A conversation with Sheena Iyengar on The Art of Choosing

Following her live broadcast–offered as part of Linkage’s Thought Leader Series–on September 15th, 2010, Rich Rosier sat down with Dr. Iyengar, author of The Art of Choosing, to discuss how and why we choose. Dr. Iyengar’s award-winning research reveals surprising and profound answers. 

Rich Rosier: We have plenty of great questions coming in.  This first one is from Chuck Duddy: “If your customer surveys suggest customers want more price plan options, should we assume that the customers were correct in assuming more price plan options would make you sell more of your service?”

Sheena Iyengar: That’s a great question, and a question that a lot of people ask.  What I want to do is start by explaining the phenomenon to show what people are really looking for. One of my first studies that I did in this area of “choice overload” was done with jams.  We set out two tasting booths in a grocery store.  We either put out six different flavors of jam or 24 flavors of jam.  And we looked at two things.  First, in which case were people more likely to come and sample some jam?  More people stopped when there was 24 – 60%- than when there was six – 40%.  But when it came down to buying, more people bought when they saw six than when they saw 24.  When they saw six, 305 of them bought.  When they saw 24, only 3% of them bought.  So here’s your basic dilemma.  People want to have a lot of choices to choose from.  But when it comes down to choosing, they want the decision to be straightforward.  They want to be able to see very clearly what the best choice is. 

So, when you’re doing any sort of a choice line-up, you need to make sure people can tell those choices apart.  Because if they can’t tell them apart and they can’t see how they’re instantly different, they essentially get demotivated.  The first thing is to make sure your employees are able to tell options apart.  If they can’t tell them apart, certainly your customers aren’t going to be able to tell them apart either.  Then you need to run pilot groups, focus groups, to see if customers can easily, in an instant, see how they’re different.  Because until they see how they’re different, they’re just not going to engage.  That’s the first principle. 

So here’s your basic dilemma.  People want to have a lot of choices to choose from.  But when it comes down to choosing, they want the decision to be straightforward.

Rich Rosier: Building on that, I was fascinated by your reference to the research that showed that if a manager gave employees six choices they were seen as “incompetent.”  When they reduced it to two choices, they were seen as competent and well-informed. Are you speaking generally when you say two is the magic number?

Sheena Iyengar: We measured zero, two, three, four, five, and six.  I wouldn’t say that two is a magic number.  That’s just a rough guideline.  Depending upon the task, clearly, six – when you’re talking about most work jobs – is too much.  But it could go anywhere from one to about three or four. 

Rich Rosier: Our next question comes to us from Rita at Qualcomm: “Many companies are spending a great deal of effort to help managers become better coaches.  To stop telling and start asking meaningful questions to help an employee find their own answers.  What are the implications of your research for this new model of managers as coaches, especially in global companies?”

Sheena Iyengar: What is interesting about coaching is that it has to be a balance.  It’s ultimately about understanding where your employees are coming from and for them, to understand where you are coming from.  One of the biggest disconnects that can happen between a coach and the people they’re coaching has to do with the difference between intention and perception.  I may think that you completely understand why I’m doing what I’m doing.  Why I’ve proposed this new idea.  Why I’m setting up this meeting in this particular way.  Why I’ve set up the incentives in this particular way.  But if you don’t understand why I’m doing what I’m doing, and you think I’m doing it for some other reasons, then we don’t have alignment.  And that could cause a lot of problems within an organization.  So, one of the things that coaches really have to do is not so much telling or questioning, it’s really trying to find out where employees are coming from.  And also getting a better gauge of how people are seeing you.  That is going to be one of the most critical pieces to that relationship.

 It is simply a necessity to make constant adjustments to make any choice work.

Rich Rosier: How can a leader instill a decision making culture where risk is tolerated? 

Sheena Iyengar: I have a great story about a former CEO of Coca-Cola.  The rumor is that this person was having a meeting with his senior managers shortly after becoming CEO.  They were giving him reports on how Coca-Cola was the leader-beating Pepsi and other soft drinks in the soft drink market with over 50% of the market share.  He stumped everybody when he asked: “How much liquid do we need to drink in a day?”  Somebody answered 64 ounces.  “And how many people are there on the globe?” A little over 6 billion.  “So what percentage of the liquid market do we really have? In actuality: Only less than two percent.” Just like that, that person had re-anchored the team and changed their reference point in terms of where they stood against the rest of the marketplace. 

 httpv://www.youtube.com/watch?v=4kgaw0b2ACY

Rich Rosier: When it turns out that a leader has made a bad choice, what can be the best thing to do at that point?

 Sheena Iyengar: Every time you make a choice you might think that it is over, that you’ve made a choice and that it will either be good or bad.  But the way I look at it, is that once we’ve made a choice, we must make other choices afterwards to make it work.  It is simply a necessity to make constant adjustments to make any choice work.

