• Skip to content
  • Skip to primary sidebar

Right Attitudes

Ideas for Impact

Creativity

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

June 21, 2016 By Nagesh Belludi Leave a Comment

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

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 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.

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.

Wondering what to read next?

  1. Four Ideas for Business Improvement Ideas
  2. Howard Gardner’s Five Minds for the Future // Books in Brief
  3. Finding Potential Problems & Risk Analysis: A Case Study on ‘The Three Faces of Eve’
  4. Van Gogh Didn’t Just Copy—He Reinvented
  5. Creativity by Imitation: How to Steal Others’ Ideas and Innovate

Filed Under: Mental Models, Sharpening Your Skills Tagged With: Artists, Creativity, Critical Thinking, Luck, Mental Models, Problem Solving, Scientists, Thinking Tools, Thought Process, Winning on the Job

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

May 13, 2016 By Nagesh Belludi

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

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.

Wondering what to read next?

  1. Finding Potential Problems & Risk Analysis: A Case Study on ‘The Three Faces of Eve’
  2. The Curse of Teamwork: Groupthink
  3. This is Yoga for the Brain: Multidisciplinary Learning
  4. Creativity by Imitation: How to Steal Others’ Ideas and Innovate
  5. Charlie Munger’s Iron Prescription

Filed Under: Mental Models, Sharpening Your Skills Tagged With: Conversations, Creativity, Critical Thinking, Mental Models, Networking, Social Dynamics, Teams, Thinking Tools, Thought Process, Winning on the Job

Find out What Your Customers Want and Give it to Them

April 22, 2016 By Nagesh Belludi 1 Comment

“Nobody asked the dogs what they wanted”

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.”

Wondering what to read next?

  1. Your Product May Be Excellent, But Is There A Market For It?
  2. How to … Get into a Creative Mindset
  3. Airline Safety Videos: From Dull Briefings to Dynamic Ad Platforms
  4. The Singapore Girl: Myth, Marketing, and Manufactured Grace
  5. Invention is Refined Theft

Filed Under: Business Stories, Leadership, Managing Business Functions, The Great Innovators Tagged With: Creativity, Customer Service, Innovation, Parables, Peter Drucker, Thought Process

Stuck on a Problem? Shift Your Perspective!

March 11, 2016 By Nagesh Belludi 1 Comment

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.

Wondering what to read next?

  1. Reframe Your Thinking, Get Better Answers: What the Stoics Taught
  2. Many Businesses Get Started from an Unmet Personal Need
  3. What Isn’t Matters Too
  4. How to Become a Broad-thinker: Principles and Methods
  5. How to Stimulate Group Creativity // Book Summary of Edward de Bono’s ‘Six Thinking Hats’

Filed Under: Mental Models, Sharpening Your Skills Tagged With: Creativity, Humor, Philosophy, Thinking Tools, Thought Process, Winning on the Job

Serendipity and Entrepreneurship in the Invention of Corn Flakes

February 5, 2016 By Nagesh Belludi Leave a Comment

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 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

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.

Wondering what to read next?

  1. How Johnson’s Baby Powder Got Started: Serendipity and Entrepreneurship
  2. The Myth of the First-Mover Advantage
  3. Always Be Ready to Discover What You’re Not Looking For
  4. Van Gogh Didn’t Just Copy—He Reinvented
  5. Chance and the Currency of Preparedness: A Case Study on an Indonesian Handbag Entrepreneur, Sunny Kamengmau

Filed Under: Business Stories, Sharpening Your Skills, The Great Innovators Tagged With: Creativity, Entrepreneurs, Luck

How to Become a Broad-thinker: Principles and Methods

December 18, 2015 By Nagesh Belludi Leave a Comment

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.)

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.

Wondering what to read next?

