To change customer behaviour, find the angles

Over the break I was able to dabble in one of my hobbies, stone carving – taking a hammer and chisel to a block of hard rock to see what emerges. I enjoy the challenge of changing its form from one state to another, which, on reflection, relates a lot to how we approach behaviour change.

I mean, how do we get from this, to that?

Before and after images of Bri's stone sculpture

Take the time to first understand

A mistake when carving is jumping in and assuming all stone will act same. In fact, each piece has its own weaknesses and strengths. I therefore first make a few tentative strikes to allow the stone to reveal something to me. Once the desired outcome forms in my mind I can work towards it.

This is how we can approach behaviour change too. Rather than jumping in with fixed assumptions, we first need to spend some time ‘noodling around’ to understand the person or people we are trying to influence. For this I use my “Empathy Map” which gets me into the mindset of the target audience and focusses me on the specific context in which the behaviour is occurring.

Overcoming inertia

A slab of stone is inert, immovable. This is how your customers or stakeholders can feel too – like whatever you try, they are not going to budge from their status quo.

It means when seeking to influence someone’s behaviour we must first recognise that asking them to change means giving up their current behaviour. Start by asking yourself, “what are they currently doing?” so you get a fix on what you are asking them to move away from. 

It’s all about angles

If you attempt to tackle a slab of stone by pummeling the centre it will do one of two things; resist until you are defeated, or resist until a fissure forms that destroys it. In either case, a blunt, frontal assault is ineffective.

Instead you have to use the angles, chipping away at the edges towards your objective.

Same goes for behaviour change. If you are too blunt or forceful, your attempts will be resisted. This is known as “reactance”, and has been found to reduce the effectiveness of ads like “Just Do It” for some consumers.  Telling someone they “have to change”, that “this will be good for them” or even providing a litany of facts and figures to justify the change is unlikely to be persuasive.

Instead, anticipate reasons for resistance to change and devise angles for addressing each barrier. There are three reasons people resist change:

  • Too lazy (apathy) – they can’t be bothered
  • Too confused (decision paralysis) – they might be interested but are confused as to what they need do
  • Too scared (anxiety) – they might be interested but worried about proceeding

It’s not all about force

While it takes a certain amount of force to chip into rock, it’s more about being precise and consistent, working with the stone rather than attempting to have it wield to your will.

With behaviour change, it’s not about how much money you spend or how loudly you communicate your message, it’s about small, well-considered “nudges”. A clear call-to-action button on a website can impact conversion more than a TV ad. An opt-out default on a form can change a whole country’s rates of organ donation. Moving fruit to within arm’s reach in a cafeteria can change how a whole workforce eats.

Process of elimination

American writer, philosopher and artist Elbert Hubbard said “The sculptor produces the beautiful statue by chipping away such parts of the marble block as are not needed – it is a process of elimination.”

Behaviour can seem very complicated, and a natural tendency is to try to add more and more to justify the request to change. But as with stone carving, behaviour change can be more effective through elimination – eliminating superfluous information, eliminating unnecessary choices, and eliminating “noise” that distracts from the objective.

Most of all, behavioural economics and my framework for behaviour change is about eliminating opinions about how to influence outcomes. By focussing your efforts on the three science-based reasons for resistance – apathy, paralysis and anxiety – you can eliminate speculation and more efficiently and effectively design for change.

Carve your results in stone

At the end of a carving I am left with a tangible, permanent representation of my efforts. I can sit back and admire the endeavour. The same cannot always be said of behaviour change, because life goes on and your attention will quickly turn to the next issue to tackle. That’s why it is important to measure the impact of your initiatives, creating a record of before and after so it doesn’t get lost.

This article also appeared in Smartcompany.

Study on reactance in advertising:

“Just do it! Why committed consumers react negatively to assertive ads”. Authors Yael Zemack-Rugar, Sarah G. Moore, Gavan J. Fitzsimons (2017) http://onlinelibrary.wiley.com/doi/10.1016/j.jcps.2017.01.002/abstract

Embedding behavioural economics in your business

This is the third and final instalment on embedding behavioural economics (BE) in your business.  Part 1 looked at building a business case for behavioural techniques and Part 2 covered where your BE function should sit in your organisation. In part 3 we will be examining how to go about actually embedding BE – where to start and what to do.

