Sometimes, even billionaires make mistakes.
In 2014, Jeff Bezos had a plan to make Amazon a ‘loveable brand’. He wanted the e-commerce giant to be less Walmart and more Apple.
His solution was to launch a phone - the Amazon Fire. This premium smartphone would bring all Amazon services together and challenge Apple and Android.
Right from the start, Amazon’s senior product teams had serious doubts about the Fire project. But it was the brainchild of Jeff Bezos - the man who re-invented shopping. The product teams kept schtum and trusted their boss’s track record.
Bezos became obsessed with a feature that he thought would revolutionise the smartphone world - Dynamic Perspective.
‘We poured surreal amounts of money into developing it,’ recalls a former engineer. ‘Yet we all thought it had no value for the customer. Whenever anyone asked why we were doing it, we said ‘because Jeff wants it’.’
But Dynamic Perspective wasn’t the only major fail. More destructive was Bezos’s decision to make the Fire phone the same price as the Apple iPhone 6.
Weeks after parading the Fire on stage, Bezos’s dream was crushed by appalling sales figures. The iPhone 6 exceeded four million sales in its first 24 hours. The Amazon Fire failed to shift 35K devices in its first two months.
The Overconfidence Effect
This story serves as a useful reminder for all marketers. Especially those promoting a new product or service.
In psychology terms, Jeff Bezos succumbed to a classic cognitive bias: the Overconfidence Effect.
The Overconfidence Effect happens when people overestimate their knowledge and abilities. Their subjective confidence in their judgements is greater than the objective (actual) accuracy of those judgements.
Unsurprisingly, it’s more pronounced in men.
Entrepreneurs suffer from overconfidence all the time. Every restaurateur hopes for lasting success, despite statistics showing that most close their doors after just three years. A track record of success, which inflates the ego and reinforces feelings of superiority, only serves to strengthen the Effect.
In Jeff Bezos’ case, Amazon and Kindle gave him the overconfidence to waltz into a new sector and challenge the might of Apple. The Overconfidence Effect meant he dismissed the concerns of his product teams, while grossly overestimating the appeal of a gimmicky feature, Dynamic Perspective.
Thankfully for Jeff, he had talents elsewhere.
While we marketers may lack Bezos’ giant ego and bank account, we’re all susceptible to the pitfalls of overconfidence. So, how can we avoid this trap?
Here are three important techniques to remember:
- Seek diverse opinions. Consult with others and consider diverse opinions before making key strategic decisions. Avoid relying solely on your own judgement and seek out contradictory options and evidence.
- Be sceptical of predictions. Especially if they come from so-called ‘experts’. Surprisingly, experts suffer more from the overconfidence effect than laypeople. When asked to predict oil prices in five years’ time, an economics professor will typically be as wide of the mark as a plumber. However, the professor will offer his forecast with certainty.
- Recognise the role of luck: Acknowledge that some degree of luck plays a role in marketing outcomes (e.g. an unusually generous budget, a fortunate choice of creative) and that success can’t be solely attributed to your skills and knowledge. Recognising luck will help you to maintain humility and avoid overconfidence.
In conclusion, next time you have a light bulb moment and feel the urge to rush ahead with implementation, take a moment to remember the fate of the Amazon Fire.
Apply the techniques above and you will undermine overconfidence.
