As Sutherland states: “In science, the dream is to uncover a universal, timeless truth or law. In business, we don’t need to be right in general – we just need to make the best decision for the situation at hand … In business, you don’t need to be ‘right’. You just need to be right enough … Sometimes all you need is to be less wrong than your competitors.”
Or, to put it another way, a business can science the shit out of a problem without needing a PhD. But a business also has to become comfortable with the fact that some of the results may not always be what you expect.
In fact, because behavioural science is grounded in understanding the nonconscious, hidden drivers of behaviour, they almost certainly will not be as expected. Sutherland says this is an inherent (competitive) advantage.
“Every time you test these things you find significant events – not necessarily predictably. But they’re significant enough at the very least to be worth testing. And the gains are monumental … I think there’s a massive sweet spot, because people only test what’s rational. The burden of proof we apply to a rational suggestion is very low. And the burden of proof we apply to an irrational suggestion is very, very high.
“But actually irrational suggestions, if they succeed, are much more valuable, because it’s knowledge you have which might give you one up over your competitors. That is a really valuable insight, whereas merely confirming what you already know is almost worthless.”
The conclusion is clear. “Test counter-intuitive things,” he advocates. “Because your competitors won’t.”
The value of this has been, in my experience, that the budgetary commitments are also much less. Should you hire a traditional management consultancy like McKinsey, for example, to address a problem they may spend hundreds of thousands of pounds developing a report of several hundred pages, that advocates one solution.
Hire a behavioural scientist and you will likely get a ten-page report with ten solutions that you can practically test to prove what works. Behavioural science solutions are as open to small businesses and start-ups as they are to large corporates – and can level the playing field.
McKinsey themselves even acknowledged this critical role in their 2019 review of behavioural science in the corporate world: “Creating an effective nudge unit requires much more than hiring a few experts who understand heuristics and statistics. It’s up to senior management to create the conditions for success by helping to focus the unit, situate it in the organization, celebrate its impact, and hold it to high ethical standards.”41
My interviews with leading behavioural practitioners confirmed they have found great value in an experimental approach – what I like to call ‘test-tube behaviours’.
David Perrott, an established South African practitioner, says an experimental approach actually fosters creativity, rather than the opposite: “Experimentation allows for more creativity, more counter-intuitiveness and innovative techniques, because it is viewed as a test. Because no one’s neck is on the line if it fails.”
In the following parts of the book, we will explore how an understanding of behavioural science, and applying test-tube behaviours, can lead to benefits in key areas of business, and how some leading businesses have effectively applied this knowledge.
Next we will see how removing this stigma of failure through a growth mindset, and an experimental approach to understanding the drivers of human behaviour, has driven the growth of the most successful global businesses in the 21st century. In addition, we will see how it is baked into the culture of these organisations.
28 www.theguardian.com/public-leaders-network/small-business-blog/2014/feb/03/nudge-unit-quiet-revolution-evidence
29 Halpern hypothesised that this is due to large taxpaying businesses viewing themselves as unique, and so what other people do (the essence of social proof) was viewed as irrelevant.
30 Explained overleaf.
31 This is agreed by international treaty.
32 Data from the Bureau of Aircraft Accidents Archives (B3A), a non-government organisation based in Geneva. Worth noting also that the volume of air traffic (i.e. the number of people carried by air) has increased over that period from 331m annually, to nearly 4bn (International Civil Aviation Organization, Civil Aviation Statistics of the World and ICAO staff estimates).
33 Now GoBeyond Partners.
34 In line with Thaler and Sunstein’s objective of going with the grain of behaviour, there is a win-win situation here in that no one likes spending more time on the phone to the bank than necessary, so successfully achieving the objective of the call more quickly benefits both parties. Call duration inversely correlated to customer satisfaction.
35 See the description of availability bias on page 14.
36 This uses the concept of self-efficacy, the behavioural bias that our own belief in our ability to achieve an outcome affects the likelihood of that outcome, to make the customer more likely to successfully complete security.
37 The effect was actually greater in relative terms as the rest of the call centre experienced an increase in call duration over the course of the pilot, for various operational reasons.
38 On Twitter, when asked to give his most important advice to PhD students.
39 Also, in the interests of full disclosure, my former boss.
40 behavioralscientist.org/it-isnt-a-replication-crisis-its-a-replication-opportunity
41 ‘Lessons from the front line of corporate nudging’, McKinsey Quarterly, January 2019.
Chapter 4: How to Create a Behavioural Business
What to Do Now
In this part, we have seen how behavioural science demonstrates that:
much of human decision-making is more emotional, less rational, and more instinctive than we assume;
as a consequence, much of our behaviour is heavily influenced by context and our innate biases and heuristics;
changing that context (the choice architecture) even in very small ways can have a significant impact on behaviour;
a scientific, evidence-based approach to applying behavioural science has helped governments address a number of important issues, such as smoking;
to determine the most effective ways to change behaviour, it is important to test, in as close to the real-world context as possible, and collect data on actual (not claimed) behaviour;
to effectively do this in business requires a growth mindset, i.e. recognising