Category: Product Development

💎 On why using claimed data in general to understand your audience can be misleading (Facebook likes vs. Spotify streams)

An example from Seth Stephens-Davidowitz illustates the problem. He looked at the gender of Katy Perry Facebook fans and found that they were overwhelmingly female. However, Spotify listening data revealed the gender split was much more balanced: Perry was in the top ten artists for both genders. If the music label used the Facebook data to target their advertising they’d be way out.

Does that mean the new data streams are junk and best ignored?

Not at all. Observed data is an improvement on claimed data, but it’s still flawed. To understand customers we need a balanced approach, using multiple techniques. If each technique tells us the same story then we can give it greater credence. If they jar then we need to generate a hypothesis to explain the contradiction.

Let’s go back to the Katy Perry example. A simple explanation would be that while both genders enjoy listening to her, far more women are comfortable expressing that publicly. If a record label wants to sell Katy Perry songs or encourage streaming, then Spotify data would be ideal. However, if they want to promote her concerts, it would be better to use the Facebook numbers. Neither data set is right in any absolutist sense – they are right in certain circumstances.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On the power of aligning incentives (jumping out of a plane)

Here’s another example: in World War 2, US paratroopers had a problem with the fact that, allegedly, one in twenty chutes failed in some way. The soliton was to require the packers and inspectors to regularly jump out of airplanes using parachutes chosen at random from the store. The quality of packing then rose to 100 per cent and stayed there. “The packers are all jumpers,” explained on NCO to Stars and Stripes magazine: ” We try to have each man jump once a month. That’s a pretty food way to keep them honest on the tables.”

Excerpt from: One Step Ahead: Notes from the Problem Solving Unit

💎 On the Power of Diversity to Solve Problems

What is more, the effect was large: groups that has to accommodate an outsider were substantially more likely to reach the correct conclusion — they did so 75 per cent of the time, versus 54 per cent for a homogeneous group and 44 per cent for an individual.

Excerpt from: Messy: How to Be Creative and Resilient in a Tidy-Minded World by Tim Harford

💎 On why we often continue with failing projects for far too long (sunk costs)

“To withdraw now is to accept a sure loss,” he writes about digging oneself deeper into a political hole, “and that option is deeply unattractive.” When you combine this with the force of commitment, “the option of hanging on will therefore be relatively attractive, even if the chances of success are small and the cost of delaying failure is high.”

Excerpt from: Sway: The Irresistible Pull of Irrational Behaviour by Ori Brafman and Rom Brafman

💎 On creativity being about connecting things (as noted by Steve Jobs)

“Creativity is just connecting things,” Jobs told Wired Magazine. “When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had a synthesise new things. And the reason they were able to do that was that they’ve had more experiences or they have thought more about their experiences than other people… Unfortunately, that’s too rare a commodity. A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots to connect, and the end up with very linear solutions without a broad perspective on the problem.”

Excerpt from: Little Bets: How breakthrough ideas emerge from small discoveries by Peter Sims

💎 On obsessing over easily quantified data often having damaging results (the invention of the Tesco “Free From” range)

The obsession with easily quantified date crowds out the need for discretion and judgement.

Two examples illustrate the resulting issues. First is the experience of Terry Leahy who, when he was head of marketing at Tesco, analysed the performance of their gluten-free products. The sales data hinted it was an under-performing section – those that bought gluten-free goods only spent a few pounds on these items each shopping trip. A naive interpretation suggested de-listing them to free up valuable shelf space.

However, sceptical of the number, Leahy interviewed gluten-free shoppers and discovered that their choice of supermarket was determined by the availability of those products. They didn’t want to make multiple shopping trips, so the visited whoever had the specialist goods. After all, every shop had milk and eggs but only sone stocked gluten-free goods. Leahy used this insight to launch Tesco’s hugely successful “Free From” range long before the competition.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On the power of asking a question rather than just stating a fact (during political campaigns)

If unemployment and inflation are up and confidence in the future is down, telling voters that life has gotten worse, while clearly factual, is less effective than asking voters “Are you better off today than you were four years ago?” Ronald Reagan asked Jimmy Carter and the tens of millions of debate listeners this devastating political question in their only face-to-face campaign encounter in 1980. No litany of economic data or political accusation could carry the power of a simple rhetorical question that for most Americans has an equally simple answer. “Are you better off” framed not just the debate, held only five days before the election, but the entire campaign, and it propelled Reagan from a dead even to ta nine-point victory over the incumbent Carter.

