Most of us live in a world of full inboxes, shifting deadlines and a confusing array of acronyms and buzzwords. We often need heuristics (a mental shortcut or rule of thumb) and biases as a way of navigating the swirling sea of information, decisions and choices while quickly sorting the “chaff from the wheat” in our daily lives.

If life is the study of attention, then what we pay attention to is intimately related to what we think about most, which is based on various predilections and predispositions of our three-tiered brain (e.g., see the use of redundant messaging, vivid and active imaging, sexual links, etc.).

Heuristics and biases are ubiquitous because they are innate to the human animal. They apply to customers, colleagues, executives, investors and any other category to which we assign human beings.

To better understand how people's distortions, shortcuts and biases affect how you market to various stakeholders, you should be aware of people's thinking patterns and perceptual filters, including your own.

The biases and heuristics that are most relevant to this discussion include anchoring and adjustment, availability bias and confirmation bias.

Anchoring and Adjustment

Various independent lines of research suggest that to explain or describe an event, people anchor on the first number or evidence they hear. Witness the countless examples of professionals using strategic anchoring to cut a better deal or bring you closer to their position.

In one research study on this topic, participants were asked to estimate the percentage of African countries in the United Nations. Before the participants answered, they watched the research leader spin a wheel with numbers from 1 to 100. When the wheel landed on 10, one group of participants guessed 25%. When the wheel landed on 65, another group guessed 45%.

This example may seem trivial, but along with other corroborating studies it demonstrates that in areas of ambiguity or uncertainty people often latch onto random flashes of certainty or confidence.

The other part of this heuristic is the act of insufficient adjustments or calibrations from an anchor (which may or may not be credible). We typically see this adjustment played out in various negotiation situations.

For example, the buyer will anchor the seller on a bad-faith offer (e.g., low-ball them), hoping the seller will make an insufficient adjustment, with the buyer then coming out ahead.

This scenario can also be played out with a seller anchoring the buyer to an unrealistic price, hoping the buyer thinks that a legitimate concession is being made when conceding to a deal.

When the anchor issue pertains to a price, however, we have to take into account the price-quality relationship and the work of social psychologists demonstrating the law of perceptual consistency, which compels people to convince themselves that the more expensive item is actually better, even if it's not.

Net, Net: Become more aware of the heuristic of anchoring and adjustment and how it can help or hurt you in reaching your objectives with various stakeholders.

Availability Bias

This bias is related to the concept of mindshare—or how much people are thinking about your idea, product, company or position, as well as the source of their thinking. The information most available to us often comes from the media. People tend to diagnose problems or issues based on the most recent cause they've experienced.

For example, if you know someone who was recently involved in a plane crash or you see one on television, you are likely to predict that they happen more frequently than they actually do.

In another example, there is a direct relationship with the number of people you know who smoke (fill-in-the-blank here), and the overall number of people you think smoke. People often generalize their experience writ large on the world without an understanding of base rates (e.g., plane crashes versus car crashes) or sample size (e.g., I know two people that smoke, therefore…).

There are two types of availability bias:

  1. Recency Effect: The IRS often convicts people for tax evasion in March to make it a memorable and recent event for people doing their taxes in April. With regard to sales and marketing, sales people typically recommend products on which they have been trained most recently. For example, product managers want to get consistent mindshare with each salesperson so their specific product is top-of-mind (or readily available) when the salesperson is in front of a prospect.

  2. Vividness: A single vivid experience is highly memorable and available to the mind for what could be an indefinite amount of time. These are also called flashbulb memories, which often leave an indelible mark on the psyche. Examples of this type might include seeing a plane crash, being involved in a riot, or watching a bizarre and out-of-place commercial or event.

Net, Net: Become more aware of how you can use the availability bias to your advantage in creating more mindshare and memory hooks.

Confirmation Bias

Confirmation bias (sometimes referred to as overconfidence bias) revolves around people's fondness for evidence that confirms rather than challenges their current beliefs.

Basically, if people are wrong, they lose the sense of control they need to predict, dominate, and manage their world. When people's beliefs or values are challenged with disconfirming evidence, they often choose to disregard, dispute, or dilute the evidence.

Numerous studies have shown that people will often “read over” a section in the newspaper that is in conflict with their beliefs, without being aware that they are doing it.

Focus groups and other types of marketing research often attempt to understand the beliefs or characteristics that people ascribe to a brand or product to determine if a company's messaging is aligned with or confirms the different belief sets.

One of the problems with the confirmation bias is that people become so dogmatic and rigid in their viewpoint that they aren't open to competing explanations or to adapting their position in light of new facts or interpretations.

One method of combating confirmation bias is to actively elicit all the disconfirming evidence for a particular position. It's also helpful to assume that what other people say is true, and then to follow their thinking to its logical conclusion.

For example, maybe the market for your product is smaller than you've assumed, what is the evidence “for” and “against,” and how would you deal (contingency planning) with the “smaller market” situation should it arise (e.g., scenario planning).

Alfred Sloan, the former CEO and Chairman of General Motors, would often delay a decision when he couldn't find any opposition to it. He believed that if there was no dissent, the issue hadn't been sufficiently analyzed (i.e., watch out for a roomful of “yes” people).

Net, Net: Challenge your beliefs and positions by looking for disconfirming evidence or assume that a differing viewpoint is true and determine what that would mean to your plan going forward.

Summary

We know that most people do not think or behave like the classical “economic man”—logical, rational and objective. With so many things vying for people's attention, we are constantly filtering our experience using heuristics and biases in order to more easily sift, sort and decide. By understanding people's irrational patterns, we can begin to understand the drivers behind certain behaviors.

You may begin to look differently at initial offers or prices, on the effect of recent events, and on searching for disconfirming evidence to what seems like a bulletproof idea, initiative, or strategy. By putting heuristics and biases in the light, and by making people, including yourself, aware of them, you can begin to reshape and reframe the decision criteria into criteria that better meet your goals and objectives.

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ABOUT THE AUTHOR

Michael L. Perla is a principal consultant at a sales and marketing consulting firm. He can be reached at michaelperla@bellsouth.net.