How to embed Behavioural Economics

How you go about embedding BE in your business will, of course, be shaped by where you want it to fit within the organisation (e.g. centralised or decentralised, in-house or outsourced). But whether you are recruiting a BE specialist or using external expertise to up skill your team, there’s a roadmap you might like to follow.

1.     Initiation

By reading this blog I can tell you are, at the very least, in the initiation phase where you are curious about behavioural economics and looking for ideas about how to use it. Typically this is when people come across books like Thinking Fast and Slow or Nudge, read an interesting article or see one of Dan Ariely’s TED talks. For me it was reading Predictably Irrational. From there the natural question is, how do I get hands-on with this stuff?

2.     Up-skilling

In the up-skilling phase, you and/or your team are looking to get deeper into BE and what it means for you. This might mean attending a workshop or online course. From what people have told me, workshops like the ones I run are a good commitment device – you commit to carving out the time and know by the end that you will walk away being able to apply the science. Online courses can sometimes slip into “I’ll get around to it” bucket.  The key is to make sure your training moves beyond theory.

3.     Application

Now that you have been exposed to what BE has to offer, it’s time for rubber to hit the road and to put pen to paper. That means applying what you’ve learnt to real-life issues. Start small with something like an email, presentation or web page that is easy to benchmark, contain and measure. Ideally you will be able to shadow an expert or be coached through your first few attempts so you gain confidence.

4.     Consolidation

After you and your team have had some time applying your BE learning, it’s good to regroup and share experiences. What worked? What didn’t? What do you need to know more about? As a catalyst, reconvene around a short and sharp BE refresher training session, recapping the core theory and mashing it up against your experiences from the field. Reviewing training materials once you’ve had a go at applying it will make it much more resonant.

5.     Transfer

Time to pay it forward! Now that you or a group within your business has achieved a degree of confidence and competence in applied BE, it’s time to work out how to disseminate and maintain it. This is particularly important to ward against inevitable staff changes, as some newly minted BE experts will move on, and some newbies will come on board.

To transfer skills and become self-sustaining you have a few options from which to choose. First you can circle back to phase 2. Up skilling, where you seek a course or workshop; second, you can nominate some key staff to become BE train the trainers, where they learn how to teach others, or third, and perhaps most cost-effectively, you can design (or commission) a modular-based self-guided BE training program that staff can access to either acquaint or refresh themselves as they need.

Incorporating with business as usual

Aside from developing and embedding a BE skills base, your goal should be to incorporate BE terminology and concepts in as many business as usual (BAU) activities as possible. That means things like:

  • Team meetings – get people talking in terms of what their behavioural challenge is, and how to move people from current to desired behaviour
  • Briefing documents – include a “what is your behavioural objective?” question, along with other prompts to tease out the intent of the work being requested
  • Emails – pay attention to subject lines, structure and the behavioural objective
  • Presentation templates – design the narrative to engage both System 1 and 2, clarify the desired outcome and address points of inertia
  • Job interviews – overcome reliance on System 2 answers and access System 1 instead
  • Performance measurement – reconsider the emphasis placed on self-reported vs. observed behaviour

This article also appeared in Smartcompany.

How to resource your Behavioural Economics function

In my last article we covered the business case for behavioural economics (BE), including how to engage and convince your stakeholders.

Now let’s consider how best to resource your BE function.

Where should your BE function sit?

Make no mistake, BE is a whole of business opportunity. In other words, behavioural techniques can be applied to how your receptionist answers the phone, how your invoices are designed, a proposal or tender document and presentation, supplier negotiations, pricing strategy, product design, marketing campaigns…even how the staff cafeteria is set up.

But let’s not get overwhelmed. Frequent readers will know that too many options can result in decision paralysis!

So instead let’s start with some clear decisions about where the BE function should sit.

Should you centralise or decentralise the function?

centralised BE function is a team or person who provides subject matter expertise to projects. Like any shared service (like customer insights or HR), the value of the centralised BE function will rely heavily on the influencing skills of its representatives to convince internal stakeholders of worth.

