artdiamondblog.com – Page 387 – Art Diamond's web log

Amazon’s User Reviews Increase Rationality of Consumer Choices

Source of book image: http://2.bp.blogspot.com/-dNUZ_u-GWSk/UpqE0zmFQQI/AAAAAAAAAko/Z8uisfEjgRc/s1600/Absolute+Value+cover.png

(p. 3) You are no longer the sucker you used to be.

So suggests continuing research from the Stanford Graduate School of Business into the challenges marketers face in reaching consumers in the digital age. As you might suspect, the research shows that a wealth of online product information and user reviews is causing a fundamental shift in how consumers make decisions.
As consumers rely more on one another, the power of marketers is being undermined, said Itamar Simonson, a Stanford marketing professor and the lead researcher.
. . .
To get the full impact of the findings, you first have to know the conclusions of a similar experiment decades ago by Dr. Simonson, . . . . . . .
The researchers found that when study subjects had only two choices, most chose the less expensive camera with fewer features. But when given three choices, most chose the middle one. Dr. Simonson called it “the compromise effect” — the idea that consumers will gravitate to the middle of the options presented to them.
. . .
Flash forward to the new experiment. It was similar to the first, except that consumers could have a glimpse at Amazon. That made a huge difference. When given three camera options, consumers didn’t gravitate en masse to the midprice version. Rather, the least expensive one kept its share and the middle one lost more to the most expensive one.
“The compromise effect was gone,” said Dr. Simonson, or, rather, he nearly exclaimed the absence of the effect, underscoring his surprise at the findings. They are to be published next month in “Absolute Value,” a book by Dr. Simonson and Emanuel Rosen.
Today, products are being evaluated more on their “absolute value, their quality,” Dr. Simonson said. Brand names mean less.

For the full story, see:
MATT RICHTEL. “APPLIED SCIENCE; There’s Power in All Those User Reviews.” The New York Times, SundayBusiness Section (Sun., December 8, 2013): 3.
(Note: ellipses added.)
(Note: the online version of the article has the date December 7, 2013.)

The new research is reported in:
Simonson, Itamar, and Emanuel Rosen. Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information. New York: HarperBusiness, 2014.

In Britain Right and Left Support “Libertarian Paternalism”

(p. 4) In 2010, Mr. Cameron set up the Behavioral Insights Team — or nudge unit, as it’s often called. Three years later, the team has doubled in size and is about to announce a joint venture with an external partner to expand the program.
The unit has been nudging people to pay taxes on time, insulate their attics, sign up for organ donation, stop smoking during pregnancy and give to charity — and has saved taxpayers tens of millions of pounds in the process, said David Halpern, its director.
. . .
Creating Commitment
One morning in late May 2008, 10 copies of a little red book arrived for Rohan Silva in Norman Shaw South, the Westminster wing where the leader of the political opposition — at the time, the Conservatives — is traditionally housed.
The book was “Nudge,” and Mr. Silva, then 27 and David Cameron’s youngest adviser, piled them up on his desk. He had read the book as soon as it came out, a few weeks before. In fact, he had read deeply on behavioral economics and social psychology and met many of the American academics who specialized in the field. He was eager to spread the message in his country. “We used to joke about Ro being on commission for Thaler and Sunstein,” said Steve Hilton, Mr. Cameron’s former director of strategy and now a visiting scholar at Stanford.
. . .
Libertarian Paternalism
. . .
. . . , the question in Britain no longer seems to be whether, but how, to nudge. In their book, Professor Thaler and Mr. Sunstein defined their approach as steering people toward decisions deemed superior by the government but leaving them free to choose. “Libertarian paternalism,” they called it, and while that term is not used much in Britain, there is broad agreement on the subject among the left and the right.
Mr. Halpern used to be policy chief for Tony Blair, the former Labour prime minister, and later wrote a report on behavioral policy-making commissioned by Mr. Blair’s Labour Party successor, Gordon Brown. In one small way, the 2010 election campaign was also a race to decide which party would carry out an idea that had been percolating in the intellectual ranks of both for some years.

