>>male presenter: First off, I'd like to thank everybody for coming.
I think it's a cool topic that will be of interest to a lot of us.
My name is Mark Rivera.
I'm with the People and Innovation Lab at Google.
We spend a lot of time thinking about what makes people at Google--all of us--happy and
productive.
And so, we are very pleased to have Dr. Sheena Iyengar here, who is one of the foremost experts
on a really broad topic.
That is, choice--how people make choices and what happens to us when we're faced with an
overload of choices, which, I think, it's safe to say all of us usually are.
To demonstrate this, we just took her to lunch at Charlie's.
[laughter]
One of the difficult choices we face on a day-to-day basis.
Sheena wrote a book called "The Art of Choosing," which has been an extraordinary hit.
Amazon, in 2010, it was one of the best books of Amazon.
It was the finalist for the Financial Times Book of the Year.
Her work has been covered in the New York Times, the Wall Street Journal, books like
Malcolm Gladwell's "Blink."
She's been a guest on CNN, CNBC, CBS, and now at Tech Talk at Google.
So, please join me in welcoming Sheena.
[applause and cheer]
[pause]
>>Sheena Iyengar: Well, thank you for having me here today.
This is my first time ever coming to Google.
And the place really is quite cool, particularly when you see those, the volleyball pit.
It was really quite cool.
And when I went to Charlie's, I actually commented to my assistant that there really are some
benefits to being blind given that I couldn't see all the choices.
So, I didn't actually--.
[laughter]
So, as you know, I have been studying choice now for about 20 years.
And I essentially look at three big questions--and those are all covered in the book--which is
why do we want choice?
What are some of the things that affect how and what we choose?
And what are some things that we can do to improve our choosing experiences and choice
outcomes?
Now today, I'm going to talk about a particular modern day dilemma that has to do with choice.
And this dilemma is, perhaps, the biggest dilemma that we all face today.
And it relates to all three of these questions.
Now, as I talk about this modern day dilemma, I'm going to need your help.
So, there's going to be times when I'm gonna have some questions for you and I'm gonna
wanna know your answers.
So, since I'm blind, when I ask you a quick question, only raise your hands if you wanna
burn off some calories.
[laughter]
Otherwise, when I ask you a question, I'd appreciate it if you'd, if your answer is
"yes" just clap your hands.
So, are you ready to hear about the modern day dilemma of choice?
[clapping]
Thank you.
So, this dilemma that I'm referring to has been referred to by many, many different names
now over the years.
It's been studied now for over ten years.
The first time I got wind of the fact that it was actually being referred to by many
different names was when I met the head of Fidelity Research.
And he described to me this problem.
In fact, he was describing to me my own study--not that he knew that--and then he even gave me
some slides that described this problem very well.
They were actually better than my slides, so I just took them.
[chuckles]
And he called it the "narrow it down" problem.
Then there was the time when I met with senior management in McKinsey and they described
the same problem, the same study, the same results.
And they had an internal memo, which they titled, "The Three by Three Rule."
Now, my favorite description of this particular problem was the one offered by Rush Limbaugh.
He said it was the stuff of pointy headed intellectuals that didn't know the first thing
about the marketplace.
Now, I figured I was in good company if I was being skewered by Rush Limbaugh.
You have probably heard about this problem.
It's most often referred to in the media as the "jam" problem.
It was first identified and discovered right here in the Bay Area, in the South Bay.
So, I wanna now tell you the real story behind the jam problem.
When I was a PhD student at Stanford University, I used to go to this upscale grocery store.
And it was called Draeger's.
In those days, it was a rather unusual store.
I mean, nowadays, you have stores like it all over the country.
In those days, it was truly unique.
You went there.
There were 250 different kinds of mustards and vinegars and mayonnaise.
Over 500 different kinds of fruits and vegetables.
They even had 12 different kinds of bottled water.
Of course, I noticed you guys had three different kinds here at Charlie's cafe.
I mean, who even thought of--.
I mean, distinguishing between water.
Here is their olive oil aisle.
They had 75 different kinds of extra virgin olive oil, including those that were in a
locked case that came from a thousand year old olive trees.
[laughter]
Now, I used to go to this store.
I liked going to this store.
And one day, I asked myself a rather strange question.
How come you never buy anything?
Now, true.
I was a poor graduate student, but I could afford some things in that store.
So, I decided to pay a visit to the manager.
And I asked him whether this model of offering people all these choices was really working.
And he pointed at the bus-loads of tourists, usually with cameras in hand, and said, "Yeah.
It's working."
We decided to do a little experiment.
We chose Wilken and Sons, it’s a jam.
Oh.
Here's the jam aisle.
And they had 348 different kinds of jam.
We chose Wilken and Sons, the Queen of England's brand, to do our little experiment with.
So, we set up a tasting booth right near the entrance of the store.
We either put out six different flavors jam, or 24 different flavors of jam.
And now we measured two things.
First, in which case were people, entering in the store passing by, more likely to stop
and sample some jam?
