Doesn’t Everyone Think (and Eat,) Like I Do?  A Taste of Bias.

Doesn’t Everyone Think (and Eat,) Like I Do? A Taste of Bias.

Why do 80% of the 30,000 consumer products launched each year and 70% of corporate transformations fail?

Often business leaders are blinded by cognitive biases, which seriously affect their decision-making – and, as a result, the revenues and welfare of their companies. It can be hard to see these biases from the inside.

Take, for instance, one of Britain’s largest food companies. The CEO and other senior leaders were looking to expand into a new market – in this case, the U.S.

I worked with them to gather data, conduct customer research and review every aspect of building a food business in the U.S., from distribution channels to marketing. A key part of the planning process was focus group research, to be held in five U.S. cities.

I’ll never forget sitting in one such city on the other side of a large one-way mirror with two senior leaders who were assigned to work with me and my team on the expansion strategy. Within minutes of the group’s start, I saw expressions of shock on their faces.

The facilitator was trying to get twelve American participants to taste steak and kidney pie, one of the most popular dishes all of the U.K. They saw with their own eyes that the Americans wouldn’t even taste it. I witnessed one senior executive scream at some of the participants, he was so frustrated. “Just taste it you idiots.” he yelled at the Americans from behind the sound-proof mirror.

This is an example of a cognitive bias I see all the time. Corporate leaders make the very common mistake of projecting their personal beliefs and experiences onto others. Stanford University social psychologist Lee Ross, first named this the False Consensus Effect after two studies showing that people assume that others make decisions based on how they would make their own decisions; and that if other people decide to do otherwise, they view them as “defective or unacceptable.”

The thinking goes, “If I love something, why wouldn’t everyone love it too?” In the corporate world, this can mean they start basing a corporate strategy on that biased belief. They assume other people believe what they believe. It happens all the time. They see an opportunity that just doesn’t exist. If I like steak and kidney pie, I think everybody likes it. Or, my husband says the house “isn’t cold” because he’s not cold; and meanwhile, I’m “freezing.”

The “difficulty” or “blind spot” is in imagining that other people can see the world differently from you. So, in the case of the food corporation’s leaders, they can’t believe people will hate the foods they love. It could be the music we love. Or the temperatures we love. We’re simply “blind” to thinking that differs from ours. Just imagine how this can seriously affect a company.

Or let’s say, the CEO is technologically inclined, and the company is trying to market a new product, in this case software. The CEO finds it easy and intuitive to use so she thinks, “well, of course! Everybody will find it easy and intuitive to use!” But for people who are less inclined or skilled, it’s highly complex and word gets around, “Oh! You don’t want to buy it. It’s too hard to set it up.”

In the meantime, the CEO, like so many in the grip of this “effect”, is sitting in her office thinking “this can’t true” because to her it’s so easy to set it up.

The British food company – now free of their “bias blinders” and with “eyes wide open” – chose to acquire a U.S. food retailer and use it as a vehicle for learning more about the U.S. food market. They decided to get that learning first, then gradually introduce new products into the market.

Very wise choice indeed.

The takeaway? A good dose of humility is never a bad thing. Be a learner first and then an investor.

Where might you be making assumptions based on your own beliefs? In the past, have you successfully discovered where customer preferences differ from your own?

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For more info on the False Consensus Effect, and to see a very clear and detailed explanation, CLICK HERE. 

Curious What Your Customers are Really Thinking? Listen Up.

Curious What Your Customers are Really Thinking? Listen Up.

Good strategies rely on a deep understanding of customers.

Much of the time we assume that, in general, we know what other people think, so why bother to listen? Psychologists refer to this social-cognitive skill as “Theory of Mind.” Humans create stories or narratives that explain the behavior of others, based on theories of what we imagine is happening inside their heads. “Theory of Mind” informs a great deal of our interaction with others and, in fact, we wouldn’t do very well in social situations without it. But, applying this kind of mind reading to strategy work doesn’t usually yield optimum results.

I work with a client who is a leader in creating university software. Sales of their new software product weren’t doing well and they didn’t understand why. My advice was to go on a listening tour and talk to targeted potential customers, with the explicit directive that they simply listen, and not sell.

The senior manager’s quick response to me was “that would be a waste of time; we already understand how these people think. The sales team is out talking to them all the time, and we even hired a former university software buyer to join our marketing department.”

From his perspective, his prospects simply didn’t understand that the superiority of the software functionality and unique pricing model could lead to enormous savings for them. And with his final statement, “We just need to work on messaging and do a better job of telling our story,” it became clear that they weren’t prepared to listen quite yet- to my advice, or to their customers.

A year later my phone rang. They were ready for that listening tour. As we travelled the country together and engaged with 20 potential customers, we heard how risk averse they were. My client was able to deduce that the product was actually too innovative for this market.