Wider Horizons
One of Mr. Thaler’s favorite nudges is something that Schiphol Airport near Amsterdam adopted in public bathrooms: a small sticker of a fly in the center of a urinal has been shown to improve aim. It saves the airport cleaning costs.
During a recent visit to Downing Street, Mr. Thaler ran into Mr. Cameron in the men’s room. There were no fly stickers.
“What’s the deal?” he joked.

For the full story, see:
KATRIN BENNHOLD. “The Ministry of Nudges.” The New York Times, SundayBusiness Section (Sun., December 8, 2013): 1 & 4.
(Note: ellipses added; bold in original.)
(Note: the online version of the article has the date December 7, 2013, and has the title “Britain’s Ministry of Nudges.”)

The Nudge book is:
Thaler, Richard H., and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness. Revised & Expanded (pb) ed: Penguin Books, 2009.

“Government Takes What It Wants”

“Mike Campbell, 76, challenged Zimbabwe’s land redistribution law. He and his son-in-law, Ben Freeth, 38, were beaten by a gang.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) CHEGUTU, Zimbabwe — Edna Madzongwe, president of the Senate and a powerful member of Zimbabwe’s ruling party, began showing up uninvited at the Etheredges’ farm here last year, at times still dressed up after a day in Parliament.

And she made her intentions clear, the Etheredges say: she wanted their farm and intended to get it through the government’s land redistribution program.
The farm is a beautiful spread, with three roomy farm houses and a lush, 55,000-tree orange orchard that generates $4 million a year in exports. The Etheredges, outraged by what they saw as her attempt to steal the farm, secretly taped their exchanges with her.
“Are you really serious to tell me that I cannot take up residence because of what it does to you?” she asked Richard Etheredge, 72, whose father bought the farm in 1947. “Government takes what it wants.”
He dryly replied, “That we don’t deny,” according to a transcript of the tapes.

For the full story, see:
CELIA W. DUGGER. “White Farmers Confront Mugabe in a Legal Battle.” The New York Times, First Section (Sun., December 28, 2008): 1 & 10.
(Note: the online version of the article has the date December 27, 2008 and has the title “White Farmers Confront Mugabe in a Legal Battle.”)

“Mr. Freeth circulated photographs of his injuries online after the invasion of his farm.” Source of caption and photo: online version of the NYT article quoted and cited above.

Carnegie Attended a Private School Where Teacher Was an Entrepreneur

(p. 15) At the age of eight, Andra had begun attending school. Although he implies in his Autobiography that it had been his decision to put off school until then, eight, in fact, was the age at which most Scottish boys entered the classroom. There were numerous schools in Dunfermline in the early 1840s, thirty-three of them to be exact, almost half endowed or supported by the kirk (church) or the municipality. Andra was sent to one of the “adventure” schools, so called because they were started up and supported “entirely on the teachers’ own adventure.”

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: italics in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Portland Government Stops Girl from Selling Mistletoe to Pay for Braces

In Portland, the government is stopping an 11 year old girl from selling mistletoe to raise money for her braces. Here is a link to the KATU local Portland ABC news station video report: http://www.katu.com/news/local/11-year-old-told-not-to-sell-mistletoe-but-begging-is-fine-234014261.html?tab=video&c=y It also has been posted to YouTube at: http://www.youtube.com/watch?v=Vj4caXi0wdw

Use of Floppy Disks Shows Slowness of Government

(p. A14) WASHINGTON — The technology troubles that plagued the HealthCare.gov website rollout may not have come as a shock to people who work for certain agencies of the government — especially those who still use floppy disks, the cutting-edge technology of the 1980s.
Every day, The Federal Register, the daily journal of the United States government, publishes on its website and in a thick booklet around 100 executive orders, proclamations, proposed rule changes and other government notices that federal agencies are mandated to submit for public inspection.
So far, so good.
It turns out, however, that the Federal Register employees who take in the information for publication from across the government still receive some of it on the 3.5-inch plastic storage squares that have become all but obsolete in the United States.
. . .
“You’ve got this antiquated system that still works but is not nearly as efficient as it could be,” said Stan Soloway, chief executive of the Professional Services Council, which represents more than 370 government contractors. “Companies that work with the government, whether longstanding or newcomers, are all hamstrung by the same limitations.”
The use of floppy disks peaked in American homes and offices in the mid-1990s, and modern computers do not even accommodate them anymore. But The Federal Register continues to accept them, in part because legal and security requirements have yet to be updated, but mostly because the wheels of government grind ever slowly.
. . .
. . . , experts say that an administration that prided itself on its technological savvy has a long way to go in updating the computer technology of the federal government. HealthCare.gov and the floppy disks of The Federal Register, they say, are but two recent examples of a government years behind the private sector in digital innovation.