  1. Many Businesses Get Started from an Unmet Personal Need
  2. Stuck on a Problem? Shift Your Perspective!
  3. How to Stimulate Group Creativity // Book Summary of Edward de Bono’s ‘Six Thinking Hats’
  4. You Can’t Develop Solutions Unless You Realize You Got Problems: Problem Finding is an Undervalued Skill
  5. This is Yoga for the Brain: Multidisciplinary Learning

Filed Under: Mental Models, Sharpening Your Skills Tagged With: Creativity, Elon Musk, Thinking Tools, Thought Process, Winning on the Job

Picasso’s Blue Period: A Serendipitous Invention

November 27, 2015 By Nagesh Belludi Leave a Comment

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.

Wondering what to read next?

  1. Van Gogh Didn’t Just Copy—He Reinvented
  2. You Can’t Develop Solutions Unless You Realize You Got Problems: Problem Finding is an Undervalued Skill
  3. How to Bring Your Ideas to Life
  4. You Never Know What’ll Spark Your Imagination (and When)
  5. Unlocking Your Creative Potential: The Power of a Quiet Mind and Wandering Thoughts

Filed Under: Sharpening Your Skills, The Great Innovators Tagged With: Artists, Creativity, Luck

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

November 24, 2015 By Nagesh Belludi Leave a Comment


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

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.

Wondering what to read next?

  1. Serendipity and Entrepreneurship in the Invention of Corn Flakes
  2. The Myth of the First-Mover Advantage
  3. Always Be Ready to Discover What You’re Not Looking For
  4. Van Gogh Didn’t Just Copy—He Reinvented
  5. Chance and the Currency of Preparedness: A Case Study on an Indonesian Handbag Entrepreneur, Sunny Kamengmau

Filed Under: Business Stories, Sharpening Your Skills, The Great Innovators Tagged With: Creativity, Entrepreneurs, Luck

Clever Marketing Exploits the Anchoring Bias

November 17, 2015 By Nagesh Belludi Leave a Comment

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

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.

Wondering what to read next?

  1. Decoy Effect: The Sneaky Sales Trick That Turns Shoppers into Spenders
  2. The Wisdom of the Well-Timed Imperfection: The ‘Pratfall Effect’ and Authenticity
  3. The Mere Exposure Effect: Why We Fall for the Most Persistent
  4. Elon Musk Insults, Michael O’Leary Sells: Ryanair Knows Cheap-Fare Psychology
  5. Your Product May Be Excellent, But Is There A Market For It?

Filed Under: Business Stories, MBA in a Nutshell, Mental Models, Sharpening Your Skills Tagged With: Biases, Creativity, Marketing, Materialism, Personal Finance, Thought Process

Make a Difficult Decision Like Benjamin Franklin

October 30, 2015 By Nagesh Belludi Leave a Comment

Benjamin Franklin, American inventor, journalist, printer, diplomat, author, and founding father Benjamin Franklin (1706–1790) was renowned for his lifelong quest for self-improvement, as he thoroughly documented in his “Autobiography” (1791.)

In my previous article on Benjamin Franklin’s “Plan for Conduct,” I noted that Franklin had a methodical mindset.

As a young adult, Franklin developed a method for making complex decisions. At age 66, in a letter to his close friend Joseph Priestley (a London chemist who, in 1774, isolated the element oxygen,) Franklin described this method.

In this letter written on September 19, 1772, Franklin mentions one of the key challenges of fact-collecting and decision-making:

In the affair of so much importance to you, wherein you ask my advice, I cannot for want of sufficient premises, advise you what to determine, but if you please I will tell you how. When these difficult cases occur, they are difficult chiefly because while we have them under consideration all the reasons pro and con are not present to the mind at the same time; but sometimes one set present themselves, and at other times another, the first being out of sight. Hence the various purposes or inclinations that alternately prevail, and the uncertainty that perplexes us.

Make a Difficult Decision Like Benjamin Franklin - T-charts

Then, Franklin describes how to weigh the “pro et contra” (Latin for “for and against”) in any situation:

To get over this, my way is, to divide, half a sheet of paper by a line into two columns, writing over the one pro, and over the other con. Then during three or four day’s consideration I put down under the different heads short hints of the different motives that at different times occur to me for or against the measure. When I have thus got them all together in one view, I endeavor to estimate their respective weights; and where I find two, one on each side, that seem equal, I strike them both out: if I find a reason pro equal to some two reasons con, I strike out the three. If l judge some two reasons con equal to some three reasons pro, I strike out the five; and thus proceeding I find at length where the balance lies; and if after a day or two of farther consideration nothing new that is of importance occurs on either side, I come to a determination accordingly. And though the weight of reasons cannot be taken with the precision of algebraic quantities, yet when each is thus considered separately and comparatively, and the whole lies before me, I think I can judge better, and am less likely to make a rash step; and in fact I have found great advantage from this kind of equation, in what may be called moral or prudential algebra.