Together we developed a plan to launch a bridge product that was easier for universities to adopt. Once their comfort level increased, they could introduce the more innovative add-on features. After implementing this change, their business started to grow and thrive like never before.

A listening tour is time-consuming but not as time-consuming as implementing the wrong strategy. The best listening tours go beyond listening to just one type of customer. Don’t go just for the customers who are easy to reach or those who already love your products. Be persistent and keeping hammering away until you have talked to a truly representative sample.

There are many keys to a successful listening tour but the most important one is to stop talking and listen. This sounds simple but is actually incredibly difficult for most people. It is hard to visit a customer and not want to sell them something or, at least, extol the virtues of your company and products or services.

To listen, you have to stop talking and make space for the other person to share their ideas. Don’t correct them or suggest answers. Resist the urge to fill the uncomfortable silences. Most difficult of all, don’t hint at what you want to hear.

What are you assuming about your customers and how they think?   How could you do some deep listening to check those assumptions?

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More Information: Interested in more information on listening in a business context? I recommend this article from the Center for Executive Excellence on the five levels of the listening. 

I also suggest checking out this TED Talk with a broader societal perspective on listing. by Julian Treasure – Author of How to be Heard: Secrets for Powerful Speaking and Listening.

If You Can’t Trust Your Brain, Who Can You Trust?

If You Can’t Trust Your Brain, Who Can You Trust?

Many business strategists rely heavily on intuitive thinking. But what if you can’t trust your intuition as much as you think you can?

Human brains are amazing. We can send people to the moon and back, cure disease and make almost anything out of cauliflower. The brain makes (often) accurate, intuitive judgements in split seconds. As Malcolm Gladwell wrote in Blink: The Power of Thinking without Thinking, “We need to respect the fact that it is possible to know without knowing why we know and accept that — sometimes — we’re better off that way.”

Psychologists estimate that we make 35,000 judgments every day, for example, selecting items at the grocery store, making decisions behind the wheel of a car, or choosing whether to delete an email. In these cases, we are using mental shortcuts that reduce the cognitive effort involved in decision-making. Our brains recognize a pattern that is similar to other situations and we respond to a “gut feeling” that directs us what to do. These decisions are generally good enough for most situations. With small decisions, which most decisions are, if we don’t get it precisely right, the consequences aren’t ultimately significant in the long game.

In my work with large company CEOs, I find that as leaders rise in seniority, they become more likely to rely on their intuition. Their ability to make quick and intuitive decisions that turn out well has played a part in their rise to leadership. But when they hit what I’ll call the “intuition wall”—the point where decisions become much more complex, this type of decision making doesn’t work as well anymore. Pattern recognition is not the ideal tool for the new, multi-faceted situations they face. These puzzles may appear to fit into a pattern, but they don’t.

What is behind this dynamic? Psychologists have found, not surprisingly, experts are usually better at making decisions than novices. They have schemas or mental models they can access quickly and use to solve automatically in their area of expertise. That’s great, except when the problem that needs solving isn’t in that expert’s exact sweet spot of expertise. An expert who can fix computers, isn’t necessarily any better than a novice at building computers. As CEOs and general managers move up the ranks, they can get into real trouble because they can never have expertise in all the areas where they need to make decisions.

When faced with larger strategic decisions such as a major corporate investment, launch of a new product line or critical hiring decision, your brain can feel like an expert and will want to lead with intuitive reasoning. Instead of working through a systematic assessment of options that will yield a balanced conclusion, your intuitive brain could be tempted to jump to a decision and then put your analytical brain to work on proving that it is the right thing to do.

There are ways around this bias for strategic planners. Research shows that just being conscious of the human tendency to overuse our intuition is a powerful tool. The most important fix for this bias though is to slow down and use a methodical thinking process. Articulate the logic and analysis behind the strategic narrative you are building. Even better is to formally introduce a contrarian viewpoint, forcing challenges to the strategic narrative.

The next time you feel tempted to let your intuition lead the way in the strategy process, ask yourself if the decision may be too large to leave in hands of this less trustworthy part of your brain. If you are working on a major, important, strategic decision, especially if it involves multiple areas of expertise, you’ll need to push yourself to use both parts of your brain—the intuitive and the analytical.

Then you will truly be able to trust your brain.

Have you observed yourself or others overusing intuitive decision-making? How have you pushed back against this tendency? What has worked well for you?

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For more information:

In this video, Nobel Prize winning psychologist Daniel Kahneman talks about the pitfalls of intuitive decision-making or what he calls System 1 Thinking.

For a clear review of the strengths and weaknesses of intuitive decision-making see this article from Scientific American.