For the full story, see:
JADA F. SMITH. “Slowly They Modernize: A Federal Agency That Still Uses Floppy Disks.” The New York Times (Sat., December 7, 2013): A14.
(Note: ellipses added.)
(Note: the online version of the article has the date December 6, 2013.)

Carnegie Was Important Innovative Entrepreneur

Source of book cover image: http://img1.imagesbn.com/p/9781594201042_p0_v2_s260x420.JPG

Andrew Carnegie was a famous, much reviled, and much praised innovative entrepreneur. He is not my favorite innovative entrepreneur. He was happy to have the government protect the steel industry, and he tried to have his sidekick take all the blame for a violent episode at his steel works. But he worked hard (at least in his early decades), was often generous, fought against Teddy Roosevelt’s imperialism, and most importantly, he greatly improved the process for making steel, thereby increasing its quality and decreasing its price.
Nasaw’s serious and substantial biography is useful at untangling and documenting the good and the bad. In the next several weeks, I will be quoting some of the more important or thought-provoking passages in the book.

Nasaw’s biography of Carnegie is:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Functional Stupidity Management

(p. 1194) In this paper we question the one-sided thesis that contemporary organizations rely on the mobilization of cognitive capacities. We suggest that severe restrictions on these capacities in the form of what we call functional stupidity are an equally important if under-recognized part of organizational life. Functional stupidity refers to an absence of reflexivity, a refusal to use intellectual capacities in other than myopic ways, and avoidance of justifications. We argue that functional stupidity is prevalent in contexts dominated by economy in persuasion which emphasizes image and symbolic manipulation. This gives rise to forms of stupidity management that repress or marginalize doubt and block communicative action. In turn, this structures individuals’ internal conversations in ways that emphasize positive and coherent narratives and marginalize more negative or ambiguous ones. This can have productive outcomes such as providing a degree of certainty for individuals and organizations. But it can have corrosive consequences such as creating a sense of dissonance among individuals and the organization as a whole. The positive consequences can give rise to self-reinforcing stupidity. The negative consequences can spark dialogue, which may undermine functional stupidity.

Source of paper abstract:
Alvesson, Mats, and André Spicer. “A Stupidity-Based Theory of Organizations.” Journal of Management Studies 49, no. 7 (Nov. 2012): 1194-220.

Innovative Fracking Entrepreneurs Again Show that Energy Is Only Limited by Ingenuity

Source of book image: online version of the NYT review quoted and cited below.

(p. 7) In “The Frackers,” Gregory Zuckerman sets out a 25-year narrative that focuses on the half-dozen or so Texas and Oklahoma energy companies behind the fracking boom, especially Chesapeake Energy, the Oklahoma City giant that is the Exxon Mobil of fracking. Technologies are born. Gushers gush. And fortunes are made and lost.

In the process, Mr. Zuckerman assembles a chorus of little-heard American voices, from George Mitchell, the Greek goatherd’s son whose company first perfected fracking, to Chesapeake’s two founders, Aubrey K. McClendon and Tom L. Ward.
. . .
Geologists knew that layers of shale spread across North America contained commercial amounts of oil and gas, but not until a young geologist at Mr. Mitchell’s company, Mitchell Energy, perfected a new “secret sauce” of water-based fracturing liquids in the early 1990s did layers of shale — in Mitchell’s case, the Barnett Shale of North Texas — melt away and begin to yield jaw-dropping gushers.
Oryx Energy, a company that was based in Dallas, was among the first to pair fracking with horizontal drilling, producing even more startling results. Still, it took years, Mr. Zuckerman writes, before larger businesses, especially the skeptical major oil companies, fathomed what their smaller rivals had achieved. This allowed what were flyspeck outfits like Chesapeake to lease vast acreage in shale-rich areas, from Montana to eastern Pennsylvania.

