Finding Potential Problems & Risk Analysis: A Case Study on ‘The Three Faces of Eve’

The Three Faces of Eve (1957)

Risk Analysis is a Forerunner to Risk Reduction

My previous article stressed the importance of problem finding as an intellectual skill and as a definitive forerunner to any creative process. In this article, I will draw attention to another facet of problem finding: thinking through potential problems.

Sometimes people are unaware of the harmful, unintended side effects of their actions. They fail to realize that a current state of affairs may lead to problems later on. Their actions and decisions could result in outcomes that are different from those planned. Risk analysis reduces the chance of non-optimal results.

The Three Contracts of Eve

'The 3 Faces of Eve' by Corbett H. Thigpen and Hervey M. Cleckley (ISBN 0445081376) A particularly instructive example of finding potential problems and mitigating risk concerns the Hollywood classic The Three Faces of Eve (1957). This psychological drama features the true story of Chris Sizemore who suffered from dissociative identity disorder (also called multiple personality disorder.) Based on The Three Faces of Eve by her psychiatrists Corbett Thigpen and Hervey Cleckley, the movie portrays Sizemore’s three personalities, which manifest in three characters: Eve White, Eve Black, and Jane.

Before filming started on The Three Faces of Eve, the legal department of the 20th Century Fox studio insisted that Sizemore sign three separate contracts—one for each of her personalities—to cover the studio from any possible legal action. For that reason, Sizemore was asked to evoke “Eve White,” “Eve Black,” and “Jane,” and then sign an agreement while manifesting each of these respective personalities. According to Aubrey Solomon’s The Films of 20th Century-Fox and her commentary on the movie’s DVD, the three signatures on the three contracts were all different because they were a product of three distinct personalities that Sizemore had invoked because of her multiple personality disorder.

Idea for Impact: Risk analysis and risk reduction should be one of the primary goals of any intellectual process.

Postscript Notes

  • I recommend the movie The Three Faces of Eve for its captivating glimpse into the mind of a person afflicted with dissociative identity disorder. Actress Joanne Woodward won the 1958 Academy Award (Oscar) for best actress for her portrayal of the three Eves.
  • The automotive, aerospace, and other engineering disciplines use a formal risk analysis procedure called “failure mode and effects analysis” (FEMA.) FEMA examines the key risk factors that may fail a project, system, design, or process, the potential effects of those failures, and the seriousness of these effects.

You Can’t Develop Solutions Unless You Realize You Got Problems: Problem Finding is an Undervalued Skill

Problem Finding is an Undervalued Skill

Problem finding plays an important role in creative thinking

Problem finding is one of the most significant parts of problem solving. However, it tends to be an underappreciated skill. Many managers naively consider it strange to encourage employees to look for problems at work: “Why look for new problems when we’ve got no resources to work on ones we’ve already identified?”

Many courses and books on problem solving and creativity overlook problem finding. Many educational resources tend to assume that problem solving really begins only after problems have been identified.

Problem-identification lead to the invention of the ballpoint pen

Invention of the Ballpoint Pen by Biro Brothers The story of the invention of the ballpoint pen demonstrates the importance of problem finding. Had the inventors not recognized a problem with the existing writing instruments of their day, they would not have developed their invention.

In the 1920s, Hungarian journalist Laszlo Biro spent much time proofreading and checking for errors in others’ writings. To communicate these errors to the authors, Laszlo could not use pencils because their impressions fade quickly. He tried using a fountain pen, but the ink from the fountain pen dried slowly and often left smudges on paper.

Laszlo observed that the ink used in newspaper printing dried quickly and left the paper smudge-free. When he tried using that ink in his fountain pen, however, the ink was too viscous to flow into the tip of the fountain pen.

