Think bigger

360 degree BE

Carrot Rewards, a mobile app that spruiked its use of behavioural economics (BE) to engage 1.1 million users, filed for bankruptcy this year after failing to find an investor.

Which got me thinking: are businesses embedding BE in product design but overlooking its use to influence those who pay the bills?

BE on the inside

With loyalty points for petrol, travel and groceries as their prize, the Carrot Rewards app encouraged Canadians to walk more, get flu shots and complete health questionnaires. According to a media release, it was an “AI-driven wellness app that leverages behavioural economics and nudge theory to motivate and reward users for making better lifestyle choices.”

The BE component seems largely to have been the immediacy of reward, tapping into short-term bias, with small rewards promptly transferred upon completion of a task. User friction was also reduced, with easy ways to track tasks and transact points.

Did it work to improve health behaviours? A study in JMIR Mhealth Uhealth determined the app increased average daily step count by 5%, and as much as 21% amongst physically inactive users. So yes. Early signs were good. BE-ing the inside of the app was working.

BE on the outside

Here’s where I broaden my point though, because I don’t know the details of how the Carrot Rewards team sought to influence investors, I just know they clearly failed. What I have noticed amongst businesses that talk about using BE, including advertising and market research agencies, is they seem to limit their use to the mechanics of the product to be consumed.

In other words, the app’s usability but not the task of getting people to download it. The ad campaign but not the getting the clients to agree to it. The research but not getting the clients to use what’s discovered.

It’s a blinkered, siloed use of behavioural techniques and means great BE-powered initiatives are failing for lack of a BE-powered influencing approach. They haven’t BE-d the external positioning.

It’s like having the world’s greatest chef in the kitchen but failing to think how you will get people to the restaurant. What a waste!

BE 360 degree

Behavioural techniques are a 360-degree skills-set. By that I mean you can use the same techniques on:

  • Your customer (the consumer or user)
  • Your stakeholders (investors and/or leaders)
  • Yourself

In the case of an app, for example, that means within-app usability and functionality to drive behaviour of users. It means anticipating and overcoming resistance to downloading the app in the first place, and trying to get users to prioritise its placement on their home screen.

Further, it means securing investment to develop the app by influencing stakeholder perception of value. Ask yourself, “why they should they bother?” and “how you can minimise risk?” Use short-term bias to emphasis short-term advantages, nullify loss aversion by providing assurances in favour of the investment, and amplify the downside of missing out on the opportunity.

In terms of using BE on yourself, it gives you a roadmap of how to adjust your behavioural patterns. You can use environmental primes to change the course of your behaviour for example, like setting a motivational phrase as your morning login, the size of the plate you eat from and what music you play at what time.

The lesson from the failure of some BE-infused products is that it may not be the products at all, but rather how they are sold in.  BE on the inside isn’t enough. BE the outside too.

Don’t tell me what to do (if you want me to do it)

Do you ever have the urge to do the opposite of what is being suggested, even when it’s against your self-interest? You might be experiencing reactance; our tendency to bristle against attempts to constrain our freedom.

Reactance means we have to be very careful when influencing others, whether that means customers, the public or even our family!

Reactance in business

Reactance can be a problem in business. It may impact staff relations when a boss tells a staff member what to do, or a customer when a consultant pushes too hard for the sale. “You should definitely get the red one”, they might say, so the customer decides on black.

Online, customers may go out of their way not to click your ad that has popped up and interfered with their task. In fact, results of a Hubspot survey suggested 91% of online ads were considered intrusive and caused reactance.

Triggers for reactance include:

Reactance in health

Reactance is also a big challenge for health-related organisations. Telling us we shouldn’t smoke, drink or sunbake can backfire. As a general rule, any time we try to sell a “should do”, we risk reactance. 

One study on alcohol consumption asked undergraduates the extent to which health warning information impacted their attitudes and intended behaviours. They found a greater level of reactance was related to a greater perceived threat to their decision-making freedom. In another, reactance weakened how much smoker’s believed pictorial (vs. text) warnings motivated quitting.

Reactance in parenting

As anyone with kids would know all too well, telling them what to do can result in the reverse. Research suggests you might get away with it with younger children, but adolescents prefer certain products more when parents disapprove.

