Want to understand your industry? Understand choice overload.

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We’ll attempt to walk through the idea of choice overload in this post. It’s going to require a little bit of setup, so bear with me for one second.

You can probably figure out what the term “choice overload” means conceptually, but let’s define it first. It means, well, you have too many choices around a specific product or service. Milk is a good example. There is whole, almond, 1 percent, 2 percent, skim, and a bunch of other junk I don’t even understand. It’s just milk, you’re thinking. What’s with this choice overload?

This is all tied to the “paradox of choice,” which helped Barry Schwartz become more famous. Freedom of choice is a central tenet of Western societies, and yes, it has made us freer. But has it also paralyzed us and increased dissatisfaction as opposed to increasing happiness?

Choice overload and the job situation

The next roundabout you need to circle here is the jobs situation in America (and elsewhere). This is all very tied to what just happened in the Presidential election. I just read this article about Trump and the Rust Belt, and it makes a couple of interesting points:

  • Late 1800s: 80 percent of America employed in agriculture; now it’s 2 percent
  • 1960: 40 percent of country employed in manufacturing; now it’s 5 percent

Now, as this happens, there are two things to remember. We still eat food and grow it — and we still make things. It’s just that the economy has become more effective (automated, etc.) at producing the things we make and eat, so we need less people. But … because it’s a capitalism, those people need to make money. The Gig Economy (which is very real) has been good for this in some ways. But there’s a problem.

Choice overload and innovation

That problem is how we look at innovation, entrepreneurship, or “launching/doing your own thing.” Most people, and companies, are actually not innovative. They certainly have the potential, but what they do is … they take a thing they kinda sorta know and square peg it into something else that has been successful. That’s the running joke behind “the Uber of…” that you’ll hear young tech bros say. People grabbed an idea, tried to make it an on-demand service ala Uber, and maybe it worked/maybe it didn’t.

Is our supposed Era of Innovation creating too much choice overload for consumers?

So the overall point here is this: the economy is changing, and it is leaving people behind. That’s hard to question. The repercussions of that were just shown in a major election. And as the economy is shifting and people need new roles, they essentially create mirror companies or processes to what already exists.

And now you have a ton of choice overload. Go on Amazon and look up some random thing like “soap dispenser for bathroom.” I bet there are 50+ options by 50+ companies large and small. Choice overload. Now what?

Choice overload: Stanford research

Here’s some research out of Stanford on choice overload. It’s tied to this paper on “assortment size.” The outcome of this research is pretty logical. They find that choice overload is contextually relevant to “decision-making stage” of the (buzzword alert) “buyer journey.” So if you’re at an early stage (not sure what to do yet), you like the choice overload. That makes you feel comfortable! If you’re at a specific stage (lower in funnel), you do not like the choice overload as much. It’s annoying. All this is logical.

I bought a car yesterday; by “bought” I mean “leased.” I went to the dealership intending to do research and four hours later, I got a CR-V. I was high top of funnel when I entered, and I had some choice overload. They were showing and up-selling me on different cars. I’m a weird person and make decisions fairly quickly in my head, so maybe I’m not the best example here. But choice overload was present, and I sliced through it initially (when it was, in some ways, comfortable) and got lower in the funnel, where it actually got annoying. When I already had some signatures down, a guy was like “Maybe you want a truck?” No, I don’t want a fucking truck. I’m already signing papers here! So I lived this Stanford research like a good little lab rat.

Choice overload: The company side

Let me walk you through a quick potential scenario.

Let’s say you are a mid-size company and you make end tables. You’ve been making good, quality end tables for years and it’s a primary revenue stream. But you’ve got some investors and stakeholders (“key stakeholders”) who want to see more diversified options and newer revenue streams. You begin creating other things. Coffee tables? Sofas? Headboards? But other people were already creating those things. So now where the market had four headboards, now there are six options. Choice overload begins.

I try to think about work in different ways, and I also try to call out some managerial BS we’ve all experienced. If that kinda sorta interests you, I do a newsletter every Thursday. Feel free to join up.

This is natural because a company cannot just rest on its laurels. Some do, of course. But most are driven to make more and show growth, and when you do that, you usually need to create somewhat new products or services. Those new things enter into pre-existing markets, further crowding that market. As a result, choice overload has a massive growth rate. It will keep going so long as shareholders are telling executives “Get out there and grab market share by the p*ssy in that other vertical.”

This is what led us to a world where so much of the focus is on customer experience. With 35+ options for a coffee filter, ultimately you choose the one that provides the best experience — i.e. strains your coffee and doesn’t smell or stink or whatever. The ironic part of all this? An increased focus on customer experience has led to about 3,000+ consultants and “thought leaders” branding themselves as experts on the topic. So now when executives or conference planners need a customer-driven speaker, well … there’s choice overload there too. Ha.

Choice overload: “Every decision is really two decisions”

Money quote from the Stanford research:

“Every decision is really two decisions,” Simonson says. “If your first decision is about whether you want to buy, then having more options is conducive to buying. But if your first decision is on which specific product to select, then having a big assortment can make it more difficult to identify the best option.”

I’d argue that when contemplating any avenue of your life, understanding this is important. Every decision is really two (or more) decisions. That applies to work (and why so many corporate decisions are awful), love, restaurant choice, sex, coffee filters, thought leadership, and much more. If you slot choice overload into the proper context, it will seem less paralyzing.

What else would you add on choice overload?

My name’s Ted Bauer. Hit me up anytime at tedbauer2003 [at] gmail.com.

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