We all want customized experiences and products -- but when faced
with 700 options, consumers freeze up. With fascinating new research, Sheena
Iyengar demonstrated how businesses (and others) can improve the experience of
choosing. Identify four of the methodologies Sheena Iyengar suggested as
methods of helping us improve our experience in choosing. Discuss the
implications of two of these methods in terms of your own decision-making as an
individual and a member of an organization. How else can you improve your
ability to decide?
Sheena Iyengar states that one of the biggest modern day choosing problems that we have is the choice overload problem. For example, the average American makes about 70 choices per day. The average CEO engages in about 139 tasks per week with each task made up of multiple sub-choices. 50 percent of their decisions are made in about 9 minutes or less. Only about 12 percent of the decisions CEOs made was an hour or more. There are three negative consequences and impacts of offering people more and more choices (choice overload): people are more likely to delay postpone choosing even when it goes against their best self-interests (engagement), they're more likely to make worse choices (decision-making), and they're more likely to choose things that make them less satisfied even when they do objectively better (satisfaction).
The four methodologies that Sheena Iyengar identified as methods of helping us improve our experience in choosing are: cut, concretization, categorization and condition for complexity.
The first methodology is cut. The common phrase that "less is more" and is so applicable today. The initial reaction when people hear cut is panic. Cut shelf space and the number of options. However, when this is done the benefits are: an increase in sales, lowering of costs and an improvement in the choosing experience. For example, the average grocery store today offers about 45,000 products. Wal-Mart offers about 100,000 products. However, the ninth largest retailer, Aldi, offers only about 1,400 products and one kind of tomato sauce. Cut - eliminate the extraneous alternatives.
The second methodology is concretization that is in order for people to understand differences between choices, they have to be able to understand the consequences for each choice, and that the consequences need to be felt in a vivid very concrete way. For example, people spend an average of 15 to 30 percent more when they use and ATM card or credit card versus cash. Why? Because it doesn't feel like real money. So making it feel more concrete can actually be a tool to save money. Concretize - make it real.
The third methodology is categorization. People can handle more categories versus choices. For example, at Barnes & Noble there are hundreds of magazines. If we take 600 magazines and divide them up into 10 categories (business, management, travel, history, etc). versus I show you 400 magazines with 20 categories, people will believe that there is more choice and better choosing experience if I gave you the 400 compared to 600. Why? Because the categories will tell them apart. Categorize - we can handle more categories and less choices.
The fourth methodology is the condition for complexity. People can actually handle a lot more information than they think, however, need to take it a little easier. Complexity has to be gradually increased. For example, when buying a new car there can be many different options and choosing (decisions) for each option, e.g., colors, engines, transmissions etc. Lesson learned is start off easy and learn to choose. Other lessons to learn include motivation and engagement. Get involved and active.
For my own decision-making as an individual and a member of an organization,
concretization and
categorization are applicable. For concretization, I have changed my paradigm
of being an impulse buyer purchaser with a credit card with a focus on the
reality of money. For a credit card, you can pay me now or later (with
interest). This has saved me money too. At work, I make purchasing decisions
with the focus that if I were the business owner, would I actually make the
purchase? Does it make business sense and is there a business case for it? For categorization, I go to Barnes & Noble
all the time especially for magazines including Harvard Business Review and MIT
Sloan Management Review. In addition, I browse other categories including
history and review World War II magazines. At work, I use affinity charts and diagrams
to categorize ideas from kaizen continuous improvement events. This helps to
create a visual representation of the ideas along with big picture functional and
technical areas (tooling, design engineering, management, plant and facilities
etc).
There are several other factors impacting choosing skills and
ability, e.g., culture (both national and organizational), nature (genes and
heredity), nurture (upbringing), religion, and heuristics (rules of thumb)
along with paradigms (mental models and ways of thinking) and biases. Culture
can emphasize individualism and or collectivism and can impact choice. Organizational
culture focus is on vision and operating principles. Everyone has a brain that
works operates differently including the unconscious automatic system and
conscious reflective critical thinking system. The best is when they both work
together (synergy). Everyone is brought up differently including religion.
As far as improving my ability to decide, there are several
standard process models including SWOT, DMAIC, Dr Deming's PDCA,
Hersey-Blanchard Situational Leadership etc that are business industry standards
for choosing. I use these techniques and have been very successful too because
they are applicable for decision-making. I also have a mentor coach who I work
with to share ideas, gain insights and provide direction. I am also a mentor to
others (mentees) too.
References
Sheena Iyengar: How to make choosing easier (November 2011). TED Talks. Retrieved http://www.ted.com/talks/sheena_iyengar_choosing_what_to_choose
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