Second, in which case were people more likely to take the opportunity and use the coupon
that we just gave them for free--giving them one dollar off of a bottle of jam--in which
case are they more likely to buy a jar of jam?
Now, more people stopped when there were 24--60 percent--as compared to when there were six--40
percent.
Well, when it came down to buying behavior, we saw the opposite effect.
Of the people who stopped when there were 24, only three percent of them actually bought
a jar of jam.
Now, by contrast, of the people who stopped when there were six, 30 percent of them actually
bought a jar of jam.
Now, if you do the math, people were at least six times more likely to buy a jar of jam
if they encountered six than if they encountered 24.
So, although people were more attracted to the larger display, when it came down to actually
making a choice, they were more likely to choose when they saw fewer than when they
saw more.
Now, that study was published in 2000.
And since then, there's been over a decade of research that has looked at this jam problem,
which I'm gonna call the "choice overload" problem, across many, many domains.
Jams to chocolates to speed dating to any kind of dating type choices, political choices,
investment choices, health care choices, job search choices, in lots of different domains
of choice, ranging from the trivial to the consequential.
And essentially, we observed three negative consequences of offering people too much choice.
I'm gonna summarize these results.
And keep in mind that while I'm biased towards describing you results from my studies, many
of my colleagues in the field have also looked at this phenomenon.
First, consequence.
The more choices people have the more likely they are to delay or procrastinate.
Now, this is a good thing when the choice is whether or not to buy jam.
That's probably really good for my waistline.
The problem is that we delay and procrastinate even when it goes against our best self-interest.
So, I'm gonna give you one case of a situation where clearly, we should not be delaying or
procrastinating.
At least most of us would agree with that.
Let's take the specific case of retirement savings decisions.
I had an opportunity to do a project with Vanguard.
We looked at 800 thousand Americans from 657 institutions, drawn from 64 different industries.
And we looked at whether the number of funds offered in a retirement savings program--the
401K plan--was correlated with participation rates.
And we found that it was.
So, here's a snapshot of the graph.
So, for plans that offered you about a handful of choices, participation rates, some were
in the 70th percentile.
Still not great.
But by the time you got to plans that offered you 60 options, participation rates had dropped
to about 60 percent.
Notice how the big trend in retirement savings industry now is to reduce, reduce, reduce.
Bring it down to about three options.
So, first consequence.
The more choices people have, more likely they are to delay and procrastinate even when
it goes against their best self-interest.
Second consequence.
The more choices people have, the more likely they are to make inferior choices, worse choices.
So, let's just stick to the 401K decision.
The more choices people have, even when you look at the people that actually chose to
participate, the more choices they had, the more likely they were to put all their money
in money market accounts.
We all know that's a dumb decision.
That doesn't even grow at the rate of inflation.
The more choices they had, the more likely they were to entirely avoid equities.
We all know that when you're talking about long-term financial growth, that doesn't make
sense.
Sure, in a one-off bad year, but not from a long-term future financial perspective.
We also know that the more choices people have, the more likely they are to exhibit
inconsistent preferences.
And that happens even on important domains like romantic choices, job search choices.
Third consequence.
The more choices people have, the more likely they are to be less satisfied with that which
they have chosen.
Why?
Because you're constantly saying, "What if?"
[laughter]
So, here's one of my favorite examples--just because food's on the mind right now.
So, imagine either being shown six different kinds of Godiva chocolate or 30 different
kinds of Godiva chocolate.
And the only thing you have to do is pick a chocolate, eat it, tell me how delicious
it is.
Turns out, the same chocolate selected from six is regarded as less, as more delicious
than when it was chosen from 30.
Now, how anybody could consider any chocolate less delicious is beyond me, but--.
[laughter]
As they're walking out the door, now here they had this wonderful experience.
They got to eat a free chocolate.
As they're walking out the door, they now have a choice.
They can either get paid for this highly entertaining activity or they could get a free box of chocolate.
The people who saw six were four times more likely to go for a free box of chocolate,
more satisfied with the choice.
So, why do we experience choice overload?
Right?
After all, the more choices we have, the more opportunities we have to find the best choice,
the perfect match.
Well, let's now think about the causes of choice overload.
We've always known that our eyes are too big for our stomachs, but it turns out that our
eyes are too big for our minds as well.
We have cognitive limitations.
In 1956, the famous psychologist George Miller, came out with a very simple idea.
And that idea still holds true today.
He came out with this paper called "The Magical Number Seven, Plus or Minus Two."
Very simple idea.
We keep wanting to attack this idea and say, "No, it's too simplistic."
But it keeps coming up.
And here's how the idea goes: We have some basic limitations of our brains.
If I ask you to rank order from best to worst for a whole bunch of things--taste, smells,
looks of things--no matter what it is, beyond about seven, I just get confused.
Things I thought I liked better, I like less well and vice versa.
If I ask you to keep track of some things in your minds--words, numbers, pictures--and
I don't give you the opportunity to rehearse or memorize that information, beyond about
seven, the information just starts to crumble away.
Now, if you think about it, what is a choice?
It's a bundle of information.
What are you doing when you make a choice?
