing that I know about this scarcity mindset, we talked a little bit about this earlier, after off tape. But one thing I know about scarcity mindset is when you are in that mindset, it actually forces you to make bad decisions, this book called scarcity, which talks about this, but you actually make bad decisions and poor choices because of that mindset. And that’s why it’s particularly dangerous.
Alistair McBride 02:08
Yeah, it’s because as we were saying, You’re in much more of survival mode. Yeah. And now you can do the extreme, more extreme version of survival mode, we’re talking about fight or flight. But either which way that what’s typical of that is that people are quite tunnel visioned. We’ll think of it literally for survival. You don’t need to see every option you just see exit sign or a salvation that you run toward or fight toward. And that’s it. So it was helpful in that context. It’s not helpful in in a lot of ways in a modern business context, you know, where you’re not really thinking through the problem that you’re just acting II, often with a very short term ism. It’s also the it was interesting that when you were explaining there, you came in, I felt almost in the middle. That you were talking and you’re right, I get it. You’re teeing it up. But it’s one of those interesting things that you were saying. Scarcity Mindset, but it’s where does that come from? It’s, as you said, it’s from clients where suddenly there was there was opportunity a couple of months ago, or is it people were interested? And there’s like, oh, we can’t do that. Because our budgets are slashed. Oh, we’ve no budget for that. And you’re hearing this and hearing this and hearing this. And so it’s that classic thing.
Alastair McDermott 03:33
That because of fears of a recession specific exactly
Alistair McBride 03:36
because of fears of a recession, but this is the point is that people talk themselves into recession. And then it’s a chain reaction of people. Oh, well, I’m not talking myself into recession, but they’re telling me there’s a recession because of the way they’re acting. So then you have to adapt. But as a business advisor, friend, we’re friends it’s me many years ago, when I was an art dealer, when the recession 2008 hit, and I was basically shutting up shop, essentially, because the first thing to go was, you know, buying art for businesses. And they said to me, okay, that makes sense. I can see why but he kind of wouldn’t let me away with the simple explanation that the economy is killed. And I liked that. I think I even liked it at the time. But he said somebody in your industry is making a killing right now. Who is it? And I said, oh well off the top my head it’s probably the auction houses because the people who need to get in cash quickly to pay debts are bringing their pictures their their artwork, when they bought better homes. And people with some cash who want to clean up when it’s you know, 40% off the regular price, essentially, are going in and getting the bargain and that’s what happens as soon as the stock market people are selling who were who are Oh are in fear and people with cash are as somebody who was Tony Robbins whatever was talking about this where he says you It’s the only time when it’s like going into a Ferrari dealership and seeing 70% off, and people go, Oh my god, this is terrible. Like, if you have cash, it’s amazing, right. But that’s the point. It’s the perspective shift. So what and this is not the easy part, this is the difficult part is, as you said, either you sell something to the same group of people. That is a no brainer for them to buy that isn’t a luxury item. Right? So for example, one of the services I did before I showed up the art game was actually various art evaluation for their insurance. And there was other stuff about moving their arm around and just different services instead of buying more art. Right? And that’s a poor example. But the point is you what does that same client need, that you’re currently not providing? Or aren’t aware? They’re not aware that you can provide? So it’s one way but the other one is, you know, what can you pivot to? And that’s the other the flip side of that is, what can you picture that they do need?
Alastair McDermott 06:05
Yeah, so I there’s a nice pithy kind of phrase, which is, you either need to change the people, or you need to change the people. And so in that case, that means either change your clients mindset, or or, you know, the the way that you position what you’re selling to them, or go find different clients who who aren’t in that scenario. And so you’re changing what you’re offering is or the way that you’re pitching it to them and explaining them in a different way. Right. I mean, that’s doing things like offering money back guarantees and things like
Alistair McBride 06:38
that. But absolutely, because you have to make it a no brainer. I mean, with every trans every deal. Every agreement is an element where one side has taken on more risks than the other. And when people are in fear. So they’re extremely risk averse. They’re hyper conservative in their decision making, as you say, and so if you’re a consulting into that, and they’re saying, We have no budget, especially for consultants as if they’re a luxury, they say, Well, I’ll tell you what, if I save four times my fee, does that sound good to you? If I’m here to save you four times the fee that you’ll pay me, does that sound reasonable? Because then you’re you’re flipping on them? It’s like you’d be mad enough to. But it’s a totally different offer. It’s a totally different proposition.
Alastair McDermott 07:24
Yeah. Now the counter to that somebody might say, well, you know, they may not believe that. And that’s where you say, well, I’ll guarantee and I can bring in a guarantee. I’ll give you exactly if I don’t achieve that.
