The Behavioral Scientists’ Guide to Better Product Decisions
As a product leader, I believe that there are two key ingredients for achieving positive outcomes: Truth and Math. Throughout my career, I’ve coached product teams on how to discover the truth and do the math required to achieve their goals. Yet, I’ve seen many of the 45 B2B and B2C product teams that I’ve worked with prone to avoid Truth and Math in favor of their own assumptions.
Recently, I visited Minneapolis to speak at Target’s Product DNA conference about the science behind this phenomenon. Below I reveal what stands between us and the Truth we need to be successful in three parts:
- Why we assume
- When we should and shouldn’t rely on those assumptions
- How behavioral scientists recommend we approach our decisions
Why we assume
Daniel Kahneman, the Nobel-prize winning psychologist, described how we make decisions in his best-selling book, “Thinking Fast and Slow.” Kahneman described our two systems of thinking:
System 1, which we rely on 95% of the time, is when we make quick judgments, based on our past experience. These “no-brainer” decisions are derived from our past experience and instincts. System 1 thinking kept our ancestors from eating poisonous berries. Emergency physicians rely on System 1 thinking with 80% accuracy to diagnose and treat patients with limited time and resources. We rely on System 1’s pattern of decision-making to fill in incomplete information with something that seems logical. System 1 thinking can be powerful and efficient. It combines millions of memories into a quick response. When faced with a “fight or flight” choice, we are able to make it. System 1 can also be error-prone.
When we assume
Neuroscientists discovered that we feel good when we spot a pattern and fill in the missing details from our experience. Our brains come up with a plausible explanation, triggering a feel-good release of dopamine in our brains. We are rewarded for jumping to conclusions.
Unfortunately the brain doesn’t care if we are ‘correct.’ We only have to ‘think’ we are correct to receive the dopamine hit. Neuroscientists recently discovered when we are most likely to rely on our instincts and limited experience: when we are uncertain about a situation.
Logically, in these uncertain situations, it would make sense for us to rely on our slow, System 2 thinking. Like Mr. Spock, it’s rational, analytical and a more reliable way of making decisions. Yet, we only engage our brain this way for about 5% of our decisions.
It’s difficult and uncomfortable to engage in System 2 thinking so we do our best to avoid it. Our brains find this rigorous thinking cumbersome, time-consuming and exhaustive. Scientists found when they gave people analytical tasks and then offered them a snack of fruit salad vs chocolate cake, their subjects gave into temptation to offset the pain. It’s much easier to assume, and we assume often.
When we shouldn’t assume
In low-risk situations, it’s fine to rely on our brains’ instincts to pattern recognize. The cost of being wrong is low. We find other food to eat instead of the potentially poisonous berries. We rely on picture menus in foreign countries. We rely on celebrity or Instagram endorsements to try new products. If it’s good enough for them, it must be a good investment for me.
In technology companies, the pace of innovation convinces leaders to make fast decisions. Better to make a fast choice than fall behind. Leaders are in their positions because they have made more right decisions than wrong. They rely on their past experiences to spot patterns and fill in the missing information with their assumptions. Yet, we only need to look at the low success rate of start-ups and the large amount of venture capital wasted to understand the cost of risky assumptions.
The risks of being wrong in product development is high. We face complex decisions in unfamiliar territory. Teams attempt to solve new problems for new customers with new technology. We invest significant resources to build and bring products to market. We are in the land of uncertainty, yet our brains desire confidence. It is easy to slip into System 1’s automatic associations. The competition is moving quickly. We don’t want to miss our opportunity. We make assumptions, drawn from limited or irrelevant experience, and proceed.
We architect a plausible story about the problem and solution and rally around it. The building blocks are our assumptions. We build our plausible solution and introduce it to customers. When we fail to experience the success we predicted, it is no longer convenient to avoid the truth. We are confused and uncomfortable after being so certain. It is only after this experience that we recognize the ignorance of our own ignorance.
Perhaps we didn’t understand the problem our customers were trying to solve. Perhaps we didn’t identify the optimal customer profile. Perhaps our success criteria weren’t specific enough to measure incremental value. Perhaps our solution didn’t obviously improve upon the status quo for a customer to justify the switching costs. Perhaps our leaders were so confident in their vision, they only asked when their solution would be ready.
Product releases gone wrong hurt customers, our sales and support teams, our leadership and ourselves. Unless a majority of product team members have experienced negative product outcomes, they don’t recognize nor push back on the System 1 thinking driving decisions. Experienced product veterans know to ask during the development process:
“How do I know I’m right?”
“What if I’m wrong?”
“What needs to be true for this plan to succeed?”
Many biases contribute to these faulty assumptions and worse than expected outcomes. But the #1 cause of all these risky assumptions is the one Kahneman would most like to eliminate…. overconfidence bias.
The behavioral scientists’ guide to better decisions
Most of us are early on the learning curve for our products. Why? Because we often do not have full context on the problems our products are being used to solve. And often we don’t have perfect information on our customers’ alternatives and constraints. We frequently pursue ideas that are primarily informed by what we believe or hope to be true. Our confidence originates from the plausibility of the problem-solution story. That confidence becomes overconfidence when we rely solely on our System 1 thinking. We cannot trust our intuition and ability to infer patterns because we have not seen this all before.
Behavioral scientists and economists recommend solutions to help us counteract the overconfidence bias driving our risky assumptions.
- How might we fail? (Consider the opposite/Counterfactuals)
- Input from independent experts
- Track predictions vs actual results
Each of these techniques are means to inject Truth into our decision-making processes. We need System 2 stamina to suppress the lazy urges of System 1.
Neurologist Dr Robert Burton, author of On Being Certain: Believing You Are Right Even When You’re Not, explored the paradoxical relationship between our beliefs and what we actually know. Burton recommends a fourth technique to become a better decision maker:
Humility is the trait that helps us recognize the limits of our knowledge and value the insight of someone else. Personally, my humility practice stems from my motivation to make good product decisions stems from my desire to avoid the pain of being wrong and wasting resources. Other techniques to culture humility include becoming passionately curious and embracing your spirit of service.
Humility opens our minds to the possibility we are wrong and encourages the stamina required to engage our System 2 thinking. We structure assumptions as hypotheses to be tested and quantified.
Seasoned product leaders encourage both humility and discovery processes in their teams. The discovery techniques parallel the advice of behavioral economists to counteract overconfidence bias. Why? Seasoned product leaders and behavioral economists want to avoid poor decisions in order to create return on investment. They know that product teams will only achieve meaningful outcomes if they discover the Truth and do the Math.
For more advice on how overcome overconfidence bias, check out my related post, The Best Product Teams Crave Truth and Do Math. I share techniques for product teams to surface their riskiest assumptions to be (in)validated and create the equation that will lead to their desired outcomes.
Hope Gurion, founder of Fearless Product, is a Product / Business coach for technology companies. Follow me to get more product leadership advice. Share your thoughts in comments below or connect with me on LinkedIn or via email.
