Brazil accepts an offer from Abbott Laboratories to cut the price of an anti-Aids drug by 30%.
A revista americana PC Magazine selecionou em um artigo cinco novas tecnologias …
I recently read an excellent paper called “Incorporating Behavioral Anomalies in Strategic Models.” The paper explores the idea that if our strategic models are based on assumptions of rational behavior, and behavioral economics has shown that rationality cannot always be assumed, what does that mean for strategy? Here is an excerpt from the paper.
In many decision-making situations, decision makers begin with a set of beliefs and subsequently gather additional information to update their prior beliefs before making decisions. Confirmatory bias is the tendency of decision makers to favor their prior beliefs (or working hypotheses) much more than normative models would dictate. Most of the traditional models in marketing, statistics and economics model the decision makers as engaging in optimal data collection and employing Bayes' Rule to update the prior beliefs in the light of new data. For example, in models of search (e.g. Weitzman, 1979), consumers use Bayes' rule to revise their priors about other stores' prices after finding the price at a store, and then decide whether to search further.
However, a large literature in psychology has accumulated a substantial body of evidence
that decision-makers tend to overweigh their prior beliefs or existing hypotheses.
The paper suggests some directions for future research. I've said before that I think b-schools will someday have a basic course in neuroscience as part of the curriculum. Until that happens, think about it this way… worry less about the details of economic theory and more about the real behavior you can observe through experimentation in different areas of your business.
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You may have seen this picture before. Some see an old woman. Others see a young woman. Psychologists know that they can prime you to see the picture a certain way.
Men willingly believe what they wish. - Julius Caesar.
Companies fall from power. It wasn't long ago that people thought WalMart was going to rule the world. Not long before that, it was Microsoft. These days, everyone is worried about the power of Google. I'm not, because big companies, even great companies. eventually face stiff competition from newcomers, who either oust them, or at least keep them in check.
There are many reasons big companies fail, but the one I want to focus on is selective perception. One of the classic studies in the field of psychology showed fake playing cards to users to see how they responded (a red 5 of spades, for example). Here is what the authors conclude.
Our major conclusion is simply a reaffirmation of the general statement that perceptual organization is powerfully determined by expectations built upon past commerce with the environment. When such expectations are violated by the environment, the perceiver's behavior can be described as resistance to the recognition of the unexpected or incongruous.
Other studies on selective perception and alcohol have shown that expectations are more important than chemistry in determining anxiety levels, and that sports fan honestly don't see many of the infractions committed by their favorite team during a game.
This perception bias can be just as dangerous in the marketplace. Sometimes customer demand changes slowly over time, and companies adapt well. Other times, the change is very incongruous, and in these situations, companies often miss the change. They see what they want to see. They interpret the data in ways that reinforce their existing ideas about the marketplace. That's when startups can step in and capture lots of new customers.
Andy Grove was right when he said that only the paranoid survive. It pays to be paranoid because one of the best ways to guard against selective perception is to worry that it's happening to you, and that your competitors understand something you don't about the market.
If you are the market leader, and want to stay in that position, the best thing you can ask yourself about your market research is what would it take to prove this is wrong? By seeking disconfirming evidence, you will start to free your mind from the man-with-hammer-sees-every-problem-as-a-nail syndrome. If you are a startup, look for a market that is going through changes that the market leaders don't recognize due to their selective perception.
If you want a real world example, look at the new search results page of Ask.com. Both Businessweek and The Wall Street Journal wrote this week about how Ask's search results are displayed better than Google's. Is it the beginning of a change? Does Google have selective perception? Are they too focused on expanding into other forms of advertising instead of improving the user experience of their core product? It's not something I follow closely, but I can tell you that I use Google less than half the time for my searches.
Many pundits will say it is the job of the leader to set the corporate vision. I will add to that and say that a leader must also make sure the vision doesn't become tunnel-vision. Keep your guard up, and don't be afraid to relentlessly question your preconceived notions.
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If you ever need a crash course in a topic, Bnet is a great resource for finding high level overviews of various business ideas. The site primarily focuses on strategy, management, and HR issues, but they are adding more business content all the time. Here are some of my favorite guides they provide. I hope you can find something in the list below that is useful and valuable to your daily grind.
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It’s no secret that we’ve got a freakish love of keyboard shortcuts around these parts. If you share the same love, then you'll quickly take to Mashable's cheat sheet of keyboard shortcuts for popular web apps like: Gmail, GReader, GCal, Google Maps, Google Video, Google Docs & Spreadsheets, Netvibes, Wikipedia, Blogger, Remember the Milk, Pandora, Yahoo! Mail, and Wordpress. Ditch the mouse!
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Just posted a slight modification to the Gmail mailto: Compose Greasemonkey user script, which adds support for Google Apps For Your Domain. No Greasemonkey for you? This version is already packaged in with the Better Gmail Firefox extension.
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There’s more that makes Fastladder an impressive web-based feed reader, but those were the basic highlights that stood out and got me a little upset with Google Reader. That doesn’t mean its necessarily time to jump ship for Fastladder yet (unless you’re really dying for the extra features), but the Google Reader team best not get complacent in the face of strong web-based Reader alternatives. Aside from Google Reader, Fastladder is the best I’ve seen.
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