Alistair McBride 07:36
Well, if they don’t believe it, then that’s another problem. But you have to make it, as you said, ambitious, but believable. And you can even ask them, then well, what would you believe? Yeah. You’ll make me twice your feet. Okay, fine. That’s perfectly fine with me. Look, we’re being a little bit flippant here. But because it is tough, it is tough. When you’re in that zone. I think we’ve all spent time in that.
Alastair McDermott 08:01
The issue for me is that what’s happening is people are becoming more risk averse. But if you take zero risks, you make no forward movement. Like you have to take some risks, you won’t save your way to success. Yeah,
Alistair McBride 08:16
you can cut and slash costs and overheads only so much. I mean, it’s a good idea to you know, tighten a few belts and you know, be Oh, yeah, I mean, that was wasn’t wrong with that.
Alastair McDermott 08:29
I did a lot of back in early March of 2020 Was I reexamined every single recurring payment that I was making in the business, I slashed a whole bunch of them. And I was actually pretty ruthless with you know, there was even a couple of things where I was paying, you know, $10 a month here $50 A year there. And I just put them because I was I was reducing every recurring ongoing payment that was not absolutely necessary for the business
Alistair McBride 09:00
once a year, so anyway, yeah,
Alastair McDermott 09:03
it’s a good idea that whether it’s a recession or not, exactly what but in this case, we have people you know, looking at cutting potentially essential maybe not essential but in very important services. And so I think you’ve got to balance that you’ve got to find so if we’re if if we as a service provider, as a consultant are trying to sell into an environment where our clients is in a scarcity mindset and and we talked about like, what that actually means the scarcity mindset and that it can actually make you make incorrect decisions and the book scarcity goes into this in a lot of detail
Alistair McBride 09:42
explore that just for a minute just let’s scope that out. What type of gonna say inappropriate decisions there. They’re not optimal decisions. They seem like obviously the right decision at the time otherwise you wouldn’t be making that it’s probably see seemed like the only option. And it sounds like the classic thing, when you have one option, you’re giving yourself an ultimatum, as they say, when you have to you have a dilemma, suddenly, when you’ve three that you actually have proper choice, right? But that’s a human issue, like it’s a human thinking error is often we jump at, oh, that’s the answer. Or even if whether we like it or not, or we go, it’s either A or B, and it’s usually a binary, we often fall into binary decisions, decision making, which is again, natural. I mean, the way I do this with clients where they go, Oh, it’s either it’s this is the answer, or it’s a or b, it’s X or Y, it’s black or white, A or B. And that’s so limiting. Just literally stopping say, is, it may be one more possibility, even if it’s a combination of a and b, to get C, or something completely, much further out there. And then all of a sudden, you have more options to play with it. Oh, what if Oh, how about, and then suddenly, the creativity is working, you can’t be creative and survival mode. You just can’t that’s
Alastair McDermott 11:06
really important is is being in that scarcity. Mindset is it’s having a toll on your brain. Like it’s, it’s costing you mental energy, huge. And it’s it’s limiting your ability to, to weigh the pros and cons of decisions. Very much, very much. And I think that’s the that’s the thing that it’s because and so that’s the case, if there’s a perception of scarcity and scarcity is a scarcity of a resource of some kind. And that could be money, which is the major one, it could also be time as well. But it’s this, this thing where our decision making is actually impaired, because we’re in that scrabbling kind of almost like hyperventilation mentally, you know, and that’s the thing that I find really interesting about it. I’m trying to trying to switch out of that, like, how do you switch out of that?
Alistair McBride 12:09
Well, not to get too down into the weeds, but the first way is you actually take control your breathing, when you’re getting nervous, when you’re in fear state, your breathing goes very high, which creates a neurological loop that, oh, I’m in a fierce state, we’re ready for attack or being attacked, and you’re in that state. So when you breathe deeper, a you’re literally filling your brain more oxygen better. But also that change in you taking control of something that’s automatic most of the time also tells your brain, hey, we have more we have more agency here than we thought. Or maybe things aren’t as bad as we thought. And it’s been shown neurologically that it opens up new areas of the brain, again, for getting stepping out of that survival mode into literally what to call challenge mode where you’re suddenly seeing possibilities, you’re able to strategize, you’re able to work things out. You know, and that’s kind of where you want your headspace to be to start to look for. Okay, I’m Scrooge Balaam, I will have what would look like if I wasn’t what might be okay, but what are the other possibilities? This is what they said, well, what’s the underlying need there of the client or of the market? And either you can keep you can tweak things to sell to the same market? What do they need now? Or you can say, Well, who else might need the thing that I have? Now? Right? So maybe you go to a different market where you’re offering has a better
Alastair McDermott 13:35
product you’re talking about there, by the way, it’s very logical. So So you’re talking about a very logical response to figuring out what the answer might be, you know, in terms of dealing with the problem that you’re facing. But But what you said previously, as well, is okay, before you even get into that logical state, first deal with the physical impact of taking literally taking a breath. Yeah, yeah, it’s fascinating. Absolutely. And so Okay, so on a very practical level, we’re talking about, first of all, taking that breath, and making sure that you know, you’re physically able to think
Alistair McBride 14:15
it’s literally breathe 15 to 30, deep, slow breaths, if you’re sitting into the seat, if you can imagine, like, right down deep in your belly. And there’s loads of different breathing techniques, but the point is, just start breathing deeply and being aware of your breathing. Right. And that starts to actually you’ll literally feel some people feel significantly different. Other people feel only mildly different. But the point is, it changes your physical state, which helps to change your mental emotional state. They start to get a little nudge and then that’s where you can start. That’s what if and then you’re starting to get what is is the debt is the staff creativity.