Excerpt from: Words That Work: It’s Not What You Say, It’s What People Hear by Frank Luntz

💎 On investing in companies that have flaws (often the big winners)

… the venture capital business is 100 percent a game of outliers, it is extreme outliers… We have this concept, invest in strength versus lack of weakness. And at first that is obvious, but it’s actually fairly subtle. Which is sort of the default way to do venture capital, is to check boxes. So “really good founder, really good idea, really good products, really good initial customers. Check, check, check. Okay this is reasonable, I’ll put money in it.” What you find with those sort of checkbox deals, and they get done all the time, but what you find is that they often don’t have something that really makes them really remarkable and special. They don’t have an extreme strength that makes them an outlier. On the other side of that, the companies that have the really extreme strengths often have serious flaws. So one of the cautionary lessons of venture capital is, if you don’t invest on the basis of serious flaws, you don’t invest in most of the big winners.

Excerpt from: Barking up the Wrong Tree: The Surprising Science Behind Why Everything You Know About Success Is (Mostly) Wrong by Eric Barker

💎 On the danger of forgetting who the end user is (journalists write for other journalists)

There’s another risk factor among the outlets that consider themselves to be “quality” journalism – that writers become more concerned with the opinion of other journalists than with the audience. This is a concern that dates back at least to the 1970s. “Journalists write for other journalists, the people they have lunch with rather than the reader,” an unnamed journalist said at the time, leading one academic to conclude: “Their image of the audience is hazy and unimportant… they care primarily about the reaction of the editor and their fellow-reporters.”

This tendency is exacerbated in US award culture, where the most prestigious prizes favour journalism written in great length – often 10,000 words or more and presented in a dense, discursive fashion. These pieces are often, for a journalist like me, a joy to read and are often produced over the course of months. They are often the very best articles their outlets produce – but it’s not hard to argue that they’re not as accessible or impactful as they could be.

Excerpt from: Post-Truth: How Bullshit Conquered the World by James Ball

💎 On the downside of spreadsheets and the illusions they create (intangible factors aren’t so easily quantified)

The spreadsheet is a tool, but it is also a worldview — reality by the numbers… Because spreadsheets can do so many important things, those who use them tend to lose sight of the crucial fact that the imaginary businesses that they can create on their computers are just that — imaginary. You can’t really duplicate a business inside a computer, just aspects of a business. And since numbers are the strength of spreadsheets, the aspects that get emphasised are the one easily embodied in numbers. Intangible factors aren’t so easily quantified.

Excerpt from: The Tyranny of Metrics by Jerry Muller

💎 On the mismatch between employers and employees (leaders need to drastically over-communicate priorities)

A while back Inc. magazine asked executives at six hundred companies to estimate the percentage of their workforce who could name the company’s top priorities. The executives predicted that 64 percent would be able to name them. When Inc. then asked employees to name the priorities, only 2 percent could do so. This is not the exception but the rule. Leaders are inherently biased to presume that everyone in the group sees things as they do, when in fact they don’t. This is why it’s necessary to drastically over-communicate priorities. The leaders I visited with were not shy about this.

Excerpt from: The Culture Code: The Secrets of Highly Successful Groups by Daniel Coyle

💎 On the importance of judging a presentation by its effect (not its technical excellence)

In here delightful book, On Speaking Well, Peggy Noonan (who wrote speeches for former Presidents Bush and Reagan) tells a story about Coco Chanel that illustrates this important distinction. Chanel believed that the hallmark of a great dress was that it didn’t call too much attention to itself. Thus if a woman walked into a room wearing one of her dresses and everyone said, “What a fabulous dress!” she had failed. Success came when the woman walked into the room and people said, “You look fabulous!”

In the same way, a presenter fails if people say “What a great presentation!”.

Excerpt from: Perfect Pitch: The Art of Selling Ideas and Winning New Business by Jon Steel

💎 On the power of asking obvious questions (it’s never foolish)

The barrier created by thinking “I may make a fool of myself if I ask this” can mean that starting points and new directions for thinking remain undiscovered. Always ask the questions that seem too obvious, or those you think you’re supposed to know the answers to. When industrial designer Kenneth Grange was briefed to develop new express trains for British Rail in the 1970s, a seeming naive question popped into his head; “What exactly are the buffers on the locomotive for?” Expecting to be told “They’re to stop the trains crashing into stations, stupid!”, instead he learnt that they were for shunting carriages  — a redundant activity from a bygone era.

