The world of data privacy is about to change. Currently most companies feel free to treat your personal data as an asset that can be leveraged by their company. As you no doubt have realized, many companies sell your personal information to other parties to cross sell their products. For example, my friend Marc once put his dog’s name when answering an online promotion only to see that his dog started to get a lot of related mail over the next few months.
This problem is getting much worse. With the rise of social networking and people’s dependence on the Internet, much more of our private information is now available online. For example, banks often use “private” information to verify your identity when calling customer service. But now such information like mother’s maiden name is easily accessible via Facebook.
My prediction is that two things are about to happen. One is that people are going to start to become much more concerned about their privacy as they continue to put more and more information online. Secondly, some company with lots of private data (like Facebook) is going to play a bit too fast and loose with privacy, causing a public catastrophe. As the importance of privacy increases and companies fail to safeguard it, we’re looking at a major change in public policy on privacy. Likely this will mean that consumers will own all of their data and companies will need explicit permission to share it with others.
When I talk to people about this, I often get the response, “This is technology, it’s no place for government policy.” But once technology becomes entrenched into our everyday life, that is exactly when it starts getting regulated. Remember that 100 years ago electricity and telephones were the top technologies of their day and now they are two of the most regulated industries on earth.
As an example I’d like to talk about another new technology that totally changed the world. It was introduced in Seattle in the early 1960s at theSeattle Artificial Kidney Center. This was one of the first dialysis machines in the world, made possible by advances in technology allowing a permanent stent to be placed into the body. This allowed people to have regular treatments where blood is moved outside of the body and cleansed by a machine. These machines were greatly oversubscribed due to their lifesaving nature and extremely limited availability.
The head of the center Belding H. Scribner knew that making a decision on who should get treatment was incredibly serious. He created the Admissions and Policy Committee to decide who deserved treatment the most. These decisions were based on characteristics other than medical fit -- the patients were already screened by a panel of doctors. This committee was a cross section of society composed of seven lay people – a lawyer, a minister, a housewife, a state government official, a banker, a labor leader, and a surgeon who served as a "doctor-citizen." The group considered the prospective patient's age, sex, marital status, net worth, income, emotional stability, nature of occupation, extent of education, past performance and future potential. Essentially they needed to determine which of these people was "worth" the most.
While Scriber’s solution was a good one, it was shocking when it reached the national stage. In November 1962, Life magazine ran an article called, "They Decide Who Lives, Who Dies.” While the article started as a study into this new wonderful and life saving technique, it quickly became a study of what the author referred to as: The Life and Death Committee.
This article sparked a national conversation and led to the creation and popularization of bioethics. The inventors of dialysis were amazed that public discussion focused on the decision of who got the treatment rather than the amazing ability of the machines to transform what was once a death sentence to a chronic condition.
Today when there are issues on life saving decisions based on limited availability (i.e., for transplant organs) a person’s worth is no longer considered. Doctors use a number of factors such as age and health to wean down the list. Once patients are one the list, organs are distributed based on severity of the condition, the time on the wait list and the geographical distance between the donor center and the hospital.
It’s tempting to think that Bioethics is a much greater social issue than personal privacy. But it’s not. Bioethics has just had more time to mature and enter the social consciousness. In fact, I was once in a business school class where we were presented with the Seattle Artificial Kidney problem of deciding who should live. This was a case study used at both the beginning and end of the class – essentially to show how much we’d learned during the class. However, it wasn’t in a Bioethics class but a Decision Sciences class!
We were given the following problem: “Five people were dying of kidney disease and we only had the ability to save one of the five.” We were given short bios of each person, e.g., a 50 year old doctor with 3 children who is working to cure cancer. We were to rank order which of the people we should save. While the exercise was very interesting and really showed how to rank order on a number of criteria, no one brought up any of the ethical issues. The teacher even seemed unaware of them. Even today with five decades of Bioethics behind us, whole classes of students can ignore the social issues when presented with a technical problem to solve.
In short, technology can often go unhindered while it is being developed; however, once it becomes enmeshed in the social fabric, decisions are not made on technical merits but on how they affect society as a whole. What was once a technical issue becomes a social one. Or to quote Spiderman's Uncle Ben “With great power comes great responsibility.”
Saturday, November 13, 2010
Tuesday, May 18, 2010
Are More Choices Good or Bad?
I've been following some of the recent research on how people make choices. The following summary represents two sides of an argument on whether or not more choice is a good or bad thing. In actuality, Malcolm Gladwell’s point of view is actually the standard thinking -- that more choice is better. Barry Schwartz, the author of Paradox of Choice says that some choice is good but more choice isn’t always better. Below I present their views as a mythical debate on the virtues and vices choice.
