This morning I read an interesting post about the Facebook IPO by Innosight Manager Rebecca Waber on one of Harvard Business Review’s blogs. It was titled The Facebook Investor You Never Want To Become.
Rebecca writes about the approach used by many investors of Facebook stock, which was to use “availability bias” in making their decision to buy the stock. Rebecca tells us that…
“Availability bias is the mental rule-of-thumb whereby we call to mind our personal knowledge of a topic in order to work out how important it is.”
She goes on to say that…
“It’s the reason so many people overestimate the danger of flying in airplanes or of having their children abducted, and underestimate the risk of getting cancer from lack of sunscreen or getting in a car accident. Airplane accidents and abductions are big news; they are memorable and easy to call to mind, so we overestimate their importance.”
What struck me was the decision-making process Rebecca suggested in her blog post, which she advises will help protect our organizations against making decisions using the availability bias.
- Focus on discovering customers’ needs. When you discover unmet customer needs, you naturally create a differentiated offering with true market value. Easy to say, but the trick here is to make sure you really are looking for customers’ needs — not just convincing yourself that customers need what you, or everyone else, want to make.
- Pursue a long-term strategy. In an effective strategy, short-term moves should be leading you toward a desired outcome in the long term. A collection of opportunistic bets, no matter how sure they seem in the moment, is not a strategy. Would any solid personal financial plan have advocated liquidating mutual and bond funds to bet the farm on Facebook?
- Don’t follow the herd. We’re all human, and there’s emotional comfort in doing what everyone else is doing. Recognize that feeling — and then make sure that you’re not letting it cloud your judgment. Be vigilant and actually evaluate each investment opportunity on its merits, not on its media profile.
I shared with Rebecca that her three suggestions articulate how I try to advise my clients, which is to create business and marketing plans keeping the following thoughts in mind:
- Use real intelligence from potential/clients, not just our own assumptions (or availability bias)
- To remember that marketing is not a sprint but a marathon
- Know that a me-too marketing strategy will get them exactly where they planned, and that’s looking just like those they are following or copying, if they are lucky.
Don’t we owe it to ourselves, stakeholders, staff, investors and families to make decisions based on the sound criteria outlined above?
Is jumping in to daily business and marketing decisions without a solid plan to back us up the way we know deep-down is sound and long-lasting?
Thanks, Rebecca, for inspiring this conversation, and thanks to Director of Digital Strategy for TMG, Andrew Hanelly, for sharing this post on Twitter.