Decision Making and the Starbuck’s Effect

starbucksInvesting in more people in China takes a higher calculus in 2024 than in 2012 when I first wrote this blog.  With the right risk assessment, I see companies moving ahead again. Let’s think on our decision making biases.

I have helped a number of Western companies make decisions to invest in China to start factories or other work. Years ago, I used a matrix of factors that represent what the company needs in location as they try to choose where to invest.  They are all weighted appropriately by the company leaders. They never list- Is there a McDonald’s? a Starbucks? However, 9 times out of 10,

 

The leaders will be influenced and choose the place with a nearby Starbuck’s  or other such familiardecision making restaurant. All the numbers they put on the board are higher in the place where they saw more Western Restaurants.  For example: ‘Availability of Good Factory Space for Rent’ will be listed higher by them though no one mentions the McDonald’s. They talk about the objective factors and vote McDonald’s though no one explicitly is considering availability of Western fast food joints when saying how good they feel the facilities are.  I can predict how they will vote based on restaurants along the route. Unwritten decision making biases dominate. Starbucks also causes this effect here and are everywhere.

Marketers have studied this effect. We think we are very objective.  Good marketers know better and can get us to do things that we do not expect.  I have tried once by words to get a company to not succumb to the ” sighted a McDonald’s’ priming effect. It did not help. See also Decision Making Needs Better Information.

Decision Making Biases Can Hurt US More Than We Know

Perhaps this blog will help some people with this Western Restaurants effect, but many others exist all around us. At least in bigger decisions, we need to get passed our own subjectivity by what ever help we can get.

In recruiting, the big issue is not letting candidates who are good at using great buzzwords get us mystified. We need to hire on data showing how people have done at other companies rather then their use of certain phrases or showing certain enthusiasm.

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Posted in: China, Decision Making, Leadership, Market Entry

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