Behavioural economics has a sticky date problem
Friday, June 17, 2016/
While enjoying a weekend away with friends recently, we decided to share dessert. What better on a winter’s night than the sweet decadence of a gooey, melting, sumptuous sticky date pudding?
And it arrived.
Only it wasn’t as we expected. In fact, we had to confirm that they had given us the right dessert. Oh yes, it was a sticky date pudding. It was a deconstructed sticky date pudding. Dry portion of cake to the left. Sauce in a smear to the right. A quenelle of ice-cream in the centre. A few walnuts nestled here and there.
Let me share with you the disappointment of our deconstructed sticky date. It was dry, too sweet, too bland, too … un-integrated. In short, it was ANNOYING and said more about the arrogance of the chef than his/her commitment to our enjoyment as guests.
Behavioural economics has a sticky date problem
And guess what? That’s been the problem with behavioural economics too. Rather than pulling behavioural insights together into a tasty, cohesive recipe, behavioural economics has offered myriad tasty morsels and left it up to the audience to reconcile them.
People want choice. People get overwhelmed by choice. People follow what others do. People don’t like to be seen to follow others. People act impulsively. People stick with the status quo. People are lazy. People like challenge.
To be useful behavioural economics needs to evolve from a series of interesting anecdotes to a framework that can help analyse and resolve behavioural challenges.
The Williams Behaviour Change Model
So that’s what I’ve cooked up. I’ve created your very own behavioural framework that is as tasty as a non-deconstructed sticky date pudding. This model gets beyond behavioural economics for its own sake and provides a structured way for you to interrogate your behavioural challenge and design how to get people to take the action you want.
There are three key components of the model:
1. Defining the behavioural challenge
Everything we do in business is about getting people to move from point A, their existing behaviour, to point B, the desired behaviour. From not clicking a button to clicking, from not signing to signing, from not turning up on time to being a model of punctuality; each and everyday we need to get other people to take action to get the outcome we need.
Before we can work out how to get people to take action we therefore have to ask ourselves what they are currently doing and what we want them to do.
2. Analysing the behavioural barriers
There are three reasons people don’t take action:
- Apathy – your customer simply can’t be bothered intellectually, emotionally or physically to do what you want (a System 1 challenge);
- Paralysis – your customer is overwhelmed by the decision (Paradox of Choice); and/or
- Anxiety – your customer is worried about proceeding (Loss Aversion)
In any given situation you may have one, two or three barriers at work, and by identifying which are in play, you can then anticipate problems before they arise.
3. Designing behavioural enablers to address each barrier
Once we’ve identified the barriers, we can use behavioural economics to address each one:
- To overcome apathy we need to engage our customers, and that typically means reducing effort and maximising reward;
- To resolve paralysis it’s up to us to clarify our customers’ choices. That may mean constraining the number of choices, introducing default options or using design to improve differentiation; and
- To overcome anxiety we need to mitigate fear of taking action, either by giving our customers nothing to lose or, conversely, making inaction unpalatable by giving them something much worse to lose.
In creating the Behaviour Change Framework my hope is to help people like you bridge the gap between an interest in behavioural economics and its application to everyday business issues.
Do you have to write an email? Launch a marketing campaign? Pitch for new business? Negotiate with a supplier? Motivate staff? Influence your boss? It all starts with your A, your B, your barriers and your enablers.
If you are interested in knowing more about how to identify and overcome the three barriers to action, as well as how to tackle issues like acquisition, retention, pricing, innovation, staff performance and website design, then you might be interested in my new book Behavioural Economics for Business, which will be released in a few short weeks.
Bri Williams runs People Patterns, a consultancy specialising in the application of behavioural economics to everyday business issues.
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