You're comparing bundles upon bundles upon bundles upon bundles of information.
This can be quite taxing on the mind.
Now, I know what you're thinking.
"OK.
OK.
Yeah.
I've seen some context in which I get pretty overwhelmed with a lot of choice, but you
know what?
I really like having a lot of choice.
What about that time when I loved that rare song on that rare CD?"
So, when do we benefit from having more choices?
And the answer to that lies in our level of expertise.
So, let's take a cognitively challenging activity, like playing chess.
Right?
So, let's look at the youngest chess master in the world, Judit Polgar.
Now, can you imagine Judit Polgar when she's deciding that next move?
She's not looking at just the next move, of course.
She's gotta look at least eight moves ahead of where she is right now.
If she were to contemplate every single move and every single combination of moves that
she has available to her at that moment, it's more than the number of stars in the galaxy.
And yet, she makes that decision, in the words of Malcolm Gladwell, "in a blink of an eye."
And how does she do that?
Does she have this supercomputer in her brain that just deals with all these choices?
No.
She sees that chess board, not as made up of individual pieces, but made up of lines
of attack as patterns.
Her expertise allows her to organize, prioritize the pieces on that board such that she can
quickly dump out the irrelevant options and zero in on that handful of most relevant options.
It's not that she has a better memory bank.
If I were to take that chess board and rearrange it in a way that doesn't make sense, it wouldn't
naturally occur in an ordinarily occurring chess game, she won't do any better than any
of us at rearranging and re-memorize and re-putting together that chess board.
[pause]
So, if we have expertise in the domain, which means that we've learned about our options,
we've learned all the patterns that are available to us, we do better.
We can handle more choices.
[pause]
So, if you think about the modern day choosing environment, who is it best suited for?
Well, it's ideally suited for the quote experts on the choice domain.
So, let's say you wanna buy a car.
If you know that you wanna buy a car that's 30 thousand dollars, or under 30 thousand
dollars, it has a sun roof, has some extra cargo room space in the back, even though
you don't know exactly what car you want, simply having that information about what
your preferences are will make it a lot easier for you to dump out all the, a whole bunch
of irrelevant options and figure out what's your smaller choice set.
So, for those kinds of things, it's great to have a lot of choice.
The problem is that expertise is not that scalable.
Just because you're an expert in classical music, doesn't mean that you become an expert
in rock music.
And so therefore, it takes time to develop expertise.
And we're limited in our capacity to develop expertise on domain after domain after domain.
But as customers, we constantly ask of our choice providers for more and more and more
choice, regardless of whether it's a domain in which we have expertise or not.
Now, this problem can become quite acute for businesses on whom the pressure to provide
a lot of choice is acute.
I wanna share with you a rather mundane example, which I think is pretty powerful, precisely
because it's so mundane.
So, as a girl, I sometimes like to go to a manicure salon and get my nails done.
As you can imagine, as a blind person, getting your nails done, picking out a color is kind
of an interesting dilemma.
[laughter]
Right?
I can't see the colors.
I can't see what other people are choosing.
So, I gotta figure out what color I'm gonna pick.
And so, I rely on other people's opinions.
Now, one time, I was in the beauty salon and I was choosing between two very light shades
of pink.
Of course, everybody here knows you would never walk into a manicure salon that offers
you anything less than a hundred different bottles of nail polish color, right?
That's just not enough.
That's just not a worthy beauty salon to get your nails done in.
All right.
So, here I am choosing between very light shades of pink.
One is called "Ballet Slippers" and the other one is called "Adore-A-Ball."
[laughter]
Now, how many of you here would say that I should definitely go for Ballet Slippers?
[clapping]
OK.
How many of you here would say I should go for Adore-A-Ball?
[clapping]
That's pretty much even.
Maybe a little less on the second round.
I don't know, but about even.
Anyway, I don't think that would help me make the choice any easier.
So, here I am trying to decide between these two.
So, I ask these two ladies.
The one lady says, "Oh, you definitely have to go for Ballet Slippers."
"All right.
Well, tell me about this color.
Why should I choose it?"
"Well, it's a sheer pink.
It'll look really elegant on you."
Hey, that sounded nice to me.
Sure.
Elegant sounds good.
And the other lady chimes in and says, "No, no, no.
You really need to choose Adore-A-Ball."
"Why?
What does it look like?
How is it different?"
"Hmm.
It's a light shade of pink.
It'll look really glamorous on you."
[laughter]
OK.
They both sounded pretty light to me.
I don't know the difference between sheer and light.
And then there's glamorous and elegant.
So, I tried to get these two ladies to explain to me the difference between elegant and glamorous.
And about the only thing I could get them to agree on was that if I could see them,
I would know the difference.
[laughter]
So, I wondered about that.
I decided to bring these two bottles into the laboratory.
I took the labels off and I invited a whole bunch of undergraduate women.
And I asked them to tell me which one they would pick.
Fifty percent of the women that came in accused me of playing a trick on them--
[laughter]
that it was the same color in these two bottles.
We do have suspicious undergrads, but please.
Of the other 50 percent, more of them chose Adore-A-Ball.
