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The science behind it

A highly innovative approach leveraging our mind’s System 1 and System 2.

Our mind works like a computer with two processors

Modern processors

Indeed, research in cognitive sciences has shown that our brain operates very much like a computer with two processors:

Our explicit processor. We call it system 2 of mental operation. It is slow, conscious and deliberate. We use this system when analytically solving new or complex situations like 7*43.

Our implicit processor. We call it system 1 of mental operations. It is fast, unconscious and impulsive. We use it when we intuitively make decisions or solve problems like 4+4.

While system 2 is under our control, system 1 is used outside of our awareness. Our implicit processor is very powerful as it helps us perform not only automatic tasks such as walking or driving but also quickly solve complex problems. It happens when our “intuition is right’’ without us being able to analyze the underlying reasoning.  Nevertheless, the implicit processor often makes approximate and subjective decisions. Why? Because they are influenced by many unconscious biases (i.e. cognitive deviations in our reasoning and judgment). They result from our past experiences or culture and can impact our perceptions in different areas such as finance, human resources management, and often drive consumer behaviors.

The phenomenon of unconscious biases is the subject of increasing interest and research, for example it has been popularized in books such as ‘Blink’ by Malcolm Gladwell or ‘Thiking fast and slow’ from the Nobel-prize winner Daniel  Kahneman.

While traditional business approaches address only our system 2, Diverseo’s approach complements traditional consulting approaches by integrating the latest research of mind sciences. We identify unconscious bias, assumptions and inferences from system 1 to allow businesses register impact in areas where traditional approach have limited results.

blink - thinking fast and slow

Financial decision-making

Buy hold or sell

When choosing between two portfolios A and B, you may be influenced by a number of factors that prevent us from making the right decisions. A rational, fact-based and exhaustive quantitative analysis would lead you to choose portfolio B. And yet, you may finally choose portfolio A because a colleague has bought it, because it has been successful in the past, or because it is less risky and you tend to have a low preference for risk. Such biases might even lead you to change the criteria integrated in your quantitative analysis. They can therefore significantly affect the performance of our investments. Another interesting example is the better-than-average effect, when investors tend to think that they are systematically better than the others. Research in behavioral finance has shown that such a bias leads to more trades, higher transaction costs and no significantly higher returns. Coping with cognitive biases can then help improve the quality and effectiveness of investment decisions.

Impulsive, emotional, unprompted…most purchases are far from being rational. Consumers are influenced by the immediate stimuli of the shopping environment, their past experiences and social interactions. Quantifying and monitoring these is key for making effective marketing decisions.

In a recent study using our approach, for instance, American consumers have been shown to associate implicitly 66% more unhealthy products with tastiness than healthy products while it was the contrary for French consumers. Such attitudes were much less differentiated when consumers were explicitly asked to evaluate both types of products. These most often are not captured by qualitative techniques such as focus groups. The ability to measure and quantify such unconscious associations with Diverseo’s proprietary tools is a powerful asset for your marketing strategy.

Consumer behavior

Consumer behavior

Human resources and diversity management

Job interview. Businessman having a job interview.

Social interactions are often initially System 1 –or unconscious- operations. Each time you see someone, you automatically attribute certain characteristics to this person, without even being aware of this process. Such automatic attributes result from your past experiences and culture can have a deep influence on your perceptions of different people. They can lead you to make wrong decisions in recruitment, promotion or compensation.

Let’s illustrate the impact of unconscious biases in diversity management with the example of stereotypes about women. Concretely, such a stereotype means that when making a decision about a promotion to a key leadership position, a man may be appointed instead of a more competent woman because of an insidious cognitive associations such as women/family or men/leadership. But you may also prefer the man due to other biases which have nothing to do with stereotypes. For instance, the man was the first to be interviewed so you remember him better or you were told just before that he was a serious guy.  We are not necessarily conscious of such biases. We have only the strong intuition that this person will fit the position better but we have no way to know why. Again, our implicit processor is an effective problem-solving shortcut but it can also lead us to make unfair and biased decisions.

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