How to avoid reactance

The key to avoiding reactance is to position whatever you are asking from their point of view. Giving them a sense of control over the decision is key to them taking ownership. For instance, recommendations could be couched as follows:  “It’s your decision of course, but what I’ve found with other clients in a similar position is…”, or “Totally up to you, but if it were me I would…”.  Implied social norms can also help, along with ensuring your online customers feel they have control over their privacy settings. Or, if you are like me, point out how much you have in common because similarity has been found to reduce reactance too.

Bending time to advantage

Sometimes we underestimate our adaptability.

We think we’re locked into our habits and it takes a Herculean effort to change our behaviour.

And to a degree that’s true. Habits can be difficult to break and buggers to make (which is why I wrote a book called The How of Habits).

But many of us are going to be changing our habits without much effort at all this weekend.

Many of us are going to get up an hour earlier for no reason at all except the clocks have changed.

Welcome to Daylight Savings!

Daylight Savings is a master class in behaviour change en masse. In the early hours on Sunday morning we miraculously ‘lose’ and hour, resetting our watches one hour forward.

We do it because everyone else is (it’s the norm) and the path of least resistance is to conform.

And life goes on. Sure, we might feel a little weary for a day or two but then we recalibrate and adapt to eating, going to bed and getting up earlier.

The lesson from such a change is that time really is a construct and if we wanted, we could decide to get up an hour earlier at any time of the year.

So your opportunity is this.  This weekend change how you want time to work for you.  If you have promised to make a change in your life – more time with loved ones, exercising, reading, relaxing, or cooking, then use this disruption to your advantage and make it happen.

This article also appeared in Smartcompany.

Originally published 28 September 2015.

Guilty until proven innocent

To customers you are guilty until proven innocent

There was a judge in the US who, at the start of every trial, would step out from behind the bench, approach the defendant and shake their hand. “I have just shaken the hand of an innocent person,” he would proclaim.  Why did he bother?

The justice system is predicated on “innocent until being proven guilty”. The challenge is those on the jury are prone to judge the defendant before the facts are even introduced, and seek confirmatory evidence for their view. A case of “guilty until proven innocent”.

By proclaiming the defendant innocent, the judge was using his authority to correct the decision-making frame for jurors. Start from a point of innocence, not defence.

What this means for you

In business, your customers are like jurors who come to the task of purchase with expectations. You are like the defendant. They will be predisposed to not buy your story (product, service).

The upshot is you can often be at cross-purposes with your customer.

You think they will make a decision based on grounds you believe are important (e.g. how much time you’ve put into your product or service, your credibility, why you are amazing) when they are using their frame of reference (e.g. how price compares to other options, the opportunity cost of their time and money if they spend it with you, their deep-seated motivations for wanting to buy).

Tips for you:

  • It is important not to talk too much about yourself, particularly early on (e.g. your value proposition, using “we do this, we do that” statements). Instead you need to prove you understand their objective and fit how your solution fits.
  • Re-frame the decision context if you need to move the customer away from their frame of reference to yours.  Red Bull, for example, did not frame itself as an aspirational drink and compete in that hyper-competitive soft-drink space. Instead they re-framed the category (a functional drink) so they could charge substantially more.
  • You don’t have a judge to proclaim you innocent, so instead use testimonials and credibility cues to signify why you are worthy of trust.
  • When people are used to something being free (like online news) it is very difficult to charge for it. You need to significantly shift the benefits they receive in order to substantiate a charge and distance it from the free service.
  • As the popular meme attests, when the CFO says, “what if we train people and they leave?”, the CEO can reframe as “what if we don’t and they stay?” In other words, flipping the context can be helpful to have your customer rethink their position.

Pushing past the lull

I always find myself amused when I walk past this driveway. I call it the driveway to nowhere, because standing right in front of that shiny new slab of concrete is an old tree trunk.

Driveway to nowhere

Could there by a more apt metaphor for how business or personal projects usually go? We get excited, spend money preparing ourselves for the journey ahead, maybe even tell people how great it’s going to be, then hit a roadblock.

Surviving the bit after the start

Whether you are running a project for work or trying to change personal habits, the challenge is to survive the bit after the start. In Stanford University professor BJ Fogg’s language, we need to prepare to ride the motivation wave, with the high invariably being followed by a low.