Now, when I put the labels back on and invited a whole bunch of other women and asked them
which one would they pick.
Now, more of them chose Ballet Slippers.
Who says that a rose by any other name would have actually not smell differently?
So, why is this happening?
Well, this brings me to the second cause of choice overload, which is that so often, the
differences between the choices are so small.
And yet, we feel compelled to deliberate on those differences and figure out which one
is the one I should choose?
And that we are reluctant to simply roll the die and say, "Eenie, meenie, miney, moe."
We wouldn't want to be caught alive doing something like that.
That is because when we're making a choice today, whatever it is, what we're eating,
what we're wearing, what car we drive, what music we listen to, whatever it is, it's no
longer just about function and value.
What we buy says something about who we are.
So, when we make a choice, we're not just asking ourselves, "What do I want?"
What I'm asking myself are some questions that are much more complex than that.
What I'm really asking myself is, "Who am I?
And given who I am, what do I want?
And given what I want, well, what should I choose?"
Expressing yourself in this way allows you to assert your individuality, to distinguish
yourself from other people.
It even allows you to custom make yourself, at least your physical self these days.
And yet, this kind of expression can become rather overwhelming and frustrating as the
number of options are proliferating beyond our capacity.
You see, though we think of choice as an active individuation, we rarely choose alone.
By this, what I mean is that every act of choice is an act of communication.
Like body language, it's generated by you--sometimes consciously, sometimes subconsciously.
And each time I make a choice, I'm sending a message to you.
Most often, the message that I want to send to you is that, "Oh, look.
I'm unique.
But you can still relate to me.
I'm an individual, not an outcast."
Well, how unique are we really?
My colleague and I started to find out.
We asked people to tell us how much they liked a whole range of things, like what names would
you like to call your child to sunglasses to ties, shoes, etc.
We asked them how unique are these things, how much do you like these things, how much
do you think other people would like these things.
To give you a sense of what the choices were, names ranged from Mike to Addison to Nehemiah.
Ties went from the standard black or red to stripes and paisleys, all the way on up to
neon orange leopard prints.
[pause]
Well, everyone believed that they were more unique than everybody else.
Everyone believed they liked more unique things than everybody else.
Fact.
Everybody liked the same things.
Nothing too bland.
Nothing too bizarre.
Just right was slightly unique.
One participant really put it well.
When you're wearing a suit, the tie is the one thing you have to show off your taste
and personality.
Some of these ties have way too much personality and not enough taste.
It's just not right to wear an avant garde tie.
So, although we aspire to be unique, we still wanna be understood.
Yes, we want to stand out from the majority, but usually not in a way that makes us a member
of a glaring and lonely minority.
Which brings me to the third cause of choice overload, which is that today, choosing has
become a high-stakes exercise.
We have so much pressure put upon us to know what we want, to express what we want, and
to make choices that are in line with what we say we want.
As Nicholas Rose wrote in his book, "The Powers of Freedom," "Modern individuals are not merely
free to choose, but obliged to be free, to understand and enact their lives in terms
of choice.
They must interpret their past and dream their futures as outcomes of choices made and choices
still to be made.
Their choices are in their turn, realizations of the attributes of the choosing person,
expressions of personality that reflect back on those who have made them."
So, when we're making a choice, it's actually even more complicated than I described a few
minutes ago.
It's not just that you're asking yourself, "Who am I, and given who I am, what do I want?
And given what I want, what should I choose?"
In addition to all of that, I'm also asking myself, "If I pick that, what does that say
about who I am and what I want?
And is that sending the right message about who I am and what I stand for?"
That's a huge burden.
Now, think about it from the perspective of you, the choice provider.
You've got quite the dilemma here, right?
You've gotta give people lots of choices because people need to feel that they found the exact
fit for their unique selves, even though they're really not that unique.
And yet at the same time, if you give them too many choices, then they might procrastinate
or get less satisfied or make bad choices for themselves.
So, how do help them out?
What I wanna do now is show you just a few techniques drawn from my research groups.
We actually test out quite a few techniques.
I wanna share with you three techniques today--three low-cost techniques that seemed adaptable
to the Google environment and give you some examples of how to think about these.
Now, I should preface all of these techniques by saying the following.
I don't think people want a lot of choice.
People will say they want a lot of choice, but I don't think that's what they really
want.
What they really want is a better choosing experience.
They want to feel competent during the choosing process.
And they want to feel confident that what they have chosen is a quote "good choice."
That's what they want.
And once you frame it that way, it gives us a little more flexibility.
So, the first technique.
Cut.
I know, I know.
This doesn't seem to be very popular around here.
We don't like to hear the word cut, but you know what?
Less really is more.
When Proctor and Gamble went from 26 varieties of Head and Shoulder down to 15, they actually
saw a rise in sales of ten percent.
When the Golden Cat Corporation got rid of their ten worst selling cat litter products,
they actually saw an increase of revenues of 87 percent that came from a drop in costs
and an increase in sales.
Think about grocery store shopping.
I told you about Draeder's, right?