MR GLADWELL, PLEASE BEGIN YOUR ARGUMENT THATMORE CHOICE EQUALS MORE HAPPIENESS
I'd like to tell you all about the person who has added more happiness to the world than anyone else: Howard Moskowitz. Howard is the creator of chunky tomato sauce. A market researcher, Howard discovered that certain customers had fundamentally different tastes in tomato sauce. When Howard started his research the world thought that there was only one "best" type of tomato sauce that everyone would prefer. This was a platonic ideal of spaghetti sauce -- that was captured in the old world methods of sauce (like Ragu). However, what he discovered was that people’s preferences were not focused on one universal platonic ideal but differed in three dimensions: regular, spicy and chunky. At the time, no one was manufacturing chunky tomato sauce and that's exactly what Moskowitz's client -- Prego created.
Giving people the right kind of tomato sauce is like making them the right cup of coffee. If you ask people what kind of coffee they like, they will tell you that they like a dark, rich, hearty roast (but only 25-27% of people actually prefer that). Most of you actually want milky weak coffee. If we came up with a blend to coffee to suit everyone, the best score you can get is a 60 out of 100 on average. However, if we could segment you into 3 or 4 coffee clusters, you would move from a score of 60 to 75 or 78. The difference between a 60 and 78 is the difference between coffee that makes you wince and coffee that makes you deliriously happy.
MR SCHWARTZ, PLEASE PRESENT YOUR OPPOSING ARGUMENT -- THAT TOO MUCH CHOICE CAN MAKE US LESS HAPPY:
I agree with the vast majority of what Mr. Gladwell has to say with one exception. Though some choice is better than no choice – more choice isn’t always better. This is a bit counterintuitive because in Western society we believe that freedom is good and more choice means more freedom.
However when I go to the supermarket today there are 175 salad dressings and that’s not including the 15 extra virgin olive oils and 42 vinegars I could mix together for customized Italian dressings. There are 75 varieties of iced tea, 230 soups and 40 brands of toothpaste. However, all of these choices don’t make people any happier -- they actually make them less happy. There are a few reasons for this:
IN MY OPINION MR SCHWARTZ WINS THE DEBATE (AND HERE ARE HIS SOLUTIONS)
In order to make customers happier, part of the solution is to reduce (rather than enhance) number of decisions an individual makes. Think about the freedom of going to a restaurant with a tasting menu. The chef makes the decisions freeing you from choosing what to order – not to mention choosing what kind of salad dressing to buy. It doesn’t have to be that drastic though – customers can be happy with customization as long as it requires relatively little work on their part. A good example of customization with little work is the Pandora radio application. You just tell Pandora the songs that you like and Pandora creates your perfect radio station.
However, businesses can only do so much to raise customers’ happiness. Marketers continue to bring out new and better products – trying to convince consumers that these new products and new choices will make them happier. While these new options may be slightly better, most of the time it’s at the margins. Consumers need to lower their expectations of new products and realize that even the most customized product only provides the core benefits of the product itself and maybe a little more. No matter how customized your dishwashing detergent is, it will never make you as happy as the woman using it in the television ad. Taking that mindset, customers can be happier by ignoring most of the choices and just focus on the few clusters that really matter – and realize that the other differences won’t be all that significant.
If you like this sort of discussion you should watch the videos themselves – they very good. Then you might want to listen to the radio program Radiolab on Choice as well as pick up Dan Arielly’s book Predictably Irrational.
MR GLADWELL, PLEASE BEGIN YOUR ARGUMENT THATMORE CHOICE EQUALS MORE HAPPIENESS
I'd like to tell you all about the person who has added more happiness to the world than anyone else: Howard Moskowitz. Howard is the creator of chunky tomato sauce. A market researcher, Howard discovered that certain customers had fundamentally different tastes in tomato sauce. When Howard started his research the world thought that there was only one "best" type of tomato sauce that everyone would prefer. This was a platonic ideal of spaghetti sauce -- that was captured in the old world methods of sauce (like Ragu). However, what he discovered was that people’s preferences were not focused on one universal platonic ideal but differed in three dimensions: regular, spicy and chunky. At the time, no one was manufacturing chunky tomato sauce and that's exactly what Moskowitz's client -- Prego created.
