Unconscious Choice and Product Management
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This document summarizes a presentation given to the Product Tank in Kansas City on unconscious choice and product management. It discusses how human decision making relies on mental shortcuts or heuristics that can lead to biases. It outlines several cognitive biases and heuristics, like the planning fallacy and halo effect, that can negatively impact product decisions if not accounted for. The presentation advocates using slow, deliberate thinking to overcome biases by tactics like considering alternative hypotheses, seeking outside perspectives, and separating ideas to avoid halo effects of order. The goal is to move from being a victim of cognitive biases to intentionally using critical thinking techniques to improve product decisions.
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Unconscious Choice and Product Management
- 1. Unconscious Choice Product Management & Product Tank, Kansas City, December
- 2. Behavioral economist Cognitive scientist of illogical thinking
- 3. “Most people do not take the trouble to think through [a] problem. Intelligence is not only the ability to reason; it is also the ability to find relevant material in memory and to deploy attention when needed.”
- 4. Heuristic #1: PRIMING Heuristic #2: COGNITIVE EASE Heuristic #3: COHERENT STORIES (ASSOCIATIVE COHERENCE) Heuristic #4: CONFIRMATION BIAS Heuristic #5: THE HALO EFFECT Heuristic #6: JUDGEMENT Heuristic #7: SUBSTITUTION Heuristic #8: AFFECT Heuristic #9: THE LAW OF SMALL NUMBERS Heuristic #10: CONFIDENCE OVER DOUBT Heuristic #11: THE ANCHORING EFFECT Heuristic #12: THE AVAILABILITY HEURISTIC Heuristic #13: AVAILABILITY CASCADES Heuristic #14: REPRESENTATIVENESS Heuristic #15: THE CONJUNCTION FALLACY Heuristic #16: OVERLOOKING STATISTICS Heuristic #17: OVERLOOKING LUCK Heuristic #18: INTUITIVE PREDICTIONS
- 5. Two Systems Fast Thinking Slow Thinking
- 11. Two Systems: Slow Thinking deliberating, solving, reasoning, focus, considering other data, weighing the options
- 12. Two Systems: Fast Thinking Slow Thinking
- 13. Inaccurate judgement or bias No energy or choosing not Meanwhile, behind the scenes…
- 15. “Because thinking slow takes work we are prone to think fast, the path of least resistance.” “Laziness is built deep into our nature.”
- 16. So What? 48 Laws – Biased, Over Confidence, Choice
- 17. Shift the Focus 48 Laws – Biased, Over Confidence, Choice
- 19. Heuristic #1: PRIMING Heuristic #2: COGNITIVE EASE Heuristic #3: COHERENT STORIES Heuristic #4: CONFIRMATION BIAS Heuristic #5: THE HALO EFFECT Heuristic #6: JUDGEMENT Heuristic #7: SUBSTITUTION Heuristic #8: AFFECT Heuristic #9: THE LAW OF SMALL NUMBERS Heuristic #10: CONFIDENCE OVER DOUBT Heuristic #11: THE ANCHORING EFFECT Heuristic #12: THE AVAILABILITY HEURISTIC Heuristic #13: AVAILABILITY CASCADES Heuristic #14: REPRESENTATIVENESS Heuristic #15: THE CONJUNCTION FALLACY Heuristic #16: OVERLOOKING STATISTICS Heuristic #17: OVERLOOKING LUCK Heuristic #18: INTUITIVE PREDICTIONS Heuristic #19: THE NARRATIVE FALLACY Heuristic #20: THE HINDSIGHT ILLUSION Heuristic #21: THE ILLUSION OF VALIDITY Heuristic #23: TRUSTING EXPERT INTUITION Heuristic #24: THE PLANNING FALACY Heuristic #25: THE OPTIMISTIC BIAS Heuristic #26: OMITTING SUBJECTIVITY