Rich Rosier: I know you’ve spent some time in the book talking about this next question.  I thought maybe you could share a little bit of insight on your findings in this area.  How should leaders go about making better choices when there are an overwhelming number of choices they could make?   

Sheena Iyengar: We actually have different techniques.  You have to figure out your priorities–reduce your choice set.  Say you want to buy a really nice engagement ring or fancy piece of jewelry.  You want to do well but you don’t want to suddenly become a jewelry expert.  The mistake we often make is to first go to the really big stores that offer thousands of choices.  That is actually one of the worst things you could do because you have absolutely no expertise, you see all these choices, and you have no way of categorizing or making sense of them.  What you should do is first go to the smaller stores which usually have specialties and can help you understand what the categories are.  You go to this kind of special store and see one kind of jewelry.  You go to another store and see a different type and so on and so forth.  That helps you first figure out how to categorize things.  It also gives you a quick thumbnail sketch of what kinds of things you like and don’t like.  You do that for a little bit and then you go to the big store after you’ve learned a little bit about how to categorize the options, what you like and dislike and now you’re more ready to see a lot of choices.  That’s what you can do at an individual level.  And you can take what I just said and turn it around from the perspective of an organization.  Say you’re a marketer and you have a lot of products to offer.  Well, first off, you should remove the redundant options.  The second thing you can do-if you can’t remove the options because your particular product or your business model just requires that you have a lot of choice-you can look to categorize them. Our brains can handle more categories as long as you don’t include more than ten options per category.

Rich Rosier: Through your research, have you uncovered Patterns across “bad choices”? Is there a recurring problem in leaders who make bad choices? 

Sheena Iyengar: I would say that the biggest underlying cause for bad choices is a lack of awareness.  Most of us, if we see and comprehend what we did wrong, will try to make some adjustments.  We may not always succeed in the adjustments that we make but we do make efforts to at least do some adjustments and eventually if we keep at it we get better.  But often, people just don’t grasp that what they are doing is being perceived as wrong. That’s actually when 360 feedback assessments and processes, or informal environments in which people are more likely to tell you what’s wrong should come into play-as long as you are committed to really take those opinions into account.

I would say that the biggest underlying cause for bad choices is a lack of awareness. 

Rich Rosier: Irrespective of culture, what types of people have an easier time with making choices and how can a leader use that information to know on a one-on-one basis who’s more likely to work effectively in making choices versus someone who is going to struggle with choices. 

Sheena Iyengar: There is some research on that.  There’s something known as the maximizers versus the satisfiers, and there are actual scales that measure this.  A maximizer is somebody that always has to find the best thing, the best show-that’s why they spend all of their time channel flipping trying to find the best one and oftentimes actually run out of time watching it.  They are the ones who have to have the best job, the best outfit, and they’re just obsessed about finding the best.  And often, a lot of time gets wasted in this process. 

Then you have the satisfiers.  The satisfiers are the people that say, you know I’m going to look for something that’s good enough-they choose it and they’re done.  Those people obviously have an easier time making choices. 

 As a leader working with maximizers, it is important for you to acknowledge that the choices made had to have been the dominating alternatives.  As long as people around them have that perception of their work, maximizers will be appreciated and satisfied.   

Rich Rosier: You’ve worked with Malcolm Gladwell in the past and I was curious about whether or not you thought there are circumstances when it is okay for a leader to go with his or her gut when making a decision. 

Sheena Iyengar: There’s a lot to this question.  Think about decisions as falling into two buckets.  Those that have measurable outcomes (i.e. did I perform better or worse? Did I get better revenues or not?  Did I choose the right stock or not?) For things like that, essentially all the great success stories are informed intuition: the combination of gut and reason with gut becoming the epitome of reason.  If you don’t know or have any expertise in the topic at hand, use your reason.  If you’ve already developed the expertise, it may look like gut but it’s essentially an informed gut decision. 

Then there is the other kind of decision.  Which is one that has a more subjective outcome (i.e. will this make you happy?  Is this the right thing to do? Do I want to marry this person? Do I want to switch jobs?  Reason usually can’t answer those questions.  Reason will tell you what you should like, what should be good for you, tomorrow, ten years from tomorrow, but it won’t actually tell you how you will feel about it.  So you’ve inherently got a dilemma here. Your gut tells you how you feel about it today.  But that’s not reliable.  Your reason tells you how you should feel about it.  But that’s not reliable.  And one of the things that I talk about in my book is the importance of being able to rely on other people and get their help.  Look at the people who have made the kind of decision that you are right now contemplating-and because they should be a few years out they should have experience in the consequences of that decision.  When you look at those people, use your gut to answer the question: Do I want to be like them?  Do I think I’d be happy if I were them?  And use your reason to assess whether or not the reasons why they are happy would apply to you. You should then be able to answer your questions pretty well. 

Rich Rosier: Thank you very much. I really appreciate you being here and sharing again all your key insights from this process.