Excerpt from: The A-Z of Visual Ideas: How to Solve any Creative Brief by John Ingledew

💎 On overconfidence being a bigger problem than incompetence (usually mistake of experts who have power and authority)

We all spend a lot of time complaining about incompetence, but as Malcolm Gladwell pointed out in a talk he gave at High Point University, overconfidence is the far bigger problem. Why? Incompetence is a problem that inexperienced people have, and all things being equal, we don’t entrust inexperienced people with all that much power or authority. Overconfidence is usually the mistake of experts, and we do give them a lot of power and authority. Plain and simple, incompetence is frustrating, but the people guilty of it usually can’t screw things up that bad. The people guilty of overconfidence can do more damage.

Excerpt from: Barking Up the Wrong Tree by Eric Barker

💎 On why we should seek out disconfirming evidence when formulating a theory (confirmation bias)

No professionals suffer more from the confirmation bias than business journalists. Often, they formulate an easy theory, pad it out with two or three pieces of ‘evidence’ and call it a day. For example: “Google is so successful because the company nurtures a culture of creativity.” Once the idea is on paper, the journalist corroborates it by mentioning a few other prosperous companies that foster ingenuity. Rarely does the writer seek out disconfirming evidence, which in this instance would be struggling businesses that live and breathe creativity or, conversely, flourishing firms that are utterly uncreative. Both groups have plenty of members, but the journalist simply ignores them. If he or she were to mention just one, the storyline would be ruined.

Excerpt from: The Art of Thinking Clearly by Rolf Dobelli

💎 On prioritising tried and trusted findings (over the new and surprising)

But the problem is not just with journalists. The physician John Ioannidis scandalized his colleagues and anticipated the replicability crisis with his 2005 article “Why Most Published Research Findings Are False.” A big problem is that many of the phenomena that bio. medical researchers hunt for are interesting and a priori unlikely to be true, requiring highly sensitive methods to avoid false positives, while many true findings, including successful replication attempts and null results, are considered too boring to publish.

This does not, of course, mean that scientific research is a waste of time. Superstition and folk belief have an even worse track record than less-than-perfect science, and in the long run an understanding emerges from the rough-and-tumble of scientific disputation. As the physicist John Ziman noted in 1978, “The physics of undergraduate text-books is 90% true; the contents of the primary research journals of physics is 90% false.” It’s a reminder that Bayesian reasoning recommends against the common practice of using “textbook” as an insult and “scientific revolution” as a compliment.

A healthy respect for the boring would also improve the quality of political commentary.

Excerpt from: Rationality: What It Is, Why It Seems Scarce, Why It Matters by Steven Pinker

💎 On why collective behaviour is so hard to predict

Pitts put it. ‘A one-man riot is a tantrum.’ So how does a riot grow from a single person? In 1978, Mark Granovetter published a now classic study looking at how trouble might take off. He suggested that people might have different thresholds for rioting: a radical person might riot regardless of what others were doing, whereas a conservative individual might only riot if many others were. As an example, Granovetter suggested we imagine 100 people hanging around in a square. One person has a threshold of 0, meaning they’ll riot (or tantrum) even if nobody else does; the next person has a threshold of 1, so they will only riot if at least one other person does; the next person has a threshold of 2, and so on, increasing by one each time. Granovetter pointed out that this situation would lead to an inevitable domino effect: the person with a 0 threshold would start rioting, triggering the person with a threshold of 1, which would trigger the person with a threshold of 2. This would continue until the entire crowd was rioting.

But what if the situation were slightly different? Say the person with a threshold of I had a threshold of 2. This time, the first person would start rioting, but there would be nobody else with a low enough threshold to be triggered. Although the crowds in each situation are near identical, the behaviour of one person could be the difference between a riot and a tantrum. Granovetter suggested personal thresholds could apply to other forms of collective behaviour too, from going on Strike leaving a social event.

Excerpt from: The Rules of Contagion: Why Things Spread — And Why They Stop by Adam Kucharski

💎 On progress being made when you’re prepared to accept a decline in a metric others aren’t

The shift towards 3-point shots had broad consequences for overall basketball tactics. But without the original and founding insight – that the game had been too cautious in accepting the increased risk of missing the shot altogether – there would have been no great leap forward. Whenever someone innovates in business or in life,’ argues the poker player Caspar Berry, ‘they almost inevitably do so by accepting a negative metric that other people are unwilling to accept.’ (My emphasis.)

Excerpt from: Making Decisions: Putting the human back in the machine by Ed Smith

💎 On the importance of avoiding black and white thinking

The physicist Richard Feynman put it like this: ‘Statements of science are not of what is true and what is untrue, but statements of what is known to different degrees of certainty … Every one of the concepts of science is on a scale graduated somewhere between, but at neither end of, absolute truth and absolute falsity.’

