Thursday, 25 September 2014

Thinking, Fast and Slow: The Social Media Research Perspective

Dr. Nicos Rossides is the CEO of Medochemie, an international pharmaceutical company with more than 100 operations worldwide. Nicos is also the Chairman of DigitalMR's Advisory Board. This post originally appeared on the Digital MR blog www.digital-mr.com/blog/

Nobel laureate Kahneman has written a seminal book on the different types of thinking processes we humans deploy. In “Thinking, Fast and Slow” he argues that cognitive biases profoundly affect our daily decisions - from which toothpaste to buy, to where we should go on holiday. He goes on to claim that our decision processes can be understood only by knowing how two different thinking systems shape the way we judge and decide:

"System 1" is fast, instinctive, subconscious and emotional;
 
"System 2" is slower, deliberative, logical.
 
The book delineates cognitive biases, such as how we frame choices, loss aversion, and our tendency to think that future probabilities are altered by past events..  All these can throw light on fascinating facets of human judgement and thought and are posited by Kahneman to be both systematic and predictable.
 
Framing: Drawing different conclusions from the same information, depending on how or by whom that information is presented.
Loss aversion:  The disutility of giving up an object is greater than the utility associated with acquiring it.
Gambler’s fallacy: The tendency to think that future probabilities are altered by past events, when in reality they are unchanged.
 
How is this relevant to research? And why exactly should research agencies and their clients care? Well, I would argue that the basic dichotomy described in the book is critical to the existence of the market research industry. Our ability to generate insights, which in turn can only be gained through the analysis and interpretation of evidence, is key to managing a modern business – it is “system 2” thinking. Of course, one could get some things right by merely relying on intuition or gut-feeling; therein lies the caveat: get some things right. Indeed, chances are that the odds would be heavily stacked against you if you ignore facts and rely on less than rigorous or no analysis. Putting this in a different way, fast thinking is not a good way to raise your metaphorical batting average as a business.
 
One could certainly argue (correctly) that intuition does not occur in a vacuum – in that it often has its roots in prior experience. But testing your assumptions before going ahead with a decision is a way to avoid mistakes. Indeed, examining available evidence to inform decisions is a tried and tested way of succeeding in business. Ask Procter & Gamble  which spends hundreds of millions every year on painstakingly researching all aspects of the marketing mix.
 
We can draw a parallel to P&G’s B2C decision model  (based on “System 1” thinking) in which they established the “First moment of truth” which stated that there were 3-7 seconds from when the customer sees the stimulus to when they react (decide to buy). There was then a second decision (“Second moment of truth”) that customers made after the purchase; based on the negative or positive experience with the product, a decision would then be made as to whether they should continue using it/buy from this vendor again
 
Stimulus -> Shelf (First moment of truth) -> Self experience (Second moment of truth)
 
Google pointed out that the ubiquity of internet access has caused an upward trend in people (in a B2C and B2B context) after they had observed the stimulus, researching about the product/service to obtain more information before they made their first moment of truth decision; they call it the “Zero moment of truth” (ZMOT)
 
Stimulus -> Information (Zero moment of truth) -> Shelf (First moment of truth) -> Self experience (Second moment of truth)
 
Companies are now looking to the web as a solution; this should be done carefully as even using the web as a source of informing decision can lead to systematic biases (searching for what you want to see).
 
By analysing the zero moment of truth (sources from which customers are obtaining their information) and the first and second moments of truth of current/potential customers, (through what customers are saying online), DigitalMR serves to create an objective way to inform choices (the zero moment of truth) of decision makers of a company through tools such as social media listening, online communities and an array of other digital research tools.
 DigitalMR & ZMOT
So, fast thinking is all nice and good, deeply steeped in our evolutionary past, but when it comes to business, “system 2” slow thinking based on informed choices is the way to go, especially when dealing with big ticket decisions.
 
What is your view on systems 1 and 2 thinking? How many of your decisions are rooted in system 1 Vs system 2 Vs both? Please share your way of being part of the conversation during the zero moment of truth.

1 comment:


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