For the full review, see:
BRYAN BURROUGH. “OFF THE SHELF; The Birth of an Energy Boom.” The New York Times, SundayBusiness Section (Sun., November 2, 2013): 7.
(Note: ellipses added.)
(Note: the online version of the review has the date November 2, 2013, and has the title “OFF THE SHELF; ‘The Frackers’ and the Birth of an Energy Boom.”)

Book being reviewed:
Zuckerman, Gregory. The Frackers: The Outrageous inside Story of the New Billionaire Wildcatters. New York: Portfolio/Penguin, 2013.

Interruptions and Distractions Disrupt Worker Productivity

Someday we will look back at open office plans as another way-overdone management fad. See also my earlier entry on the effects of workers switching tasks and my earlier entry on open offices.

(p. D2) Research led by Bing C. Lin, a doctoral candidate in industrial and organizational psychology at Portland State University in Oregon, found intrusions, or unexpected interruptions, increased exhaustion, physical strain and anxiety by one-third to three-fourths as much as the size of employees’ actual workloads. Bottling up frustration when someone barges into your cubicle worsens the strain, according to the study of 252 employees, published earlier this year in the International Journal of Stress Management.

For the full story, see:
SUE SHELLENBARGER. “WORK & FAMILY MAILBOX; Sue Shellenbarger Answers Readers’ Questions.” The Wall Street Journal (Weds., Nov. 13, 2013): D2.
(Note: the online version of the review has the date Nov. 12, 2013, and has the title “WORK & FAMILY; The Toll of Office Disruptions; Latest Research on Distractions and Worker Efficiency.”)

The Lin study summarized above is:
Lin, Bing C., Jason M. Kain, and Charlotte Fritz. “Don’t Interrupt Me! An Examination of the Relationship between Intrusions at Work and Employee Strain.” International Journal of Stress Management 20, no. 2 (2013): 77-94.

Wind Power Increases Government Corruption

“Kathy Laclair of Churubusco, N.Y., dislikes the noise from the wind turbine blades and says their shadows give her vertigo.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) Lured by state subsidies and buoyed by high oil prices, the wind industry has arrived in force in upstate New York, promising to bring jobs, tax revenue and cutting-edge energy to the long-struggling region. But in town after town, some residents say, the companies have delivered something else: an epidemic of corruption and intimidation, as they rush to acquire enough land to make the wind farms a reality.

“It really is renewable energy gone wrong,” said the Franklin County district attorney, Derek P. Champagne, who began a criminal inquiry into the Burke Town Board last spring and was quickly inundated with complaints from all over the state about the (p. A16) wind companies.
. . .
. . . corruption is a major concern. In at least 12 counties, Mr. Champagne said, evidence has surfaced about possible conflicts of interest or improper influence.
In Prattsburgh, N.Y., a Finger Lakes community, the town supervisor cast the deciding vote allowing private land to be condemned to make way for a wind farm there, even after acknowledging that he had accepted real estate commissions on at least one land deal involving the farm’s developer.
A town official in Bellmont, near Burke, took a job with a wind company after helping shepherd through a zoning law to permit and regulate the towers, according to local residents. And in Brandon, N.Y., nearby, the town supervisor told Mr. Champagne that after a meeting during which he proposed a moratorium on wind towers, he had been invited to pick up a gift from the back seat of a wind company representative’s car.
When the supervisor, Michael R. Lawrence, looked inside, according to his complaint to Mr. Champagne, he saw two company polo shirts and a leather pouch that he suspected contained cash.
When Mr. Lawrence asked whether the pouch was part of the gift, the representative replied, “That’s up to you,” according to the complaint.

For the full story, see:
NICHOLAS CONFESSORE. “In Rural New York, Windmills Can Bring Whiff of Corruption.” The New York Times (Mon., August 18, 2008): A1 & A16.
(Note: ellipses added.)
(Note: the online version of the article has the date August 17, 2008.)

“To some upstate towns, wind power promises prosperity. Others fear noise, spoiled views and the corrupting of local officials.” Source of caption and photo: online version of the NYT article quoted and cited above.