Tag Archives: behavioral economics

Are You Failing to Act, or Acting to Fail?

Strategy is not necessarily about deciding to do something. Sometimes it is about deciding not to do anything. Strategy is not about actions, it is about making decisions (and deliberate choices) based on where you want to go and reflected through realities around you.

Action is easy. Making a deliberate decision for inaction is harder.

schmeichel

Good example of this are penalty kicks in football (or soccer in US). Goalie is in definite disadvantage to catch the ball because 80% of all penalty kicks will score. For goalie, there are three options: go left, right or stay put. According to the study, 49% of times they turn to right, 45% to left and only 6% time they stay where they are. However, they should stay they where they are, because then they would have 33.3% change of halting the penalty kick instead of 14.2% on the left and 12.6 percent on the right.

Why they still jump although it is inferior strategy?

Mainly because they feel better when they do that. At least they tried. If you fail when you have done something it does not feel not as bad as failure due to inaction. The reality of probabilities does not change your feelings. People do not generally understand probabilities. Although you increase your choices on catching the ball, the majority of penalty kicks will still be goals. Doing the wrong thing is justified, because “at least you did something”:

“If things turn bad, at least they (goalies) will be able to say that they tried to do something, whereas if they choose not to change anything and the situation continues to be poor (or becomes worse), it may be hard to avoid the criticism that despite the warning signs they ‘didn’t do anything’”

Action Bias Among Elite Soccer Goalkeepers: The case of penalty kicks

How often brands have changed their tagline just because they got a new marketing director?  How often we flip-flop with our strategy just because “we need to do something”? How often we change teams just to “shake things up”. Being quick to act is good method to appear decisive, but it does not necessarily mean that you are truly thinking strategically.

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Show That You Care and Don´t Screw Up

If waiter repeats customer´s order, he is more likely to get a tip. Just by repeating order, 78% gave tip compared to 52% when waiter just confirmed the order. It is a simple thing, but how many waiters really do it?  It is also good rule to live by every time you are serving customers. You need empathy but you need to deliver as well.

Show that you care
People love their own words and decisions. Repeating the order confirms that you have done the right decision. Customers will experience sameness with the servers, like them more and will leave bigger tips.

Don´t screw up
When waiter repeats the order, there are higher likelihood that the order will be right. By doing something that showcases interest of your customer´s needs, you are also securing your own back.

It is win-win situation: you appreciate the customer and same time you minimize your probability of doing mistake. In Singapore context though, I don´t know what would be the result on tip when waiter repeats your order but is still able to mess it up.

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