When bringing a new idea to market, how do you choose the right
approach? Do you ask your senior management and fellow employees for
their opinions? Do you rely on market reports and research surveys? Do
you simply trust your gut?
Or do you conduct your own in-house experiments to learn firsthand what works best in your organization?
If you forgo experimenting, you’re not alone: The latest findings from Harvard Business School researchers suggest that few organizations actually experiment. However, this is rapidly changing as the field of applied behavioral science gains momentum and moves from the lab to the real world.
The Rise of Behavioral Science
Popular culture is now embracing the behavioral science movement, thanks to popular TED Talks, New York Times best-sellers, and Harvard Business Review articles that focus on applied social psychology and how it can be used to improve our businesses and our world.
With behavioral economics becoming the new “Moneyball,” psychological concepts such as loss aversion, social proof, and default effects are entering the popular lexicon. Once thought of as incomprehensible “brain surgery,” behavioral science is becoming water-cooler conversation. Behavioral economics pioneer Richard Thaler’s recent Nobel Prize is another testament to the public’s embrace of the field.
Yet the industry implementation of these ideas has been slow to start. While more than 60 governments in 23 countries around the world have pioneered best practices based on behavioral science, few industry leaders are following suit.
the number of leading companies with dedicated behavioral science teams
can currently be counted on one hand (Walmart, Pepsi, and Morningstar
are notable examples). But now more than ever, it’s critical for
industries to build dedicated internal practices of behavioral science.
Why Care About Behavioral Science?
case studies have shown that businesses benefit massively from better
understanding human behavior as a fundamental consideration of employee
productivity and happiness, customer engagement, and product and
business model innovation.
science is helping to unleash human potential in the workplace by
providing employees with a sense of meaning. Science shows that
employees are motivated by far more than money — namely, a sense of
For example, Adam Grant led a landmark study showing that college fundraisers generated 171 percent more alumni donations, compared with a control group, after reading letters from scholarship beneficiaries. In this same study, meeting a recipient in person for just five minutes generated performance improvements that lasted months.
it’s easy to think of employees as mere assets to be managed, business
leaders would be wise to apply this principle of purpose — and to
experiment within their own organizations to create a happy, engaged,
and productive workforce.
marketers have been leading the way in applying psychological
principles to influence stakeholder behavior. Marketers price products
strategically — tapping into our bias for the midpoint — by anchoring
against higher-priced decoys.
New products are often presented
“fully loaded” and tend to be purchased that way, as our default bias
taxes the will to remove each bell and whistle. Free trials are an
institution of consumer promotions because our natural aversion to loss
makes us unlikely to discontinue a service once we’ve tried it.
behavior-based marketing tactics are enhanced by A/B testing
capabilities within consumer websites, enabling marketers to compare
subtle nuances of messaging, which can have outsized effects on consumer
behavior. But these “nudge” tactics aren’t just about communication.
They have the power to change important behavior in consumers’ lives.
For example, when Opower wanted to encourage customers to use less energy, it added an element of social comparison, pointing out how much energy customers used in comparison to their neighbors. This approach decreased energy usage of high consumers by more than 6 percent, thanks to our deeply engrained bias to act in accordance with social norms.
what really drives consumer judgment and decision-making?
Counterintuitively, it’s not always more information. Testing and
designing communications for the complexities of the human mind is often
a more effective path.
incremental improvements to existing solutions, behavioral science can
also help us dream big. Perhaps the most exciting application is the
transformation of products and business models.
In an economy of rapid disruption and technological innovation, companies can’t afford not to pay close attention to human motivation and behavior. Behavior-based trends are transforming entire industries.
example, subscription models are proliferating because they separate
the pain of payment from the joy of consumption — a fundamental
behavioral principle driving the rise of innovative startups like
Birchbox, Trunk Club, and Blue Apron.
Another emerging principle is operational transparency. Behavioral scientists teach us to “show the work” and to provide a window into the process of delivering value — from clothing to travel to pizza. (Think Domino’s pizza tracker.)
Even established industries such as insurance have been fundamentally disrupted by innovators paying attention to human behavior. With leading behavioral economist Dan Ariely as its chief behavioral officer, Lemonade is the first peer-to-peer insurance company rapidly gaining “crazy market share” by building on fundamental principles of behavioral science. It’s striving to make insurance simple, transparent, and prosocial — by giving back unused premiums to causes that clients care about, for example.
