I have been reading Daniel Kahneman’s work on decision making and found he’s got some concepts on the importance of reference points for decision making. He talks about “Bernoulli’s error.
Are you with me?
I’ll back up two steps and cover the “Bernoulli’s error” concept here.
Basically this is the guy who gave us the normal distribution. The thing he came up with is decision making ‘should’ be based upon logic and rational thinking. It’s also fixed on a particular reference point (i.e. the day you analyse the situation and make a decision) and the decision extends into the future.)
So, an example; You need to work out the best car for you. The Aptera 2e may be the right choice. It was always the right choice, and it always will be. At least until a better car comes along.
But.
If you are already driving the ZAP Alias, the decision to migrate to the Aptera may be a different one that if you are driving something a little older.
The mistake that Kahneman identifies and articulates is that our reference points change over time. What we perceive as valuable, or risky today, is different from the past and will be different in the future.
Kano recognises this and sees that what can be an ‘exciter feature’ today will eventually be commoditized.
Another example for the business casers out there. A return on a project of $10 million a year sounds okay now, but what if a better opportunity comes up later? Does our decision to go for $10Mpa stand?
And at the more detailed level, a system requirement that sounds like a basic and mandatory feature today might become irrelevant later, as more becomes known about the way users interact with the system itself.
Of course you eventually have to commit to something and you can’t just keep abandoning projects or requirements as something better comes up. You have to be able to see where you are and where your next step will take you. Divining too far into the future is pointless and results in ‘analysis paralysis.’
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