Tips for projects and project teams

1.     Do the hard stuff first

At the commencement of a project, when the team is most keen to impress each other and make a mark, that’s the time to do the heavy lifting. Run longer form workshops if you need them, assign work to individuals and team, and require they report back to the group. Get the tasks people don’t like doing (often setting up the systems and processes) out of the way, being careful to balance it with some activities where people can start to share their vision for the project.

2.  Short and shallow lulls

Once the honeymoon period is over, the team may start getting distracted by other shiny objects and greener grass. Suddenly people don’t attend meetings or submit what they promised. Time to get some fun back into the group to reenergise the project. Bring them back to what they personally want to achieve and say lull-a-bye!

3. Create your good news/bad news cadence

Short term bias means people will be more interested in the immediate timeframe. Not only that, they’ll be motivated by good news in the short term and want to defer the pain of bad news till later. 

  • Work with this natural rhythm by prioritising frequent, short and intermittent rewards over bigger, more distant payoffs. For example, organise free coffees for everyone, a guest speaker to share ideas, or simply write a nice note to team members rather than just plan a celebration when the project wraps in 12 months time.
  • On the flipside, batch bad news so they are not constantly reminded of it. Losses hurt more than gains feel good, and we get over bad news faster if we experience more of it once rather than smaller amounts more often.

4. Never ever ignore the work people have put in

The fastest way to deflate an individual or team is to ignore their efforts. As researchers have discovered, it’s as damaging to motivation as destroying their work in front of their eyes. As busy as you might be, always acknowledge their contribution, even if it cannot be used. In this case explain why and give them an opportunity to share what they learned with the group so they don’t feel it was wasted effort.

Tips for habit change

1. Do the hard stuff first

As with running a project, capitalise on your peak motivation at the start by doing the hard stuff. Set up your environment to support your new behaviour, so that might mean distancing yourself from people who don’t share your goals and/or clearing out a spare room so you can do your planned yoga without having to find and pay for a class.

2. Anticipate roadblocks

Known as ‘implementation intentions’, anticipate you will encounter roadblocks and plan how you will respond when they happen. It’s as simple as jotting down some “If/then” statements, like “If I am invited out with friends then I will drink sparkling mineral water and tell them I am on a health kick”, or “If I am travelling for work, then I will order my vegan dinner from a meal delivery service”.

3. Focus on process not progress

We can quickly get demotivated if our progress isn’t what we hoped – you see this all the time with people on a diet who chuck it in as soon as the scale doesn’t represent their efforts. Instead, focus on the process that will ultimately get you to your desired outcome. If weight loss is your thing, focus on eating a good dinner and moving everyday rather than measuring how your body changes on the scale. Measure the consistency of your effort rather than the outcome.

Saving a doomed product rollout

Imagine you’ve been asked to sell new software to existing clients. This happened to a friend of mine recently. The plan was to offer the software on a trial basis and then convince clients to pay $2000 a month ongoing. The plan was doomed.

Problem 1. No frame of reference

My friend’s clients had no frame of reference for the new product. They’d never seen it before and they didn’t know whether they needed it. They’d rightly be thinking “is $2000 expensive, cheap or about right?”

When we introduce a product or service it’s our job to provide a contextual anchor that makes the price look like great value. Steve Jobs did this when releasing the iPad by first telling the crowd that “pundits” speculated it would be sold for $999, before thrilling us all with his pronouncement that it was “only $499”!

When you omit an anchor you risk your client using the closest proxy, and once they’ve done that you have lost control of the sale. It’s hard to sell $2000 software when they are used to paying $49 for something they (mistakenly) think is similar.

Here’s the trick. Before you reveal the price be sure to insert into the conversation a frame of reference that is ideally related. In this case, my friend could say things like:

  • “A similar software can cost up to $3000 a month”
  • “I reckon this software will save about 20 hours a week, or around $40,000 a year”
  • “We have two versions of the software. One is $6000 a month, and this one is $2000”

When paying $2000 feels like a relief, you know you’ve anchored them effectively.

Problem 2. “Yes or No” rather than “This or That”

My friend was only planning to offer one choice of software to clients – the $2000 option. Unfortunately that frames the decision as a binary “Yes please” or “No thanks”, and because it’s much easier to stick with the status quo, “no” is more likely.

smarter play is to introduce at least two product options because it changes the decision from “whether I’ll buy” to “which one I’ll buy”. From “yes or no” to “this one or that”.