Laszlo then collaborated with his chemist-brother Gyorgy Biro to invent a new pen tip consisting of a ball that was enclosed within a socket. As the ball rolled inside the socket, the ball could pick up ink from a reservoir or cartridge and then continue to roll to deposit the ink on the paper. The Biro brothers thus invented the ballpoint pen. The company they created is now part of the BIC Company. The ballpoint pen continues to be called a ‘Biro’ in some countries.

Often, creativity is the outcome of discovered problem solving

Greek Philosopher Plato famously wrote in The Republic, “Let us begin and create in idea a State; and yet a true creator is necessity, which is the mother of our invention.”

One reason we fail to identify problems is that we do not stop to think about improving various situations that we encounter. Very often, these problems are directly in front of us; we need to consciously identify them and convert them into opportunities for problem solving. Instead, we tend to take inconveniences and unpleasant situations for granted and assume they are merely “facts of life.”

  • The grain mill was not invented until somebody in antiquity identified the ineffectiveness of two hours of pounding grain to make a cup of flour.
  • The world’s first traffic lights were installed around the British Houses of Parliament in London only after somebody thought of the problem of traffic congestion. In other words, up until the problems from congestion were identified in the 1860s, no one attempted to systematically consider how the problem might be solved.

James Watt invented his seminal separate-condenser steam engine

  • James Watt invented his seminal separate-condenser steam engine after discovering an interesting problem with the Newcomen steam engine. In 1763, when Watt was working as an instrument maker at the University of Glasgow, he was assigned to repair a model of a Newcomen engine for a lecture-demonstration. Watt initially had difficulty getting the Newcomen engine to work because its parts were poorly constructed. When he finally had it running, he was surprised at its efficiency. Watt observed that the engine was constantly running out of coal because the constant heating and cooling of the cylinder resulted in a large waste of energy. Watt then devised a system whereby the cylinder and the condenser were separate. This led to his invention of the “steam engine” (or, more precisely, the separate-condenser steam engine.)
  • As I mentioned in a previous article on the opportunities in customers’ pain points, crispy potato chips were invented only when Chef George Crum of New York’s Saratoga Springs attempted to appease a cranky customer who frequently sent Crum’s fried potatoes back to the kitchen complaining that they were mushy and not crunchy enough. Decades later, Laura Scudder invented airtight packaging for potato chips only after becoming conscious of customers’ complaints that chips packaged in metal containers quickly go stale and crumble during handling.

Finding and defining a creative problem

If problems are not identified, solutions are unlikely to be proposed

It pays to keep your eyes open and look at inconveniences, difficulties, and troubles as creative problems to be solved. Don’t ignore these merely as facts of life.

Curiosity, intrigue, and motivation influence problem finding (and problem solving.) One of the easiest ways to develop your skills in problem finding is to ponder at anything around you and wonder why those gadgets and contraptions were ever invented. Analyze carefully and you’ll learn that the first step taken by the inventors of these objects was the identification of the problems the objects were designed to solve.

When you look around various objects in your life, think about what life was before these objects were invented. What problems could these inventions have solved? Why was the zipper invented? What problems motivated Bjarne Stroustrup to create C++? What was internet search like before Google? How did commerce transpire before the advent of coins and bills and money?

Some people make a career out of problem finding. Managers who want to know if their organizations are running efficiently frequently hire consultants to look for problems that managers do not know exist in their businesses.

And finally, if you want to become an inventor or an entrepreneur, try to start with problems you already have in your work or in your life. Ideally, identify problems shared by a large number of people to increase the probability that your inventions will be put in widespread use.

Idea for Impact: A creative solution to a problem often depends on first finding and defining a creative problem. Very often, the solution to a problem becomes obvious when the problem has been properly identified, defined, and represented.

How to Stimulate Group Creativity / Book Summary of Edward de Bono’s “Six Thinking Hats”

Stimulate Group Creativity Using Edward de Bono's 'Six Thinking Hats'

In his bestselling book Six Thinking Hats, Edward de Bono describes a powerful problem-solving approach that enriches mental flexibility by encouraging individuals and groups to attack an issue from six independent but complementary perspectives.

