An introduction to behavioural economics for business impact

Cast your mind back: what was your new year’s resolution? Mine – to read more on the bus to work - is such a distant memory, I had abandoned it by the end of January. It didn’t seem too ambitious at the time, but it turned out it was. I wanted to read, I know how to … but somehow every time I got on the bus it was easier to plug into a podcast. I don’t outline this to show you what a mindless smartphone slave I am, just to illustrate the obvious point that knowing how to do something is not the same as doing it. There is a quantum leap between the two.

In corporate learning we often overlook the fact that people already know what they ought to do, how to do it and even want to do it – but sometimes it isn’t straightforward just to do it. So if our purpose is to help people take the right actions, complete tasks and do their work in the simplest way – how can we do that? If we are truly committed to creating learning with impact, we need to think about not just knowledge transfer, but the science of behaviour.

Pinpoint that one thing

In our Learning Insights 2018 report, one of our ever-insightful clients said, “I’m looking forward to asking more: what’s the one thing we could provide to help you do your job?” There are two things I love there: the simplicity of ‘one thing’ and the focus on ‘doing’. Most of the time it’s not about giving people all the knowledge they could possibly need to cover any eventuality; it’s about keeping your eye on the prize – getting stuff done.

The purpose of corporate learning should be to make an organisation more successful, by helping employees to do their jobs better – in all kinds of ways. So surely, in L&D, our question should always be this kind, generous, supportive question - ‘How can we help you? How can we make your life easier?’

Complexity and simplification

But why is this so critical now? We’re all aware of the constant torrent of data and increasing complexity of the workplace. Research from Deloitte showed that more than 80% of companies surveyed rate their business as ‘highly complex’ or ‘complex’ for employees, and yet fewer than 16% of companies have a program to ‘simplify work’. Pity the employees!

But wait a second! We are all the employees – and this issue of complexity and simplification is key. Simplification is becoming more and more critical for us to be able to function properly and effectively in the digital landscape – or even despite the digital landscape.

How can we help people to deal with this complexity? Here’s a quote from the classic behavioural economics text, Nudge: “The sheer complexity of modern life, and the astounding pace of technological and global change, undermine arguments for rigid mandates or for dogmatic laissez-faire. Emerging developments should strengthen, at once, the principled commitment to freedom of choice and the case for the gentle nudge.”

The gentle nudge

The term ‘nudge’ comes from the field of behavioural economics. Traditional economics has always functioned on the assumption that people are rational and make the best decisions for themselves. But as we all know, our thinking and behaviour is often irrational and instinctive. So behavioural economics is a field that focuses on how that instinct works – and as described in Nudge, a nudge is an approach “that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives.”

Nudge has a fantastic example of how behavioural economics works. If you’ve ever taken a bathroom break in the Gents at Schipol Airport, Amsterdam, you may have seen a small picture of a fly etched near the drainage hole in each urinal. The airport manager was looking for a way to reduce spillage around the airport’s urinals. So he had the inspired idea of having small flies etched on them – as a kind of target. As a result of this, the airport manager reported an 80% reduction in urinal spillage – and an estimated 8% cut in total bathroom cleaning costs. This is behavioural economics in action.

A lot of behavioural economics is focused around public sector policy-making: how to design systems and campaigns to encourage people to do the right thing for themselves and others. It has been used in campaigns around saving for retirement, smoking cessation, binge drinking and forest fire prevention, for instance.

Obviously, this is relevant to us in the world of corporate learning too - because often what we’re seeking is not just knowledge transfer, but behaviour change and changes in decision making, habits and actions. Particularly in an area like compliance. For instance, in anti-bribery or data protection, often the question is not ‘do your learners know the information?’ but ‘how can you help your learners take the right actions’.