Alastair McDermott 14:58
So the engineering me once turn this into a checklist. Okay. Cool. Because I like to make these into these like practical, easy to follow things. Right? So the first thing we do is if we’re if we think that we’re in this scarcity mindset this state is get our breathing and physical state just calm down. Well, if
Alistair McBride 15:16
you really want to start, you can do what’s called thoughts topic where you notice your, because often you’re hearing a lot Oh, God will panic talk, or even if it’s not panic, it’s just very negative talk in your head. Yeah, and just saying, Stop. Stop the voice just rattling in your head. Yeah. And then you go inward breeze, trying, just concentrate on your breathing. And yeah, your mind will wander, that’s okay. Bring it back. 15 to 38 hours was one, right? Okay. Right, that’s then you do say 30 breaths right then hot.
Alastair McDermott 15:52
Yeah, so thinking logic. So first of all, like saying to yourself, hey, this, the way that I’m thinking, Now, my thinking may actually be impaired by this scenario. And so just be aware of that. Because just that awareness will help. Absolutely. And something I mentioned before, it just is this thing that’s taking a toll on me, like mentally, and it like it’s increasing my ongoing cognitive load, so that I don’t have as much space for making decisions.
Alistair McBride 16:26
Usually, it’s the survival mindset of you’re going into tunnel vision, you’re not seeing other options that may be there. And you’re also then falling into and the biggest psychological biases is confirmation bias, ie, your one looks to confirm what we believe to be the case. And we automatically omit or almost make invisible counter evidence or evidence to the contrary. So what we’re trying to do is get out of that confirmation bias. So if you think, oh, there’s a recession coming to this recession, coming to the recession coming, because that’s what people are telling you. That’s n equals six clients, who told you that now that that may be most of your world, and maybe you’re reading about and you’re going, Oh, my God, and you’re getting into panic, we have to also realize the sense that you’re, you are now contributing to the recession happening faster. You are a contributor. It’s like, you know, Oh, I better take my money out of the bank, as I hear it’s dodgy. But taking your money at accelerated defaulting, right? So you’re part of that. So also realize that your filter is now there’s a recession happening? Oh, god, Oh, God. So putting that aside, not saying that that’s invalid, and that society might be heading towards a recession. But then it’s like, well, how do you make money in a recession? How do you in your industry, potentially, with your skill set, make money in recession?
Alastair McDermott 17:51
Right, and this is like, the next step in this checklist is logically thinking, and examining all of the options, even the ones outside of the tunnel vision that you might currently be in BNI. Exactly. And so be aware that you might have that tunnel vision and that there is stuff outside of what you’re looking at.
Alistair McBride 18:09
So as we said, the first two levels that are most obvious, are literally saying, with my current group of clients, or past clients, and people like them, who tell me they have no budget to tell me this? How can I change my offering by others the wording or the actual service that you provide one or the other, to fit their needs? So it’s a no brainer. The other option, just again, just as the first to the spring to mind, there may be many more is how do I sell my current offering, maybe even with different packaging, different wording to a different group of people who aren’t in maybe your current clients? That’s mindset just yet. Right? So like, we just to say, We saw this in COVID times, all over the shop, particularly what restaurant service industry was decimated, right. And you had, I noticed in the restaurants around me, you had some of them going, Oh, we’re closed and we’re closing down and it’s all doom and gloom. Others hustled, they immediately went into hustle zone. There were there were closed, like a day, and they already had, you know, COVID pickup order over the phone, the websites on the way next week, and all that sort of stuff. They were amazing. They just managed to adapt so fast. I mean, so brave, like, none of this was easy, you know, either way, but some restaurants by example, managed to adapt. They were trying experiment with this experiment, and it didn’t work out. Oh, that was a mess. We needed better stuff than the things they got to transport the food so they made that better. But it was an iterative process. It was an adaptive process, where there’s other sort of saw panic, oh, we can’t possibly do that or for whatever reason, that won’t work for us, and then they ended up shutting down, which is a shame but you know, it speaks to two very different points of view. It’s a little bit like that classic one, where you have these twin brothers. And one was this in and out of prison, drug use, or all of this? Oh, well, I were bound to have, you know, grew up like this because I’m part of the system. And I had this horrible childhood and all this. And that was totally valid. He did have a horrible childhood, right. But that was the story. The other brother is multimillionaire, it goes well, I had to hustle for everything I got. But I’m always looking for opportunities. There’s always money on the table somewhere, I just, I know that people are too comfortable. But I had that edge, because I never had that safety net. So that made me hungry to find the opportunity every time. So the same situation, radically different perspectives. Again, I apologize, because that’s a very flippant and weak example. So I apologize that it’s not typical in many ways. But it is an example of just the filters that we apply to our environment and how some people feel this negative inevitability, and other people feel this much more constructive, almost inevitability, it’s like I’m the one who gets it over the line. That’s some people’s story. In other people’s story is Oh, the SH one T hits the fan, and I get covered up, that’s the way it works.