Note the difference in these questions, for example.

  • Do you want an orange? Yes/No.
  • Would you prefer an apple or an orange? An orange.

Asking clients (or colleagues) for a preference jumps the decision-making queue because it assumes they want a piece of fruit, the only question is which. While they can still say they want neither, it is more difficult for them because you’ve drawn them into considering the merits of having one or the other.

In my friend’s scenario, that means adding a more expensive version of the software to the rollout discussion with the intent of making the $2000 option look great. You may not ever sell the more expensive option, but it will help you sell the cheaper one.

Problem 3. Free pilot program

The third problem my friend was facing in this new software rollout was offering it as a free pilot program. Making something free lowers the stakes for the client and theoretically makes it easier for them to agree.

The problem though, is when no cost is involved there is no value either. No skin in the game. Your clients will be less likely to use the software because they’ve paid nothing for it. Then, when you invite them to upgrade and pay they will decline because they remember they didn’t use it!

Instead we need to sell the product as if there are dollars attached. If we need to we can then waive the fee for a few months as a special favour to them. Importantly, they need to feel they’ve bought it or they will never use or value it. 

How to survive an incompetent leader

I learnt a great deal from my 15 years in the corporate sector, including how incompetence is condoned. Like teachers who pass ‘problem’ children on to the next grade, workplaces are rife with incompetent staff who float through the organisation; Dimwit’s who outlast and outplay their more competent colleagues.

If you are one of those competent, diligent workers who finds themselves surrounded by, or worse, lead by a bumbling fool, here are some realities I’ve observed and tips on how to survive.

Lesson 1. Deadwood floats

‘Deadwood floats’. Larger organisations are the natural habitat of incompetent people. Here they can stay sufficiently under the radar so their lack of productivity remains undiscovered, duck any business-critical work, pop in and out of meetings to be seen as involved, avoid eye contact when actions are assigned by tapping away on their tablet like a possessed chicken, and morphing into the background of their team such that they can claim credit for the good outcomes but disavowal the bad.

This means that when the inevitable organisational purge happens, incompetents are more prone to survive. As we know, if a TV show is not rating, the stars get fired, not the extras. Before you know it, the organisation is full of D-listers as your talented people leave and the zombie brigade multiplies.

Lesson 2. Stupidity is domain specific

Incompetent people are not incompetent at everything. A past colleague of mine, for example, was perceived as lazy and useless. At work, yes. But he was also a gifted triathlete who did things we could never do with his body. Did this make it easier to work with him? No. But it did show he was not lazy at all, just differently motivated. In the right hands, he could have been turned into a much more productive and engaged employee.

I choose to think that people believe they are doing a good job. That their perception doesn’t accord with reality is the job of their boss to correct. Do they know what doing a good job for you actually means? Don’t assume they do. Rather than playing their game and expect less of them, expect more.

Lesson 3. They don’t think they are

You can’t call a lazy or incompetent person lazy or incompetent because that’s not how they see themselves. People like to maintain a positive self-view, and we do that by rationalising our own actions and externalising blame. Somewhere in their brain they think they are an OK person, that they are doing a good job. To think otherwise would cripple them with cognitive dissonance. Under challenge, they will get hyper-defensive and double down because they have had to rationalise to themselves more than they will even need to with you. They’ll beat you at this game because they’ve already played it. Your only hope is to focus on the outcome they failed to deliver rather than suggest it is a flaw in their very nature.

Lesson 4. Incompetence is infectious

Incompetence leeches into the fabric of an organisation. The behaviour you walk past, you accept. If the norm in the organisation is to walk past ineptitude, then that’s a leadership issue. Only when the boss is seen (not simply heard) to model the behaviours of dedication, commitment and engagement will tolerance for incompetence be eroded.

Too often people who are not pulling their weight are seen as a fringe issue – the weak but inevitable link. Managers start to play down to them, diverting the important work to others and making the team work harder to compensate for the inept. See how complicit we become? But then resentment grows, your best staff leave, good staff become mediocre because, well, “who cares? Why should I bother?”, and bosses get promoted way from the problem. Deadwood wins again!

