How to Make Choosing Easier

It seems that in the past 40-50 years Americans have steadily increased their available options. Before Walmart and other big box stores people shopped at local delis, bakery's, and butcher shops. Before Amazon.com local businesses sold direct to geographical markets. Back then choices were few. Today there is an almost an endless amount of choices and options we have presented to us on a daily basis. Chances are that if you live in an American city you could drive 5-10 miles from your home and run across a dozen fast food restaurants, 2-3 grocery stores, and half a dozen other major chains all hoping to get your business. We are inundated with choices.

Sheena Lyengar spoke about the many choices we have available to us and how to "be choosy about choosing" in her TED presentation How to make choosing easier. She talked about a fancy grocery store she used to visit with hundreds of choices for jams, mustards, and olive oil. Shelves filled with so much variety of similar products, in her hypothesis, were causing too much choice for the average consumer. She studied the effects of many choices to few and their correlation with consumer decisions. What she found was that we as consumers make more decisions when we are faced with less choices.

Sheena talked about four methods to making choosing easier when faced with choice overload. These are cut, concretize, categorization, and conditioning for complexity. Her research concludes that less is more when making decisions and choices are easier made when they can be visualized. Categorizing separate and distinct options helps funnel down areas of interest, and by gradually increasing complexity of choices maintains attention when making decisions. She believes that by using these four principles we can make better choices, and I agree.

After listening to Sheena I immediately thought about Amazon, the largest online store around. Amazon.com sells over 200 million products broken down into 35 different departments. The model Amazon employs to sell these products does, however, make it easier for consumers to make buying decisions. You can search individual departments for specific items, or just type in what you are searching for and let Amazon whittle down the choices for you. There are almost always pictures and reviews attached to each item, and once you land on what you are looking for Amazon presents you with a slew of sellers and their prices, shipping options, and options to pay. In other words, this mega-online- store has made a tremendous impact on consumers world wide by following the four simple methods Sheena Lyengar suggested to make choosing easier.

We are not just faced with the choice overload dilemma as consumers. We face these issues in almost every facet of our personal and professional lives. The more choices we have to choose from can often times muddy up the decision-making process and slow down decision-making all together. For example, recently in my small outdoor retail store we have been looking to add a third line of patio furniture to our line-up. We currently have a heavy duty plastic line (made from recycled milk jugs... very cool product and story) and a big-end brushed aluminum line. We want to include a wicker option to round out our options and tackle a large, underdeveloped market in the Texas Coastal Bend. You would not believe the choices we have to make to compare and contrast the various manufactures that make wicker type outdoor furniture. The owner of the company has tasked a few of the general managers with funneling down the choices and presenting them to him for the final approval. This has been going on for months and we are no closer to including this much-anticipated third product line than we were four months ago. However, we do need to ensure we choose the right company to represent in order to have a long-lasting and profitable venture in our patio furniture line.

Without knowing Sheena Lyengar's proposed methods for making choosing easier I, being the newest of the GMs, made some recommendations to reduce our potential wicker manufacturers to three, accumulate proposals form each with some visuals, and categorize them by price, reputation, and location to reduce shipping costs. Bam! Now we are cooking with grease. Hopefully with these recommendations we will launch our complete line of patio furniture by this spring.

Aside from Sheena's suggestions we can learn to make decisions easier by understanding more does not mean better. We can use tools like the Internet and its many websites to help us discover the reasons to make a decision or not, but we should not get caught up in the sea of choices. In my opinion, I believe that we should still employ that small town mentality of going with who ever offers a great product with superior service at reasonable prices. Keep the decision-making process simple, and have the fortitude to be calm in the face of overwhelming choices.

JP

Multistage Decision Making

E(P_1 )= .5 ×(V_1+ V_2)

E(P_2 )=p × .75 ×(V_1+ V_2 )+(1-p) ×(.25 ×V_1+  .5 x V_2)

Above is the formula used by researchers to find a viable solution in Hoch and Kunreuther's book Wharton on Making Decision. The decision to be made with this formula was whether or not to use a current distributor who has historically reached 50% of customers or taking on a new distributor that has the potential to reach 75% of customers, yet only reached 25% last year (pg. 40). By deduction of reason and formulation it is possible to discover the probability of risk when making important decisions that could potentially have a sizeable impact on a business. However, not all of us are researchers and statisticians. 

Making decisions is what makes us unique from most other animals on the planet. We make hundreds if not thousands of decisions every day. Small, mundane decisions to Large, holy cow decisions are part of our daily routine. How we think about making these decisions is worthy of some thought.

For me, the formula above does not fit in my decision making process. This is not to say I don't think things through, look at all the options, and weigh out the possible consequences of my decisions, I do... just not in such a mathematical way. In the situation above I would probably take the calculated gamble on the new distributer with the possibility to increase my customer reach. If it doesn't work out or meet my expectations we always have the option of the first distributer. Granted, this would be more work down the road, but if distributer #2 made some strategic changes in their processes is the gamble worth an additional 25% exposure? I would say so. No formula needed.

As a General Manger for a small retail outdoor living store I make decisions each day that could affect our bottom line. For me, it is important to accumulate as much knowledge as I can about what I am making a decision on. I will ask several people and seek out advice and experiences from others, take into account our historical successes, and listen to my gut in order to make a sound business decision. While the later may not be as scientific or accurate as the others it hasn't failed me more than my "gut feeling" has saved me. Experience is a valuable asset to have on your side when making decisions and this experience tends to migrate towards the lower abdomen area of my body. It reminds me of painful mistakes from the past and serves as a beacon for making good choices in the future. Scientific, no. Helpful, yes.

Strategic planning is just long-term decision making, and I feel it is important to use your resources available to you to make informed decisions that have long reaching affects. Logic is a balancing tool I use to wrangle in my off the wall ideas, but I do not think I would benefit much more from using an optimal dynamic decision analysis tool in the sense described in this text. Yes, I would write down pros and cons. I would research fully my options. And, as a result, I would make a sound decision based on sound thinking. Same result, different method.

To measure the effectiveness of a decision you must track the progress. Inspect what you expect, and make adjustments when needed. To get back to the problem at hand, if the distributer #2 didn't hold up their end of the bargain, and I was not reaching close to 75% of my customers we would have to make some more decisions and possibly make some changes. Reputation is everything in the business world, and reputation is earned by doing what you say you can do repeatedly. However, reputation alone is not the end all be all for choosing to go with one distributer over another. The decision for me is constant improvement, and I track these processes carefully.

To sum up, decisions are important and a way of life. Small or large we should consider all the options before making rash choices. If using a formula helps to make an informed decision, use it. As for me, I will continue to use a fluid, dynamic approach to making the right choices. It helps that I am not afraid of making mistakes as this fills up my gut-o-meter with that valuable knowledge fuel I have come to rely on so heavily.

 

JP