Friday, March 23, 2012

The Art of Choosing with @Sheena_Iyengar

This afternoon in the closing session we have the very accomplished Sheena Iyengar - author of The Art of Choosing. I haven't read her book but I hear she's pretty awesome. I'll believe it - I'm all ears.  

Sheena has been studying choice for several years and her book explores several questions. Why do we choose? What affects our choices? How can we improve our choosing experience and outcomes? Sheena asks the audience if they're having a good time - loud resounding clap!

Sheena takes us into a story about the Draeger's Grocery Store. They had 75 different kinds of olive oils from all sorts of places. Awesome eh? Sheena went there several times but bought nothing! She asked the manager if the choice was actually working for them as a business. They didn't know. So they set up 24 Jams in one place and then another place with 6 Jams. Which place would people buy more jam? While 60% stopped at the 24 Jam store, 40% stopped at the 6 Jam store. However, 30% bought from the latter while 3% from the former. This - if you do the math is a 6 time increase in sales. The paradox of choice documents this phenomenon. Turns out that more choice usually ends up confusing people enough to postpone the decision.

Today you have more choice than ever before. You are confronted by 3 trillion bits of information in the air! 15 million possibilities for a soulmate on - brilliant eh? Not so much. This is choice overload. There are three main consequences of too much choices:

  1. People usually stick with the status quo - people choose not to choose. No one wants to commit to one choice. Let's look at 401k plans in the US - more fund choices seemed lead to less people participating and hence less savings. 
  2. It reduces decision quality. Medicare - it's the same story; people are unhappy with the choices they make and a lot of people want to buy directly from Medicare and would love fewer choices. I have the same problem with the new age of social media platforms. The market is so saturated with choices that it's making life worse and fragmented.
  3. We're less satisfied with our choices. Think of how much TV programming that's available. You watch a program and then you're unhappy with what you missed. 
So what's going on here? George Miller (psychologist) came up with the notion of a magic number 7 (+/-) 2. The paraphrasing of the law is that the average person can usually hold 7 (+/-) 2 objects in working memory. So more choice than that is usually a detriment to decision making and choosing. Think about it - when you start a game of chess, you have more choice available (as combinations) than stars in the galaxy. If you have expertise then you can chunk this information and break it down into specific lines of attack. So do you have enough information available to you to make a decision? For example the car you want to buy? SUV, cruise control, automatic transmission, etc - will narrow down your choices and make life easier. Unfortunately you're not an expert and the market is designed for experts.

So here are four choosing techniques that help:
  1. Cut: Remove the choices. When P&G reduced the number of their shampoo choices, they increased their profits and this is the case with several product lines. Think of Apple - the only choice you have is the iPhone! Don't boggle the mind with extraneous choices. Sheena tells us about leadership perceptions. When a manager gives no choice, the engineer group surveyed rates them badly. When the manager gives them two choices they rate them highly. When the same engineers get 6 choices they again rate the manager badly. You want to give people choices but you don't want to overwhelm them. If you only had one option what would it be? If you can't justify the options then don't put it in there. 
  2. Concretise: How can you make the consequences of your decision explicit? Why is my credit card always maxed out? Potentially because it doesn't feel as real as spending real money from the bank. To make decisions what you need is not only information but also a feeling of the consequences. It's like in Indecent Proposal when Robert Redford offers a million dollars in return for a night with Demi Moore and it's a hypothesis the reaction is different from when the money becomes actually real. Good example, eh? I came up with that all by myself.
  3. Categorisation: Experts are able to categorise information. That being said, a choice provider can be the expert and categorise for the consumer or decision maker. After all, it's perhaps in your interest to help people make a choice. Think of a magazine rack. If 400 magazines were laid out in front of you in 25 different categories you'd be more likely to make a choice. As it turns out our brains are also more equipped to handle categories than choices. So you're more likely to make choices from 25 categories than say five.

    For example look at the wine categorisation technique that specific cellars use to categorise the hundreds of wines that are available to us.
  4. Condition: If we can approach things in a methodical fashion, we're more likely to arrive at a choice than by just the accident of finding 'the right furniture' in Joe's used furniture store. Sheena gives us the example of a German car manufacturer that allow users to custom make their car by breaking down various choices available ranging from certain decisions that have low choice (4) to high (56). Now people that advance from high choice to low make less purchases than those that advance from low to high. Also satisfaction is higher for those that move from low to high choice. People's excitement for choice usually increases with each step and the fact that you build up the condition makes them more excited about the product itself. Start shallow and get deeper. Why does Apple do so well (something I wrote earlier)? Small choice vs heavy choice and people understand their choices much better.

Wow, this was a great session on design though not so apparent on the surface. I think there's a lot of meat in there for community managers, leaders, marketeers, sales-people, designers and anyone offering an experience to take a lot out of this session. This lady is brilliant. Sheena maybe blind, but she is helping us see. If you need to use the learnings from this session in practice then check out GLEAM - Global Leadership Matrix (coming soon). This will include several tools with video clips alongside - this'll help you learn about yourself and design solutions that actually make sense. Also, everyone who comes to the website, you'll be able to participate in Sheena's research. Be choosy about choosing. Follow Sheena on twitter and check out her website!


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V Stevens said...

Great post Sumeet. I did read some of Sheena Iyengar’s works. It’s good to see you conceptualizing it and just putting across through this post. Jack Canfield is another great motivational speaker whom I admire the most. He is the author of the Master Piece, Chicken Soup For The Soul. Catch Jack Canfield live right in your city on 14th April, 2012.

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Hindi SMS said...

This is the problem with theories and hypothesis, the author can spend an entire book harping upon one point and in the process taking away the beauty of the point. This happens with most 'one point agenda' books like those of Taleb and Freidman.
The reader is smart and his time is valuable. "we get it !" and usually in the first chapter itself. So why drag it over 300 pages , why not bring in new theories ?

It would have been a great book, if it had not been a book but a chapter in a book of 50 such theories.

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