Heuristic #27: THEORY-INDUCED BLINDNESS Heuristic #28: LOSS AVERSION Heuristic #29: THE ENDOWMENT EFFECT Heuristic #30: LOSS AVERSION Heuristic #31: THE POSSIBILITY EFFECT Heuristic #32: THE CERTAINTY EFFECT Heuristic #33: THE EXPECTATION PRINCIPLE Heuristic #34: OVERESTIMATING THE LIKELIH Heuristic #35: THINKING NARROWLY Heuristic #36: THE DISPOSITION EFFFECT Heuristic #37: THE SUNK COST FALLACY Heuristic #38: FEAR OF REGRET Heuristic #39: IGNORING JOINT EVALUATION Heuristic #40: IGNORING FRAMES Heuristic #41: IGNORING OUR TWO SELVES Heuristic #42: THE PEAK END RULE Heuristic #43: DURATION NEGLECT Laws
- 20. Going to court…. Unconscious and conscious product managementVictim of the thinking laws? (Thinking Fast Errors) Thinking above the law? (Thinking Slow Master)
- 21. Kahneman’ s Court Heuristic #24: THE PLANNING FALACY Heuristic #5: THE HALO EFFECT
- 22. The Planning Fallacy Law Research shows we are overly optimistic in forecasts and have an “illusion of control” Studies: - Railroad Projects: For a span of 40 years, 90% railroads projects overestimated usage by 106% and underestimated cost by 45% - Kitchen Remodels: estimate $20K more expensive than estimated - CFO Estimates on S&P Performance: 80% confidence, slightly above 0% correlations with actual performance and estimates “The story that breeds overconfidence”
- 23. Many fails: “I know the stats and we just take more shots, faster, to get to success” Ignore the stats of failure: “We will be different than the 90% of ideas that fail” The Planning Fallacy LawProduct Management Implications Victim of the Law Above the Law Overly optimistic in forecasts and have an “illusion of control” % Intent: Plan to spend X% designing the new or in customer development & discovery... then Friday…repeat Believe forecast of success on hope: “The market is $500m, if we can get just 1%, and hockey stick users” Pad your agile roadmap: “Let’s add an extra month in there, just in case…” Intentional %: execute product thinking goals like shipping code Equal transparency: Publish possibilities of success and failure equally on future plans (roadmaps, profit, estimates, & adoption) personally and with team
- 24. Many fails/experiments: “I know the stats and we just take more shots, faster to get to success” The Planning Fallacy LawTactics for Mastery Above the Law Equal transparency: Publish possibilities of success and failure equally on future plans (roadmaps, profit, adoption) Dual Idea Perspective: Add a competing hypothesis at the beginning Find an Outside View: Baseline with external forecasts/studies and customize to avoid recycling internal trash data Pre-mortems: Team writes a story of that product team being a disaster (especially leadership or clients)
- 25. The Halo Effect Law Sequence matters and impression is lazy Studies: - Solomon Asch sequencing - Teacher essay grading “exaggerated emotional coherence”
- 26. Solomon Asch Research What do you think of Alan and Ben? – Alan is intelligent, industrious, impulsive, critical, stubborn, and envious. – Ben is envious, stubborn, critical, impulsive, industrious, and intelligent.
- 27. Solomon Asch Research What do you think of Alan and Ben? – Alan is intelligent, industrious, impulsive, critical, stubborn, and envious. – Ben is envious, stubborn, critical, impulsive, industrious, and intelligent.