'The Benjamin Franklin Reader' by Walter Isaacson (ISBN 743273982) Ben Franklin’s humble tool for decision-making is now known as the T-Chart. It is widely used to examine two opposing facets of a topic, object, situation, circumstance, or event under consideration. T-Charts are particularly helpful for analyzing advantages and disadvantages, as well as strengths and weaknesses.

Recommended Reading: For a great collection of the writings of Benjamin Franklin, including his “Autobiography”, see Walter Isaacson’s “A Benjamin Franklin Reader”.

Wondering what to read next?

  1. Make Decisions Using Bill Hewlett’s “Hat-Wearing Process”
  2. Question the Now, Imagine the Next
  3. Disproven Hypotheses Are Useful Too
  4. How to Solve a Problem By Standing It on Its Head
  5. This is Yoga for the Brain: Multidisciplinary Learning

Filed Under: Great Personalities, Mental Models, Sharpening Your Skills Tagged With: Creativity, Decision-Making, Discipline, Thinking Tools, Thought Process

« Previous Page
Next Page »

Primary Sidebar

Popular Now

Anxiety Assertiveness Attitudes Balance Biases Coaching Conflict Conversations Creativity Critical Thinking Decision-Making Discipline Emotions Entrepreneurs Ethics Etiquette Feedback Getting Along Getting Things Done Goals Great Manager Innovation Leadership Leadership Lessons Likeability Mental Models Mindfulness Motivation Parables Performance Management Persuasion Philosophy Problem Solving Procrastination Psychology Relationships Simple Living Social Skills Stress Suffering Thinking Tools Thought Process Time Management Winning on the Job Wisdom

About: Nagesh Belludi [hire] is a St. Petersburg, Florida-based freethinker, investor, and leadership coach. He specializes in helping executives and companies ensure that the overall quality of their decision-making benefits isn’t compromised by a lack of a big-picture understanding.

Get Updates

Signup for emails

Subscribe via RSS

Contact Nagesh Belludi

RECOMMENDED BOOK:
How to Talk to Anyone

How to Talk to Anyone: Leil Lowndes

Communication consultant Leil Lowndes discusses 92 tricks to become a better conversationalist and improve social relationships---body language, words to say, telephone techniques, social tactics.

Explore

  • Announcements
  • Belief and Spirituality
  • Business Stories
  • Career Development
  • Effective Communication
  • Great Personalities
  • Health and Well-being
  • Ideas and Insights
  • Inspirational Quotations
  • Leadership
  • Leadership Reading
  • Leading Teams
  • Living the Good Life
  • Managing Business Functions
  • Managing People
  • MBA in a Nutshell
  • Mental Models
  • News Analysis
  • Personal Finance
  • Podcasts
  • Project Management
  • Proverbs & Maxims
  • Sharpening Your Skills
  • The Great Innovators

Recently,

  • You Need Your Enemy to Be Worth It
  • The Quiet Rebellion
  • The ‘Near Enemy’: The Subtle Corruption That Makes Good Acts Fail
  • Inspirational Quotations #1162
  • The “Empty Vessel” Effect: Why Insecurity Speaks the Loudest
  • Persuasion’s Oldest Trick Isn’t the Promise of More—It’s the Threat of Loss
  • Efficiency vs. Effectiveness: Activity Without Outcome as Self-Indulgent Futility

Unless otherwise stated in the individual document, the works above are © Nagesh Belludi under a Creative Commons BY-NC-ND license. You may quote, copy and share them freely, as long as you link back to RightAttitudes.com, don't make money with them, and don't modify the content. Enjoy!