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On billion dollar ideas, crowded shops & minds of lawyers

 "We are generally too easily content with one explanation for anything" - Rory Sutherland


Why are Google, Amazon, Facebook etc. disproportionately successful?

The answer more commonly lies in a behavioral explanation than in a technological explanation, Rory argues.  

 

Here's why:

 

If you ask an economist “why are shops crowded during a sale”,

they will say “because the prices are lower.”

And that is perfectly true and accurate.

But is it the whole truth?

 


If we delve a bit deeper into what a sale means for people you'll notice about three other things going on in our brains:

 

  • Scarcity value. Implicit in the idea of a sale is that when something is gone it's gone. These items are the remaining ones from the last season and there is a limited number of them available.

  • Social proof. Lots of other people are shopping which makes shopping seem fundamentally normalized.

  • Relative perception of price. There is value in feeling that you are getting a better deal compared to some baseline measure of last week, next week, or the deal than your mate is getting down the road.


So, the reason why shops are crowded during a sale is much more than a price to value equation.

There are other forces at play as well.

And behavioral science helps uncover all that. 


Behavioral science gives you the whole why.



The business context

 

In business, we put an enormous amount of energy into the “what” : measuring and quantifying things, assembling statistics for presentation upwards within the organization, for the construction of narratives to stockholders.

 

But all this effort isn't matched by a commensurate effort in asking “why”: what the causality might be.

 

We are lazy when it comes to the “why”.

 

The reason behind this could be connected to the ideas of people like Dan Sperber and the argumentation hypothesis. They suggest that humans don't have the brains of scientists; instead, we've inherited the minds of lawyers.

 

This is evident in negotiation training, where presenting one strong reason and stopping is crucial.  

For example, if you have a great alibi, if you have a single conclusive case for the defense, you make that case and then you stop. You don't go on adding other reasons because if one of your supplementary reasons is weak the opposition will then pick that apart.

 

But the whole “why” is very important.

 

Because to solve problems you've got to understand them first.

You've got to spot the asymmetries.

The inequalities.

The disproportionate attention given to one thing over another. 

Only then can you generate new ideas.

Billion dollar ideas, the likes of Google and Amazon.

 

"We are generally too easily content with one explanation for anything". But we shouldn't be.


Question for you

 

If you can pick one problem that has been puzzling you, can you think of what could be causing it? What is another reason? And another? And another?

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