Well, do you know the eighth largest retailer today is ALDI.
It's a grocery store.
Last year, it grew by five times the rate of all the other grocery store chains.
Now, the average grocery store today offers you 45 thousand products.
The average Walmart today offers you a hundred thousand products.
ALDI?
Fourteen hundred.
Only one kind of canned tomato sauce.
But people trust that it's a good value tomato sauce.
And I know you guys are on the online world, so here's an online study.
This is an online grocer, doesn't wish to be named, done by my fellow colleague at Harvard.
Now, what they did, this online grocer decided to reduce the number of choices that they
offered.
Fifty-four percent of the choices were removed.
Seventy-five percent of the households ended up buying more.
And these were of households that were buying before as well.
They saw an overall sales increase of 11 percent.
Now, let me give you some specifics.
If they cut brands, there was a modest positive increase in sales.
If they cut flavors per brand, that's when it actually hurt sales.
Now, look at brand times size.
Brand times size.
What I mean by that, that's like a six-pack of Coke, two-Liter bottle.
I add 12-pack.
Removing the 12-pack dramatically increases sales.
That size times brand choice additions just don't help us.
We just get confused.
We stop buying.
That's what's going on here with these kinds of choices.
Now, a lot of times we also believe that, you know luck, choices are really useful because
it also, it doesn't just help you in terms of sales, but it also helps you become more
creative, particularly in the performance arena.
Now, let's test that.
I wanna show you one of my favorite studies.
It wasn't done by me, but I love the picture so I use it.
So, imagine a bunch of expert knitters.
They've been asked to make a scarf, to knit a scarf.
This is what they do for their profession.
They're either given twelve pieces of yarn or six pieces of yarn, and given one week
to make a scarf.
They know they're gonna be judged by other knitters on how creative these are.
And they know they're gonna be judged by potential buyers on how creative they are.
Here's what the scarves look like when they have 12 pieces of yarn.
Here's what the scarves look like when they had six pieces of yarn.
Hey, what do you guys think?
You like twelve better?
Is twelve more creative?
What about six?
[clapping]
I'm hearing more enthusiasm for the six.
And we see this across many different domains now that if you give people a lot of choices,
even when they're experts in the domain of creativity, it doesn't seem to be helping.
Now, you guys, though, also give people choice.
You give people choice in a rather interesting way, which is that you allow your employees
to take 20 percent of their time to do something creative.
And you might say, "Well, is it that bad?"
Well, it's not bad.
Because we've put a bandwidth around it.
Notice how 50 percent--actually you guys can give me the real numbers on this--but notice
how a lot of different ideas that come out of new product inventions that come out of
Google came out of that 20 percent time.
Things like Gmail that we can't actually imagine a world without at this point.
Why does that work and why does the 12 pieces of yarn not work?
The great French polymath, Henri Poincare, once said, "Invention consists of avoiding
the constructing of useless combinations and consists of the constructing of useful combinations,
which are an infinite minority.
To invent is to discern is to choose."
Now, let me propose the corollary, which is that to choose is to invent, so that as we
learn about, as we develop expertise in a given area, we are able to be in a better
position to best construct those most useful combinations, rather than being distracted
by these external stimuli.
We can construct what's most useful.
So those are some thoughts on "cut."
Now, there are times when you're gonna say to me, "Look.
I've cut as much as I can.
I just can't cut anymore.
I need to offer people all these choices because they really are different."
So, my first rule of thumb, by the way, get rid of all redundant, irrelevant options.
So now, these choices really are different.
What do you do?
Brings you to the second technique: categorization.
Now, categorization works in some pretty interesting ways.
Take a magazine aisle.
I picked this just because it's a cognitively fairly intensive task.
You have magazine aisles up and down the Wegman's grocery stores.
They offer anywhere from 331 to 664 magazines in their aisle.
Their aisle is identical.
So, all they're doing is double, triple, quadruple slotting the same magazine when they have
less.
And what we were interested in was in looking at to what extent does the number of magazines
affect people's perceptions, their satisfaction, in sales.
And what we found was quite interesting.
If I ask you how many choices you have in front of you, you don't know the right answer
to that.
The correlation between people's estimates of how many choices they thought they had
in front of them and how many actual choices there were, was less than 0.05.
It was actually really low.
That's because we don't actually sit around, like stand around there, and count, like oh,
one, two, three.
We just don't do that when you're talking about that many choices.
What drove people's perception of how many choices they had, whether they were satisfied
with the choices present, whether they were likely to buy, was not number, but how it
was arranged.
So, if you take 400 magazines and you divide it up into 25 categories, and you take 600
magazines and you divide it up into 10 categories, people see the 400 as offering them more than
the 600.
Why?
Because categories become the cue for variety.
And we can handle more categories than we can handle choices.
I can handle up to 20, 25 categories because categories are cues.
Like, not like.
Dump out categories fast.
I'm not so quick to dump out choices, but I'll dump out categories.
And I'll say, "Yeah, OK.
That category is relevant to me."
Now, per category, you wanna make the number of choices small.
And I can't give you a scientific number on that.