Edward de Bono is a leading authority in creative thinking. He is widely regarded as the father of lateral thinking. De Bono has written over 70 books on thinking and creativity.

Using the ‘Six Thinking Hats’ for Structured Brainstorming

Edward de Bono, leading authority in creative thinking and lateral thinking De Bono created the ‘six thinking hats’ method after identifying six distinct lines of human thought in problem solving. De Bono calls each approach a “hat” and assigns them different colors.

At the heart of the ‘six thinking hats’ method are six different colored hats that participants put on—literally or metaphorically—to represent the type of thinking they should concentrate on while wearing each.

  1. White is neutral, objective, and fact-based. A white hat is concerned with objective data: “What information do we have? What information do we need? What information are we missing? How can get the information we need? What objective questions should be asked?”
  2. Red denotes passion, anger, intuition, and emotions. A red hat considers the emotional side of problem solving, which is often neglected or masked in meetings: “What are our gut reactions to the matter at hand?”
  3. Black is somber, serious, and cautious. A black hat is vigilant, plays devil’s advocate, and encourages derogatory and judgmental behavior: “what are the weaknesses of these ideas? What are the risks? What could go wrong?”
  4. Yellow represents positive thinking, hope, and optimism to counteract the black hat’s power. A yellow hat plays “the angel’s advocate” and is cheerful and confident: “What are the best-case scenarios? What are the best aspects of this? What are the advantages? Who can benefit from this?”
  5. Green signifies abundance, growth, richness, and fertility. A green hat is the hat of creativity; it rejects established rules and norms, and invents new approaches: “What are some new ideas on this subject? What is interesting about this idea? What are the variances in these ideas?”
  6. Blue represents the sky and therefore provides the overarching perspective. A blue hat performs “meta thinking” and is concerned with the organization of the thinking process and the use of other hats. The blue hat synthesizes and reconciles different viewpoints. At the start of a brainstorming session, the blue hat sets the stage for where the discussion may go. The blue hat guides and sustains the discussion, often restating its purposes: “What are we thinking about? What is the goal? What should we do next? What have we achieved so far? What should we do to achieve more?” At the conclusion of the brainstorming session, the blue hat appraises the discussion, and proposes a plan of action.

Use De Bono’s Six Thinking Hats Model for Critical Thinking and Problem Solving

'Six Thinking Hats' by Edward de Bono (ISBN 0316178314) An individual working alone may use the approach to consider broader, distinct lines of thought. By changing hats, the individual can switch viewpoints and ensure that he/she is not stuck in specific thinking patterns.

However, the approach is best suited to group discussions (when chaired by a skilled facilitator) in which conflicting ideas may never otherwise be fully synthesized into plans of action. By persuading each participant to think constructively alongside other participants, the ‘six thinking hats’ method taps into group members’diverse perspectives and uses their collective knowledge without destructive conflict.

Using these hats nurtures creativity by letting participants step beyond their typical roles and contribute to developing, organizing, and progressing ideas. Participants can also identify how their cognitive state at any one time shapes how they approach problems.

Recommendation: Read. Edward de Bono’s Six Thinking Hats presents a very effective technique for stimulating group creativity. The method can remove mental blocks, organize ideas and information, foster cross-fertilization, and help conduct thinking sessions more productively than do other brainstorming methods.

Complement with Dan Ciampa’s Taking Advice for an excellent framework on the kind of advice network you need on strategic, operational, political, and personal elements of your work and life. Read my summary in this article.

Find out What Your Customers Want and Give it to Them

“Nobody asked the dogs what they wanted”

Dog Food Product Once upon a time, a pet-foods company struggled to sell a new dog food product they’d recently introduced to the market.

The company’s CEO called the department heads together to discuss why the new product wouldn’t sell.

The head of production said he’d done everything right; it wasn’t his department’s fault.

