Traditional (and expensive) tools or innovative (and cost-effective) tools?

How to make better decisions for your organization with behavioral science.

If you are reading this article, you’ve probably heard about behavioral science. Perhaps, you want to know more about what it really means and how you can apply it to improve the experience of your customers, collaborators, and/or citizens.

If so, you are in the right place!

This article will help you understand how to make better decisions for your organization. You will also discover why it is often important to design solutions complementing the use of traditional tools with innovative ones.

Diana Parkhouse on Unsplash

Are traditional tools enough to make better decisions?

Sometimes people make decisions that harm their own well-being in the long run. For example, many clients don’t pay their debts on time, which leads them to pay penalties; workers prefer to spend more today rather than save for the future; and citizens waste water and other limited resources without considering the impact on the environment.

In order to solve these challenges, public and private organizations often implement a solution approach that uses traditional tools such as giving financial incentives (e.g. monetary rewards to improve employee performance), or spreading information (e.g., design campaigns to raise awareness about caring for the environment).

Let's see a specific case😉

EAt the Houston airport, customers reported an unusual number of complaints about the waiting time to collect their luggage. The traditional solution approach adopted was to increase the number of workers. This accelerated the process of transporting luggage from the plane to the baggage strip and the average wait never exceeded eight minutes, which was similar to the waiting time at other airports [1]. This solution, while reasonable, was not only costly (paying more salaries), it was ineffective too (complaints persisted).

This unsuccessful example helps to highlight the importance of using complementary tools; for example, those based on behavioral insights. They can achieve the goal by modifying people's perceptions and behaviors through small changes in the context in which decisions are made.

So, how could behavioral science be applied to reduce complaints? Later we will see how they managed to solve this problem at the Houston airport in a simple and innovative way.

How can you make better decisions for your organization with behavioral science?

Behavioral science refers to an interdisciplinary study area that combines psychology, economics, sociology, anthropology, neurosciences, among other scientific fields. It aims to comprehensively understand people’s decision-making process and behavior.

Solutions based on this field of study are not intended to replace traditional tools, but rather to complement them. Why is it a good complementary tool? Because they act on people’s bounded rationality and allow us to identify those factors that, according to the evidence, have the greatest impact on their behavior.

A study was conducted in the area of human resources and evaluated the impact of receiving financial incentives on increasing employee productivity. One group of people was given a monetary award in the form of a 20% salary increase (the job was announced with an hourly wage of 12 euros), and another group was offered a thermos bottle of the same value as a gift.

Rationally, both incentives have an equivalent value and therefore both groups should perform similarly. However, employees who received the gift had 25% higher productivity than those who received the salary increase [2]. But what did the collaborators prefer to receive? When given the opportunity to choose between the two (knowing that the value was the same), more than 80% preferred to receive the money.

This inconsistency can be explained from behavioral science with the concept of reciprocity. Employees who received gifts as incentives may perceive a higher subjective value than the monetary equivalent. This is because buying and packing a gift involves a greater effort than simply giving money, which is why the gesture of giving is valued more.

This shows us the importance of this discipline to understand people in a deeper way, and the potential it has to design better solutions to the challenges faced by organizations.

Why is behavioral science important?

In the example of the Houston airport explained at the beginning, we saw that the traditional solution approach didn’t achieve the expected result (reduce the number of complaints). Therefore, airport executives carried out a more in-depth analysis of the user's journey: they discovered that it took passengers a minute to walk from the arrival gates to the luggage strip and seven minutes more waiting to collect their bags. About 88% of their time was spent waiting for their luggage.

Since the complaints persisted, a new different approach was adopted. Rather than trying to reduce waiting time even further, they influenced the customers’ perception of time: passengers were assigned to the strip of luggage furthest from their arrival gate. Now they had to walk more to collect their bags and, therefore, they waited for a shorter time in the luggage area. Surprisingly, the complaints dropped to almost zero.

Solution with traditional tools vs solution with innovative tools (Heurística, 2019).

The innovative approach made it possible to design a human-centered solution. They identified the factors that influenced the customers' waiting time perception, and created a solution that achieved the expected goal.

From behavioral science, this successful solution, compared to the solution found with traditional tools, is based on the psychological principle of Idleness aversion: people don’t like to do nothing (or feel that we do nothing) and we like to be busy. Thus, it is possible to change people's perception by making them ‘do’ something: the time spent walking towards the belt is perceived as shorter than the time "without doing anything" (waiting next to the luggage strip).

How can you apply and evaluate the results of solutions based on behavioral insights like these?

From my experience as a Behavioral Researcher, I suggest taking into account some steps to follow:

1. Identify the problem to be solved and the target behavior: The process for designing an innovative solution usually begins with a problem or challenge in mind (eg, the high level of COVID-19 contagion). In identifying the problem, the behavioral science approach requires determining precisely what are the specific perceptions and behaviors that organizations want to encourage or reduce in people (eg, maintain a distance of 2 meters in public spaces).

2. Conduct a specific analysis to understand the factors that facilitate or impede the behavior. Different models can be used to achieve this. For my projects, I frequently use the COM-B model, which considers the ability, opportunity, and motivation that a person needs to perform the desired behavior.

3. Include the experimentation stage, based on the goal of the project. One of the most used methods to evaluate the efficiency of alternative solutions is the Randomized Controlled Trial (RCT). This allows to design and test different interventions that companies can consequently scale to their target audience, based on statistical evidence.

If you are interested in implementing this approach and method in your organization, it is not necessary to develop or invest large resources in a new area or research department. Behavioral science experts can support you in applying behavioral principles in a cost-effective, ethical, and measurable way.

For more information on how to apply behavioral science in Latin America and around the world, feel free to contact me on LinkedIn, or email me here.

Silvia Cottone

Behavioral Science Consultant & Worldwide Speaker

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Reference

[1] Larson, R. C. (1987). Perspectives on Queues: Social Justice and the Psychology of Queueing. Operations Research, Vol. 35, №6, pp. 895–905.

[2] Kube, S., Maréchal, M. A., & Puppe, C. (2012). The Currency of Reciprocity: Gift Exchange in the Workplace. American Economic Review, 102(4): 1644–1662