But what we're seeing is that depending on how complex the choice is, somewhere between
about three to about ten seems to be a good range per category.
Now, I want you to look at this picture of jewelry displays.
One is called "Jazz."
The other one is called "Swing."
If you think the collection on the left should be called Jazz and the collection on the right
should be called Swing, clap your hands.
[clapping]
OK.
Some people.
Collection on the left, Swing.
Collection on the right, Jazz.
[clapping]
Well, more people said that.
And by the way, you guys are right.
That's how they call it.
That's how Tiffany labels them.
But you know what?
This is a horrible way to categorize.
I mean, gimme a break.
Does it really look like this is Jazz versus Swing?
Does that really tell you anything about what you wanna buy and put on your ears or body?
The category names should not be informative to the choice-makers.
They should be informative to the choosers.
[pause]
So, one of my favorite examples of really good categorization is this store called Best
Sellers.
Maybe some of you went to this store before it got bought out by A and P. It was rated
as the number one wine shop by the Wine Enthusiast magazine in '09.
It only offers you a hundred different bottles of wine, divided up into eight categories.
The category names really make sense to me.
They're like, fizzy, juicy.
OK.
I get that.
Per category, they only give me about ten options, a little over ten options.
And now look.
If I can zero in on one category, well, now I'm willing to engage.
I'm gonna engage and maybe learn about the various wines.
Maybe even read all the information that the sommeliers want me to read so I can look smart
and feel smart when I pick up that bottle of wine and I'll take it to my boss' place.
Because when we make a choice, it's not just an expression of our preferences.
It's not like we know our preferences and then we go in and make a choice in line with
that.
So often, the choosing process itself teaches us what our preferences really are.
So now, let's look at a third technique.
It's what I call "conditioned for complexity."
So, this is a technique that, I think, works well for really complicated choices, like
the customization problem.
And I wanna show you a really complicated study that was done with a bunch of colleagues
of mine.
One of them will be actually here tomorrow, Jonathan Levav.
And here's what we did.
This was done with a German car manufacturer.
And this German car manufacturer wishes to be unknown.
So, this particular car company allows people, residing in Europe, when they buy this car,
to completely custom-make their car.
So, they make an average of about 60 different decisions.
So, they're gonna decide.
So, once you decide on a particular model of car, now you have to make a whole bunch
of decisions about this car.
So, you onto the computer and you even have to click on different decisions.
And these decisions vary in the number of options that they offer you, like gear shift,
you've got four options.
Interior decor, 13 options.
Exterior car color, 56 car colors.
So, here's what they agreed to do.
They varied the order in which the decisions were presented.
So, half the customers went from high choice decisions--56 car colors--to low choice decisions--four
gear shifts.
The other half went from low choice decisions--four gear shifts--to high choice decisions--56
car colors.
[pause]
Notice that they're all seeing the same amount of choice.
The experience ought to be identical.
The amount of information that I'm asking them to shove into their brains is ultimately
the same, but it will not be experienced in the same way.
Now, how are we gonna test that?
Well, per decision, you can hit the default key, which means you'll automatically get
whatever happens to be the default.
So, we reasoned, "If I see you hitting that default key a lot, that means you're getting
disengaged.
You're getting tired."
You know, look.
If you're talking about spending over 30 thousand Euros of your hard-earned money and now you're
just gonna hit the default key?
[laughter]
So, here's what you get.
High to low.
They start off engaged.
Then they start hitting the default.
Low to high.
There's hanging in there.
[pause]
Now, we also asked them after they paid down over 30 thousand in Euros, how satisfied were
they with their car that they just purchased?
And from the perspective of the vendor, they want you to be happy and contemplating your
next car.
High to low.
Not so happy.
Low to high.
Much happier.
Now, I've shown you this one.
We actually did this with quite a number of other different decisions, but I picked this
one 'cause it's probably the most complicated of the decisions that we've looked at.
So, what's happening here, like, why should it make a difference?
Well, think about it this way.
You start off with a simple decision because it only has a few choices.
You're learning how to choose.
You're learning how to form preferences.
Even though the decision of which gear shift doesn't actually teach you anything about
your preferences of interior decor, by the time you get to 13 choices, you're getting
better at ruling out alternatives and figuring out how to choose and how to form preferences.
By the time you get to 56 car colors, you're excited.
You wanna see what this end product looks like.
You are engaged.
You are willing to invest.
So, starting off in the shallows helps prepare you for the complexity.
Teaches you how to choose.
Teaches you how to deal with complexity.
Teaches you how to form preferences.
And it keeps you motivated.
Remember I referred to the three-by-three rule earlier on that McKinsey has.
It's another form of this.
They are dealing with complicated products, with high-end clients.
They understand that they're clients don't know their preferences.
So, what do they do?
They structured the choice in three tiers of three choices.
That's how they--.
That way, people understand how they made their choices and how they went from one set
of choices to the next set of choices to the next set of choices.
When you look at investment brokers and you look at what are the, what is the commonly
reported technique of the top ten percent of investment brokers as to what do they do?
They will also tell you a version of the three-by-three rule.