Alastair McDermott 21:19
Yeah. The other thing is, it like going back to what you said about you know, who’s making money, there’s always somebody making money. And in any negative situation, your competitors are also feeling the same pain, most likely. And so if you can, if you can make the scenario work, if you can make it work for you in that scenario, and your competitors don’t, you can actually grow. So because you figure it out.
Alistair McBride 21:46
I mean, you remember all those stats during the last recession, about how Oh, some of the greatest companies ever most of those companies, longest lasting ones were created in the middle of the worst recessions?
Alastair McDermott 21:54
Yeah, some practical stuff, because I, I like to keep it keep it really practical as well. I wrote some notes for folks at the start of the COVID shutdown. And you just reminded me that at a very high level, first thing is just to assess the situation, and look at taking action straightaway and what you need to act on. One thing that’s important, I think, is to call your clients, I think this is important all the time. But call your clients because they’re uncertain right now as well. Just call them and talk to them, and maybe brainstorm some ideas with them, or show them that you care. For instance, brainstorm ideas with them, you know, without making it a sales call, just hey, that might help with the scenario that you’re in. So then obviously, sorry, go ahead.
Alistair McBride 22:43
Just point out a few things with that. First of all, I love it. Because you’re again, instead of being in in survival mode, where you’re in reactance, now you’re reacting. Instead, here, you’re acting with more agency. Yeah, what are my options, and then you’re going to maybe your better self, where you’re actually instead of being afraid of the call from your client, in case they’re going to cancel on you or something, you’re actually doing the opposite. You’re reaching to them, and saying, how are your needs changing? So that you can adapt to those needs with that, but again, you’re a partner rather than this sort of distant provider person whose cancelable you’re less cancelable? You know, so you get ahead of that. Yeah. And helping them uh, how can I help you better at this stage? And all of that just speaks to just, it’s just far better and approach?
Alastair McDermott 23:35
Yeah, I think it’s, it’s kind of it’s a, it’s a bit like going into the Jay Abraham, what’s called the Theory of preeminence, that what he calls the concept of being traditional, that was the term that he uses. It’s a legal term, fiduciary, yeah, beneficiary and I know it has a legal meaning. But it also just means putting your client’s interests ahead of your own, financially and in every way, which is really what we should be doing if we’re doing the best job properly for our clients as we show their best interests. Okay, so So I think it’s got it’s kind of doubling down on that, you know,
Alistair McBride 24:13
it is and also realizing that, as he said, for everyone around you, in your competition, how many are having are in survival mode? Or how many are adapting? Right, and giving yourself credit that you’re actually being proactive and improving your situation? And yeah, it might be easy and there’ll be some shake up and you know, things won’t be maybe the worry last year. But also realizing, as I said that you’re doing something about it and you’re connecting in with clients to see where their heads out how you can help them better and so on. All of this is easier said than done.
Alastair McDermott 24:53
Yeah, but it can be done. Exact and it’s it’s a more positive thing. Think Be thinking about than just being in a state where you’re looking at your books, and you see that a client has canceled. And you see that there’s potentially a recession looming, and you’re just in that state of fear. So it’s, it’s taking positive steps to improve the situation. And also, I mean, having those conversations, like it almost never hurts to have a phone call with your clients in any scenario, like it’s a good thing to do. But in this, in this case, you’re showing that you’re being proactive, and that you, you really do want to help improve their condition, which is an Alan Weiss phrase. But that’s, that’s our job is to improve our clients condition. Sure, sure. True. So I’ll thank you for allowing me to record this because it was an interesting conversation. And if people are listening to this on my podcasts are watching this on YouTube, where can they find more from you?
Alistair McBride 25:57
Just go down mcbride.com al MCB, Ry d.com. And you’ll see all the need of me or reach out to me on LinkedIn.
Alastair McDermott 26:06
And you have a podcast called dealing with Goliath podcast called dealing with Goliath. Check it out. Awesome. Thank you all
How to Deal with Scarcity Mindset