If You Want to Paralyze Your Business, Give Your Customers and Yourself Too Many Choices
What made Elon Musk flirt with disaster
Usually, I never think straight when I’m hungry — let alone have a eureka moment. Yet, there I was staring at an endless menu thinking: “Holy Sweet Potato… ‘the more choices, the better’ couldn’t be more wrong.” Since then, my default choice has always been the dish of the day — and, believe it or not, limiting my options has made me happier.
“The theory is that when we have so many options, we have greater opportunity costs in selecting each particular one; therefore, we’re less happy with our decision.” Manson wrote in one of his blog posts — keyword being opportunity cost.
Opportunity cost represents the loss of the benefits that could have been enjoyed compared to the options we didn’t select.
For instance, if I choose an apple pie for dessert, I will miss out on the softness of a Crème Brûlée and the crunchy texture of a Macaron. Sure, apple pie is delicious but choosing it will deprive me of the other options.
The trade-off would’ve been fine if the human psyche wasn’t focused on what’s lost. In his book, The Paradox of Choice, Schwartz tied this negative tendency to choice abundance. He wrote: “Being forced to confront trade-offs in making decisions makes people unhappy and indecisive.”
Why is this relevant for entrepreneurs? Not only do we have to choose which business paths we should pursue, but we also have to be aware of what options we’re offering to our clients.
In other words, the paradox of choice affects your business both in decision-making and sales.
Decrease Your Options to Maximize Your Performance
Entrepreneurs are often a lot of things at once. Many of us tap into different fields and offer a variety of services simultaneously. Except, the more entrepreneurial paths you undergo, the more risks you take and the less productive you get. Elon Musk’s journey is a perfect example.
Musk’s adventure started with Zip2 that he founded with his brother in 1995. Four years later, the brothers sold the successful Zip2 and founded the company that later became Paypal. After selling the latter in 2002, Musk started SpaceX and Tesla months apart — and that was the trigger of disheartening consequences.
In an interview, Musk recounted his struggle with choosing which business to abandon. In 2008 both companies were on the verge of collapsing, and Musk didn’t have enough money to ensure the survival of both of his entrepreneurial children.
“If I split the money, maybe both of them would die.” Musk said. “I gave both SpaceX and Tesla a probability of less than 10% likely to succeed.”
Eventually, Musk took that crazy bet and split the money. Luckily for him and the rest of the world, his decision paid off — but not all of us get as lucky.
Had Musk focused on one company at a time, his odds of succeeding would’ve been greater, and he would have saved himself a lot of turmoil and exhaustion. “He looked like death itself,” his ex-wife Talulah Riley said, describing him during the 2008 crisis.
Musk had probably not realized that to do many things at once is to do none properly. Productivity expert and author David Allen said it best: “You can do anything, but not everything.” Besides, the more diversified your work is, the more liable you are to fall into the trap of multitasking — yes, it’s a trap.
Neuroscience argues that only 2% of the population are adept at multitasking — The rest of us are just constantly shifting back and forth from one task to another. Each time we switch mental gears, we lose up to nine minutes to refocus. Besides, further studies suggested that excessive multitasking damages our brains.
Sure there’s the faint possibility you can get away with juggling businesses and taking gambles — as Musk did. But for that, you would need a lot of wealthy friends and plenty of good fortune.
For the rest of us, grounded entrepreneurs, it’s important to stick to the facts and avoid needless pitfalls. In doing so, remember to:
- Prioritize your most relevant business path.
- Focus on one task at a time as much as possible.
Once your main goal is reached, and you’re in a position to afford to hire people, you can move to a new goal, such as reaching new clients through a new business. Speaking of clients, remember that they, too, have trouble with choices.
Limit Your Customers Options to Increase Their Satisfaction
To illustrate the importance of decreasing your customers’ options, let’s get back to me and my dessert choice for a minute. Picking apple pie over Macarons and Crème Brûlée altered my expectations and, in turn, my contentment.
Schwartz argued that the more options people have, the higher their expectations. The result, he explained, is “less satisfaction with results even when they’re good results.”
Schwartz’s words mean two things. First, the mere presence of two dessert alternatives shrunk my satisfaction with the pie regardless of its quality. Second, if there were a fourth option like ice cream at my disposal, my dissatisfaction with the pie I chose would expand.
In the online world, this negative double-effect is amplified. For instance, if you type “Sparkling water” on Amazon, you’ll get 711 results.
Screenshot by the author from Amazon.com
Whichever bottle you choose, you’ll suffer from the consequences of missing out on 710 other options — your high expectations will lead to disappointment, and opportunity cost will foster regret and what-ifs.
That’s why, in this context, websites like Amazon are a great place to disappoint yourself as a customer.
It doesn’t stop there. Meta-studies carried out in 2015 showed that choice overload paralyzes the customers’ decisions. When your customers have too many options, their brains think that they’re better off not choosing at all — put differently, they become reluctant to buying altogether.
In short, choice overload leads to no sales, or at best, unsatisfied customers.
So, what should we do then?
The answer is straightforward: limit your customers’ options. Yes, that’s it.
Here are three varied examples of how to do it:
- Limit the products you sell at one time: You can organize your sales to highlight only three or four products per month or season. Even Apple highlights only one product on their landing page.
Screenshot by the author from Apple.com
- Limit your niches if you’re a content creator: For instance, I changed my bio from “The bald guy who writes about things he finds useful” to “Psychology | Business | Marketing — Bla-Bla-Bla.”
- Limit the number of menus on your website if you sell online and on your menu or façade if you have a shop or diner: the contrast between Google and Yahoo is a good example. While Google encourages you to dive in through its simplistic template, Yahoo makes you freeze with its barrage of menus and headlines.
Screenshots by the author from Google.com and Yahoo.com
Every time you multiply your business options, you create more risk, and every time you provide an additional choice for your customers, you set them up for disappointment.
In other words, choices on your business journey are like salt in a dish. Its absence makes the dish dull, and its excess makes it distasteful. Sure, the right dose depends on your taste and that of your target clients, but nobody enjoys overly salty food.
So, remember to pull your pinches.
Business | Psychology | Marketing — What's your favorite quote? Mine is "True masters are eternal students."