Category: Product Development

💎 Lotteries to get shoppers to stop firms avoiding tax (gamification of taxes)

As early as 1951, the Taiwanese government sought to address this problem by doing two things. First, it unified all receipt and invoicing platforms into a central system, which meant that all businesses which gave out receipts would automatically send the unique receipt numbers and invoice amounts to the government for tax reporting. (In fact, in Taiwan most people don’t need to hire accountants to do their taxes – the government can directly tell you how much you owe them or how much they should return to you).

But the second step is where we see true innovation. The Taiwanese government turned each receipt and invoice number into a lottery ticket for citizens to play. For every odd-numbered month, citizens can see if their receipt numbers match the winning prize. The first place would win the equivalent of $62,000 – about five years of salary for an average new college graduate, while the second place would win $6,200, with subordinate prizes scaling all the way down to $7.

Because of this “Uniform Invoice Lottery” system, consumers are now demanding receipts and invoices from businesses, preventing the business from evading taxes by exchanging cash under the table (or purchasing with Bitcoins). In addition, consumers are more likely to spend money.

Excerpt from: Actionable Gamification: Beyond Points, Badges and Leaderboards by Yu-kai Chou

💎 Beware simplistic attempts to change behaviour (Mexico City and air pollution)

At the same time, we should be open-eyed about the challenges we’ll face as we make that shift. Take this example from Mexico City: City officials in 1989 banned the general public from driving one weekday per week, based on the last digit of their license plates. The intent was to encourage use of mass transit options and thereby improve air quality. It was a noble upstream effort to prevent air pollution.

It didn’t work. Many Mexicans bought a second car often an old clunker, to keep costs down—so they could drive every day. Air quality did not improve.

Good intentions guarantee nothing.

Excerpt from: Upstream: The Quest to Solve Problems Before They Happen by Dan Heath

💎 The need for cognitive diversity (Allen Shawn)

A species in which everyone was General Patton would not succeed, any more than would a race in which everyone was Vincent van Gogh. I prefer to think that the planet needs athletes, philosophers, sex symbols, painters, scientists; it needs the warmhearted, the hardhearted, the coldhearted, and the weakhearted. It needs those who can devote their lives to studying how many droplets of water are secreted by the salivary glands of dogs under which circumstances, and it needs those who can capture the passing impression of cherry blossoms in a fourteen-syllable poem or devote twenty-fwe pages to the dissection of a small boy’s feelings as he lies in bed in the dark waiting for his mother to kiss him goodnight. … Indeed the presence of outstanding strengths presupposes that energy needed in other areas has been channeled away from them.

– Allen SHAWN

Excerpt from: Quiet: The Power of Introverts in a World That Can’t Stop Talking by Susan Cain

💎 Drowning in maths and starving for ideas (data is not enough)

  • Do you think Coke has data that Pepsi doesn’t have?
  • Do you think McDonald’s has data that Burger King doesn’t have?
  • Do you think Ford has data that Chevy doesn’t have?

Here’s my point – just about the same data is available to just about everyone who wants it. And if you don’t have it, with about two clicks of a mouse you can buy it.

It’s not the data that makes the difference, it’s what you do with it.

Give a mediocre person or company all the data in the world and they’ll come up with garbage. Give a brilliant person or company one critical fact and they’ll build you an industry.

Hundreds of physicists had the same data as Einstein. But Einstein had something they didn’t – the creative brilliance to formulate a vision of what the data meant.

The advertising industry – whose only important asset is ideas – has learned nothing from this. We keep heading in the wrong direction. We keep bulking up everything in our arsenal except our creative resources. Then we take the people who are supposed to be our idea people and give them till 3 o’clock to do a banner.

Sure, we need people who are tech-savvy and analytical. But more than anything, we need some brains-in-a-bottle who have no responsibility other than to sit in a corner and feed us crazy ideas. We keep looking to “transform” our industry but ignore the one transformation that would kill.

Excerpt from: Advertising for Skeptics by Bob Hoffman

💎 How Apple’s allure comes from paying attention to areas most companies ignore (opening the packaging)

“Inside Apple”, Adam Lashinsky describes the “packaging room” at the firm’s headquarters, where for months “a packaging designer was holed up…performing the most mundane of tasks – opening boxes.” The goal? A box with the perfect drag and friction on opening to introduce an enticing pause as you unveil your new phone.

