I’m really excited to write about this topic as it’s on two concepts that aren’t incredibly well-known but have outsized impacts wherever they are implemented.
In 1968, General Motors and Toyota entered into a partnership to establish New United Motor Manufacturing Inc. (NUMMI). At the time, GM was losing market share to Toyota and the GM plant NUMMI was to be piloted in was the worst-performing in the company’s portfolio; it had the highest error rates, low staff morale and frequent strikes.
Toyota retained the workforce and over the course of a few short years, completely transformed that plant into a top-performing, low-error operation, with employees who operated as owners and felt a deep sense of value for their work.
How?
Toyota operated on a set of principles anchored by two pillars – respect for people and continuous improvement, or kaizen.
“In the kaizen philosophy, innovation is seen as an incremental process; it’s not about making big leaps forward, but rather making small things better, in small ways, everywhere you can, on a daily basis.” – Steven Bartlett, The Diary of a CEO.
Kaizen is the philosophy that set Toyota apart, transformed a failing plant and continues to differentiate the most innovative companies today. It is a deep-seated commitment to continuously improving, incrementally as needed, day after day after day. It requires an understanding of what excellence looks like, a keen attention to detail, a bias for action and staying power.
In Nigeria, I have come against a different philosophy: “just manage it like that.” And every time I am faced with it, I balk and push determinedly past it, demanding that things be done to a level of excellence. It stands in stark contrast to the kaizen philosophy and seriously undermines the impact that a commitment to very good work and an appetite for continuous improvement can have.
A business that employs the kaizen philosophy in a market that does not will immediately stand out and build a competitive edge for itself.
Now let’s look at the other concept: psychological moonshots.
I recently read Steven Bartlett’s book, The Diary of a CEO – The 33 Laws of Business & Life, and law #13 he decrees as: Shoot your psychological moonshots first. This law is anchored on the idea that “it’s nearly always cheaper, easier and more effective to invest in perception than reality.” The term itself was coined by Rory Sutherland, who explains it as:
“A psychological moonshot is a relatively small investment that drastically improves the perception of something.”
A very simple example would be – plating rice. These are the same amount of rice, scooped from the same pot; which one of these plates would you be willing to pay (even if just a little bit) more for?
Arranging the rice into a mound is inexpensive, but raises its perception. Psychological moonshots are really that simple – because when it comes to our perceptions and emotions as humans, we can be pretty simple.
Steve Bartlett outlines five psychological moonshots in this chapter; let’s look at each of them.
5 Psychological Moonshots
To go through these, I’ll use a fictitious bake shop called Nani’s Cakehouse, owned by Nani and known for the best birthday cakes, artisan cupcakes, and other baked treats.
1. The Peak-End Rule
This rule describes how we judge an experience: by its peak (positive or negative) and its end. It explains why a wonderful celebration, where at the end, a big fight breaks out because someone got drunk and unruly, will have our experience of the event tainted. Its like the last bite of a meal, the closing words of a speech, the ending of a movie…we all operate under a cognitive bias that gives preference to how we felt at the peak of an experience and how we feel at the end of it.
Knowing this, how should Nani’s Cakehouse apply it? If Amos is working with Nani to design a cake for his wife’s 50th birthday, Nani should bake in (see what I did there) a peak event – a blind taste-testing with Amos’ favorite music playing in the background. She should then also design the end experience, not just for Amos, but for all customers who purchase from her. This could be as little as packing the cakes in specially designed boxes with oversized ribbons or as elaborate as having them delivered with a hired quartet singing a proprietary delivery song.
2. Idleness Aversion
“People who are busy are happier than people who are idle” – Uber Labs research. And this finding applied even if people were not busy of their own volition. It is this bias that perhaps underlies why we set so many goals and want to always be engaged in something.
If busier people are happier than idle people, how should Nani’s Cakehouse apply this?
When a customer comes in to place an order for a baked good that needs more than five minutes to be made, Nani can ensure that the customer is engaged. She can print out cake-related crossword puzzles for the customer to play while s/he waits, she can have a screen at the shop that plays some of the best peak-end moment reactions (engaging the customer while continuing to market her goods!)
3. Operational Transparency
People want to know that they are not being taken advantage of. Especially when there is information asymmetry in favor of the vendor, a lack of transparency can really hurt the customer experience. The solution is to operate like a glass box – giving the customer a view into the process and the rate of progress. I’d say, though, that this moonshot needs to be thoughtfully applied; after all, no one wants to watch someone taking a dump in a glass box.
Knowing this, how should Nani’s Cakehouse apply it?
Because cakes are pretty straightforward and the information on how to make them, ubiquitous, Nani’s Cakehouse may not need to apply this particular moonshot. But for customers who ask, Nani’s Cakehouse is free to share some details about their process that’s unique to them.
4. Uncertainty Anxiety
It is less psychologically stressful to know something negative is about to happen than to be left with uncertainty. Knowing that a meal you ordered is 20 minutes delayed is less irritating than just knowing it is delayed without knowing for how long.
A lot of companies employ an understanding of this psychological bias, some perhaps without even knowing it. For example, almost every food delivery company includes an order tracker with statuses like: order confirmed, order prepared, rider confirmed, rider at restaurant, rider on his/her way to you… And this is in addition to the estimated delivery times that are kept up to date.
Knowing this, how should Nani’s Cakehouse apply it?
For customers who order delivery, Nani’s Cakehouse should only use delivery apps that function as above. If Nani decides to build her own delivery platform for her business, she should take these factors into account. She could have a beautiful progress bar designed: Mixing batter → Baking → Decorating → Boxing → Out for delivery.
5. The Goal-Gradient Effect
This is the phenomenon where we are more motivated by how close we are to achieving a goal. We tend to speed up close to the finish line, when we can literally see success. This shows up in staying up to quickly read the last few pages of a book when we’re close to the end of it, buying more coffee when we’re just a stamp or two away from free coffee.
Knowing this, how should Nani’s Cakehouse apply it?
Nani could design customer loyalty cards for the Cakehouse, with cupcake stamps, such that a customer earns a free cupcake after buying a certain number of cupcakes. The last spot should be highlighted or embossed with some language like “one cupcake away” to motivate customers to come back quickly for that last stamp.
The honest fact is that it is much harder to increase customer satisfaction when a certain standard has already been met. In a world of rapid technological advancement alongside its democratization, it is not technology that will be the differentiator; it is these “other” things – customer empathy in design thinking -> psychological moonshots, and determined, continuous improvement -> kaizen.
These will be what make the winners. Implement responsibly.
Warmly,
Aniekeme