Giving people the right kind of tomato sauce is like making them the right cup of coffee. If you ask people what kind of coffee they like, they will tell you that they like a dark, rich, hearty roast (but only 25-27% of people actually prefer that). Most of you actually want milky weak coffee. If we came up with a blend to coffee to suit everyone, the best score you can get is a 60 out of 100 on average. However, if we could segment you into 3 or 4 coffee clusters, you would move from a score of 60 to 75 or 78. The difference between a 60 and 78 is the difference between coffee that makes you wince and coffee that makes you deliriously happy.
MR SCHWARTZ, PLEASE PRESENT YOUR OPPOSING ARGUMENT -- THAT TOO MUCH CHOICE CAN MAKE US LESS HAPPY:
I agree with the vast majority of what Mr. Gladwell has to say with one exception. Though some choice is better than no choice – more choice isn’t always better. This is a bit counterintuitive because in Western society we believe that freedom is good and more choice means more freedom.
However when I go to the supermarket today there are 175 salad dressings and that’s not including the 15 extra virgin olive oils and 42 vinegars I could mix together for customized Italian dressings. There are 75 varieties of iced tea, 230 soups and 40 brands of toothpaste. However, all of these choices don’t make people any happier -- they actually make them less happy. There are a few reasons for this:
- Paralysis: With so many options people find it difficult to choose at all. As an example, one of my colleagues examined employee engagement with employer sponsored retirement accounts. She found that for every 10 more funds offered, participation actually goes down 2%.
- Opportunity Cost: With 175 salad dressings it’s easy to imagine a salad dressing that must be better than what you have chosen. When there are lots of alternatives to consider it is easy to imagine the attractive features of alternatives that you haven’t chosen. These untaken choices subtract from the satisfaction of what we’ve chosen even when we’ve chosen a good option. As the following cartoon suggests, you can never be happy if you’re always wondering if you should be doing something else:
- Escalation of Expectations: In the old days jeans never fit right. They were stiff and painful and eventually if you washed them enough they fit all right. Today, I went to buy jeans and was completely overwhelmed by the options. I spent an hour trying on jeans and left with the best pair of jeans that I ever had. But, I felt worse, I wrote a whole book to explain this The Paradox of Choice: Why More Is Less. Going in, when I thought there was only one type of jeans, I had no expectations but with 100 pairs of jeans, I should be able to find that perfect pair of jeans. What I got was good but not perfect. When I compared what I got to what I expected I was disappointed. Today everyone expects things to be perfect and you can never be happily surprised – which is a shame.
IN MY OPINION MR SCHWARTZ WINS THE DEBATE (AND HERE ARE HIS SOLUTIONS)
In order to make customers happier, part of the solution is to reduce (rather than enhance) number of decisions an individual makes. Think about the freedom of going to a restaurant with a tasting menu. The chef makes the decisions freeing you from choosing what to order – not to mention choosing what kind of salad dressing to buy. It doesn’t have to be that drastic though – customers can be happy with customization as long as it requires relatively little work on their part. A good example of customization with little work is the Pandora radio application. You just tell Pandora the songs that you like and Pandora creates your perfect radio station.
However, businesses can only do so much to raise customers’ happiness. Marketers continue to bring out new and better products – trying to convince consumers that these new products and new choices will make them happier. While these new options may be slightly better, most of the time it’s at the margins. Consumers need to lower their expectations of new products and realize that even the most customized product only provides the core benefits of the product itself and maybe a little more. No matter how customized your dishwashing detergent is, it will never make you as happy as the woman using it in the television ad. Taking that mindset, customers can be happier by ignoring most of the choices and just focus on the few clusters that really matter – and realize that the other differences won’t be all that significant.
If you like this sort of discussion you should watch the videos themselves – they very good. Then you might want to listen to the radio program Radiolab on Choice as well as pick up Dan Arielly’s book Predictably Irrational.
Saturday, February 06, 2010
Why Default Settings Matter
In a fascinating talk at the TED conference, Dan Ariely asks the following question, "What determines whether or not someone decides to donate their organs?" When you look at the data, there is a striking difference between two types of countries in the world. Some countries have an organ donation rate of close to 100% while others hover much lower -- not reaching beyond 30%. What could possibly account for this difference especially among countries with similar cultural and ethnic heritage? Why would Austria be so much higher than Germany? Or Sweden be so much higher than Denmark?
Arielly points us to the paper "Do Defaults Save Lives?" by Eric J. Johnson and Daniel Goldstein. A default choice is the choice that a customer makes by doing nothing -- e.g., always using Internet Explorer to browse the web because that's the way things worked when you bought your computer (in fact, the Microsoft antitrust case in the late 90's revolved to a large extent around these default choices.)