Packaging is a curious thing. On the one hand it is mere wrapping, soon-to-be rubbish that stands between the consumer and the item to be consumed. Yet it can also pique our lust for what lies within. Apple lavishes almost as much attention on the design of its boxes as it does on their contents. The result is not just an elegant container but a carefully orchestrated ritual. You do not merely Open this box as if you were tearing into a packet of crisps. You are welcomed inside.

The ceremony begins before you reach the box itself which arrives wrapped in plastic film.

Excerpt from: The Economist 1843 covering Inside Apple: How America’s Most Admired–And Secretive–Company Really Works by Adam Lashinsky

💎 The BASIC model (a simple process for identifying what nudges should be applied to a particular challenge)

A way of identifying behavioral problems that may be amenable to a nudge intervention is given by the Danish organization iNudgeyou, which use the BASIC model to design interventions. The acronym stands for: B = behavioral mapping: collecting data to define the problem – the what phase. A = analysis: why people are currently behaving as they are – the why phase. S = solution mapping: this is the scientific and systematic process of making suggestions – the how phase. I = interventions – this is the testing of possible nudge solutions before full implementation – this is the test phase. Once a nudge intervention has been selected, there is then C = Continuation: solutions may fail due to poor implementation or lack of maintenance, so a process of on-going monitoring of the success of behavior change is needed, as well as an evaluation of possible unforeseen side-effects – the results stage. An approach such as BASIC is needed whenever nudging is being considered – jumping from general knowledge to specific behavioral problems is fraught with problems.

Excerpt from: Behavioral Economics: The Basics by Philip Corr and Anke Plagnol

💎 A review of life satisfaction found 9 groups consistently scored higher (for happiness)

a. are wealthier (especially when compared to people who are like them)
b. are young or old (being in your forties and fifties is a bad time for life satisfaction)
c. are healthier
d. have lots of social contact
e. are married (or at least cohabiting)
f. are a little more educated (having a degree is good but you probably shouldn’t get a PhD if you want to maximize your life satisfaction)
g. are religious (it doesn’t matter which religion)
h. have a job
i. commute a short distance to work

Excerpt from: Happiness by Design: Change What You Do, Not How You Think by Paul Dolan

💎 How constraints inspire creative thinking (the birth of just-in-time manufacturing)

It’s often assumed that Just-in-Time (JIT) Manufacturing was devised by the Japanese in the 1970s. It wasn’t. The Empire State Building, built in 1931-32, is a great example of JIT building. New York City refused the builders permission to store materials on site in case it disrupted traffic on Fifth Avenue. To overcome the problem, the architects, working without a computer, scheduled the delivery of all materials so that they could be unloaded from a truck and immediately fitted into place on the building. At the height of the construction, trucks were drawing up outside the building site every ten minutes!

Excerpt from: The Little Book of Big Management Theories: and how to use them by James McGrath and Bob Bates

💎 On the folly of forecasting (those who predict don’t have knowledge)

As the sixth-century BC poet and philosopher Lao Tzu observed, “Those who have knowledge don’t predict. Those who predict don’t have knowledge.”

Excerpt from: The Little Book of Behavioral Investing: How not to be your own worst enemy by James Montier

💎 On how survey answers vary according to the medium (whether asked online or in the presence of someone else)

But people give different answers to certain questions when they are sitting in front of a computer screen alone from those they express when someone is there to ask the question. In one study, the answers to questions such as “How do you manage on your income?” varied between 29.9% and 47.7% saying they were “comfortable,” depending on whether the question was answered in the presence of someone else or not.

Excerpt from: Consumerology: The Truth about Consumers and the Psychology of Shopping by Philip Graves

💎 On the benefits of getting customer feedback on prototypes (as early as possible) rather than the finished product

The level of feedback you get is so much more valuable and impactful… The problem with showing something to consumers when it’s almost totally done, people don’t necessarily want to give negative feedback at that point because it looks like, “This company has spent a lot of money already getting it to this stage and now I’m going to tell them, ‘It sucks.’ ” On the other hand, if something hangs together with tape, and it’s clear that it’s an early prototype, the mindset of consumers often is, “These people still need some help, so let me tell you what I really think about it.”

Excerpt from: Little Bets: How breakthrough ideas emerge from small discoveries by Peter Sims

💎 On the tendency to interpret information to fit with our own behaviour (smoking and lung cancer)

My personal favourite from Festinger’s many brilliant examples of cognitive dissonance deals with people’s beliefs about the link between smoking and lung cancer. He was writing at the very birth of research on the causes of cancer. It was a unique window of time during which it was possible to test whether groups of smokers and non-smokers would accept or reject new information that had been uncovered about a link. Festinger saw the effects you’d expect from anyone suffering cognitive dissonance: heavy smokers – those who had the most to lose from the new research being right – were the most resistant to believing that a link had been proven; only 7 per cent accepted the validity of the new research. Twice as many moderate smokers accepted the link, at 16 per cent. Non-smokers were much more willing than smokers to believe the link had been proven, but as a mark of just how far social norms have swung since then, only 29 per cent of them believed the link had been proven, despite having nothing to lose.

