3 Ways Customers’ Minds Plays Tricks on Them

by Colin Shaw on August 18, 2015

I often say people are irrational, but only because they are. We all do irrational things. We like to think we make logical decisions based on rational thinking all the time, but we don’t. The truth is, your mind plays tricks on you every day, and many times, it’s in one of three ways.

In “Thinking Fast and Slow,” Professor Daniel Kahneman, Nobel Memorial Prize in Economic Sciences recipient in 2002, explores why our mind plays tricks on us. He wrote the book because he wanted to understand why he was frequently wrong about things. What he discovered is that our “intuition” is not what we thought it was. Instead, it’s a system of lazy thinking based on emotion, not logic.

Kahneman describes our brains as having two ways of thinking, which he refers to as System 1 and System 2. System one is fast, doesn’t take much energy to do, and is based on emotion. System 2 is slow, takes much energy to do, and is based on logic. Because thinking with System 2 takes more energy, most people rely on System 1 thinking far more often than System 2. This fact is the foundation for why people get things wrong.

Like many of you, I don’t like to be wrong—especially because my intuition was so sure I was going to be right. I feel, well…stupid and stupid is not a way I like to feel. So when I read this book, I was interested in how this System 1 thinking was leading me to false conclusions, leading me to false beliefs, and making me look stupid. The following three concepts struck me as important to understand and how they affect my decisions as a leader:

#1 The Anchoring Effect: This term refers to instances where a person assigns a value to a quantity unknown before they make an estimate, i.e. like when you hear the asking price of a house, your estimate is not in relation to that price, or the anchor.

Lesson:

There are many applications of the anchor effect on leadership, but I’ll limit my discussion to two. First, it’s important in a negotiation to understand whoever first mentions a number (or the anchor) is likely to get something close to that number; so be first. Second, be careful about introducing an anchor when you want to know another person’s opinion. If you suggest a value, you implant that in your audience, limiting the candor you might have received without that anchor.

#2 Availability Heuristic: When a person can think of many examples of a category quickly, they believe the overall frequency of that category is large. This is largely influenced by the fact the examples were many and easy for the subject to access.

Lesson:

This one shows me that just because I recall similar circumstances doesn’t mean the circumstances are trending. In other words, the availability heuristic cautions leaders not to jump to conclusions; use System 2 to confirm what System 1 suggests is frequent (and obvious).

#3 Availability Cascade: Biases form when something minor becomes inflated to the point it becomes something major. The media is the typical culprit for overinflating the minor event in many cases, i.e. Snowmageddon 2015, or winter storm Juno, now simply called the blizzard that wasn’t.

Lesson:

Be sure to engage your rational thinking when you feel pressure to act quickly to react to a situation. My guess is Governor Andrew Cuomo wishes he’d watched a little more weather channel coverage before he shut down the subway for the first time in its 101 year history.

The thing about these three concepts is everyone is victim to them from me to you to the Governor of New York. We all defer to System 1 thinking more often than System 2. It’s true of people who you work with and for people with which you do business. People think this way and it affects what they do.

The good news is that once you are aware of them, you can address them and change it for the better. The key to overcoming this thinking stumbling block is first accepting that it happens, and then recognizing when it happens in your thinking. Your mind is playing tricks on you; learn to play the game better and you win.

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Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s first organizations devoted to customer experience. Colin is an international author of four bestselling books and an engaging keynote speaker.

Follow Colin Shaw on Twitter @ColinShaw_CX

Colin Shaw3 Ways Customers’ Minds Plays Tricks on Them