While researching and writing the book Play Bigger, we started to realize that good category design required an understanding of cognitive biases and how they work. So we turned to the brain science community.
I had written an earlier book titled The Two-Second Advantage that was about the intersection of brain science and computer science, which introduced me to some people we could talk to for Play Bigger. But for a lot of our foundational research about biases, we turned to the work of Daniel Kahneman, and especially his book Thinking Fast and Slow.
Shortcuts in Our Minds – Cognitive Biases
Daniel Kahneman, 3/5/34 – 3/27/24
I write this now because Kahneman died March 27, at 90.
One of his peers, the author and Harvard psychologist Steven Pinker, was quoted saying this about Kahneman: “His central message could not be more important – namely, that human reason left to its own devices is apt to engage in a number of fallacies and systematic errors, so if we want to make better decisions in our personal lives and as a society, we ought to be aware of these biases and seek workarounds.”
Except in category design, we come at it from a different direction: Knowing, per Kahneman, that biases often influence people’s buying decisions more than facts, we want to try to create those biases. The way to win a market category and lead it over time is to plant the bias in customers’ minds that your product or service is the absolute best one to get…even if it’s not the best. Such biases are why most people first think “iPhone” when they need a new smartphone, or why we reflexively turn to Google for search without thinking or caring if some other search engine might return better results.
Respect!
Here’s what we wrote about biases in Play Bigger. Again, our respect to Kahneman.
The category as an organizing principle is supported by research on the brain and cognitive biases, as described by Nobel Prize winner Daniel Kahneman in his book, Thinking Fast and Slow, and by a host of brain scientists. Our brains are governed by more than fifty different cognitive biases that push us toward decisions based not on facts and logic, but on instincts that can be at odds with facts and logic. It’s a shortcut system in our brain — a way to make decisions faster and easier, especially when overwhelmed by too much information.
One of the cognitive biases is called The Anchoring Effect. It’s a tendency for an early bit of information to affect our view of all the information that comes after. For instance, the first offer put on the table in a negotiation has a powerful impact on any other offer that comes after. So in category dynamics, an early company that solves the problem will win a powerful place in customers’ minds. It becomes an anchor. Other companies coming afterward get judged against that early company. Another bias that kicks in is the Choice Supportive Bias — the tendency to give positive qualities to an option we’ve chosen just because we’ve chosen it. This means that once you’ve committed to a product or service in a new category, you’re likely to feel certain that it is the best even if something slightly better comes along. This helps explain why category kings can’t be dethroned by a competing product or service that’s simply better. Once people have chosen a king, they will always tend to believe the king is better, even if it’s not. This reality explains why companies with superior technology can still lose category wars. Once a king emerges customers believe it’s the best, regardless of any evidence to the contrary.
The category king concept also plays out in humans’ pack mentality. Groupthink Bias describes a tendency to believe things because other people do. Brain studies have shown that when we hold an opinion that differs from others in a group, our brains produce an error signal, warning us that we are probably wrong. In a category, the Groupthink Bias brings momentum to an emerging category king — customers embrace the king because so many other customers have embraced the king. The pressure to make important buying decisions is not unlike the feeling of being under threat for some people.
Research from Vladas Griskevicius at the University of Minnesota shows that when people are threatened they seek safety in numbers. “In the pack we feel less vulnerable, less likely to get eaten when the critter cannot see us because we blend in with the crowd. The group is our haven, our shield.” As a result, the people who already own iPads make the people thinking about buying iPads feel safer about the decision. The need to fit in is a uniquely human behavior and begins as early as two years old. “Conformity is a very basic feature of human sociality,” said Daniel Haun, a psychological scientist at the Max Planck Institute for Evolutionary Anthropology. Studies show that people will and do change their minds to fit in. MRI scans of people changing their minds to conform to a group show that two critical reward-related regions in our brain are stimulated when we change our minds to be like others. It turns out people want to buy from category kings because our brains feel safe and happy when we do.
–
Want to discuss how your category strategy can take advantage of cognitive biases? Book an office hours slot with us here.