Excerpt from: The Perils of Perception Why We’re Wrong About Nearly Everything by Bobby Duffy

💎 On going that little bit further than the competition to tip the pitch odds in your favour (personalisation can win the deal)

In 2005 a flagging Japanese economy convinced Takashi Hashiyama, president of the electronics firm Maspro Denkoh, to sell the corporate collection of French impressionist paintings This included a major Cezanne landscape and lesser works by Sisley, van Gogh, and Picasso. Both Christies and Sotheby’s gave presentations to Hashiyama touting their expertise and ability to achieve the highest auction prices. In Hashiyama’s judgment, the presentations were equally convincing. To settle the matter, he proposed a game of rock, paper, scissors.

“The client was very serious about this,” Christie’s deputy chairman Jonathan Rendell said, “so we were very serious about it, too.” The money was serious, too. The Maspro Denkoh collection was valued at $20 million. Both Christie’s and Sotheby’s quickly agreed to the game.

In contrast, Kanae Ishibashi, the president of Christie’s Japan, began researching RPS strategies on the Internet. You may or may not be surprised to learn that an awful lot has been written on the game. Ishibashi had a break when Nicholas Maclean, Christie’s director of impressionist and modern art, mentioned that his eleven-year-old twin daughters, Alice and Flora, played the game at school almost daily.

Alice’s advice was “Everybody knows you always start with scissors.” Flora seconded this, saying “Rock is way too obvious… Since they were beginners, scissors was definitely the safest.”

Both girls also agreed that, in the event of a scissors-scissors tie, the next choice should be scissors again — precisely because “everybody expects you to choose rock.”

Ishibashi went into the meeting with this strategy, while the Sotheby’s rep went in with no strategy at all. The auction house people sat facing each other at a conference table, flanked by Maspro accountants. To avoid ambiguity, the players wrote their choices on a slip of paper. A Maspro executive opened the slips. Ishibashi had chosen scissors, and the Sotheby’s representative had chosen paper. Scissors cuts paper, and Christie’s won. In early May 2005, Christie’s auctioned the four paintings for $17.8m, earning the auction house a 1.9m commission.

Excerpt from: How to Predict the Unpredictable: The Art of Outsmarting Almost Everyone by William Poundstone

💎 On our tendency to seek news that confirms what we already know (we get uncomfortable with new things)

Be careful. People like to be told what they already know. Remember that. They get uncomfortable when you tell them new things. New things . . . well, new things aren’t what they expect. They like to know that, say, a dog will bite a man. That is what dogs do. They don’t want to know that man bites a dog, because the world is not supposed to happen like that. In short, what people think they want is news, but what they really crave is olds … Not news but olds, telling people that what they think they already know is true.

—Terry Pratchett through the character Lord Vetinari from his The Truth: A Discworld Novel

Excerpt from: You Are Not So Smart: Why Your Memory Is Mostly Fiction, Why You Have Too Many Friends On Facebook And 46 Other Ways You’re Deluding Yourself by David Mcraney

💎 On new and revolutionary products (our opinions of them change as we age)

There’s a set of rules that anything that was in the world when you were born is normal and natural. Anything invented between when you were 15 and 35 is new and revolutionary and exciting, and you’ll probably get a career in it. Anything invented after you’re 35 is against the natural order of things.

Excerpt from: Paid Attention: Innovative Advertising for a Digital World by Faris Yakob

💎 On resisting the impulse to tinker with marketing approaches (paying not to change)

There was a perhaps apocryphal tale about a time when Reeves was out sailing with a client. The client made bold to ask why he should continue paying the same fee when the ad was never really changed. “What do you need all those people on my account when you never do anything?” Reeves, who could be surly, gruffed, “To keep your people from changing what I’ve done.”

Excerpt from: Branded Nation: The Marketing of Megachurch. College Inc.. and Museumworld by James Twitchell

💎 On the risk of unintended consequences (because of moral licensing)

Before starting out on this change of venue, they first collected data on the amount of paper hand towels used in the mens restroom for a period of 15 days to work out the average amount of paper towels typically used each day. Once this had been done they then introduced a large recycling bin near the sinks with signs indicating that the restrooms were participating in a paper hand towel recycling program, and that any used hand towels placed in the bin would be recycled. For the next 15 days, they then simply measured the amount of paper hand towels used.

