Tag: Business

Albert Bernstein on the Dinosaur Brain and How To Make Bad Decisions

I enjoyed reading Dinosaur Brains: Dealing with All Those Impossible People at Work by Albert Bernstein.

Near the end of the book, Bernstein playfully illuminates how too many decisions get made.

  1. Take an idea from some authority figure, maybe your boss, or an author;
  2. Tell everyone this idea is the basis for all the change you’re going to make;
  3. Do things the way you’ve always done them;
  4. If something changes, take credit for it. If something bad happens, point out that this just goes to show that the old way of doing things was better.

Sound familiar? It should.

Another approach, let’s call it the more rational approach, might look something like:

  1. Understand the problem, or set a goal;
  2. Establish criteria (how will you know the problem is solved or you’ve reached your goal);
  3. Generate alternatives;
  4. Measure alternatives versus criteria and try a few of them;
  5. Evaluate;
  6. Choose the best solution.

This approach probably won’t get you promoted, but it will increase the odds of making better decisions.

How Williams Sonoma Inadvertently Sold More Bread Machines

Paying attention to what your customers and clients see can be a very effective way to increase your influence and, subsequently, your business.

Steve Martin, co-author of Yes! 50 Secrets from the Science of Persuasion, tells the story:

A few years ago a well-known US kitchen retailer released its latest bread-making machine. Like any company bringing a new and improved product to market, it was excited about the extra sales revenues the product might deliver. And, like most companies, it was a little nervous about whether it had done everything to get its product launch right.

It needn’t have worried. Within a few weeks, sales had almost doubled. Surprisingly, though, it wasn’t the new product that generated the huge sales growth but an older model.

Yet there was no doubt about the role that its brand new product had played in persuading customers to buy its older and cheaper version.

Persuasion researchers suggest that when people consider a particular set of choices, they often favour alternatives that are ‘compromise choices’. That is, choices that compromise between what is needed at a minimum and what they could possibly spend at a maximum.

A key factor that often drives compromise choices is price. In the case of the bread-making machine, when customers saw the newer, more expensive product, the original, cheaper product immediately seemed a wiser, more economical and attractive choice in comparison.

Paying attention to what your customers and clients see first can be a very effective way to increase your influence and, subsequently, your business. It is useful to remember that high- end and high-priced products provide two crucial benefits. Firstly, they often serve to meet the needs of customers who are attracted to high-price offerings. A second, and perhaps less recognised benefit is that the next-highest options are often seen as more attractively priced.

Bars and hotels often present wine lists in the order of their cheapest (most often the house wine) first. But doing so might mean that customers may never consider some of the more expensive and potentially more profitable wines towards the end of the list. The ‘compromise’ approach suggests that reversing the order and placing more expensive wines at the top of the list would immediately make the next most expensive wines a more attractive choice — potentially increasing sales.

Original source: http://www.babusinesslife.com/Tools/Persuasion/How-compromise-choices-can-make-you-money.html