Monday, February 08, 2010

Peyton Manning and the Recency Effect

In the aftermath of an exciting Super Bowl, let's consider a lesson we all can learn from the hoopla surrounding Peyton Manning in the days leading up to the Super Bowl. During the entire two weeks leading up to the big game, we heard expert after expert pronounce Peyton Manning as the greatest QB to ever live, or perhaps right on par with the great Joe Montana. Everyone presumed that he would win the Super Bowl. Was all that hype really justified? (As a Patriots and Tom Brady fan, I was perplexed, to say the least!)

Overall, going into last night's game, Peyton Manning had 9 wins and 8 losses in his playoff career. Until his only Super Bowl win in 2006, he had a reputation for performing poorly in the postseason. That championship season changed perceptions. Yet, he lost both of his playoff games in the two seasons after that championship. This year, though, he led his team to the Super Bowl once again. People seemed to forget his postseason struggles, his inability to play his best on the big stage. Even in 2006, when his team won 4 games and lost none in the playoffs, he had only 3 touchdowns and 6 interceptions during the postseason... not exactly stellar. No one seemed to remember these facts.

Last week, no one also seemed to remember that Joe Montana won 4 Super Bowls and didn't lose any, while throwing 11 touchdowns with ZERO interceptions in those games. Overall, he won 16 games and lost only 7 in the playoffs. Yet, people proclaimed Manning the greatest ever last week.

What happened to all the experts, who surely don't forget Joe Montana's greatness or Manning's playoff struggles of the past? The lesson is that humans are incredibly vulnerable to what psychologists call the recency effect. We have a strong tendency to place too much emphasis on information and evidence that is readily available, such as recent events. We are incredibly myopic. The Manning hype provides a powerful example of the recency effect in action.

1 comment:

Luke Bornheimer said...

Interestingly enough, a similar comparison can be made with almost all Apple major announcements. Further, the recency effect can even be seen in events that are PERCEIVED to have major announcements.

Two perfect examples can be found in a more recent announcement as well as one made just over two years ago.

First, the announcement and unveiling of the iPad about two weeks ago, showed how years of speculation killed the product's launch. The product, in reality, is a killer device for *what it aims to be*...but that's not what the market expected. For some reason (typical Apple pre-launch excitement), many believed the product would do everything short of solving the U.S. debt disaster. The most popular over-hyped fantasy was the idea that the iPad would have full Mac OS X on it. The idea, was CLEARLY unrealistic and yet, the stock price took a hit due to these unrealistic expectations...much like Peyton Manning was believed to win the Super Bowl without breaking a sweat.

The other example, the announcement of the MacBook Air, proves that even a revolutionary product can seem outdated when released by Apple. The computer, which represented one of the most powerful laptops of its thinnest and weight at its launch, left many disappointed.

Of course, Apple deserves no sympathy. Don't be fooled, they desire this hype and even encourages it through practices that keep products hidden until Steve Jobs pulls them out of his pocket, a manila envelope, or just pick it up off a chair (as was the case in the iPad launch).

The lesson to be learned is that, much like Peyton Manning and the tech run-up and bubble burst of the early 2000s, Apple's products often fall victim to the recency effect. Due to lack of solid information, company fanboys and followers are left to analyze rumors and often wrong predictions to fuel their interest in the product. When such practices occur, a product cannot be expected to meet the hype is has garnered.

Perhaps the successful and surprisingly positive launches of the iPod and iPhone led the market to believe that the iPad would change the world on Day 1. Perhaps this is not what Steve Jobs planned for the device to do, ironically...