Why is it difficult to get consumers and employees to change their behaviour?

As Harvard's Andrew McAfee expalins,many products fail to catch on with their intended audiences despite the clear advantages they offer.Here is a summary of his explanations:

Misconception: Consumers are not highly rational evaluators of the old vs. the new products, lining up pros and cons of each in mental tables and then selecting the winner.

Actuality [RAS]:

• We make Relative Evaluations, not Absolute ones. When I'm at a poker table deciding whether to call a bet, I don't think of what my total net worth will be if I win the hand vs. if I lose it. Instead, I think in relative terms -- whether I'll be 'up' or 'down.'

• Our reference point is the Status Quo. Comaprisons are made against where I am at that point in time. "If I win this hand I'll be up $40; if I lose it I'll be down $10 compared to my current bankroll." It's only at the end of the night that my horizon broadens enough to see if I'm up or down for the whole game.

• We are Loss Averse. A $50 loss looms larger than a $50 gainnot much affected by how much wealth one already has. Ample research has demonstrated that people find that the pain of a prospective loss of $X is about 2 to 3 times greater than a gain of $X is pleasurable.

When combined, these three lead to what the behavioral economist Richard Thaler has called the "endowment effect:"

We value items in our possession more than prospective items that could be in our possession, especially if the prospective item is a proposed substitute. One in the hand is worth two in the bush essentially.

Consumer will underweight the prospective benefits of a replacement technology by about 3X and overweight by 3X everything they're being asked to give up.

We mentally compare having the prospective item versus giving up what we already have (our 'endowment'),

but because we're loss averse giving up what we already have (our reference point) looms large.

Users are subconciously influenced by the following 3 challenges.

Challengs [GIT]:

- Timing: adopters have to give up their endowment immediately and only get (potential) benefits sometime in the future.

- Benefits are not Guaranteed: the new product might not work as promised.

- Benefits are usually Intangible: making them difficult to enumerate and compare.

Developers are blinded by their new reference point:

Gourville also highlights that the people developing new products are very dissimilar from the products' prospective consumers. You don't go work for TiVo (to use his example) if you don't 'get' the potential of digital video recorders and think they're a really good idea. And after working for the company for a while, having TiVo becomes part of your endowment; you think of things in comparison to TiVo, instead of in comparison to a VCR. Both of these factors make it harder for developers to see things as their target customers do.

Because of all of the above, Gourville talks about the '9X problem' -- "a mismatch of 9 to 1 between what innovators think consumers want and what consumers actually want."¹ The 9X problem goes a long way to explaining the tech industry folk wisdom that to spread like wildfire a new product has to offer a tenfold improvement over what's currently out there.²

Are these tools new products 9 times better than the status quo?

Solution:
There are, it seems, two broad strategies.

Increase the perceived benefits of their technologies -

lower their perceived loss and drawbacks

Demos and training are part of the former strategy, but they feel like weak measures.

Stronger ones are a clear explanation of what the technology does, network effects, peer pressure, word of mouth, incentives and an extremely effective user interface and layout.

The Power of a 'Sexy' UI:
The perceived benefits of the technology features drives them there.

But it is the UI that is going to determine what they do once they get there -- whether they'll spend time exploring and learning, or leave quickly.

A great UI not only heightens the perceived benefits of a proposed collaboration technology, it also lowers the perceived costs.

An intuitive interface lets users quickly say to themselves "Oh, I understand. This isn't hard at all. In fact, it's about as easy as email."

The greatest challenge here is making technologists sufficiently user-like -- getting them to stop thinking in terms of bells and whistles and elaborate functionality, and to start thinking instead about busy users with short attention spans who need to get something done quicker and easier.