Paper: On product customization and customers willing to pay more

I was reading this behavioral economics paper [PDF] On product customization and customers willing.

It cites how our bias plays its role (endowment effect, IKEA effect) and why credit card companies, E-commerce giants stress on personalized care and recommendation. Why we end up paying more for the customized coffee mug and feel worse if it gets broken.

Three important points:

1. Our willingness to pay more on a customized product depends on the cost.
2. Our earning defines our willingness to pay for customization.
3. We decide on customization in accordance with social trends.

Assumption

An assumption can make us sick. It fosters our brain’s ability to switch things in our or against our favor.

Love, hate, like, dislike all these are made up in our brain. Our bias, experience plays an equal role.

The monkey mind will always have its fight mode open as are our assumptions.

* My bf/gf is cheating on me.
* My manager dislikes my work.
* My employees are not motivated enough.
* My parents don’t care about me.

I keep hearing these. Without a proper investigation, we assume it. We waste several hours and live in pain.

Worry

Marketers and other emerging professions are reaping profit from our worries.

  • Do Yoga for a stress-free day.
  • Avoid sugar or get diabetes.
  • Eating meat causes heart disease.
  • Gym every day to fight obesity.
  • Eating tobacco causes cancer.

These signals and messages receive more attention. Psychologists cite that worry trumps over sex in seeking our brain’s attention.

Jeff Bezos says: your margin is my profit. I would say, your worry is revenue for others.

We pick calls or use an app to avoid our worry. Always be on email is a result of losing a potential customer or meeting invite from a subordinate.

What is the cure for our worry?
Limiting smartphone usage and being more rational in life can help us.

Transparency

Transparency seems to be the least regarded virtue in the startup ecosystem. Everyone stakeholder talks about its positive while forgetting to apply it.

Founders will not tell the team about the real state of fundraising or money in the bank. An investor will never tell you he is not interested in you anymore. An employee planning to quit will just quit.

When not being transparent has so many negatives, what is the reason behind not practicing it?

Ask

Why are shy in asking, be it for advice or buying. Social scientists call it risk-averse tendency. The fear of losing hurts more than trying to gain.

Asking from experts saves our time, no one is judging us. We make things look complicated.

At the same time is it our ego or insecurity which plays its card, I have no clue.

Micromanage

The modern-day organization has gone bonkers, managers have become a surveillance machine. How does it matter what an employee wears and what time he comes and goes back from work? Why does he need to share his social media details or his affiliations to the management?

I thought startups were about innovation and creativity. Nobody likes to live in hydra or micromanaged. It feels uncomfortable. The constant reminder about login hours or being available on slack is illogical.

If a founder cannot trust his team member, the problem is with their process and hiring.

Hype

Hype is synonymous to oxygen in the current startup ecosystem. It is not limited to calling oneself a thought leader or a serial entrepreneur. Everyone is an expert in something, everyone calls himself or team a hustler.

Most founders are under survivorship bias while investors on the hunt for a Unicorn. As a result, everyone gets into cheerleading mode. The positive side of this is good marketing, twitter mentions, and media coverage.

On the negatives, burn out and mental torture.

Like our lives, the most product gets one opportunity. The hype, tweet, podcast mentions can only take your product to a certain level. In the end, it is about solving the pain point of your customers and delighting them with support.

How much of this hype is worth pursuing?

Fearless

Starting a startup is a sign of being fearless. As a founder, you have to ensure that this philosophy gets propagated in every aspect. The hierarchy or pedigree should not hold back radical transparency.

A fresher should get an equal opportunity like anyone else. They will be wrong at times. Encourage them to learn and grow. Their fearlessness will foster creativity and innovation.

Creativity and innovation come with independence. To be independent, one has to be fearless.

advice

This crowded world of smart communication has a side effect. We have experts and advisors everywhere.
 
Open Twitter, and you will find an investor sharing wisdom on running a successful startup.
 
Open Hacker News, and you have some product guy sharing his wisdom followed by 1000 others in agreement or against it.
 
Facebook has retired folks talking about what our government should do to cure hunger and make us economically strong.
 
Instagram has influencers telling you what to wear at marriage or eye brown and lip care tips.
 
At this age and experience of mine one thing, I have realized that getting advice is more harmful than going on own.
 
Barry Schwartz in his book the paradox of choice talks about decision paralysis: too many choices are recipe for disaster.
 
If you are building a product for a certain market segment, advice should come from customers and users. Why are we wasting time reading tweets or blogs from so-called thought leaders?

Screen sucking

I am reading this book: driven to distraction at work. It talks about our screen consumption addiction.

As per a 2006 report: enterprises are losing $200+ billion/year because of distraction at work.

Reading this book reminds me of myself, how distracted and less focused I have been all this while.

Many other books like Hooked, Deep Work talks about the same. Mobile apps, notifications giving us a dopamine rush. We are more like BF Skinner’s pigeon craving for variable rewards.

Past few months I have become more aware of my screen consumption. My mobile has a limited number of apps with notification and sound muted. It has calmed me down.

On my laptop, I have installed apps like Block Site and Stayfocused. It has provided me with more time for myself. My addiction to twitter has come down. I have a limited number of hours in a day to consume social media now.

I am also limiting my screen consumption over the weekend. I wish to be dead on weekends lazying around, reading books and disconnected.

How are you all taking care of your screen sucking addiction?