- 28. The Halo Effect Law Sequence matters and impression is lazy Studies: - Solomon Asch sequencing - Teacher essay grading “exaggerated emotional coherence”
- 29. Strategic facilitator: pre-plan meetings with influencers to build over/under confidence Scrub input: intake of ideas separate from each other (decorrelate) Victim of meeting pirates: allows meetings to get hijacked by first to speak (feedback, strategy pitches, scrum) The Halo Effect LawProduct Management Implications Victim of the Law Above the Law Sequence matters and impression is Writing off sources due to history: loud customers, lame coworkers, old methods Trojan horse interviewees: like agreement and like you, so buzz from the beginning “Blink” pro: intentionally owning and omitting first impression bias
- 30. Solo-solutions: intake of ideas separate from each other (decorrelate) The Halo Effect LawTactics for Mastery Above the Law Strategic facilitator: pre-plan meetings with influencers to build over/under confidence Wisdom of Crowds Method1: for prioritization, value forecasting, etc. intake all of the data/feedback decorrelated, and average them (omit outliers) for estimate Independent Thought First: before an issue is discussed, all members of the committee are asked to write a brief summary of their position (approvals, prioritization, brainwriting ideation) 1Wisdom of Crowds, James Surowiecki, 2004
- 31. Unconscious Product Management Which one do you find yourself being? Ignore the possibility of failure Hope > data Only using internal data Padding roadmap Victim of halo effect meetings Labeling your areas of input Working with others like you Thinking Fast Errors Intentionally Thinking Slow
- 33. End of Year Review Activity – Think of a challenge for yourself on using thinking slow tactics to beat bias, overconfidence, or error in choice in 2017 – Write it down a short note to your future self – Mailed to you at end of Q1 Product Thinking Velocity: % intent v. intentional %, personal sprint cycle
- 34. Combine overconfidence with critical thinking. Increase clear thinking by increasing doubt radar. Be aware and be intentional.
Editor's Notes
- The Pm court Judge daniel kahneman Accused of doing x, when said this Guilty of article #34 this of that Letter with a stamp, a card with the 4. Resolution Mail it to you at the end of 1Q You are on trial
- Background Kahneman’s research explores cognitive science, uncertainty, illogical thinking, behavioral economics Resolution: humans assume certain things automatically without having thought thru them carefully
- Resolution: humans assume certain things automatically without having thought thru them carefully “Most people do not take the trouble to think through [a] problem,” (page 45). “Intelligence is not only the ability to reason; it is also the ability to find relevant material in memory and to deploy attention when needed,”
- Broken into 38 different heuristics, these are the heuristics lead to a mudded thinking It’s a huge book, and 10 different studies for each of these.
- System 1: automatically, involuntary Drive, read a facial expression, take a shower System 2: deliberating, solving, reasoning, focus, considering other data weighing the options Math problem, complicated form, where to invest money These two systems often conflict with one another. System 1 operates on heuristics that may not be accurate. System 2 requires effort evaluating those heuristics and is prone error.
- Fast Thinking: automatic, involuntary
- Fast Thinking: automatic, involuntary
- System 2: deliberating, solving, reasoning, focus, considering other data, weighing the options Math problem, complicated form, where to invest money
- These two systems often conflict with one another. Think Fast: operates on heuristics that may not be accurate. Snap judgement. Incorrect read. Think Slow: Requires effort that you may not have energy for, or choose to use. Go with our gut….. Error in judgement.
- These two systems often conflict with one another. Think Fast: operates on heuristics that may not be accurate. Think Slow: Requires effort evaluating those heuristics Go with our gut….. Error in judgement.