  • Pros:  Best way to establish depth of skills within the BE team, creates heightened visibility of the function, easier to recruit because you are looking for BE specialists, efficiencies of scale as the BE team works across projects and can create standardised processes
  • Cons: Difficult to develop breadth of BE knowledge across business, team may have limited bandwidth to input into a broad range of projects, requires champions from lines of business to seek out the involvement of BE, seen as ‘nice to have’ or even a nuisance that makes projects more cumbersome, can be sidelined

With a decentralised, democratised BE function, on the other hand, each and every person within your organisation sees themselves as an agent of behaviour change. BE is infused at every opportunity, from payroll form superannuation “nudges”, to procurement team tenders, HR rewards programs, the annual report narrative and sales team pitches.  This distributed BE function requires a significant commitment to training, and while its reach is greater, the risk is you wind up paying lip service to it.

  • Pros: Maximises impact of BE because it improves every touch point of business, increases engagement of workforce as everyone sees how they can make a difference
  • Cons: Difficult to up skill and maintain quality skills across larger workforce, purity of BE gets lost as more links in the chain, harder to measure and tease out “BE” aspects of activities, no one “owns” it

My recommendation? Start with a centralised BE function, whether it is formalised as such by name or simply a collective of like-minded individuals who are acknowledged as BE champions. From there the aim should be to disseminate BE across the organisation, up skilling colleagues and democratising BE’s use.

In-house or outsource your BE function?

Ultimately I believe you need to have an in-house BE function. Your aim is to have BE infuse your organisation as business as usual.

However, recruiting and establishing a BE resource or team can be difficult. Demand is starting to outstrip supply, particularly in the senior ranks. BE hasn’t been its own discipline for very long which means it will take some time before appropriately qualified and experienced people enter the market.

That means you may need to call upon outside expertise to get you up and running in the short-term. As part of that engagement, however, you should require them to help you transfer the knowledge in-house. Yes, I realise advocating in-house BE function is to my personal disadvantage, but that’s honestly how I see the BE function evolving.

BE function reporting lines?

The reality is that someone needs to be responsible for the BE function. So where should it sit in your organisational structure? This will of course depend on your size of organisation.

  • Sales and Marketing: If you are looking to invest in BE to better influence customer outcomes, then it makes sense to fold it into sales and marketing. These are the teams who most directly play the role of customer custodians.
  • Customer Insights: If you have a market research function then BE fits very nicely alongside other techniques to understand customer behaviour. As the Insights function is already called upon for subject matter expertise, this eliminates confusion for stakeholders.
  • Finance: All roads lead to finance so you could make a case for BE to sit within its ranks, especially for work involving billing, suppliers, incentives and payroll.
  • Operations: If yours is a business where the main points of behavioural friction involve procurement (how you buy) and distribution (how you ship), BE could sit under the Operations umbrella.
  • Human Resources: There’s a clear learning and development angle to BE, as well as “people” stuff and culture change. From attracting to developing and retaining staff, BE is clearly the hard edge to what has been known as “soft” skills.

My recommendation? The most obvious home for the BE function is within sales and marketing. Being close to the customer experience means BE will be able to more directly impact both revenue and profit. Once it’s established there, seek to broaden its use across other business units.

The business case for behavioural economics

One, two, three, four Nobel Prizes.

That’s the current count of the Nobel Prize in Economics being awarded to behavioural researchers after economist, academic, and author of Nudge and Misbehaving Richard Thaler was honoured for his contribution. It follows Herbert Simon (1978), Daniel Kahneman (2002) and Robert Shiller (2013)*.

Why is it a big deal? Behavioural economics is here to stay. It has been recognised as instrumental to our understanding of economics.

In other words, commerce.

In other words, business.

In other words, your business.

Which is why it was great to hear behavioural scientist Matt Wallaert advocating a new role within organisations – Chief Behavioural Officer (CBO).

A CBO would lead the identification, development and measurement of interventions to improve the effectiveness of what you are doing. They may look at:

  • how marketing can better influence customers,
  • how the procurement team negotiates more successfully with suppliers,
  • how finance gets people to pay attention to the right numbers, or
  • how HR and managers influence staff performance.

