Can a gentle nudge improve organisational effectiveness?

Written by Gareth Morrell, Head of Insights & Intelligence

The recent news that the ‘Godfather of nudge’, Richard Thaler, had been awarded a Nobel Prize for his leading work in behavioural economics prompted mixed reactions. For some, his work is the catalyst for using evidence of how people actually behave in the real world to improve policy design; others feel that at best, these improvements are simply tinkering at the margins or, at worst, reflect the social engineering of a nanny state.

The reality is a balance: there’s some truth in all these positions and lots to learn from each of them for business communicators.

But first, what did Thaler do? Nudge Theory fuses the theoretical underpinnings of cognitive psychology and behavioural economics with the design and delivery of mass public policy. The starting position here is that as citizens we often make choices that are not best for us or for the communities or society we live in, but that there are a series of well-understood influences that policy-makers can tap into to help correct this.

Seasoned advertising executives may wonder what’s new about suggesting that humans are not rational. But Thaler’s contribution was to bring this insight to the world of policy making in a way that could be measured. He realised that we could be ‘nudged’, through the minor re-wording of communications or the slight re-design of a process, into behaviour that has benefit for the individual and a wider social good.

A classic example is increasing proportion of people consenting to organ donations. The study is described in Thaler’s book: by simply switching the default option from not being a donor to being a donor, 82% of people consented to organ donation compared to 42% through the opt-in method. This taps in to a well understood bias known as ‘defaults’: we humans typically go with the pre-set option or what we’ve done before.

There’s a powerful and elegant simplicity in the improvements made by these sorts of behaviour change initiatives. So what are the critics concerned about? Firstly, they argue that nudging can only make a difference at the margins and that the interventions lack substance or political identity – it’s fiddling around rather than visionary change. It’s true that often, the impacts of a single intervention are small – but in aggregate, these changes can substantially improve outcomes as part of a wider political programme.

The second criticism is that changing people’s behaviour reeks of the nanny state. Why should we be (unwittingly) nudged into doing the government’s idea of what is the right thing for us to do? This is a danger and to counter this criticism, behaviour change initiatives have to not only be part of a wider political programme or vision, but one that has broad public support, as Andrew Rawnsley explains. Take the Organ Donor’s example: polling results across a range of countries suggest that an overwhelming majority are in favour of organ donation, so where’s the harm in changing the default to presumed consent in order to overcome our sluggishness in opting-in?

With these caveats, it is also possible for businesses to harness the power of well-established behaviour change influences such as making public commitments, reciprocity, loss-aversion or social norms. As with the policy realm, these initiatives need to be aligned to a broader corporate strategy and a vision for internal culture, one that employees buy into. If these initiatives appear random and uncoordinated, employees may resist; if they actually are random and uncoordinated, they will likely produce unintended consequences and confusion.

In the next blog on this subject, we’ll look at some specific examples of how thinking about behaviour change can improve organisational effectiveness – evidence-based and low cost solutions for an uncertain and austere business climate.