The Top 5 Cognitive Biases Product Managers Should Be Aware Of

...and What to do About Them!

I spent the Christmas of 2018 in Owerri, the capital of Imo State, Nigeria in the company of friends. We had travelled for the wedding ceremony of one of us who was to get married a few days after Christmas.?

In line with the restlessness of young men, we explored the city of Owerri and the neighbouring towns and villages. On one of our many explorations, one of us observed that many banners and posters were blue in colour.?

“It seems like blue is the official colour of this state”? the lawyer amongst us asked while pointing to a few blue coloured posters around us.?

“See another blue banner” someone else observed

All of a sudden, almost everyone around us was either wearing clothes or clothes that had a touch of blue or carried a blue item.?

Blue painted buildings. Blue coloured plastic chairs and tables. Blue cars, etc.?

Almost everything within our line of sight was blue in colour.

Since we were all on the lookout for the colour blue, all we saw was blue. In psychology speak, this is called “Confirmation Bias”

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Confirmation bias is part of the laundry list of cognitive biases that plague humans, not just Product Managers.

So, what are Cognitive Biases??

A cognitive bias is simply a systemic deviation from rational judgment. This usually arises due to mental shortcuts that we take to arrive at decisions or judgments.?

Be careful not to always link cognitive biases to errors, negativities, and irrationalities.

Imagine you are in the middle of a forest trying to pick some edible mushrooms. Right on top of a huge pile of a decaying log, you noticed this fleshy Oyster mushroom. But as you rushed to harvest it, you felt this cold slimy thing on around your ankle. Upon turning around to check, you are greeted with the cold eyes of a snake! As you are aware, not all snakes are poisonous. So, do you wait to confirm if the snake around your ankle is poisonous or not??

In instances where it is more important to act than to be 100% right, mental shortcuts come in handy.?

In life and in business people have made brilliant decisions using mental shortcuts/intuitions/experiences, etc. In the same vein, people have also made monumental errors caused by cognitive biases and heuristics.?

Over the years in my product management career, I have witnessed cognitive biases in action in different degrees.?

From the researcher who is unknowingly seeking out pieces of evidence to support his or her preconceived opinion, to the members of a focus group who simply agreed with the position of the first speaker even though they have some reservations deep down!?

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In a flash of a moment as we pointed to one blue-coloured item after another, it occurred to me that we were simply looking out for pieces of evidence to support our initial conclusion that blue was the official colour of Imo State.?

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Below are some cognitive biases and heuristics to be aware of as a product manager:

1. Confirmation Bias

My friends and I exhibited a classical example of confirmation bias. We are essentially seeking out pieces of evidence that supported our initial position while ignoring or suppressing those that contradicted them.?

I have seen this error in judgment rear its ugly head in many instances but more commonly during user research and the interpretation of user data. A manager who favours a particular website design might cite the number of users who spoke highly of it without mentioning the fact that many others disliked it quite strongly too!?

What To Do??

Play the devil’s advocate. Ask for contradicting evidence.?

2. Anchoring Bias

Anchoring bias is the tendency to make a decision based on a reference point earlier provided. The reference point here is the “anchor”?

In his brilliant book “Thinking, Fast and Slow” Nobel Prize Winner, Daniel Kahneman, described an experiment at a supermarket.?

Campbell’s Soup was put on sale at a 10% discount off the regular price. On some days, a sign would be displayed which said LIMIT OF 12 PER PERSON while on other days the sign said NO LIMIT PER PERSON. It was observed that shoppers bought an average of 7 cans on days when the limit is enforced, twice as many as they did without the limit. Many forces might be at play here but the mention of the number 12 caused an anchoring effect on shoppers. A different number would produce a different outcome.?

Restaurants use this trick to make outrageous profits by placing an overpriced item, say a bottle of wine, besides more exotic and expensive alternatives. This is because you are anchored on the more expensive prices that you see on the menu.?

Anchoring bias is very common during price negotiations.?

?What To Do??

Let’s say you are negotiating a contract with a vendor. Be careful when they quote the amount they charged another company. They may be simply trying to anchor you on that arbitrary figure!?

3. Status Quo Bias

How did you choose your retirement plan? My guess is that you chose the default option that your company offered.?

Check the “Settings” app on your smartphone. My guess is that since you bought the phone you only changed very little or nothing at all from the default with which the phone came.?

This is very profound for anyone involved in choice architecture. Whatever option you designate as the default is most likely to be used by most of your users.?

Let’s say you are the Product Manager for a retirement company that offers two plans, A and B. It is in your best interest to designate the plan you wish to sell more of as the default option.?

Status quo bias happens because making a choice is often difficult. Also, a lot of people are scared that they may lose something (loss aversion) or regret a decision that they prefer to maintain the status quo. Other times, the status quo bias exists because taking a different action is simply too hard. This may explain why you still bank with that bank of yours that has frustrated you several times!?

So, Status Quo Bias is “a preference for the current state of affairs”?

?What To Do??

(i). Designate your preferred option as the “default” option and more users are likely to choose it.?

(ii). Regularly review your chosen default options as they may no longer be the optimal choice for you

4. Overconfidence Effect

Time after time, I have seen many product managers miss launch deadlines, user adoption, revenue estimates, etc by a country mile.?

“We will acquire 1 million new users in Q1 alone. I have my strategies mapped out”

“We will deliver that by close of business on Friday”?

“That wouldn’t take me an hour to get done”?

The overconfidence effect is when the perceived ability is way greater than actual or objective ability. This leads people to underestimate the time it will take them to complete a task and to overestimate their level of intelligence especially relative to others. The overconfidence effect is similar to the Dunning-Kruger effect where people with low ability or level of intelligence overestimate.

On October 31, 2020, the Berlin Brandenburg Airport opened. But it was originally planned to open in October of 2011 at a cost of €2.83 billion. After about 9 years of delay, it is estimated to cost about? €10.0 billion.?

?What To Do?

(i) Be wary of estimates; yours and other people’s. Question the methods for arriving at those estimates.?

(ii) Under promise and over deliver?

5. Framing Effect

The framing effect is a cognitive bias that affects how we make decisions based on how the options are presented.?

Typically, the pain of a loss is rated higher than an equivalent gain. This means that when options are worded in two different ways- positive and negative- we tend to avoid the negative option.?

As a product manager, this has implications on how we word our surveys and research questions as well as how we present product information. For example…

Product A: 99% fat-free!

Product B: contains 1% fat!?

Given the option to make a choice, more people will choose Product A over Product B even though the two products contain the same amount of fat.?

What To Do?

(i) Think critically about your choice of words and its potential effects on your users

(ii) Provide as much credible background information as possible to your research/survey respondents?

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Hope you enjoyed the article?