What do you think? Do you need a CBO? Or at least, the function of one?

Even if you are in a small business, I believe the function of a CBO is the biggest untapped opportunity available to you right now.

It costs very little but can improve every single touch point you have with people. Customers. Staff. Stakeholders. Suppliers.

Over the next couple of blogs I’ll be outlining how you may go about embedding behavioural economics (BE) in your business, starting with building a case for it.


Building a business case for BE

The first step to embedding behavioural techniques is getting decision-makers on board through a business case. In short, you need to convince them why you should do this.

Central to success is your ability to shake your stakeholders out of their status quo – the prevailing “business as usual” (a.k.a. not using BE). In my piece “how to get traction for your ideas” from a couple of years ago, I covered how to use positive tension to influence stakeholders by ensuring your presentation includes points that are salient, surprising and/or scary. Here’s how we can use them for your business case.

Engaging your stakeholders

To get stakeholders interested in your BE business case your presentation needs to be:

  • Salient – messages cut through more with visuals and elements that are memorable. Bring in a stack of behavioural books to show how BE is seeping through leadership ranks, table case studies and articles of how others are applying BE, show results of any small trials you may have run in the lead up to this business case, and detail what your BE-embedded organisation would look like.
  • Surprising – what will make your stakeholder rethink their assumptions about how you do business? Point out any gaps you’ve noticed in how your business thinks people behave and how they actually do (The say vs. Do gap). For instance, did customers tell you they’d love a particular feature but it didn’t make any difference? Has customer satisfaction (a “say”) remained consistent but churn (a “do”) increased?
  • Scary – paint a picture about what your business has to lose if you don’t adopt BE. The “something to lose” strategy might include that your competitors are using it (especially likely in retail, finance and health industries) or how many customers your website is failing to convert. Your aim is to make your stakeholders feel anxious about keeping things the same so they will be interested in seeking a solution.

Convincing your stakeholders

Now that your stakeholders are interested, your other task is to convince them to proceed by making them feel comfortable with adopting BE.

  • Use analogies – to apply BE you are asking people to make a change. People cope better with change if it feels familiar, and to make a new thing feel familiar you can associate it with something they are used to. For example, if your organisation uses the Agile method, draw parallels such as BE being iterative (low risk experiments and constant improvement), inquisitive (looking for small, nimble opportunities) and collaborative (more minds, company wide endeavour).
  • Minimise perceived risk – reduce the real and/or perceived exposures to the business and to stakeholders if you adopt BE. Draw on what other businesses are doing to show how it can be done, propose small, contained trials so people can build their confidence, and get key senior influencers on board so that others feel less vulnerable.
  • Ensure reward is greater than effort – in order for anyone to bother adopting a change, the payoff needs to exceed effort. That means you have two sides of the equation to work through – maximising the reward for embedding BE while making it easy. Some thoughts to get you started:
Maximise RewardMinimise Effort
WIIFM – Frame your pitch about what the benefit is to that stakeholder, not just the organisation. Appeal to their motivational bent which could include ego (“lead the way”), cost savings (“waste less resources”), performance (“greater conversion”) or development (“up skill”)Proof points– Get people excited by showcasing results from real-life behavioural studies (e.g. people paid 2.8x more when an honesty box had a picture of eyeballs, sales increased 27% when a restaurant changed how it described ingredients, truancy decreased15% when a letter contained a social norm) ROI – Showcase the Return on Investment for your business. For example, the ROI on a small increase in web conversions through behavioural optimisation (More here)Low cost– BE can be applied with little or no cost to existing processes, policies and procedures – it’s about tweaking what you currently doKeep it simple –start with small initiatives and a small team using the most robust behavioural principlesTime – people are already busy, so demonstrate how BE can save time by clarifying behavioural objectives upfront, eliminating wasted resourcesDecision – construct your case so the only valid decision – the easy decision – is to embed BE. Consider using a decoy option to make your preferred choice stand out, and remember to use design to advantage (like ticks and crosses to compare options and focussing on the middle option). Some further thoughts on how to avoid decision quicksand are here.


You’ve got buy-in. Now what?

