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Decision-Making in Business: Dealing with Choice Overload

Decision making is a quintessential skill for entrepreneurs and managers in two key ways.  First, business owners must make many many decisions on any given day, about lots of different things like how to operate their company, what products to carry, where to manufacture products, what to do about a problem employee, etc.  Second, your customers are all making decisions too and as an entrepreneur, you typically want them to decide to use your product or service…..right?

For our April EntrepreNerds meeting, we are discussing Smart Choices: A Practical Guide to Making Better Decisions.  This book provides a framework that empowers you to make, as the title suggests, smart decisions for yourself personally and professionally.  And I’ll share more about this particular book shortly.

Today, I want to share a TED talk I recently watched by Seena Iyengar, entitled “How to Make Choosing Easier.”  Dr Iyengar’s talk was absolutely fabulous.  In this day-and-age we are all over inundated with choices and many people assume that more options are better.  As a general rule of thumb, nothing could be further from the truth.  Dr Iyengar cites her own research, which demonstrates that choice overload causes people to disengage from decisions.

Think of all the different decisions that consumers make every day.  According to her research, Dr. Iyengar found that people self-report making 70 decisions a day…..think about it, that could actually be on the low side, we’re making many tiny-choices from the second we wake up: should I get out of bed or hit the snooze, drink coffee or tea today, what should I wear, etc, etc.  That is why, as an entrepreneur, it is valuable to be aware of the kinds of choices you’re presenting to your customers and in what ways.

Dr. Iyengar’s research found that there are four techniques you can use to “make choosing easier:”

  1. Cut – eliminate options to reduce overload, in this instance less is more!

  2. Concretize – make the decision feel more real, provide visuals or encourage people to imagine the outcomes of their decisions.

  3. Categorize – organize like things with like things, people can process many categories better then they can process many options.

  4. Condition for complexity – put the more simple choices first and the decisions with more complexity later.

So to recap, you want to provide fewer choices, that feel real, and are nicely categorized, all while making the experience simply pleasant.  To learn more about Dr. Iyengar’s research and to see some specific examples of the four techniques she recommends for overcoming the challenges in choice overload, view her TED talk.  Or check out her book, The Art of Choosing (it is now on my list to read but I haven’t gotten it yet, so let me know what you think about it)!

And remember, everyone has a different comfort level when it comes to complexity of choices.  Therefore, it also is important to take into consideration your customer’s choice preferences.  For example a home builder might love to have 25+ options of table saws to choose among whereas a layman may feel overwhelmed by that many options.

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