Making choices

I'm likely to be embarking on a project soon to look at services we can provide to support learning for various forms of communities. There are 3 fundamental and important questions that have been bothering me with regards to the scope of services:

1. What type of services would appeal to the masses?
2. How many services should we offer?
   
3. How do we make it easy for the masses to decide on the suitable services?

In short, it's about how I should be developing choices and how to make it pleasant for consumers to make those choices.

I came across 2 talks on TED that provided me some leads to answer these questions. The first talk was from Malcolm Gladwell on spaghetti sauce and the second was from Barry Schwatz on the paradox of choice. In a nutshell, Malcom's points out the importance of having variability in choices and Barry's point is that too much variability can be a bad thing.

The perfect choice vs perfect choices
Malcolm pointed out that the quest for the perfect sauce is wrong. Rather, we should be going for perfect sauces. Howard Moskowitz, a psychophysicist, made 45 varieties of spaghetti sauce to cover every possible conceivable way of varying the sauce; from the level of sweetness, garlic, tartness, tomatoes-ness and visible solids. After getting a truck load of people to sample 10 types of sauces each, Howard found out that all Americans generally fall into 3 preference groups. They generally liked the plain, the spicy and the chunky sauces. The findings on the liking for chunky sauce was revolutionary because there was no chunky spaghetti sauce in the market at that time when 1/3 of the Americans would want it. For that, Prego made 600 million dollars over the next 10 years from chunky spaghetti sauce. This is why there are at least 7 types of vinegars, 14 different kinds of mustard, 71 kinds of olive oils and 36 types of Ragu sauces (LOL) today. Howard loves to say "The mind knows not what the tongue wants!"

Malcolm then went on to conclude with 4 points:

1. Experimentation (tasting) helps us to realise the desires that we cannot explain.
2. Horizontal segmentation. Different kinds of sauces suits different kinds of people. This fundamentally democratised the way we think about taste.
   
3. The shift to variability. What we thought would make people happy was to provide them with the culturally authentic and universal tomato sauce. But there has since been a shift towards the understanding of variability.
4. Embracing diversity. That in embracing diversity in human beings, we will find a surer way to providing happiness.

With these, here comes Barry with his views which I thought were counter arguments to Malcolm's to some extend.

Barry started by saying that the official dogma of the west has been to maximise welfare. To maximise welfare we have to maximise freedom. And by maximising choices we get greater freedom. However, he argues that more choices have not make us freer, but more paralysed, not happier but more dissatisfied. He gave several examples.

Problems with freedom of choice
In the case of a patient who is about to receive treatments, the doctor would practice patient autonomy; that is, explaining the options available and the risks associated with those options, and then insist that the patient decide for himself. This essentially shifts the burden of decision making from someone who knows something to somebody who knows much less or nothing.

When it comes to working, we now have the freedom to decide when, where and how to do it. With a smart phone which gives us online access to our emails, we are reminded again and again on our ability to work. This thought alone affects the quality of our leisure and family time even though we have chosen not to work.

Problems with abundant choices
Abundant choices produces paralysis rather than liberation. With many options to choose from, people find it difficult to choose at all. He gave an example of 50 over retirement financial plans offered by a company and the results is that many employees forgo evaluation and took up the default plan. This came as a result of employees being over zealous and cautious in making that critical decision that they end up spending the next day, and then the next and so on to try to identify that perfect choice.

Effects of making that choice
Even if we manage to overcome paralysis and make a choice, we normally end up less satisfied than we would be if we have fewer options to choose from. Barry cited 4 consequences:

1. Regret. If the results of our choice does not match our initial expectations, it's easy to imagine that we should have made another choice. The perception of a better alternative induces regret in the decision we make, and the regret subtracts away from the satisfaction of our choice even though it was a good decision.
2. Opportunity cost. Attractive features present in other options are going to be seen as opportunity cost. They too subtract the satisfaction we'll get from the choice we made.
3. Escalation of expectations. All the available choices make our expectations go up, as compared to having only one item to choose from. In the past when there was only one type of jeans, we made do with it and it eventually got more comfortable over time. But with the present day variety of jeans, we tend to feel that there is a perfect pair of jeans out there.
   
4. Self-blame. In the past when the one type of jeans weren't that nice to wear, it was the world's fault. But with the present day variety of jeans, picking a less satisfactory pair of jeans becomes our fault, because we tend to think that we could have done better with the available options out there.

So what have we learn from these opposing proponents? Here's my take and I welcome further comments from you:

1. Limiting the number of choices. I've no idea of a perfect number. But we know that too many is no good and not having choices is a bad thing. I guess it's a combination of time taken to evaluate an option times the number of options available. Choosing jeans is much easier than choosing a retirement financial plan, and this relatively means we can have more types of jeans than financial plans. Limiting choices to a few helps reduce the satisfaction issues.
   
2. Horizontal segmentation research. It's important for providers to develop the varieties based on segmentation. Constant testing and fine tuning of those options would be tedious but essential.
   
3. Disconnect between providers and consumers. In the case of the 36 types of Ragu sauces, Howard effectively did a horizontal segmentation. But the person standing in front of the 36 Ragu sauces in a supermarket may not have any idea which segmentation they belong to, and to aggravate matters the supermarket staff may not have cluster the sauces according to the intended segmentation. We cannot assume similarity in mental models between providers and consumers. We need a simple way to present the categories of sauces to help people adapt to the way providers think. If the providers have done their homework, it should be easy for the consumers to relate.
   
4. Experimentation. This has been prevalent in the IT industry where trial versions of software is available for experimentation. Fitting jeans and tasting spaghetti sauce are experiments too. This perhaps is the best way to help people make informed choices. But there are also situations where experimentation is not possible, like in the case of surgical procedures.
5. Expert advice. This is crucial in helping people who know nuts, don't have much time to learn or when the stake of the choice is high. Experts can help single out the common or popular choices and even help clients recommend the ideal choice based on their needs/profile.
6. Bundling. Bundling helps to combine the benefits of various choices and makes selection easier since we have a reduction of choices. The responsibility of making a choice is shared between the provider and the consumer since the consumer can now say, "It's not purely my choice, it was bundled in that way!". Of course the availability of itemised choices can co-exist in another purchase category for people who can or prefer to pick ala carte items.