Now that you’ve tackled the business rationale for behavioural economics and won your stakeholders over, your attention should turn to

  • how best to resource your BE function (e.g. centralise or democratise, in-house or outsource) and
  • how to actual embed it in your organisation (where to start and what to do).  
  • We’ll tackle these considerations in parts 2 and 3.

In the meantime, I’d recommend reading this Harvard Business Review article on “The Rise of Behavioural Economics and its influence on organisations” by Francesca Gino and listening to Matt Wallaert being interviewed in the new behavioural podcast Action Design Radio (1hr 17min)

* Hat tip to @Noahpinion for bringing this point about four Nobels to my attention

Top 10 behavioural I.N.F.L.U.E.N.C.E.S.

There is something like 600 biases and heuristics that influence behaviour. That’s a lot to navigate if you want to apply Behavioural Economics to everyday business issues, say writing an email, putting a pitch together or pacifying a disgruntled customer.

So here is my top 10. I’ve packaged them into a mnemonic called I.N.F.L.U.E.N.C.E.S. Use it as your checklist when embarking on an activity designed to get someone to do something.

 I mmediacy (Short-term Bias): We act for now not later. e.g. snack now and promise to eat salad for the rest of the week. Ask yourself: what’s the immediate payoff and have I deferred any downside?

 N orms (Social Norms): We do what others do. e.g. preferring a bustling restaurant to one that’s empty. Ask yourself: How can I signal that the desired behaviour is what other people also do?

 F raming: Context changes meaning. e.g. black pearls became highly prized once they were associated with expensive gemstones. Ask yourself: What is my customer’s frame of reference for this? With what am I compared?

 L oss Aversion: We are more motivated to avoid loss than seek gain. e.g. second serve in tennis is more conservative than the first becausethere is something to lose. Ask yourself: What does my customer have to lose and how do I negate this?

 U niqueness: We like our individuality to be recognised, not compromised. e.g. personalised Nutella and Coke. Ask yourself: Does my customer feel special and acknowledged?

 E nvironment: Location and surroundings shape behaviour. e.g. bigger bowl leads to more ice-cream being consumed. Ask yourself: How can I shape the environment in which purchase and consumption take place?

 N umbers: Contextualisation and display alter interpretation. e.g. 1,500.00 is perceived as larger than 1500. Ask yourself: Have I made painful numbers look small?

 C hoice (Paradox of choice): We desire the freedom to choose but can be overwhelmed by it. e.g. 10x jams sold when fewer on display. Ask yourself: Have I reduced options to 3-5?

 E ffort (vs Reward): For behaviour to happen, Reward must be greater than Effort (R>E=B). e.g. Amazon 1-click. Ask yourself: Have I removed points of unnecessary effort? (But see how Wholefoods got this wrong recently with pre-peeled oranges!)

S tatus Quo Bias: When in doubt we leave things as they are. e.g. leaving superannuation in the default fund. Ask yourself: What am I doing to budge people from their existing status quo? What do I want the new status quo to be? 

This article was first published 24/03/2016.

Five pitfalls of behavioural economics

I was recently interviewed for a piece on how businesses were using behavioural economics, and where they were going wrong. While there’s plenty of upside in applying behavioural science, there are five pitfalls that you should know about so you can enjoy the spoils and avoid the foils.

Pitfall #1. Thinking it only applies to customers

Behavioural economics is the study of how emotional, social and cognitive biases and heuristics impact behaviour. Behaviour is the operative word here, because the same forces that impact your customer are impacting you, your colleague, your boss, your supplier and your stakeholder.

In short, behavioural economics applies to every interaction you have. That means you can use the same knowledge about how to influence a customer to influence anyone else. Limiting it to an external audience means you are short changing yourself.

  • Take an advertising agency, for example. Not only should their campaigns be based on insights from behavioural science, they should be using behavioural science to influence their client’s decision making. How? Being deliberate about how they communicate their ideas – what day, time, location, sequence?
  • For a marketer, they should not only be using their BE skills in copywriting and constructing a brief, they should be using them to influence finance for budget decisions, sales for campaign support and the CEO for endorsement of a creative idea.
  • For a business owner, not only should BE be used to maximise website conversion and the effectiveness of sales and customer service teams, it should be applied to staff attendance and performance, productivity and supplier negotiations.

