It’s clear that the private sector has significant interest in behavioral science. A recent survey of behavioral teams found over 300 teams within companies, including Walmart, PepsiCo, and Morningstar, among other large firms. The implied promise of behavioral science—that a better understanding of human behavior can lead to better products, services, and decisions—is relevant and compelling to the private sector. And fortunately, we now have many success stories to share, involving customers, employees, and organizational decision-making.
Given the unmatched resources and reach of the private sector, there is clearly an opportunity to make a positive impact using behavioral science, both internally within companies and externally.
It’s estimated that U.S. companies alone spent roughly $90 billion on employee learning and development efforts in 2018. These training investments could surely be made more impactful, if better informed by and integrated with behavior change efforts.
Through their products and services, global multinationals can help their customers live healthier, make better financial decisions, and reduce their environmental impact, to name just a few areas. For instance, one of our clients at the BVA Nudge Unit, Procter & Gamble, serves nearly five billion people annually, which represents an enormous opportunity to make a positive impact on people’s daily lives.
A decade after the dawn of the behavioral science revolution, the private sector has only scratched the surface of this potential.
Yet a decade after the dawn of the behavioral science revolution, the private sector has only scratched the surface of this potential. Indeed, for every ten companies that express active interest in behavioral science, our experience is that perhaps one consistently applies it in their business. It seems that companies, just like individuals, can have difficulty converting their interest into specific initiatives.
Why is this the case? My colleagues and I would point to three interrelated factors:
First, a “paradox of choice” appears to be at work. Behavioral science can be applied to so many different issues and challenges (human resources, product development, marketing, etc.) that many companies just don’t know where to start.
Second, there’s a predictable level of resistance to anything new. While some managers and marketers strongly embrace behavioral science, others appear to view it an implicit threat or may dismiss it as set of tools that they can master in a day or two.
Third, there are structural challenges within organizations. Because many behavioral change efforts often cut across traditional departmental lines, it isn’t clear who should “own” specific projects or where budgets should be sourced.
Of course, there’s no single answer for overcoming these barriers. But while there’s been a good deal of emphasis at the strategic level on challenges such as where behavioral science should sit within the organization, there’s been less focus on finding the right opportunities. And in fact, the questions that we hear from firms regularly fall along these lines:
- Which types of challenges are best suited to apply behavioral science to?
- How do we know if a particular project or process is a good fit for behavioral science?
- How are behavioral science initiatives different from our existing marketing or communications efforts?
If you’re a manager who wants to bring behavioral science into your organization, answering these questions correctly is the key to finding the right opportunities. Here are three guidelines to help you start.
Begin with the business case
In a business context, pilot projects are more likely to get funded (and later recognized) if their financial impact can be clearly and easily quantified. Thus, we encourage clients to look for opportunities with clear, measurable ROI potential (most likely via cost savings or increased revenue).
For example, many hotel chains are losing millions in wasted food and energy use. This dollar figure helps frame (and justify) an investment in applying behavioral science to nudge guest behavior in ways that could reduce this waste, much of which is inadvertent.
This final point (that the waste is inadvertent) is important, as nudging should not require convincing or coercing people, nor tricking them into new behaviors against their wishes. Instead, the goal is to help them convert their (positive) intent into action.
There’s a simple way to help determine if behavioral science is the right tool to apply to a given situation. If an effort requires persuading people to change their opinions/beliefs (through education or information), it is likely a better fit for more traditional approaches (marketing, training, etc.). If an effort requires helping people to act on their existing opinions/beliefs, it is likely a good fit for behavioral science tools.
Define the behavioral change
For many clients, the most challenging step is viewing and defining their challenges through a behavioral lens. Often, they start with very broad objectives, such as “get more people to use our product,” and have difficultly articulating exactly which behaviors need to change. Yet the more narrowly managers can define desired changes (i.e., who does what differently), the more likely they are to succeed.
For an Italian digital payments company we worked with, ethnographic research revealed that the primary behavioral opportunity lay in moving people from cash to digital for their small, everyday transactions. This transition was not only a business opportunity for the company but also provided clear convenience and security for consumers. Ultimately, this led to specific nudges targeted to newsstand/kiosk environments, reminding customers of digital payment options and benefits at their point of decision.
Focus on “win-win-win” opportunities
Most importantly, we strongly encourage private sector clients to search for changes at the intersection of what’s good for the company, its customers, and society. While this vision may sound idealistic or simplistic, it is actually a strong and realistic foundation for building long-term customer relationships. And importantly, there are clear, accessible opportunities across all business sectors:
- In financial services, businesses can better help investors to save money and plan properly.
- In health care, organizations can help ensure that patients take their medicines as directed.
- In hospitality, hotels can help guests conserve energy and reduce waste.
- In consumer goods, marketers can help people eat healthier or exercise portion control.
It’s worth pausing on this final point. Adopting this “win-win-win” mentality is critical to the long-term adoption of behavioral science in the private sector, for several reasons:
- It directly addresses and helps mitigate ethical concerns and ensures behavioral science is associated with positive change, rather than manipulation.
- It helps to clearly distinguish behavioral science from traditional marketing/sales efforts, which are not necessarily rooted in the good of the consumer.
- It positions behavioral science as a catalyst for a more sustainable approach to business, which aims to serve the long-term needs of all stakeholders (and society).
Our larger goal as behavioral scientists and advisors should be to help private-sector companies recognize that applying behavioral science ethically is a formula for success.
Therefore, our larger goal as behavioral scientists and advisors should be to help private-sector companies recognize that applying behavioral science ethically is not just the right thing to do, nor a question of sacrificing short-term profit for good PR. It is a formula for success in a changing world, in which people are increasingly looking for meaning, purpose, and connection.
So as the behavioral science community enters a new decade, our collective resolution, when working in the private sector, should be to help businesses find the right projects—and to embrace a broader vision, grounded in driving positive behavioral change to their customers, employees, and society.