The heads of the sales, advertising, finance, packaging, shipping, and distribution departments had done everything right. None of them were to blame.

The CEO demanded, “Darn! What happened? Why won’t our new product sell?”

A junior staffer shouted from the back of the room, “Sir, it’s just that the dogs simply won’t eat our doggone food. You see, nobody asked the dogs what they wanted.”

Idea for Impact: Customer Focus Drives Company Success

Your research and development efforts will be successful only if they’re driven by a thorough understanding of what your customers want. Engage your customers. Pay close attention to their needs in every phase of product/service design including idea generation, product design, prototyping, production, distribution, and service. Remember Peter Drucker’s dictum that “the purpose of a business is to create and keep a customer.”

Stuck on a Problem? Shift Your Perspective!

Get Creative by Shifting Your Perspective

The World’s Second Funniest Joke

In 2001, Richard Wiseman led an international humor experiment to find the world’s funniest joke. He had internet users submit and rate 40,000 jokes. Of these, the second-funniest joke was the following (the world’s funniest joke is here.)

Sherlock Holmes and Dr. Watson are camping. They pitch their tent under the stars and go to sleep. Sometime in the middle of the night, Holmes wakes Watson up.

Holmes: “Watson, look up at the stars, and tell me what you deduce.”

Watson: “I see millions of stars and even if a few of those have planets, it’s quite likely there are some planets like earth, and if there are a few planets like earth out there, there might also be life. What does it tell you, Holmes?”

Holmes: “Watson, you idiot, somebody has stolen our tent!”

Fixation: an Impediment to Successful Problem Solving

The joke suggests the psychological concept of fixation. Fixation occurs when you view a problem from only one perspective preventing you from seeing the obvious or breaking from a routine way of thinking.

To change an entrenched pattern of thinking, try to shift your perspective—literally or metaphorically. A shift in perspective can change your physical position and thus alter your point of view in a literal and sensory way, or it may change the way you think about or define the problem at hand.

The fields of arts and the sciences are replete with examples of how a different frame of mind can offer creative insight. As I cited in my article on the start of Picasso’s Blue Period, many artistic styles develop when artists feel the need to change the way their art represents the world. The new style therefore presents an alternative perspective.

Idea for Impact: Get Creative by Shifting Your Perspective

Shifts in perspective are fundamental to many facets of the creative process. As I stated in my previous article on reframing, the solution to many difficult problems can be found merely by defining or formulating them in a new, more productive way.

If you’re stuck on a problem, stand back and apply a different lens to break away from your current perspective.

Alternatively, simply take time away from your problem. A relaxation of effort may help you see something that is obvious after the break, but was previously overlooked or taken for granted.

Serendipity and Entrepreneurship in the Invention of Corn Flakes

In previous articles about Johnson’s Baby Powder and Picasso’s Blue Period, I discussed serendipity as a rich phenomenon that is central to entrepreneurial and artistic processes. In this article, I will discuss another case study of ideas born by chance and reinforced by casual observation and customer input.

One of America’s Favorite Cereals was Invented by Fortuitous Accident

Will Keith Kellogg invented corn flakes in 1894 at a sanitarium in Battle Creek, Michigan Will Keith Kellogg invented corn flakes in 1894 at a sanitarium in Battle Creek, Michigan. Will worked there as an assistant to his brother Dr. John Harvey Kellogg and helped research patients’ diets.

One day, while making bread dough at the sanitarium, Will accidentally left boiled wheat sitting out overnight unattended. When he returned to roll the wheat into dough, he discovered that it had dried out and was flaky. Interested to see what would happen, Will passed the flaky dough through the bread rollers and baked them to create a crunchy snack. He seasoned the flakes with salt and fed them with milk to the sanitarium’s patients. The wheat flakes were an immediate hit. Indeed, after some patients left the sanitarium, they ordered Kellogg’s flakes by post.