That’s why it’s so important for the performance gap to be called out as soon as it happens. If other staff see you endorsing incompetence – and make no mistake, your failure to act is an endorsement – then watch productivity deflate like a helium balloon leftover from Christmas.

Lesson 5. Kill incompetence with fresh air and sunlight

Incompetent people thrive on your disinterest and their anonymity. They don’t like feeling their incompetence could be exposed; it makes them agitated, and that interrupts their slothful stasis. If everyone around them interacts and asks about their contribution, taking a real interest, they will either lift their game through social pressure or scurry off to a less exposing workplace. Treating them with kindness, expectation and openness is the best way to eradicate incompetence from the worker.

Lesson 6. Deadwood can rise to the top

Sadly, deadwood too often floats all the way to the top. This is a special type of deadwood, the incompetent person who is deliberately so because it frees them to do what they do best – manipulate, collude and divide. They thrive because they are impervious to those left in their wake (who are too busy picking up the pieces to see the threat coming), and callous enough to put themselves forward when others are more worthy.

If you have a choice, avoid working for these types of people. If you don’t, protect yourself from their toxicity. Work out in what currency they trade – ego, results, power – and interact with this is mind. That will make them more likely to like you, and less likely to be threatened. Hold true to your values and, if you have to, be a little deadwood yourself. Withhold. Look after your health. Distance yourself enough so you don’t become tarred by association, but stay close enough not to be seen as challenging their authority. Know that work is not everything and better times, eventually, will arrive.  

Why past behaviour is not really the best predictor of future behaviour

You’ve probably heard people say the best predictor of future behaviour is past behaviour.  But is this true, and what does it actually mean?

Let’s start with people’s tendency towards routine. Most of us are creatures of habit because that’s how our brain finds relief from the daily deluge of decision-making. Having a routine to follow each morning means I can operate on autopilot and conserve my cognitive resources.

So yes, that I brushed my teeth every morning over many years means I am probably likely to brush my teeth tomorrow. My past behaviour is a solid predictor of my future behaviour, particularly in stable circumstances.

But it’s also true that I used to swim four times a week and now I do other exercise instead. My past behaviour as a committed swimmer did not predict my future behaviour. I’m pretty sure you are not doing exactly what you did 5 years ago either, so no, past behaviour is not always a predictor of future behaviour.

And it’s not just me. When I started working for publishers of the printed phone directory, millions of Australians used us each week. By the time I left and Google had asserted itself, our “loyal” users had left us. Past behaviour was not a reliable data point to anticipate the future because the world had changed.

What do we mean, then, when we say past behaviour is the best predictor of future behaviour?  Clearly it’s not always the case.

Maybe the emphasis is on “best”. What other options are there? How can we predict behaviour without looking at the past?

Option 1. Big data

No doubt data and Artificial Intelligence are where business is heading. But that’s not an easy or inexpensive path to take. Most organisations I have worked with are struggling with the basics of consolidating antiquated legacy systems and data quality, let alone tuning these systems into powerhouse predictive models.

Retailer Target in the US is still cited as a rare example of big data’s potential. What did their predictive model enable them to do? Send pregnancy-related catalogues to a 16 year old who had not yet told her father her unexpected news. By tracking purchases of seemingly unrelated products, Target was able to predict her future needs. In simple terms, people who bought X, Y and Z had a high probability of being pregnant, so they sent her a catalogue.

But most of us can’t rely on big data. Aside from being expensive, it comes with other problems such as:

  • Data aren’t necessarily objective. Outputs from any data model are based on assumptions. Assumptions are made by people. People are subject to unconscious bias and blind spots.
  • Most models are constructed on a finite set of stable, or point-in-time, factors. For example, we might build a model around a current competitive set, exchange rate or seasonal pattern. These or other factors in the real world may change, invalidating the forecasted behaviour and requiring the model be rebuilt.
  • Answering what people do, not why. That someone clicks on a site tells you only that. You have to guess why.
  • Data don’t tell you how to solve issues. It’s relatively passive, and serves as a record rather than solution.

Option 2. Human wiring

For me, the answer to predicting future behaviour is where behavioural economics provides greatest opportunity. Based on experimentation, BE identifies specific principles that can be used to not only explain, but anticipate how people will behave. Think of it as a guide to how humans are wired.  We can know, for example, that to get someone to change from what they are currently doing to what we would like them to do, we are likely to encounter apathy (related to system 1 processing), decision paralysis (choice overload) and anxiety (loss aversion).

