as well as buy numerous products and services.
Developing a behaviourally informed strategy enabled my colleagues and I to win a global campaign of the year award in 2014 for a social media campaign addressing domestic violence. It also led to the development of the world’s most successful stop-smoking mobile app: My QuitBuddy. I have conducted training for call centre personnel, CEOs, marketing directors, creatives, TV continuity announcers, customer experience directors, university administrators and pretty much everything in between. I have briefed ministers of state, advised financial technology start-ups, and spoken at conferences of health workers, business psychologists and nutritionists.
The only way I have been able to have such a varied career is because I have been fortunate enough to study, read and collaborate with many more qualified people. You will see many of them listed in the acknowledgements – this book represents their thoughts as much as mine. In compiling this book, I interviewed 25 of the most inspirational and thoughtful practitioners to benefit from their best practice.
In these conversations I found that there was something all the leading practitioners had in common. Despite disparate academic and career backgrounds, they all shared an innate curiosity to understand how the mind works. They are eager to know why people behave in ways that might not initially make sense, to challenge conventional wisdom, and build better businesses as a result – just as we make progress in science. As Einstein said: “The important thing is not to stop questioning. Curiosity has its own reason for existing.”
Should you want to hear more from them, please listen to the podcast series that accompanies this book – and seek out as many books, blogs, tweets and utterings from these luminaries as you can.
One final thought before you dive into the wonderful world of behavioural science in business: these tools for influencing are more powerful than many realise. Recent global events are making this increasingly plain. The ethical risks raised by the application of behavioural science are important and will be addressed throughout the book.
My inspiration to pursue a career in applied behavioural science was derived from seeing its potential to help people make the decisions they want to make, and to help businesses fashion workplaces, products and services that improve our lives and contribute to the economy.
To make our lives better, not worse.
Now, let’s get down to business.
2 An important note on terminology. I use the term behavioural science in this book, rather than behavioural economics or social psychology (for example), because the insights used in this book come from a variety of disciplines such as those mentioned, and I find it is the best term to encapsulate a holistic study of human decision-making. Also, as we will see, a scientific approach is critical to effectively applying these insights.
Part One: How to Create a Behavioural Business
Chapter 1: Undoing Economics – A New Way of Thinking
Undoing economics
When i was at university 20 years ago, behavioural science as a field of study was virtually non-existent.
But now, things are very different. In addition to flourishing academic courses on behavioural science, behavioural economics and experimental psychology, there are over 200 behavioural insights teams operating with local and national governments around the world. Leading companies are installing chief behavioural officers, and working with businesses like my own to embed this understanding into their work.
The history of behavioural science, and how it has led us to a richer, more accurate understanding of what drives our behaviour, is really a classic underdog story. It is the story of how the 300-year-old goliath of traditional economic theory, which sees humans as rational operators, has been felled by a group of determined academics – in particular the ground-breaking work of Daniel Kahneman and Amos Tversky3 – using the slingshot of behavioural economics.
What is heartening is that this new way of thinking – that humans are not purely rational, utility-maximising calculators, as neoclassical economics often assumed – is fast becoming the norm. Forward-thinking governments around the world are embedding this approach into their policy. The world of business is actually lagging (badly) behind.
But times are changing. When running training courses in behavioural science, I like to gauge knowledge in the room by asking which of the leading popular science books on the topic (like Thinking Fast and Slow and Nudge) people have read. Ten years ago, between 10–20% of people in the room had one or more of those books. These days the ratio is usually over 50%, as the base level of knowledge has grown.
In addition to building that knowledge and understanding within a business, either by hiring those lucky enough to study it or buying it in from outside, what can a business do to ensure it is always focused on changing behaviour? And what, structurally and strategically, does focusing on behaviour mean in a business?
That is what we shall explore in this part of the book. But first, let’s examine what is new about this way of thinking, and what it means for businesses in general.4
Why is behavioural science important for business?
After the 18th century,5 academic theory about how people behaved was mostly based on a traditional economic theory of utility maximisation. That is, every human decision was based on a simple rational weighing up of the pros and cons of a particular action. Professors Richard Thaler and Cass Sunstein, the authors of Nudge, call this straw-man version of humans an ‘econ’, or homo economicus – because it is someone who only exists in the pages of an economics textbook. Like the character Spock from Star Trek, they are a totally rational operator, ungoverned by emotions.
And, like Spock, they are not human.
Let’s take an example – why people commit crime – to show the flaws of this approach. The University of Chicago economist and Nobel laureate Gary Becker devised what is known as the Simple Model of Rational Crime (SMORC) to explain why crime happens. This states that, in any given situation, a potential criminal weighs up the benefits of the crime (e.g. the financial gain) versus the potential costs (e.g. likelihood of being caught and going to jail).
According to this theory, the Enron fraudsters, for example, made this cost-benefit analysis and (wrongly with hindsight) decided the money they made was worth the risk of their actions. That risk being jail time and the future insolvency of the business.
The problem with SMORC, like most neoclassical economic theory (and financial models and management/marketing theory derived from it), is it assumes the Spock model of humans as totally rational beings who only act based on self-interest.
If this were true, all of us would be committing certain low-risk crimes on a daily basis. As Dan Ariely, James B. Duke Professor of Psychology and Behavioural Economics at Duke University writes:
“We wouldn’t make decisions based on emotions or trust, so we would most likely lock our wallets in a drawer when we stepped out of our office for a minute … There would be no value in shaking hands as a form of agreement; legal contracts would be necessary for any transaction … We might decide not to have kids because when they grew up, they, too, would try to steal everything we have, and living in our homes gives them plenty of opportunities to do so.”6
If you have ever tried to stop some form of dishonest behaviour in business – over-claiming on expenses, or stealing lunches from the communal fridge, for example – you will know