This startling difference in participation in organ donations is tied to how the question is worded at the DMV. In some countries, the question is worded "Check this box if you want to be an organ donor." In others, the question is worded "Check this box if you do not want to be an organ donor." If the question presumes that you will donate an organ, you will. As Arielly points out, it's not because people are lazy, it's because, the decision is so important that it is paralyzing for people to make for themselves. They shouldn't have to choose what to do -- someone should make the choice for them and "the sysem should just work."
When the people at the DMV created these forms, did they realize that they were going to have the single most important effect on the state of organ donations in their country -- certainly not. But that's the point. To a large extent, the default behaviors that the designer created are those that will stick.
Certain choices, especially those with high stakes and low information are very hard for people to make. Let's look at one product in specific that people need -- 401(k) programs. Logically you would think that the more choices you gave someone on their retirement plans, the more likely they would be to join one of the programs. However, as a company adds additional plan choices the rate of participation actually drops because consumers don't know what to do with all of these extra choices. Richard Thaler and Cass Sunstein talk about this paradox at length in their book Nudges. They discuss an innovative solution to the 401(k) problem with the "Save More Tomorrow Program." The idea is that most people don't change their 401(k) options once they join a company. Therefore, the plan should, by default, change your options for you. So this plan increases your 401(k) contribution at the beginning of each year, right at the time you get a raise. This is around the same time most raises are given out so people don't feel like they are losing any money. The company does the "right" thing for you if you decide to do nothing. This is an example of nudging the customer in the right direction or in technical speak "Libertarian Paternalism." It allows people to make their own decisions, but presents them with the best option for themselves as the default choice. It's the equivalent of saying "You can have whatever you want with dinner but I'm serving skinless chicken with fresh vegetables."
As product designers, we often expect customers to make the best choices for themselves given enough options. However, as we have seen, in many areas, people don't choose what is best -- they choose what is easiest. There are very few products that customers will engage with and learn how to use the myriad of features. If you still don't believe me, take a look at this New York Times article on the relatively few applications downloaded on the iPhone. Remember that for the vast majority of consumers they won't be changing their default settings, so make sure that the product works great right out of the box.
Arielly points us to the paper "Do Defaults Save Lives?" by Eric J. Johnson and Daniel Goldstein. A default choice is the choice that a customer makes by doing nothing -- e.g., always using Internet Explorer to browse the web because that's the way things worked when you bought your computer (in fact, the Microsoft antitrust case in the late 90's revolved to a large extent around these default choices.)
This startling difference in participation in organ donations is tied to how the question is worded at the DMV. In some countries, the question is worded "Check this box if you want to be an organ donor." In others, the question is worded "Check this box if you do not want to be an organ donor." If the question presumes that you will donate an organ, you will. As Arielly points out, it's not because people are lazy, it's because, the decision is so important that it is paralyzing for people to make for themselves. They shouldn't have to choose what to do -- someone should make the choice for them and "the sysem should just work."
When the people at the DMV created these forms, did they realize that they were going to have the single most important effect on the state of organ donations in their country -- certainly not. But that's the point. To a large extent, the default behaviors that the designer created are those that will stick.
Certain choices, especially those with high stakes and low information are very hard for people to make. Let's look at one product in specific that people need -- 401(k) programs. Logically you would think that the more choices you gave someone on their retirement plans, the more likely they would be to join one of the programs. However, as a company adds additional plan choices the rate of participation actually drops because consumers don't know what to do with all of these extra choices. Richard Thaler and Cass Sunstein talk about this paradox at length in their book Nudges. They discuss an innovative solution to the 401(k) problem with the "Save More Tomorrow Program." The idea is that most people don't change their 401(k) options once they join a company. Therefore, the plan should, by default, change your options for you. So this plan increases your 401(k) contribution at the beginning of each year, right at the time you get a raise. This is around the same time most raises are given out so people don't feel like they are losing any money. The company does the "right" thing for you if you decide to do nothing. This is an example of nudging the customer in the right direction or in technical speak "Libertarian Paternalism." It allows people to make their own decisions, but presents them with the best option for themselves as the default choice. It's the equivalent of saying "You can have whatever you want with dinner but I'm serving skinless chicken with fresh vegetables."
As product designers, we often expect customers to make the best choices for themselves given enough options. However, as we have seen, in many areas, people don't choose what is best -- they choose what is easiest. There are very few products that customers will engage with and learn how to use the myriad of features. If you still don't believe me, take a look at this New York Times article on the relatively few applications downloaded on the iPhone. Remember that for the vast majority of consumers they won't be changing their default settings, so make sure that the product works great right out of the box.
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