Will Kellogg’s Entrepreneurial Ingenuity

Serendipity and Entrepreneurship in the Invention of Kellogg Corn flakes Will Kellogg then tinkered his recipe for wheat flakes and ultimately settled on using corn in place of wheat as the flakes’ main ingredient.

In 1906, Will Kellogg launched “The Battle Creek Toasted Corn Flakes Company.” In addition to inventing corn flakes, Kellogg had a genius for business and marketing. He was a pioneer in testing markets, sampling products, using multi-color print advertisements, and developing innovative marketing campaigns.

Kellogg was keen on using slogans to promote his company’s products. In 1907, he introduced a marketing campaign that declared, “Wednesday is Wink Day in New York.” Every woman who winked at her grocer on a Wednesday received a free packet of corn flakes. Corn flakes sales skyrocketed.

Will Kellogg was also a prominent philanthropist and, in 1934, started the W. K. Kellogg Foundation.

The company Will Kellogg founded eventually became Kellogg Company, a prominent cereal and convenience foods multinational.

How to Become a Broad-thinker: Principles and Methods

Success depends on understanding basic principles as well as on developing and practicing workable methods.

  • Elon Musk, CEO of SpaceX and Tesla, recently advised in his Reddit AMA, “It is important to view knowledge as sort of a semantic tree—make sure you understand the fundamental principles, i.e. the trunk and big branches, before you get into the leaves/details or there is nothing for them to hang on to.”
  • Harrington Emerson, a prominent management consultant and efficiency expert during the early 1900s, is understood to have said that the key to becoming a broad-thinker is to focus on the principles: “As to methods, there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.” (This quote is often incorrectly attributed to American essayist Ralph Waldo Emerson.)

How to Become a Broad-thinker: Principles and Methods Principles are the fundamental set of philosophies, propositions, assumptions, laws, and rules concerning a topic, problem, or circumstances. The principles can teach you why something works the way it does.

Methods, on the other hand, are merely devices to apply those principles in a particular circumstance.

While principles are immutable, Emerson reminds us that there can be many methods to interpret and apply those principles.

Principles and Methods

Given the time-pressure induced by the hurried world of work, we are often so tempted to implement ready-made or handed-down methods that we forgo the necessary examination of underpinning principles.

By delving directly into methods, we can find some reliable direction and save a great deal of time, but we may be neglecting many factors that can affect the outcomes of our methods. These circumferential issues, second- and higher-order effects, and peripheral relationships may not be readily apparent at the outset. They will emanate only from a knowledge of the underlying principles.

Idea for Impact: To be an effective thinker, develop a broad understanding and appreciation of the principles before you develop or deploy methods.

Picasso’s Blue Period: A Serendipitous Invention

The Soup, 1902 by Pablo Picasso (from his Blue Period)

In October 1900, Pablo Picasso (1881–1973) moved to Paris and opened a studio there at age 19. Shortly thereafter, Picasso was deeply affected by a close friend and fellow artist’s suicide. Art historians believe this event marked the onset of Picasso’s Blue Period (1901–1904,) during which he produced many stoic and sentimental paintings in mostly monochromatic shades of blue and blue-green. The Art Institute of Chicago remarks,

Picasso’s Blue Period … was triggered in part by the suicide of his close friend Carlos Casagemas in 1901. The works of this period are characterized by their blue palette, somber subject matter, and destitute characters. His paintings feature begging mothers and fathers with small children and haggard old men and women with arms outstretched or huddled in despair.

Perhaps Picasso’s Blue Period is an instance of serendipity. Legend has it that one day Picasso had only blue paint to work with. When he started toying with the effects of painting with one color, he discovered the potential to produce interesting paintings that conveyed a sense of melancholy.

In what would become the hallmark of this greatest artist of the 20th century, thanks to serendipity, Picasso leveraged an apparent constraint into an unintended creative outcome. As such serendipity goes, the confluence of many factors helped Picasso initiate a new art genre showcasing themes of alienation, poverty, and psychological depression that, though now considered marvelous, then kept potential patrons away.

