Think Big

There are barriers to entry when companies launch a new product into the market. It’s unlikely users will switch to a competitive product that’s simply a clone of the market leader. Users will only switch if a product is better by a factor of nine. Well, why nine? John T. Gourville introduced the concept of “9X Effect” in this article. He argues that happy consumers overvalue what they already have by a factor of three and companies overvalue their innovations, also by a factor of three… the results is nine.

Rationale behind consumers overvaluation (aka what customers think to have):

• Endowment effect, we ascribe more value to things merely because we own them
• Status quo bias, we prefer the current feature even if there is a better alternative
• Gains and losses theory, we overestimate any losses in feature/performance.

Rationale behind companies overvaluation (aka what companies think they built):

• Self design, we build around our needs
• Over serving the market, we build feature that customers don’t value
• Missing the job to be done, we don’t understand what customers really use the product for