A Culture of Behavioral Science
We wrote this article over a shared curiosity for human behavior in the modern workplace. Do foosball tables really make employees (feel) more innovative? How do soul-sucking commutes affect teammate camaraderie? Why don’t people take their vacation days?
questions and others led us to a more formal collaboration on an
employee engagement research road map. It was designed to inspire a
series of experiments within Maritz’s client programs and better
understand what makes people tick in the workplace.
the academic and industry divide, we’ve discovered a few
characteristics, informed both by science and practice, that help make
behavioral science part of everyday organizational decision-making.
1. Chief Behavioral Officers
behavioral science requires an in-depth understanding of business and
customer challenges — which can only be grasped fully by internal teams
with on-the-ground experience and company-specific accountability.
that vein, businesses would be wise to identify a subject matter expert
to build a behavioral science center of excellence. While everyone in
the organization benefits from this knowledge, new and focused expertise
requires a dedicated person to set goals, be accountable, and share
best practices across the organization.
CBOs are advocates for the
human at the center of every policy and program. In every meeting,
they’re responsible for asking: What behaviors are we trying to
influence? Are the employees, participants, or customers in this program
doing as well as they could be? What specific steps are we asking these
people to take?
Marrying art and science, the CBO leads a series of workshops and journey-mapping to spark curiosity in human behavior and motivation, while engaging data science and analytics resources to identify measurable outcomes. The CBO might also have a scientific background, but it’s more important that he or she knows the programs well and has empathy for the individual participant as well as a strong dose of common sense. A recent article aptly summarizes the characteristics of a successful behavioral scientist.
can walk through the participant journey and intuit barriers and
motivators as hypotheses for testing, which was the first step we took
at Maritz toward building a list of testable questions that matter to
our leaders, stakeholders, and clients.
2. Academic Communities
may not have the answer to every behavioral problem, which is where
academic networks come in. Not only can they provide greater
information, but they also keep confirmation biases in check, which adds
rigor and credibility to experimenting.
oriented toward publishable outcomes is a mutually beneficial way to
uncover actionable insights in business. The academic community is
trained in the machinery of experimentation, but the business community
is endowed with a deep understanding of the machinery of their
Teaming together is an exercise in comparative advantage that improves outcomes on both sides.It’s
the ultimate win-win: Academics can be a cost-efficient resource to
businesses when they’re able to collect unique data to support their
research, and businesses can benefit from their knowledge.
expertise and interests can vary widely by topic (consumer
decision-making, employee well-being, and salesperson motivation),
technique (analysis of big historical data sets versus controlled
experiments) and focus (individual employee or organization-level
changes). So building a network of the right academic collaborators will
take some legwork, further attesting to the importance of having a
dedicated chief behavioral officer to develop these connections.
thinking about employee engagement, we considered this academic
diversity and built a network of potential collaborators by taking our
research road map on a roadshow, meeting with academics at a few
top-tier universities to investigate their research interests related to
various dimensions of the modern workplace experience.
critical to work together from the beginning on the research questions
and invite key stakeholders such as clients, customers, and employees to
contribute. Aligning interests of the business and of the academic
collaborator is the best way to generate new insights about human
behavior in the modern marketplace.
is the foundation of behavioral science. The only way to really
understand what causes behavior change in your stakeholders is to make a
habit of running randomized controlled trials (“RCTs” in science
speak). Without proper testing, you might be inferring causal
relationships that aren’t there or missing an opportunity to try
Building testing capabilities into the
foundation of a business’s tech platform is a good way to instill the
practice of experimentation. It’s also important for leadership to set
the expectation that programs aren’t perfect at launch — there’s usually
room for trying, testing, learning, and challenging assumptions.
Embracing experimentation means celebrating failures, too. When we continually test new ideas and approaches, learning what doesn’t work is just as important as uncovering what does.
behavioral science is a largely untapped field that can help business
leaders better understand and influence their employees and customers.
Businesses also have a lot to contribute to the academic field, which
still requires field research to better understand the impact of
theoretical ideas on real people in natural contexts.
The modern marketplace provides scientists with real-world settings to evolve our collective understanding of the human psyche. Industry and academia is a good partnership for a smarter world.
This article originally appeared in [https://observer.com/2018/01/why-you-need-chief-behavioral-officer-business-innovation-startups/] and belongs to the creators.