On Chunking

For those of you who struggle with ensuring that delegated tasks are completed on time, I have some good news for you. New work by some behavioral economists has shed some light on this difficult situation.

Most of us are familiar with the psychological concept of chunking in large part because of a famous paper published in 1956 by George A. Miller entitled The Magical Number Seven, Plus or Minus Two: Some Limits on our Capacity for Processing Information.

The idea is that our short-term memories can only remember 7 +/- 2 items in a list, such as number, unless we chunk it down into groups of numbers. Some common examples would be phone, credit card and social security numbers.

More interestingly, some behavioral economists have demonstrated that the same concept can be applied to the assignment of tasks. When an assignment is given to a person to complete, it is far more likely to be completed if it is chunked into two or three sub-tasks, rather than just assigned as a single task.

Rory Sutherland refers to this in many of his presentations. Here is one from the APA. He talks about this concept beginning at 2:45, but watch the whole thing it is great stuff!

The lesson here for professionals is this – whenever you give an assignment break into at least two parts, even if it seems somewhat artificial. Some examples:

  • “Enter this data, then call me.”
  • “Review this document for clarity, then email it back to me.”
  • “Create the report layout you want, then convert it to a pdf.”

I believe this will work when you assign tasks to fellow team members, but, more importantly, I believe it will help with tasks that you assign to your customers.

I have begun to experiment with it and it seems to be working.

Rethinking Unlimited Access Level Agreements

While watching Rory Sutherland’s Zeitgeist presentation for the 20th time, I was struck (finally or again) by his story about Spotify and how they have not gotten much traction with their offer of unlimited downloads per month. He suggests that they change it to some absurdly high number like 180 songs a month.

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Sutherland reasons that unlimited provides no context to the offering. As he put it, “Nobody knows what unlimited music is worth. It is a bit like asking, ‘Would you like to buy my unicorn?’”

The 180 song per month limit would give the price context in that it could be compared to iTunes at $0.99 per song. So for $9.99 a month you could enjoy $180 worth of music.

This got me to thinking.

Perhaps access level agreements should have a similar notion. Instead of saying unlimited access, perhaps it should be changed to 30 contacts (phone calls or emails) per month. Now, this would be more than anyone could possible need, and would therefore it would not be a barrier to any customer in terms of being worried about wasting a call on their particular issue. It would, however, allow them to compare it to other plans where there is a per call fee, thereby increase the perceived value of your offering.

What are your thoughts?

ET HORA LIBELLUM DELENDA EST

An Economic Theory of Everything

One of my all time favorite TEDTalks is by Rory Sutherland, a principal at the advertising firm Ogilvy. His brilliant analysis was on display again at Zeitgeist 2011.

 

The lessons here are many, but for me key learning is the link between Austrian and Behavioral economics:

  • All value is subjective, AND…
  • All prices are contextual.

The implications of these two statements together are profound and in my opinion amount to an economic theory of everything.