Instinct vs logic 

As I mentioned earlier, the principles of behavioural economics don’t rely on the assumption of reason and logic, they also take into account our instincts and unconscious impulses. In Thinking, Fast and Slow,the model of Systems 1 and 2 thinking represents this well. System 1 “operates automatically and quickly, with little or no effort and no sense of voluntary control” – it is fast, instinctive and emotional. System 2 “allocates attention to the effortful mental activities that demand it, including complex computations” – it is slower, deliberative and logical. As stated in Fast and Slow, “System 1 is more influential than your experience tells you, and it is the secret authorof many of the choices and judgments you make.”

We cannot help but have our System 1 thinking play a part in our decisions and behaviour. So if we are seeking simplification in the face of complexity, we want to decrease people’s cognitive load. We should therefore set out to appeal to their System 1 thinking, because instinctive thought is quicker and easier than a logical processing of information.

The fields of advertising and propaganda have known and relied on this speed and power of processing emotional decisions for centuries. We can best appeal to System 1 thinking and the most powerful decision engine through instinct and emotion. And one of the best ways of provoking these emotions is to use stories – which is just another reason for using scenarios, narrative and case studies in learning.

So what does all of this mean for LX?

The principles of behavioural science are all working towards the same aim as those of user experience and learner experience – making life easier, removing complexity and increasing simplicity. For instance, if we look at Nielsen’s 10 usability heuristics, we can see that they are all about using simplicity to help people do what they want and get to where they want to be.

Let’s look more closely at those principles of behavioural science. The Cabinet Office’s Behavioural Insights Team (BIT) – affectionately called the Nudge Unit – was set up to improve the UK’s government policies and services. BIT developed a checklist of influences on our behaviour for use when making policy. It’s a mnemonic called MINDSPACE.

The principles can be related to how we design a learning experience or devise a system of workplace resources and tools. They can relate to the micro level of how we design a button or interface and to the wider macro level of designing a learning ecosystem or work process.

So, how might we leverage each of these principles to enhance the impact of a learning experience?

Messenger: we are more likely to be influenced by figures of authority who we like, or people we perceive to be like us. So, we can leverage learning by having it endorsed, championed or even have content messages delivered by well-liked and respected managers and colleagues.

Incentives: we seek to retain what we have, so learners can be incentivised with badges or certification that need to be re-validated. 

Norms:  we like to follow the crowd, so once we can see that other people are contributing to knowledge sharing or user generated content we are more likely to join in, or if we can see that other learners have given a positive rating or ‘liked’ an experience, we will be more receptive.

Defaultsand Salience: it is easier for us to follow a pre-designed path, so using personalisation and filtering reassures us that the resources are relevant to us and save us mental energy in selecting them.

Priming: we are more receptive when we have seen a preview. For example, use a trailer in your launch comms campaign, signpost what’s coming up and give people an overview map, whether it’s for half an hour of online learning or an 18-month blended leadership programme. 

Affect: illustrate your learning with human stories in the form of scenarios, case studies and video diaries. Motivate people to action through emotional messaging in your comms.

Commitments and Ego– We can leverage these principles by asking learners to make a public pledge on a social platform, or share user generated content.

What you can do in the here and now 

After reading this blog post, what is the one thing you can do to help learners do their job? To get stuff done and put behavioural economics into action, you’ll need to look at your learning ecosystem and your digital learning experiences with a focus on your learners and their situation. Ask:

  • where is the complexity?
  • how can we simplify that action/process?
  • what are people’s motivations? (conscious and unconscious)
  • where can we reduce mental effort in decision-making?
  • how can we nudge people towards desired behaviour?
  • how can we make people’s jobs easier?

We can extrapolate the principles of behavioural economics to designing learning for impact - by focusing on the desired actions and behaviours. All of which lead us back to that initial question, ‘How can we make people’s jobs easier?’

As one of our Learning Insights contributors said: “We’re building training for the Facebook generation. A group that wants training on the skills that they think they need, on a device they own, delivered at a time of their choosing.” Whether or not you’re the Facebook generation, everyone wants this. Why would anyone want to do learning on a skill they don’t think they need? On a device that isn’t theirs? At a time they have no control over? But this – some people would argue – has often been the traditional way of delivering learning. Times are changing, for the better.