Right?
How do you get people to understand what their risk preferences really are and what their
investment style is going to be, is using some version of three-by-three because some
people don't actually know upfront who they really are and what kind of an investor they
wanna be.
Back to the Bay Area.
Let's compare Apple versus the Dell choosing experience.
Notice how Apple has very much this flavor of being a kind of company that offers products
that's about you, that's supposed to speak to you, that's about your identity.
Well, guess what.
Look at how many choices they offer.
Two laptops, two desktops, and then within those, a series of two choices that are in
two buckets.
Look at Dell.
Nine versus eleven.
So, choice can be linked.
Giving people less choice can be linked still to a sense of identity, a sense of uniqueness.
So, let me wrap up here.
I have talked about this phenomenon known as choice overload.
I've described three consequences of that.
Three consequences being more likely to disengage, lower quality, less satisfied.
Three causes of choice overload.
And then, I finally described you three techniques for trying to mitigate the problem of choice
overload--cut, get rid of the irrelevant, redundant, extraneous alternatives.
Second, categorize.
Categorize it in a way that makes the differences between the choices meaningful.
Third, condition for complexity.
Start people off easy.
Think of that choosing exercise as one in which people need to learn what their preferences
are and how to choose.
Now, I know I've focused so far on the domain of how do you deal with, how do you offer
choosers, from the perspective of choice providers, choices?
I mean, present that.
But look.
Choice and the management of choice affects all of us no matter what we do, whether we're
a choice provider or whether we're something else, we're all constantly trying to manage
choices.
So, what I wanna now do is have you contemplate, or have you actually do an exercise that helps
you think about how to better manage your choices in your everyday work lives.
We make a lot of choices in our every day work lives.
People report making hundreds upon hundreds of choices per week in their life.
When CEO's were recently followed, they found that CEO's in an average week engaged in about
139 tasks that were made up of many, many, many sub-choices--an average of about five
times as many choices as there were tasks that they engaged in.
That's not what's so surprising.
Fifty percent of their decisions were made in nine minutes or less.
Only about ten percent of the decisions that CEO's made did they give an hour or more of
their time.
Now, think about your time.
Do you know what makes it into the nine minute category versus the one hour category?
Are they the right choices?
So, what I'd like you to do now is do a little exercise with me.
It's on your chairs.
This is an exercise that I do with a lot of executive programs.
If you remember nothing else today, I just want you to take this exercise with you and
do it twice a year.
People say it's the best thing they've done for themselves.
And in a matter of weeks, I'm gonna have an app posted 'cause I know you guys like apps,
right?
There's going to be an app posted on my website and I will send you guys the link to it so
you can do it next time as an app.
Now, in reality, you should take about 45 minutes to do this task.
I only have what, ten minutes?
How many minutes are you gonna give me?
>>Male presenter: Ten minutes.
>>Sheena Iyengar: OK.
I got ten minutes to do this task.
What I'm going to do is really just walk you through it just to make sure you've got the
understanding of how to do it, give you a flavor of it.
And then I want you to later do this right.
All right.
So, first, jot down tasks that you do in a given week at work.
[long pause]
[bell dings]
All right.
Now, look at that list.
Think about what you can cut.
You should delegate it out.
It's extraneous.
It's a waste of time.
It's irrelevant.
You shouldn't be doing it.
Try to cut at least 50 percent.
[long pause]
You know, when I noticed that cafe that only offers you one choice with what to eat for
lunch, I knew instantly that that would absolutely be one of the choices I would cut from my
life working here.
Not gonna go to the cafe that offers me choices.
Just gonna go to that cafe that gives me no choice.
[laughter]
[long pause]
[bell dings]
Now, take the choices that you have remaining.
People are always giving me sass about not wanting to cut.
They're convinced they can't cut.
OK?
You'll see what I mean as we go further down and you'll go back up and wanna cut.
OK?
So now, take what you've got and ask yourself, "On which of these tasks is the frustration
after completing it higher than the reward?
Which of these tasks is the reward higher than the frustration?"
Frustration is higher than reward?
Nine minute category.
Your goal there is "I just wanna prevent disaster."
Let's find some quick formulas, simple solutions to prevent a disaster.
Reward higher than frustration?
One hour category possibility.
[long pause]
[slam]
[bell dings]
Now what you do, is you take all the ones that are in your one hour category potential
and now you categorize them.
Try and make it not more than five categories.
But see how many you've got.
[long pause]
[audience member coughs]
[bell dings]
How many categories are we seeing here?
Just call them out.
>>male #1: Five.
>>Sheena Iyengar: Five.
Two.
Any others?
Three.
Anything higher than five?
OK.
So, I guess I'm hearing somewhere from two to five.
Now you wanna ask yourself is where is your value added to yourself and to the organization
highest?
On which category is your value added the highest?
That goes to the top and you rank order it from highest to lowest in terms of value added.
And that's how you know where to spend more of your time.
[pause]
OK?
So, I would encourage you to really do this, take some more time doing this so that you
can really do it seriously.