How Johnson’s Baby Powder Got Started: Serendipity and Entrepreneurship

1921 Advertisement: Johnson's Toilet and Baby Powder - Antiseptic Borated Talcum Powder

Making Fortunate Discoveries Accidentally

Alexander Fleming, the Scottish biologist famous for his 1922 discovery of penicillin, once said, “Have you ever given it a thought how decisively hazard—chance, fate, destiny, call it what you please—governs our lives?”

Serendipity is the accidental discovery of something that, post hoc, turns out to be valuable.

'Serendipity: Accidental Discoveries in Science' by Royston M. Roberts (ISBN 0471602035) The history of science is replete with such serendipitous discoveries. “Happy findings” made when scientists accidentally discovered something they were not explicitly looking for led to the discovery or invention of the urea, dynamite, saccharin, penicillin, nylon, microwave ovens, DNA, implantable cardiac pacemaker, and much more … even the ruins of Pompeii and Newton’s law of universal gravitation. (I recommend reading Royston Roberts’s Serendipity: Accidental Discoveries in Science)

In each of these instances, the crucial role of discovery or insight occurred in accidental circumstances. Therefore, we must understand serendipity’s role in terms of the circumstances that surround it.

Serendipity has also played a pivotal role in establishing many successful businesses. In fact, serendipity is a rich idea that is very central to the entrepreneurial process. As the following case study will demonstrate, many experimental ideas are born by chance and are often reinforced by casual observation and customer input.

Johnson & Johnson Got into the Baby Powder Business by Accident

Johnson & Johnson Got into the Baby Powder Business by Accident In 1885, entrepreneur Robert Wood Johnson was deeply inspired by a lecture of Joseph Lister, a British surgeon well known for his advocacy of antiseptic surgery. Johnson started tinkering with several different ideas in an effort to make sterile surgery products.

A year later, Johnson joined his two brothers to establish Johnson & Johnson (J&J) in New Brunswick, New Jersey. Their first commercial product was a sterile, ready-to-use, medicated plaster-bandage that promised to reduce the rate of infections after surgical procedures. As business developed, the Johnson brothers compiled the latest medical opinions about surgical infections and distributed a booklet called Modern Methods of Antiseptic Wound Treatment as part of their marketing efforts.

Within a few years, a doctor complained to J&J that their bandages caused skin irritation in his patients. In response, J&J’s scientific director Dr. Frederick Kilmer sent the doctor a packet of scented Italian talcum powder to help soothe the irritation. Since the doctor liked it, J&J started to include a small sample of talc powder with every package of medicated bandages.

By 1891, consumers discovered that the talc also helped alleviate diaper rash. They asked to buy it separately. The astounded J&J’s leadership quickly introduced Johnson’s Baby Powder “for toilet and nursery.” Over the years, J&J built on that huge initial success and created the dominant Johnson’s Baby product line with creams, shampoos, soaps, body lotions, oils, gels, and wipes.

J&J Got into the Sanitary Protection Products Business Too by Accident

Serendipity also played the key role in establishing J&J’s sanitary napkin business. In 1894, J&J launched midwife’s maternity kits to make childbirth safer for mothers and babies. These kits included twelve “Lister’s Towels,” sanitary napkins to staunch post-birth bleeding. Before long, J&J received hundreds of letters from women who wanted to know where they could buy just the sanitary napkins. In response, J&J introduced disposable sanitary napkins as part of its consumer products line. J&J thus became the first company in the United States to mass-produce sanitary protection products for women.

Clever Marketing Exploits the Anchoring Bias

Clever Marketing Exploits the Anchoring Bias

In the ’70s, psychologists Amos Tversky and Daniel Kahneman were the first to study a cognitive phenomenon called “anchoring” and its influence on decision-making. Over the decades, extensive research on anchoring has explained that the way and context in which we receive information profoundly influence how we synthesize it.