Excerpt from: Making Decisions: Putting the human back in the machine by Ed Smith

💎 On how, once we decide upon a way of thinking, we struggle to see the other side

One important study of the power of such decision-frames was published in 1984, after a researcher from Northwestern asked a group of participants to list reasons why they should buy a VCR based on their own experiences. Volunteers generated dozens of justifications for such a purchase. Some said they felt a VCR would provide entertainment. Others saw it as an investment in their education or a way for their families to spend time together. Then those same volunteers were asked to generate reasons not to buy a VCR. They struggled to come up with arguments against the expenditure. The vast majority said they were likely to buy one sometime soon.

Next, the researcher asked a new group of volunteers to come up with a list of reasons against purchasing a VCR. No problem, they replied. Some said watching television distracted them from their families. Others said that movies were mindless, and they didn’t need the temptation. When those same people were then asked to list reasons for buying a VCR, they had trouble coming up with convincing reasons to make the purchase and said they were unlikely to ever buy one.

What interested the researcher was how much each group struggled to adopt an opposing viewpoint once they had an initial frame for making a decision. The two groups were demographically similar. They should have been equally interested in buying a VCR. At to very least, they should have generated equal numbers of reasons to buy or spurn the machines. But once a participant grabbed on to a decision-making frame—This is an investment in my education verses this is a distraction from my family

Excerpt from: Smarter Faster Better: The Transformative Power of Real Productivity by Charles Duhigg

💎 On people we think of as exceptionally creative (essentially being intellectual middleman)

Modern bike helmets exist because a designer wondered if he could take a boat’s hull, which can withstand nearly any collision, and design it in the shape of a hat. It even reaches to parenting, where one of the most popular baby books—Benjamin Spock’s The Common-Sense Book of Baby and Child Care, first published in 1946—combined Freudian psycho-therapy with traditional child-rearing techniques.

“A lot of the people we think of as exceptionally creative are essentially intellectual middlemen,” said Uzzi. “They’ve learned how to transfer knowledge between different industries or groups. They’ve seen a lot of different people attack the same problems in different settings, and so they know which kinds of ideas are more likely to work.”

Within sociology, these middlemen are often referred to as idea or innovation brokers.

Excerpt from: Smarter Faster Better: The Transformative Power of Real Productivity by Charles Duhigg

💎 On the downside of working from home (the spread of new ideas from weak ties)

In the 1970s, sociologist Mark Granovetter suggested that information could spread further through acquaintances than through close friends. This was because friends would often have multiple links in common, making most transmission redundant. ‘If one tells a rumor to all his close friends, and they do likewise, many will hear the rumor a second and third time, since those linked by strong ties tend to share friends.’ He referred to the importance of acquaintances as the ‘strength of weak ties’: if you want access to new information, you may be more likely to get it through a casual contact than a close friend.’

Excerpt from: The Rules of Contagion: Why Things Spread — And Why They Stop by Adam Kucharski

💎 On analysing successful brands and looking for a recipe for success (is often misleading)

A quick hypothesis: say one million monkeys speculate on the stock market. They buy and sell stocks like crazy, and, of course, completely at random. What happens? After one week, about half of the monkeys will have made a profit and the other half a loss. The ones that made a profit can stay; the ones that made a loss you send home. In the second week, one half of the monkeys will still be riding high, while the other half will have made a loss and are sent home. And so on. After ten weeks, about 1,000 monkeys will be left — those who have always invested their money well. After twenty weeks, just one monkey will remain — this one always, without fail, chose the right stocks and is now a billionaire. Lets call him the success monkey.

How does the media react? They will pounce on this animal to understand its “success principles”. And they will find some: perhaps the monkey eats more bananas than the others. Perhaps he sits in another corner of the cage. Or, maybe he swings headlong through the branches, or he takes long, reflective pause while grooming. He must have some recipe for success, right? How else could he perform so brilliantly? Spot-on for twenty weeks — and that from a simple money? Impossible!

Also known as: Outcome Bias.

Excerpt from: The Art of Thinking Clearly by Rolf Dobelli

💎 On why we often, mistakenly, think the past was a golden age (we just forgot about all the shitty shit)

This argument — for example, “Why isn’t music as good as it used to be?” — reflects a historical selection bias, one colorfully described by the designer Frank Chimero. “Let me let you in on a little secret,” he writes. “If you are hearing about something old, it is almost certainly good. Why? Because nobody wants to talk about shitty old stuff, but lots of people still talk about shitty new stuff, because they are still trying to figure out if it is shitty or not. The past wasn’t better, we just forgot about all the shitty shit.”