So is past behaviour the best predictor? No. Human nature is the best predictor. Learn how humans are wired to make decisions and you will always have a sense of how to shape the future.

How the illusion of explanatory depth impacts success

Do you know how a toilet works?

I’m sure you do.

But what if I asked that you explain it to me, in detail?

Feeling less confident?

The Illusion of Explanatory Depth

A while ago I wrote about the Simplification Paradox. The paradox is people don’t value something if it is simple, but can’t use it if it is too complex.

Under a similar theme, I’d now like to explore what Leonid Rozenblit and Frank Keil(2002) called “the illusion of explanatory depth (IOED).”

It works like this. We navigate our world with an inflated sense we know how things work. We believe we know why the sun rises, how telephones work and, of course, how a toilet flushes. But in reality, we don’t really know much of this in detail. As the researchers put it, “most people feel they understand the world with far greater detail, coherence, and depth than they really do.”

Over a range of experiments the researchers had people rate their knowledge about something like a device or earthquake, attempt to explain it to someone and then rate their knowledge again. Once confronted with their inability to really explain something, their confidence dropped.

How the illusion impacts sales

Let’s say you have explained your product or service to a customer and they seem to get it. “Leave it to me”, they say “I’ll talk to my colleagues (or family) about next steps”. Great, you think. Mark that as a sale. And then you wait, and wait. Nothing.

The illusion of explanatory depth likely means your customer has tripped up when trying to explain what you do to their stakeholders.  Suddenly they have discovered it is not as easy as they thought.

Two ways you can get around this. First, try to be involved in the stakeholder discussion, and second, have your customer explain it back to you so you can hone the story. (More ideas on arming your advocate here).

How the illusion impacts training

The illusion can also impact the effectiveness of training. I see it when I am teaching people my Behaviour Change Model. They nod their heads when I’m explaining it to them, but get nervous as soon as I ask them to explain it to each other. It is this exercise, though, that’s probably the most important part of the training and where the real transfer of knowledge takes place. We need to be confronted by our lack of depth to become committed to learning.

How the illusion impacts your performance

Now that you know you are affected by the illusion of explanatory depth, reflect on what things are important you actually know in detail.  I, for instance, really don’t care to know how a toilet flushes, but I do want to know everything I can about behavioural science. By writing articles like this – having to explain research and its application to everyday issues – I am addressing my illusion. If something is important to you, in other words, have a go at explaining it to someone.

“I hear and I forget. I see and I remember. I do and I understand” (Confucius).

Frame the gain or is loss the boss? The nuance of prevention vs promotion focus

Having working with hundreds of people over the eight years since I founded People Patterns I have observed two distinct approaches to new information or techniques.

According to Regulatory Fit Theory (RFT), some people are motivated by a prevention focus where they are attracted to resolving a perceived gap in their business. These clients tend to feel they are missing something and seek answers about how behavioural science can help.

Others are attracted to opportunity. Their promotion focus means they like identifying new ideas that can immediately improve their business.

The end point might be the same – applying behavioural science to improve everyday business and personal effectiveness – but the message that resonates is different. Life is easier for some, and less difficult for others.

How to apply Prevention and Promotion in your business

Your customers and staff will tend to have either a prevention or promotion focus too, which means you should adjust how you engage them accordingly.

For example, promotion-focussed diners in a restaurant spent more time on higher-level information (e.g. entrees, mains), where those in a prevention mindset were more goal-directed (e.g. specific dishes). When the structure of the menu matched their mindset, diners were willing to pay 17% more.

For customers or stakeholders who are prevention-minded, loss is boss. Speaking about the avoidance of negative consequences is powerful so use words and phrases like “gaps”, “missing out”, “waste”, and “avoid”.

For customers or staff with a promotion-mindset, frame the gain. “Opportunity”, “growth”, “win” and “save” will be your go-to words.

Which are you?

To make it easier for people to work out which of my products and services are best for them, I developed a short personality-based matching tool. To find out whether you are a Sleuth, Prospector, Mechanic or Physician, jump on the free online tool right now. Let me know whether your profile reflects your approach.