Consistent with their laboratory studies, paper towel usage increased after the introduction of the recycling bin by an average of half a paper towel per person. At first glance this small increase doesn’t seem that big a deal. However, given that the restroom was typically used over a hundred times each work day, the increase in usage was substantial: It totaled about 12,500 paper hand towels annually for this one restroom alone.

Excerpt from: The Small BIG: Small Changes that Spark Big Influence by Robert Cialdini, Noah Goldstein, and Steve Martin

💎 On the evolutionary benefit of self-deception and lying (finding a mate)

Evolutionary biologist Robert Trivers wanted to persuade a potential mate or ally of their good intentions would be better at it if they could deceive themselves without ‘leakage’ of knowledge or intent; and the most efficient way to simulate truth-telling would be to erase internal awareness of the deception. The best liars would be those who were better at lying to themselves because they would actually believe their own deceptions when they made them. They would be more likely to survive and pass on their genes; hence our gift for self-deception.

Excerpt from: Born Liars: Why We Can’t Live Without Deceit by Ian Leslie

💎 On the need to be wary of the motivations of those offering us advice (even “impartial” outsiders)

Auditors provide a good example of this bias. One hundred thirty-nine professional auditors were given five different auditing cases to examine. The cases concerned a variety of controversial aspects of accounting. For instance, one covered the recognition of intangibles, one covered revenue recognition, and one concerned capitalization versus expensing of expenditures. The auditors were told the cases were independent of each other.

The auditors were randomly assigned to either work for the company or work for an outside investor who was considering investing in the company in question. The auditors who were told they were working for the company were 31 percent more likely to accept the various dubious accounting moves than those who were told they worked for the outside investor. So much for an impartial outsider—and this was in the post-Enron age!

Excerpt from: The Little Book of Behavioral Investing: How not to be your own worst enemy by James Montier

💎 On the various ways in which social proof affects us (obesity is contagious)

Obesity is contagious. If your best friends get fat, your risk of gaining weight goes up.

Broadcasters mimic one another, producing otherwise inexplicable fads in programming. (Think reality television, American Idol and its siblings, game shows that come and go, the rise and fall and rise of science fiction, and so forth.)

The academic effort of college students is influenced by their peers, so much so that the random assignments of first-year students to dormitories or roommates can have big consequences for their grades and hence on their future prospects. (Maybe parents should worry less about which college their kids go to and more about which roommate they get.)

In the American judicial system, federal judges on three-judge panels are affected by the votes of their colleagues. The typical Republican appointee shows pretty liberal voting patterns when sitting with two Democratic appointees, and the typical Democratic appointee shows pretty conservative voting patterns when sitting with two Republican appointees. Both sets of appointees show far more moderate voting patterns when they are sitting with at least one judge appointed by a president of the opposing political party.

Excerpt from: Nudge: Improving Decisions About Health, Wealth and Happiness by Richard Thaler and Cass Sunstein

💎 On how creativity comes from connections (e.g. Liquid Paper)

Bosses, who were men, didn’t care. Womens labour was cheap, so much so that Graham supplemented her meagre income by painting Christmas decorations for the banks windows. The exercise reminded her of something she’d once learned: artists painted over their mistakes rather than erasing them.

And that’s what led Graham to her eureka moment. She realized she could paint over typing errors rather than erase them. She mixed white tempera paint in her kitchen blender and put it in a little bottle. Whenever she made a typo, she blotted it out with a brush, waited a few seconds for it to dry, and typed over it. Marketed as Liquid Paper, the invention became one of the bestselling office supplies of the late analogue age. In 1979 Graham sold her company to Gillette for $47.5 million.

Excerpt from: Head in the Cloud by William Poundstone

💎 On small nuances in messaging having a large effect (reducing antibiotic prescriptions)

They started by collating the information about what GP practices across England were doing, and used this to identify practices whose prescription rate for antibiotics was in the top 20 per cent for their local area. Half of this group of over-prescribers were then sent a letter, signed by the Chief Medical Officer, with feedback about their prescription habits, together with three specific things they could immediately do to reduce the number of prescriptions they gave out. For example, doctors can give patients delayed prescriptions, which enable them to get their medication in the future, so long as their symptoms persist. Alongside these tips, the doctors were told how their performance compared with others. They were informed that ‘the great majority (80 per cent) of practices in [your local area] prescribe fewer antibiotics per head than yours’. When Michael and his team compared the subsequent behaviour of those doctors who received the feedback letters to that of those who got no such letter, they were surprised by the impact. Over a six-month period, GP practices receiving the feedback letters prescribed an estimated 73,400 fewer antibiotic items than those that didn’t.