- Honorable Judge Daniel Kahneman presiding You are on the stand…. Breaking or violating 3 Examples
- Heuristics are the laws of human psychology. As a product manager you can break these laws… or be over them. Break a law: jump to a conclusion, only consider on reference or go based on your gut Above the law: you know psychology and are intentional about how you approach it
- Heuristics are the laws of human psychology. As a product manager you can break these laws… or be over them. Break a law: jump to a conclusion, only consider on reference or go based on your gut Above the law: you know psychology and are intentional about how you approach it
- Honorable Judge Daniel Kahneman presiding You are on the stand…. Breaking or violating 3 Examples
- Duke Plans are unrealistically close to best case scenarios Desire to get the plan approved (best case) and the sunk cost falicy that projects are not abandoned Extra: Causes to accept that a statement is true When information is scarce, system 1 is designed to jump to conclusions from little evidence. but it does not know how far it jump is When presented with information, we assume everything is there to make a decision (What-you-see-is-all-there-is)
- Takeaway: Avoid delusional optimism and use rational weighting of gains, losses, and probabilities Product Managers: Breaking the Law Believe your own external marketing from the pitch deck for future forecasting Grow 10% of $100m market, or hockey sticking new customers Use buffer or padding for roadmap or agile velocity (self-fulling prophecy) Feature driven planning/decisions with no Believe that you are special and will not fail like the others Above: Many fails: know the stakes and maximize fail ratio Publish possibilities of success and failure equally on future plans (roadmaps, financial projects, tech)
- Takeaway: Avoid delusional optimism and use rational weighting of gains, losses, and probabilities Product Managers: Breaking the Law Believe your own external marketing from the pitch deck for future forecasting Grow 10% of $100m market, or hockey sticking new customers Use buffer or padding for roadmap or agile velocity (self-fulling prophecy) Feature driven planning/decisions with no Believe that you are special and will not fail like the others Above: Many fails: know the stakes and maximize fail ratio Publish possibilities of success and failure equally on future plans (roadmaps, financial projects, tech)
- Result: The warm emotion we feel toward a person, place, or thing predisposes us to like everything about that person, place, or thing. Story: If you are told that you meet Joan at a party and she is very likable. When asked, “is she charitable?” Respondents say yes. Other examples: teachers grading essays or the worst yet… executives in meetings all day
- Who do you choose?
- Who do you choose?
- Result: The warm emotion we feel toward a person, place, or thing predisposes us to like everything about that person, place, or thing. Story: If you are told that you meet Joan at a party and she is very likable. When asked, “is she charitable?” Respondents say yes. Other examples: teachers grading essays or the worst yet… executives in meetings all day
- Executives well versed in all day meetings know that open discussion give weight to early, assertive opinions (line up behind) Examples : product pitches, roadmap meetings, feature tradeoff discussions Writing Off Sources: discredit ideas of based on historical impression of the source Drowning out or anti-behavior against sources of first impression of low value (grading papers example) : loud customers drown out, lame coworker brainstorms, old methods Suede Interviewing: think you are more likely to like team members who agreed, furthermore use product buzz words around best practices We just lean startup, that guerrilla design thinking process to a user-centric MVP
- Sequence matters, be agnostic of impressions and nothing at the end is treated the same as the beginning (new customers, employees, ideas) Weight of first impressions, renders post items irrelevant
- These two systems often conflict with one another. Think Fast: operates on heuristics that may not be accurate. Snap judgement. Incorrect read. Think Slow: Requires effort that you may not have energy for, or choose to use. Go with our gut….. Error in judgement.
- Combat over confidence by basing our beliefs not on subjective feelings but critical thinking. Increase clear thinking by giving doubt and ambiguity its day in court. Be aware and be intentional.
- Broad Thinking: as in financial market trading, find bets where there is a small win and then maximize the amount of bets (1000 bets) Broadly is non-intuitive. It’s a System 2 task that takes work. We therefore are wired by System 1 to think irrationally economically (saying no to easy money). Of 25 divisions, offered $100 loss or $200 gain. They said No. The CEO said yes to all, because there were 25 chances.
- We therefore are wired by System 1 to think irrationally economically
- Broad Thinking: as in financial market trading, find bets where there is a small win and then maximize the amount of bets (1000 bets) Broadly is non-intuitive. It’s a System 2 task that takes work. We therefore are wired by System 1 to think irrationally economically Of 25 divisions, offered $100 loss or $200 gain. They said No. The CEO said yes to all, because there were 25 chances.
- Saying no to risks until they are close to a sure thing Using only internal data for building a business case Looking at technology investments as only benefiting their product or the whole company—nothing in between Tactical suggestion: Create risk policies for the company that give all leaders a framework for making decisions and avoid “loss aversion” Never buying warranties, knowing the risk; Always Pool risks with other product leaders to give an aggregate risk balance Of 25 divisions, offered $100 loss or $200 gain. They said No. The CEO said yes to all, because there were 25 chances.