Design Thinking: Paradox of Choice

Today, product managers are confronted by the “paradox of choice” in design thinking. First developed by psychologists in 2004, this model focuses on the effects of having too many choices. In other words, there is a limitation to the benefits of providing access to several options or decision points. The side effects for having too many choices include:

Depression, Paralysis of Action, Lowered Sense of Satisfaction

When it comes to creating options, product managers must focus their design thinking on finding a balance between choice and happiness. Said differently, it’s the sweet spot between “freedom of choice” and “tyranny of choice.” With the freedom of choice, the idea is to excite customers by considering options. Conversely, the tyranny of choice presents so many options for customers that they don’t know where to start. As a result, product managers must be mindful of the risks of the paradox of choice:

  • Low Retention.

    • Customers won’t return if their first experience presents too many options.
  • Negative Conversion.

    • Customers won’t make a purchase decision if they see too many choices.
  • Consumers Go For “What Is Known.”

    • Customers won’t adopt a new service or product if your product category presents too many established options.

For example, a supermarket tested this concept by placing 24 different types of jam on the shelves. After doing so, sales did not change dramatically. Later on, the supermarket reduced the number of options to 12. As a result, sales jumped 10x in a week. This illustrates how a reduction in choices can drive positive results while providing access to some number of options for consideration.

In addition to streamlining available options, this concept applies to developing complementary products that enhance overall sales. For example, Williams-Sonoma introduced a breadmaker priced at $295. Initially, the new product did not sell through. Later on, Williams-Sonoma introduced a $435 version of the same breadmaker with different trim. While the $435 model did not take off, the $295 model emerged as a popular choice. This illustrates how providing customers with a simple comparison makes it easier to make an informed decision about a purchase. Ultimately, the $295 model’s value was elevated and better qualified due to the introduction of the $435 model.

Looking ahead, the paradox of choice will continue to influence design thinking for product leaders in every category. We need to give customers the confidence that they’re making the right decision. On the other hand, we need to provide customers with the right number of options to allow them to evaluate their decision. The key to success is striking a balance between these two factors in order to create a desirable experience.

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About the speaker
Jeff Warren Migo, Founder and CEO Member

Jeff Warren is the founder and CEO of Migo, the search app for personal transportation that mixes rideshare, traditional taxis, car-share (i.e. Car2Go, ReachNow), bikes, scooters and public transit onto a single real-time mobile app. Prior to creating Migo, Jeff led the marketing team at Expedia for Travelocity and Wotif. During his tenure at Expedia Jeff also created the first marketing team to employ data scientists and machine learning systems, leading Metasearch (i.e. Kayak, TripAdvisor, Trivago) to move from contributing 1% of Expedia's hotel booking volume to over 20% in less than a year. In addition, Jeff held a variety of leadership and corporate development roles at Motorola, where he led the team that introduced Android products.

About the host
Anne Retterer Mindspand, CEO / Founder

Anne Retterer is the Founder and CEO of Mindspand - an online community that enables organizations to list course offerings and provide access to services for local customers. Prior to starting Mindspand, Anne managed the product portfolio at Expedia and established an investment fund for tech companies in Chile with Hambrecht & Quest (now JPMorgan Chase & Co.). Anne holds an MBA from UC Davis and currently lives in Seattle.

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