January 11, 2009

Choice Architecture and Enterprise Architecture

In a free society like America, we are generally all strong believers in our rights and freedoms—like those often cited from the Bill of Rights-- speech, press, religion, assembly, bearing arms, due process and so forth. More broadly, we cherish our right and freedom to choose.

According to an recent article in Harvard Business Review, December 2008, one way that enterprises can better architect their products and services is by “choice architecture.”

Choice Architecture is “design of environments to order to influence decisions.” By “covertly or overly guiding your choices,” enterprises “benefit both company and consumer by simplifying decision making, enhancing customer satisfaction, reducing risk, and driving profitable purchases.”

For example, companies set “defaults” for products and services that are “the basic form customers receive unless they take action to change it.”

“At a basic level, defaults can serve as manufacturer recommendations, and more often than not we’re happy with what we get by accepting them. [For example,] when we race through those software installation screens and click ‘next’ to accept the defaults, we’re acknowledging that the manufacturer knows what’s best for us.”

Of course, defaults can be nefarious as well. They have caused many of us to purchase unwanted extended warranties or to inadvertently subscribe to mailing lists.”

Given the power of defaults to influence decisions and behaviors both positively and negatively, organizations must consider ethics and strategy in equal measure in designing them.”

Here are some interesting defaults and how they affect decision making:

Mass defaults—“apply to all customers…without taking customers; individual preferences into account.” This architecture can result in suboptimal offerings and therefore some unhappy customers.

Some mass defaults have hidden options—“the default is presented as a customer’s only choice, although hard-to-find alternatives exist.” For example, computer industry vendors, such as Microsoft, often use hidden options to keep the base product simple, while at the same time having robust functionality available for power users.

Personalized defaults—“reflect individual differences and can be tailored to better meet customers’ needs.” For example, information about an individual’s demography or geography may be taken into account for product/service offerings.

One type of personalized default is adaptive defaults—which “are dynamic: they update themselves based on current (often real-time) decisions that a customer has made.” This is often used in online retailing, where customers make a series of choices.

There are other defaults types such as benign, forced, random, persistent, and smart: each limiting or granting greater amounts of choice to decision makers.

When we get defaults right (whether we are designing software, business processes, other end-user products, or supplying services), we can help companies and customers to make better, faster, and cheaper decisions, because there is “intelligent” design to guide the decision process. In essence, we are simplifying the decision making process for people, so they can generally get what they want in a logical, sequenced, well-presented way.

Of course, the flip side is that when choice architecture is done poorly, we unnecessarily limit options, drive people to poor decisions, and people are dissatisfied and will seek alternative suppliers and options in the future.

Certainly, we all love to choose what we want, how we want, when we want and so on. But like all of us have probably experienced at one time or another: when you have too many choices, unconstrained, not guided, not intelligently presented, then consumers/decision makers can be left dazed and confused. That is why we can benefit from choice architecture (when done well) to help make decision making simple, smarter, faster, and generally more user-centric.


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