The effects of anchoring are very visible in marketing, sales, merchandising, and product pricing as it profoundly influences consumer behavior. By offering clever price contrasts, marketers can shape customers’ purchasing decisions. For example,

  • By offering lower prices and promotional sales, department stores induce customers to compare the sale price against the original price—the “anchor”—and think they’re getting a bargain.
  • By displaying shiny, expensive new cars in the showroom, car dealerships encourage customers to accept the prices displayed on their used cars or less flashy models.
  • Patrons at restaurants tend to order the second least-expensive bottle of wine in an attempt to avoid looking cheap. Therefore, restaurants tend to put the highest markup on that very bottle.

The Case of the $429 Breadmaker

Anchoring Bias: Williams-Sonoma $429 Breadmaker Customers are usually more likely to purchase a product when competing alternatives are included, as opposed to having only one product option.

Consider a classic example of this “single-option aversion” phenomenon. A few years ago, Williams-Sonoma couldn’t get customers to buy their $279 breadmaker. They cleverly added a spiffier-and-slicker deluxe breadmaker model to their product line for $429. While Williams-Sonoma didn’t sell many of the new and expensive breadmaker, they doubled sales of the original and less-expensive model.

When the $279 breadmaker was the only model available for sale, customers couldn’t tell whether the price was competitive because there was nothing to compare it to. By introducing a better product for a higher price, Williams-Sonoma provided an anchor upon which its customers could compare the two models; they naturally sided with the $279 model as an attractive alternative.

The Case of the $69 Hot Dog and the $1000 Chocolate Sundae

Anchoring Bias: Serendipity 3's $69 Hot Dog Usually, absurdly expensive premium goods are less of publicity stunts and more of strategic marketing tactics.

Consider the case of Serendipity 3’s menu anchors. In 2010, the popular New York eatery introduced a $69 hot dog called “Foot-Long Haute Dog” with dressings as exotic as medallions of duck liver, ketchup made from heirloom tomatoes, Dijon mustard with truffle shavings, and caramelized Vidalia onions to justify the high price. Of course, Serendipity 3 gained plenty of publicity when The Guinness Book of World Records certified this hot dog as the most expensive wiener of all time.

The true purpose of these ridiculously priced premium items is to make the next most expensive item seem cheaper. Customers who were drawn by the Haute Dog’s publicity gladly ordered the menu’s $17.95 cheeseburger. Even if $17.95 was too pricey elsewhere, Serendipity 3 customers deemed it reasonable in comparison to the $69 hot dog.

A few years previous, Serendipity 3 similarly offered a $1000 “Golden Opulence Sundae” that was only available with a 48 hour-notice. They sold only one Sundae per month. Nevertheless, this was just a shrewd marketing ploy to convince customers to spend more on high-profit margin desserts such as the $15.50 “fruit and fudge” confection or the $22.50 “Cheese Cake Vesuvius.”

Unsuspecting customers ended up paying too much for other meals at Serendipity 3 while believing they were getting a great deal.

Idea for Impact: Be Sensitive of Anchoring Bias

In both the above case studies, even if the companies sold almost none of their highest-priced models despite the publicity they generated, the companies reaped enormous benefits by exploiting the anchoring bias to induce customers to buy cheaper-than-most-expensive high-profit products.

In summary, anchoring exploits our tendency to seek out comparison and our reliance on context. The anchoring bias describes our subconscious tendency to make decisions by relying heavily on a single piece of information.

Call to Action: Sensitize yourself to how anchoring and anchoring bias may subconsciously affect your decision-making. If you’re in marketing or sales, investigate how you could use anchoring bias to influence your customers.

For more on cognitive biases and behavioral economics, read 2002 Nobel Laureate Daniel Kahneman’s bestselling Thinking, Fast and Slow. Also read Nir Eyal’s Hooked: How to Build Habit-Forming Products on how to influence customer behaviors and build products and offer services that people love.