And just like me, you too are susceptible to behavioural influence. You can use your knowledge of BE to improve your own health, productivity and wellbeing by designing your environment to reduce the likelihood of flawed decision-making. Being deliberate about where you store food, the size of your crockery, how you incorporate movement into your day, what times you do different types of task, what you read and who you have around you can have a significant impact on your life.

Pitfall #2. Not understanding the relationship between principles

Behavioural economics is a sprawling field with over 150 principles. The challenge is not only to understand all the biases and heuristics, but also understand the interplay between them.

The most obvious example of a tension between principles is how social norms relate to uniqueness. Where a norm signals the accepted “herd” behaviour, uniqueness is our need to define ourselves as individuals. Being too explicit about a norm can therefore impinge upon uniqueness and result in avoidance behaviour.

My way of helping clients wrap their arms around BE is to bring it back to a framework based on getting people to take action. If we want someone to move from A to B, what behavioural barriers are getting in the way? (More on that here)

Pitfall #3. Not considering what the current behaviour is

It can be tempting in this fast paced world to jump to solutions. We want customers to buy, website visitors to click, colleagues to do what they’re asked, stakeholders to endorse our plans and so on.

But before we can define the best solution we need to understand the problem. It starts by asking yourself two questions:

  • What are they currently doing? (current behaviour)
  • What do I want them to do? (desired behaviour)

Only by asking these two questions will you get a sense of the “delta” – the change required – upon which you can then layer behavioural economics.  Again, the framework I have created is designed to make this as easy as possible, first analysing the reasons for people not budging from their current behaviour (Apathy, Paralysis and Anxiety) and then designing solutions to address each of these three barriers.

Pitfall #4. Seeking to validate with rationalised decisions

I’ve seen this in market research and with marketers; they diligently apply BE to hypothesis generation and ideation only to revert to focus groups or opinions to validate their concept.  Here’s the problem. Asking people what they think engages a System 2, rationalised response where System 1 is usually the one making the decision. Had he listened to the people who said they didn’t want to see dust, Dyson would never have made one of the world’s most popular vacuum cleaners.

I get it though. Self-reported input is seductive – it feels like you are getting the answers directly from those you are targeting. But what people say and what they do can be very different things. Beware opinion and instead prioritise observation.

Pitfall #5. Not adopting a ‘test and learn’ mentality

While behavioural economics uses science to examine and demystify the curiosities of human behaviour, it is a recipe book rather than rulebook. As such, you’ll get maximum benefit from experimenting with BE – using it in small trials like an email campaign where half your list get the normal (control) version and half the BE version. Experiment with low exposure, low cost, measureable initiatives, frame it as a “BE pilot program” to reduce perceived risk and have some fun.

There’s one final pitfall I’d like to mention, and that’s pitfall #6, not using behavioural economics at all. While BE needs to be used properly to have the desired impact, sticking instead with how you’ve done things means you risk basing your business on a decision-maker that doesn’t exist. If you want things to change, you need to change how you do things.

This article also appeared in Smartcompany.

Why job interviews are a waste of time

Years ago I heard someone suggest that to get to know a candidate, conduct the job interview while they drive you around the block.

It sounded crazy, which is why it stuck in my mind.

So I was amused to see an interview with CEO Ron Kaplan in the NY Times recently where he said “I hand them my car keys and say, “Why don’t you drive,” and see what kind of reaction they have to driving my car in a strange city. Then I’ll be giving them directions and asking them questions while we’re driving to see if they can multitask. Some people can handle it with aplomb, and others can’t.”

Let’s look at why Ron is on to something, and how reaching for the keys could resolve the big flaw in job interviews.

The problem with job interviews

Job interviews are a necessary evil. We need to get to know the candidate, and they us. But do we actually get to know them?

In an effort to predict how the candidate will behave in the workplace, multiple formats of interview have been tried. Two of the most popular have been the;

  • behavioural interview – asking the candidate to tell you about a time when they have done something, and
  • situational interview – asking the candidate what they would do in a situation.

Theory goes that in a behavioural interview, demonstrating a past behavioural competence will mean the candidate is more likely to demonstrate this behaviour in future.