Excerpt from, You May Also Like: Taste in an Age of Endless Choice by Tom Vanderbilt

💎 On the danger of interpreting data at face value (Alex Ferguson’s mistake selling Jaap Stam)

Another example, this time involving Manchester United manager, Sir Alex Ferguson, didn’t have such a happy ending. Opta data showed that his star defender, Jaap Stam, was making fewer tackles each season. Ferguson promptly offloaded him in August 2001 to Lazio — keen to earn a high transfer fee before the decline became apparent to rival clubs.

However, Stam’s career blossomed in Italy and Ferguson realised his error — the lower number of tackles was a sign of Stam’s improvement, not decline. He was losing the ball less and intercepting more passes that he needed to make fewer tackles. Ferguson says selling Stam was the biggest mistake of his managerial career. From then on he refused to be seduced by simplistic data.

These criticisms don’t mean you should disregard tracking data. Expecting any methodology to be perfect is to burden it with unreasonable expectations. Instead, you need to be aware that it merely provides evidence to which you need to apply your discretion and judgement.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On the myth that talent alone is enough (the Beatles were not an overnight success)

To the USA, the Beatles were an overnight success, but in fact Lennon and McCartney had been playing together since 1957. In the clubs of Hamburg they performed/endured live non-stop shows for eight hours a day, seven days a week until two o’clock in the morning, and had to work incredibly hard to attract audiences from the many clubs in Hamburg competing for attention. Their abilities and confidence increased. By 1964 they had played roughly 1,200 times, totalling thousands of hours’ playing time, more than most rock bands play there entire careers. Those hours performing set the Beatles apart. They were addicted to practice, yet their rehearsing was not repetitive but adventurous. They didn’t play the classic rock songs of the time over and over until they sounded exactly like the originals, as other bands did; they experimented and improvised, constantly embellishing the standards until they made them their own. They understood there was nothing to be gained from mechanical reputation.

Excerpt from; The Art of Creative Thinking: 89 Ways to See Things Differently by Rod Judkins

💎 On how constraints can inspire (rather than hinder creativity)

Dr Seuss’s editors bet him he couldn’t write a book with a limit of only fifty different words. Dr Seuss won the bet and in the process produced one of the highest-selling children’s books of all time Green Eggs and Ham. Van Gogh used a maximum of six colours when waiting. Picasso focused on one colour during his Blue Period. They imposed these limitations on themselves. They needed a framework, but it was their framework, one that suited them.

Excerpt from: The Art of Creative Thinking by Rod Judkins

💎 On the danger of uncritically listening to claimed data (you’ll be misled)

If Rudder’s study hunted at lying, the National Survey of Sexual Attitudes and Lifestyle (NATSAL) categorically confirms it. The survey, conducted among 15,000 respondents by UCL and the London School of Hygiene and Tropical Medicine, is the gold standard of research. In 2010 it found that British heterosexual women admit to a mean of eight sexual partners, compared to twelve for men. The difference is logically impossible. If everyone is telling the truth the mean for each gender must be the same.

All of this foes to show that advertisers trying to understand their customers have a problem: if they listen uncritically to consumers, they’ll be misled.

Excerpt from: The Choice Factory: 25 behavioural biases that influence what we buy by Richard Shotton

💎 On winning back productive time (by banning talk of bike sheds)

“Bike-shedding” comes from a story by C. Northcote Parkinson (he of Parkinson’s Law). He tells the tale of a committee that has to approve the plans for a nuclear power station. Since they know very little about nuclear power stations they talk about it briefly and then just approve the recommendation put in front of them. Next they have to approve the plans for a bike shed. They all know about bike sheds. They’ve all seen one and used one. So they talk about the bike shed for hours, arguing about construction methods and paint choice and everything. This is why bike-shedding is also known as The Law of Triviality: “members of an organisation give disproportionate weight to trivial issues”. I’m sure this observation is familiar to you. Most branding conversations seem, to me, to be one long bike-shedding session. It’s not so terrible, it’s human nature. The difference is that software people have identified and named the pattern. That naming is an organisational hack that allows them to break out of it and get on with something more useful. (See also: Fredkin’s Paradox)

Excerpt from: The Marketing Society print title Market Leader

💎 On how poorly set targets lead to unintended consequences (Dead Sea scrolls to company boards)

In 1947, when the Dead Sea scrolls were discovered, archaeologists set a finder’s fee for each new parchment. Instead of lots of extra scrolls being found, they were simply torn apart to increase the reward. Similarly, in China in the nineteenth century, an incentive was offered for finding dinosaur bones. Farmers located a few on their land, broke them into pieces and cashed in. Modern incentives are no better: company boards promise bonuses for achieved targets. And what happens? Managers invest more energy in trying to lower the targets than in growing the business.

Excerpt from: The Art of Thinking Clearly by Rolf Dobelli