Excerpt from: Think Small: The Surprisingly Simple Ways to Reach Big Goals by Owain Service and Rory Gallagher

💎 On how quickly in groups form (even when the connection is obscure)

With sports affiliations, random birthplace suffices, and in business it is where you work. To test this, the British psychologist Henri Tajfel split strangers into groups, tossing a coin to choose who went to which group. He told the members of one group it was because they all liked a particular type of art. The results were impressive: although A) they were strangers, B) they were allocated a group at random and C) they were far from art connoisseurs, the group members found each other more agreeable than members of other groups.

Excerpt from: The Art of Thinking Clearly by Rolf Dobelli

💎 On taste freeze in music (somewhere around age thirty-three)

When Spotify looked at its music-streaming data, it found that teens listen to contemporary and popular music almost exclusively. As listeners age, their tastes expand. They spend more time listening to obscure bands and album tracks that were not hits. As the years go by, some take up jazz or world music or classical. But somewhere around age thirty-three, most stop listening to contemporary hits at all. The phenomenon even has a name—taste freeze. Men are more susceptible to it than women. Another fun fact: become a parent, and your “music relevance” takes a hit equivalent to ageing four years.

Excerpt from: Head in the Cloud by William Poundstone

💎 On the power of expectations (of students)

A quick digression on expectations (we’ll return – almost as a recurring theme — to the importance of teaching and teachers later). In 1968 Robert Rosenthal conducted an experiment in America where teachers were told that randomly selected pupils had actually performed in the top 20 per cent of a test that identified ‘potential’. This was, of course, untrue. But here’s the thing: when those pupils’ IQs were tested at the end of the year, they had increased relative to everybody else. Expectations improved performance.

Excerpt from: How Britain Really Works: Understanding the Ideas and Institutions of a Nation by Stig Abell

💎 On the biggest long term change in society being the growth in choice (not the internet)

In a few hundred years, when the history of our time will be written from a longterm perspective, it is likely that the most important event historians will see is not technology, not the Internet, not e-commerce. It is an unprecedented change in the human condition. For the first time -literally – substantial and rapidly growing numbers of people have choices. For the first time, they will have to manage themselves. And society is totally unprepared for it.

Excerpt from: Managing Oneself by Peter Drucker

💎 On the gap between experts’ confidence and the accuracy of their forecasts (they’re little better than coin tossers)

Philip Tetlock has done one of the most comprehensive studies of forecasters, their accuracy, and their excuses. When studying experts’ views on a wide range of world political events over a decade, he found that, across the vast array of predictions, experts who reported they had 80 percent or more confidence in their predictions were actually correct only around 45 percent of the time. Across all predictors, the experts were little better than coin tossers.

Excerpt from: The Little Book of Behavioral Investing: How not to be your own worst enemy by James Montier

💎 On the danger of proxy measures unrelated to the end goal (‘number of views’, ‘likes’, ‘shares’, ‘engagement’)

Advertising agencies and marketing departments alike need to break their bad habit of placing too much emphasis on proxy measurements. Just because it’s possible to measure something, it doesn’t mean that something has value and is worth measuring.

Today there’s far too much emphasis on soft measures such as ‘number of views’, ‘likes’, ‘shares’, ‘engagement’ or even (dare we say it) creative awards. One problem is that development of advertising is often skewed towards improving these short-term measures in order to show some measurable progress. However, this is often at odds with what is best for the business long-term.

Another problem is that placing emphasis on these kinds of measures breeds distrust from other parts of the client business towards marketing and advertising, because they don’t represent real proof of any commercial progress. They are false proxies that really only serve to massage the egos of those involved, not actual measurements of success or growth that the rest of the business can identify with or actually use.

Excerpt from: How To Make Better Advertising And Advertising Better by Vic Polinghorne and Andy Palmer

💎 On the word person being derived from the Latin word for a mask worn by an actor (we’re all actors)

(It’s not insignificant that the word ‘person’ derives from the Latin word for a mask worn by an actor.) In Goffman’s view, we’re all actors who have half-forgotten that we’re acting. Most of the time we play a double game, aware that others are performing for us and yet believing in the performance at the same time.

Excerpt from: Born Liars: Why We Can’t Live Without Deceit by Ian Leslie