In a situational interview, being able to tell you what they will do will make them more likely to do so.

Both have a significant flaw. 

You’re need to hire the Elephant, not the Rider

The flaw here, is that whenever you ask a candidate a question in an interview setting, you are getting an answer from the candidate’s “System 2”, rationalising, deliberative brain (a.k.a. The Rider), where you are really hiring their “System 1”, habitual, fast-thinking, intuitive brain (a.k.a. The Elephant).

System 1 is what people use day in, day out to navigate the bulk of their life and their work. With a massive processing capacity, the equivalent of 11,000,000 bits per second, the Elephant is what you end up working with most of the time.

System 2 is what people use for special occasions; situations that are unfamiliar, unusual or serious – you know, just like job interviews. System 2 is used only intermittently and can be depleted easily because its capacity, in contrast to System 1, is a mere 40-50 bits per second.

This explains why your job candidate will likely be exhausted after an interview – they’ve chewed up all their System 2 battery by trying to put on their best face. But it doesn’t help you make a determination about who you are really employing.

Getting them to drive you around the block

Now imagine you are being interviewed for a job. The interviewer has thrown you the keys and you are on your way. You’re in an unfamiliar car, driving on unfamiliar roads with an unfamiliar person beside you. What’s happening to your brain?

Your System 2 has taken the wheel because, in this circumstance, the uniqueness of the situation demands heightened focus. Not crashing is your priority.

What happens when System 2’s limited capacity is occupied? System 1 attends to lower-grade issues, like the questions the interviewer is throwing at you.

Which means you are incapable of exerting the self-control (a System 2 function) that you normally would in answering the questions. You are less guarded and more intuitive. Whether this is a good thing is something they will judge, but at least they are meeting the Elephant not just the Rider.

So while Ron employs the driving technique to gauge his candidate’s ability to multi-task and deal with unusual circumstances, he’s actually giving himself an opportunity to get beneath the veneer we tend to present in highly artificial, traditional job interviews.

Is Behavioural Economics applicable to B2B as well?

When asked whether Behavioural Economics (BE) applies to Business-to-Business (B2B) well as Business-to-Consumer (B2C), “people are people” has been my response. At least it used to be.

“People are people” does have a lot of truth to it. We are the same person when we buy lunch as a consumer as we are when we negotiate a deal with a supplier – our hats may change but our behavioural biases and mental short-cuts do not. We are just as prone to social norms in the boardroom as we are in the bar – we can’t simply shut this stuff off just because it’s someone else paying.

That means BE is just as relevant in B2B as B2C environments. But,

It’s learning how to apply BE that’s different

As I’ve discovered though, there is a key difference in how best to impart knowledge about the application of BE. For those either in a B2C environment or in a role with direct connection with the buyer (i.e. sales and marketing), all focus is on the end consumer. The target is easily identified, tends to be stable and this knowledge is shared so that everyone in the business ‘gets’ who it is we are trying to influence.

In a B2B environment or non-customer facing role it’s a little different. We might be selling a product or service to an accountant, a teacher or a nutritionist, or ‘selling’ an idea to an investor, stakeholder, colleague or supplier, but we think of them first by their profession rather than their consumption. That means when learning about BE it is hard to get a fix on who we are trying to influence.

Same behavioural principles, different framework for application

The upshot is that while the behavioural principles are the same, I train B2C and B2B job functions using different frameworks.

B2C – how they receive your message

For those in B2C or customer facing roles, I focus on how we apply BE to “them”, the receiver of the message because it is natural to attend to their needs. From there the task is to retro-fit this understanding to how you craft your message. (Typically this means how to overcome the 3 key behavioural barriers which you can read about here).

B2B – how you send your message

In B2B or non-customer facing roles, I instead focus on how we apply BE to you, the sender of the message, because while your receiver might change you are the common element across all your attempts to influence. (This means how to construct an argument using where, when, how and who for non-rational rather than just rational consumption).

So while people are people and behaviour is behaviour, I’ve learnt through experience that transferring knowledge about BE’s application is easiest when it feels familiar, and that means adapting how it’s done rather than what it does.

This article also appeared in Smartcompany.