The two main observations that people have when they do this is first, they realize some
things that they really should be cutting.
And it's helpful to do it every few months because it just becomes a good reality check.
The second observation that people have is they'll realize that, "You know what?
I'm just not spending the time on the stuff that matters more, that's more valuable.
I'm spending way too much time on the crap."
So it helps them re-balance their time and re-balance their time more in favor of the
priorities.
Now we all know the Pareto rule, right?
The idea that look, 80 percent of the rewards I'm gonna get in life--.
I'm sorry.
Twenty percent--.
No, sorry.
Eighty percent of the rewards I'm gonna get in life come from 20 percent of my efforts.
Which means, by the way, that 80 percent of the time you spend doing your stuff is wasted.
But of that 20 percent that's gonna lead to your 80 percent reward, you wanna make that
really, really, really powerful, really, really meaningful.
It's gotta be the stuff that really matters, where your value added is the greatest.
Remember the Pareto rule when you are trying to allocate your time and your energies, where
your thought processes should be, where all your efforts should be going.
So, I want you to do this exercise.
By the way, can I get a commitment from you guys that you'll do it in the next 48 hours?
Is that possible?
How many people are willing?
[clapping]
All right.
That's pretty good.
All right.
I'm gonna hold you to it, by the way.
[laughter]
As I said, there's gonna be an app posted and I'll send you the link so that next time
around, you don't have to do it by hand 'cause I'm sure you guys don't do anything by hand.
[laughter]
Now, if there's one message that I wanna leave you with today--.
There's two things that I don't want you to forget.
I don't want you to forget this exercise.
And I don't want you to forget the one message of today.
And that is that if we are to get the most from choice in our lives, I think it is necessary
that we should be choosy about choosing.
And that is one of the essential keys to the art of choosing.
Thank you very much.
[applause]
Do I have time to take questions?
>>Male presenter: Yes.
Does anyone have any questions?
>>female #1: So, I had a question, if, when you, the list, is it work related tasks or
life tasks?
>>Sheena Iyengar: I would do them separately.
I told you to do it work-related.
But I would do work and life separately.
If you try to do both at the same time, you'll be overwhelmed.
[laughs]
>>female #2: Do you have any techniques for like, breaking addiction to choice?
Like, if you're just like, "I must pick the absolute best restaurant to get into tonight"
or like you're really, you just can't stop trying to backslide?
Any tips on that?
>>Sheena Iyengar: I'll tell you what I do.
I ask myself, "Is this choice worth making?"
I always ask myself that.
If it's not, I'm not dedicating any energy.
So, look.
I love wine.
I really love to have a glass of wine with dinner.
But do you know that I never choose my wine?
I joined the New York Times Wine Club.
And every month, eight bottles are sent to my house and I have no idea what's coming.
[laughter]
And it's on average great.
>>female #3: [inaudible].
>>Sheena Iyengar: Oh, by the way.
I never choose my restaurant.
[laughter]
>>female #3: You mentioned that when you [inaudible].
>>Sheena Iyengar: Yeah.
Yeah.
>>female #3: [inaudible].
>>Sheena Iyengar: Usually, you are better off not giving people--.
So, people do perform better in a decision-making task, if they're not choosing whether or not,
but they're choosing between A or B. And A and B is fine and A, B, C is fine.
Those are your two ways in which we can really do a pretty good job.
But whether or not to do something?
We have a much harder time doing the trade-offs on that.
>>female #4: Are there differences as far as personality types and things like that?
[inaudible]
>>Sheena Iyengar: I don't know of anything that relates choice to Myers-Briggs.
I mean, there is this--.
I mean, Barry Schwartz is gonna be here tomorrow and he talks about maximizers.
And I've done some studies with Barry on the maximizers versus satisfiers.
And maximizers do, other people that say they want lots and lots and lots of choice and
shoot themselves in the foot that way.
But I always feel--.
So, OK.
Barry Schwartz and I often have this debate.
He always says satisfies on everything, even the choices that are most important to you
on life.
And I always say, on the decisions that are really important to you, maximize.
Everything else, find a simple heuristic.
Just make it really easy.
And a lot of times, easy means don't choose.
[pause]
>>male #2: Is there a residual effect to being exposed to lots of choice?
So when someone goes into a store that's curated a set of choices for them, they forget that
the rest of the world exists and that choices outside of that store are possible?
>>Sheena Iyengar: Huh.
That's an interesting question.
I don't know.
It seems plausible.
I mean, it certainly is the case that--.
What was I reading recently?
Fifty percent of ice cream sales in the United States are accounted for by vanilla, chocolate,
and strawberry.
Right?
But I can't imagine any of us would go into an ice cream parlor that only offered you
those three flavors.
We would have to have at least 31 flavors these days, right?
So, yeah.
I don't know.
That's a good question.
[pause]
>>male presenter: All right.
Thank you very much for your time.
>>Sheena Iyengar: Thank you.
[applause]
>>Male presenter: Thank you all for attending.
>>Sheena Iyengar: You guys can follow me on Twitter, by the way.
I also have a Twitter site.
[laughter]
Thank you.