The reading highlights a critical insight: many products fail because of psychological biases that influence both customers and the executives behind the products. These biases lead to products being undervalued by consumers, who compare them unfavorably to familiar alternatives, and overvalued by executives, who tend to overestimate the benefits of their creations. One of the most influential biases is loss aversion, a powerful psychological force that heavily shapes consumer decision-making. Psychologically, people view their current product or solution as the baseline against which any changes are assessed. Improvements are seen as potential gains, while shortcomings are perceived as potential losses. According to the theory of loss aversion, the impact of potential losses is weighted so heavily that people require gains at least 2-3 times greater than any potential losses to even consider a switch. This effect is compounded by endowment theory, which suggests that consumers see abandoning their current product as an inherent loss, making adoption of a new product even more difficult. As the text points out: “It’s not enough for a new product simply to be better. Unless the gains far outweigh the losses, consumers will not adopt it.”
For example, consider the adoption of electric vehicles (EVs). Despite significant advantages like lower environmental impact and reduced fuel costs, many consumers hesitate to switch from gasoline cars due to perceived losses such as limited charging infrastructure. The loss of convenience and familiarity with gas stations must be compensated by EVs by offering substantial gains, like lower maintenance costs or tax credits, to overcome consumer loss. Another challenge is the friction associated with adopting new behaviors. Switching to a new product often requires consumers to invest time and effort in learning how to use it. For instance, when Microsoft introduced the “ribbon” interface in its Office suite, it faced significant resistance despite the interface being more efficient in the long run. Customers familiar with the old menu system, felt like a loss in productivity. On the other side of the spectrum, company executives often overvalue their product, considering it a baseline of perfection because of their emotional and time investment in its development. This misalignment between executive enthusiasm and consumer skepticism is a critical barrier to product adoption.
Given these psychological dynamics, product managers must design strategies that align their product’s perceived value with consumers’ internal value systems, rather than relying solely on their own standpoint. One approach is leveraging the “9x effect,” discussed in the reading, which accounts for the 3x undervaluation by consumers and the 3x overvaluation by executives. As the reading discusses, the product must deliver 9-10x the value of existing alternatives to overcome these customer and executive biases. For instance, when Apple introduced the iPhone, it wasn’t just a slightly better phone, but a device that combined a phone, an iPod, and an internet browser, making it an overwhelming value which helped consumers overcome loss aversion and adopt the product. Additionally, products should maximize improvements while minimizing behavior changes required to use them. For example, when Tesla first introduced its electric cars, they did so emphasizing similarities to traditional behaviors, such as offering charging adapters compatible with home outlets. This strategy reduced the perceived loss of switching technologies. Gradual rollouts of new features also help ease consumers into new behaviors. Google, for instance, often introduces new Gmail features as optional add-ons before fully integrating them into the platform. This allows users to adopt changes at their own pace, reducing friction and resistance to new behaviors.
By focusing on these strategies, product managers can navigate the complex psychological terrain of consumer resistance and mitigate their own eager-seller syndrome. They can ensure that the value assessment of the product by internal executives aligns with the customer’s perception, making customers less stony in their adoption of the product. Ultimately, understanding and addressing the psychological biases of both consumers and executives is a practical necessity for product success.
