Recently, I took an Executive Program on Behavioral Economics with over seventy other students from around the world. Taught by Harvard Professor, John Beshears, we focused on understanding human behaviour and its drivers, such as cognitive biases and the psychology of motivation, and how to influence the behaviour of our employees and clients, ethically.
Behavioural economics provides insights to understand, predict and change human behaviour through nudges in systems or processes specifically designed to promote actions that align with desired outcomes. This art of carefully crafting an approach that encourages users to make the certain decision is known as Choice Architecture.
From diverse thinking to new principles to challenging bias, there was so much to learn and take away from these sessions. However, when it comes to rethinking how we encourage action and change, three things stood out for me, and I’d like to share them with you.
Leaders can use choice architecture strategies to influence decision-making.
Over time, our brains are trained to make quick decisions based on how familiar we are with the situation. As decision-making increasingly relies on rules of thumb that worked well in the past, it opens room for predictable mistakes. To increase the speed of decision making and minimize errors, leaders can create processes that increase the frequency of decisions aligned to the organization’s desired outcomes. If human judgement is not needed, then automate the process. If human judgement is required, simplify the process by asking individuals to make an active choice between two options (“yes” or “no”).
Consider the power of framing when communicating change
Framing is one of the most helpful tools to use when communicating change. It’s how you think about something and the words you use to express an idea. It’s the story you tell and the inspiration you can give. When trying to influence a change, educating or telling people about a solution does not always produce the desired outcome. It is important to frame the change around motivational factors that moves people to act. Such as Social Context (everyone is doing it), Personal Benefit (here’s what’s in it for you) and Structural Hoops (its process and tools to be used).
Give people an active choice.
As we think about influencing behaviour it’s important to note we can’t take away individual’s ability to make a choice. We must ethically design systems that do not manipulate but aims to serve the greater good of all. Ethical issues become even more important as you consider decisions around individual’s health or privacy. Give people an active choice by creating a nudge in the process that forces them to stop, think and consider the choice to make. You can set the default to the preferred option (i.e., opt in vs opt out), however the final decision should be in the hands of the individual. This also often helps overcome the inertia we sometimes face when making decisions.
As I reflect on time spent with this cohort, I realize that this concept has been around us for a while now, and you can see these design principles applied everywhere you look. Think about the plug for your coffee maker. It will never fit into your phone. It’s not designed to. That’s the same principle. As leaders, we create processes and systems for our teams to act and execute work with the desired outcome in mind. For instance, if you want your team to use data while planning, create a planning template that requires them to enter data as part of the process.
We all have a unique opportunity to shape our organization and the interactions with customers through the decisions we make, let’s use this superpower to engineer choices that serves the greater good of all.
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Choices are a must!