1/14/2021 Nudge Theory: An Effective Way to Transform Negative Behaviors | by Mark Bridges | Medium

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Nudge Theory: An Effective Way to Transform

Negative Behaviors
Mark Bridges Jul 27, 2019 · 6 min read

Changing the behaviors of people is the foremost issue with every transformation
initiative.
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Nudge theory is a novel Change Management model that underscores the importance of
understanding the way people think, act, and decide. The model assists in encouraging
human imagination and decision making, and transforming negative behaviors and
influences on people. The approach helps understand and change human behavior, by
analyzing, improving, designing, and offering free choices for people, so that their
decisions are more likely to produce helpful outcomes for the others and society in
general.

Nudge theory helps reform existing (often extremely unhealthy) choices and influences
on people. The theory is quite effective in curtailing resistance and conflict resulting
from using autocratic ways to change human behavior. The model promotes indirect
encouragement and enablement — by designing choices which encourage positive
helpful decisions — and avoids direct enforcement. For instance, playing a ‘room-
tidying’ game with a child rather than instructing her/him to tidy the room; improving
the availability and visibility of litter bins rather than erecting signs with a warning of
fines.

Organizations are increasingly using behavioral economics to optimize their employee

and client behavior and well-being. Nudge units or behavioral science teams are being
set up in the public and corporate sectors to influence people to address pressing issues.
For instance, to increase customer retention by changing the language of support center
staff to motivate customers to consider long-term benefits of a product; or to make
employees to follow safety procedures by placing posters of watching eyes to remind
them of the criticality of the measure.

An effective Nudge initiative necessitates much more than deploying a few experts in
heuristics and statistics. The senior leadership should lay out a conducive environment
for successful behavioral transformation. This entails assisting the Nudge unit to focus,
place it appropriately, create awareness, train and de-bias people, implement effective
rewards, and follow high ethical standards.

The leadership needs to think about and prepare to tackle 6 key challenges Nudge units
face when implementing effective behavioral transformation initiatives:

1. What should be the focus of the Nudge unit?

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2. Should the Nudge unit be placed at the headquarters or at the business unit
level?

3. Which resources be made part of the Nudge unit?

4. What are the critical success factors to consider for the unit?

5. How to communicate the results and early wins?

6. What should be done to tackle skepticism and resistance to change?

Leaders who are able to confront these challenges improve the chances that the unit’s
nudges will cause real change in the organization and in its productivity.

Let’s, now, dive deeper into the first 3 key challenges.

What should be the focus of the Nudge unit?

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The foremost action in creating a Nudge team is to clearly spell out the value proposition
for the unit. The leadership needs to define the purpose of creating a Nudge unit. They
need to clearly outline whether the Nudge team will focus on employees, on customers,
or on both. For instance, the purpose of its creation could be to deal with workforce
motivation, to make better decisions in boardrooms, to increase the internal capabilities,
or to improve the behavior of employees. The focus on customer issues, for example,
entails encouraging better pension provision, inculcating behavioral science into the
marketing mix, or to analyze the experiences of customers and employees — e.g., in-
store service initiatives, digital operations, and HR processes.

Should the Nudge unit be placed at the headquarters or at the

business unit level?
The second challenge is to decide where to deploy the Nudge unit. The placement of the
Nudge unit depends on the strategic purpose of creating the unit. At some companies, it
is housed centrally within the corporate headquarters as a global Nudge operations
center; a few have accommodated the unit within the R&D or marketing department;
some have benefited by moving the unit away from the corporate center so as to be
closer to products and services; whereas other practitioners believe that the customer-
focused behavioral science team should sit within the product management domain.

Regardless of where the Nudge unit resides, its flexibility and assimilation with other
methods of behavioral change — e.g., cognitive neuroscience, social psychology, and
personality-trait science — are critical.

Which resources be made part of the Nudge unit?

Another critical element for the success of the Nudge unit is hiring and deployment of
right resources. At the commencement of the program when key capabilities are
typically not available in-house, most organizations hire people from the outside for
their Nudge units. A few companies have recruited solely from the in-house due to the
criticality of institutional knowledge and the long learning curve required to acquire it,
whereas some have recruited across different geographies. On average, the unit
comprises of 3 to 8 members, however, larger organizations can have more people
scattered globally.

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The ideal composition of the Nudge team is to include behavioral scientists and
specialists in psychology, marketing, and advanced data analytics. The team should
include people with the right attitude and abilities — e.g., curiosity, can-do attitude,
problem solving, entrepreneurial mindset, ownership, and communication skills.

Interested in learning more about the Nudge Theory? You can download an editable
PowerPoint on Nudge Theory: Key Challenges here on the Flevy documents
marketplace.

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