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In this episode of The Decision Corner, Brooke sits down with Peter Brooks. Peter is a longtime employee at Barclays, the esteemed British banking organization. He joined over a decade ago, when the bank established the world’s first dedicated Behavioural Finance Team. Currently, he is the Chief Behavioural Scientist at Barclays.
Peter asserts that his job is primarily finding true value for customers. He identifies ways to improve customers’ decisions and money habits, while exploring how we can all make changes for the better. The Decision Lab was interested in getting a little bit of his time to hear about how that mission is going. Some topics we discuss in this conversation include:
- How banking adopted the central premises of behavioral science
- Why it didn’t happen sooner
- How humility and ignorance can be markers of authentic experience
- The power of tradition in large organizations
- The competing priorities of customer satisfaction, core values, and the company’s bottom line
- How to stay linked in to a rapidly evolving field
- Tips for up and coming behavioral scientists, and others who are just starting to explore the discipline
The 2008 Financial Crisis
“2008 was a massive inflection for the entire industry, wasn’t it? With the financial crisis that we all faced. And I think that provided some of the catalyst. In that role of financial institutions as having a social place became much more prevalent, and many of those institutions that they had to look to their governments for support, certainly had to rest upon doing more for the people who’d supported them through that period. So that’s one backdrop to this and that has created, I think, a social purpose in many organizations.”
A Barclay’s Insight that Demonstrated the Power of Behavioral Science
“What we came up with was a really good theory, that example that actually people are very used to seeing interest rates on savings accounts that are expressed annually, on their borrowing that’s all expressed annually, so why don’t we show them a 12 month rolling return? And actually, then you’ve got a better chance of showing people the return from their investing and not the risk, and hopefully that reduces that sense of anxiety, gives them the sense of comfort that actually investing is something that’s actually easy and something they should be doing.”
On Corporate Decision-making
“There’s a danger that if I go that authoritarian route, people don’t feel like they’ve had a fair crack at disagreeing and therefore the only thing they can do to control that is go slower on the ultimate decision that was made, and you get stuck in this treacle within an organization that doesn’t allow you to plow forward with the speed or the execution that you might, that that you see is we’re really bad at just getting stuff done.”
Confidence and Expertise
“You just recognize that people are messy and experimentation is key, and recognizing that you don’t know the right answer is just the most rewarding mindset you can have in a role like the one that I have, because you’ll sit there in front of some of the more senior people in an organization and you just go, “I don’t know, but I’ve got a framework for finding out an answer. Let me go and have a go.”
How Change Happens in Big Organizations
“It’s not, “See what somebody else is doing and copy it,” kind of model, it’s just you do get that sense that there’s a broader set of influences out there. And what we do, it’s not necessarily a competitive response to everything that everybody else does, but that slowly shifting sands of what consumers expect, and what they get value from, and who’s innovated, and what people are using, that does come up over time and new technology makes new things possible.”
Reflections on his Career
“The big things that I think have made my career in behavioral science one that I can be hopefully rightly proud of, but one that has meant that as an organization we have become a champion in behavioral science over the time. I think there are two things I would point to and the first one is getting the right level of senior sponsorship. If you’re new to an organization try to determine where you think that senior sponsor is and how senior are they. Are they going to be the evangelist that gets you having the input of the right tables to really champion… You could be a behavioral scientist in a small corner of a large organization and have absolutely no impact or you have a very narrow field to play in. So I’ve been immensely lucky that in my career, we’ve been given fairly broad playing fields within the bank, so I can spend one day thinking about customer credit card behaviors, and the next day thinking about investing, and the next day working with an analytics team on a piece of customer research, it’s incredibly broad and moving, but that only really comes from my senior sponsorship.”
Brooke Struck: Hello everyone, and welcome to the podcast of The Decision Lab, a socially conscious applied research firm that uses behavioral science to improve outcomes for all of society. My name is Brooke Struck, research director at TDL, and I’ll be your host for the discussion. My guest today is Peter Brooks, chief behavioral scientist at Barclays. In today’s episode, we’ll be talking about the new relationships banks are forming with their clients and how nudges are helping to get them there. Peter, thanks for joining us.
Peter Brooks: It’s a real pleasure. Thank you for having me.
Brooke Struck: Now, you noted that since 2008 the banks have taken awareness of, and many are doing more than just taking awareness, they’re actively working on their potential to support clients in the way that they manage their money. Now previously, banks seem to have been more agnostic about the specificities of their clients’ financial situations, the cadence of their earnings, so how often their paychecks are coming in and how regularly their paychecks are coming in, the patterns of their spending and this kind of thing. Really, if they were focusing on those dynamics, banks were primarily looking at upselling, but there’s been a change since then, so what has changed to spark the adoption of this new position of banks as money supporters?
Peter Brooks: I think there’s probably one point to note in your question, that actually 2008 was a massive inflection for the entire industry, wasn’t it? With the financial crisis that we all faced. And I think that provided some of the catalyst. In that role of financial institutions as having a social place became much more prevalent, and many of those institutions that they had to look to their governments for support, certainly had to rest upon doing more for the people who’d supported them through that period.
Peter Brooks: So that’s one backdrop to this and that has created, I think, a social purpose in many organizations. Probably I prefer the back in 2008 story, but actually there’s a switch towards traditional salaried type roles towards more non-traditional type of these patterns, instead of a gig economy. And the growth of that for many individuals has meant that actually as you talk to people and try to encourage people into good financial behaviors, which ultimately is what I care about in my role, you can’t just assume that everyone gets a paycheck come the end of the week or the end of the month, things could be much more volatile for many individuals now.
Peter Brooks: So as a financial institution looks to help people, the consumers also have raised their bar in terms of their expectations, but also that’s led to the financial institutions trying to understand more about those consumers and what they ultimately are doing in their lives, and how they’re earning and how they’re spending in order to try and join two sides of that problem.
Brooke Struck: That sounds like actually there are many sides to that problem. So you reference, of course, the financial crisis and changes in the patterns of employment and structural features of the economy. Of course, 2008 had a massive impact on the banking sector but had massive impact on other sectors as well, so the gig economy, of course, has taken off since 2008. So not only have the banks been thinking about this role but also the customers have been more in need, the trend was accelerated. So I wonder if you could tell us a little bit about how banks, including Barclays but potentially others, are using systems design to deliver on this new value proposition.
Peter Brooks: You can be honest as to whether you’d call this systems design or not, because I think that’s probably something everyone might have a slightly different definition for. But I think we start with a really serious focus on the consumer and design-led thinking. So for those of you who are familiar with the Double Diamond design thinking, methodology is really key to what we do, and start by not just taking the brief that might come in from a business stakeholder that says, “I want to do this because it makes sense to me and it meets my commercial aims,” but tilting that round and saying, “What’s the customer actually need us to do?” and accepting that if we can solve the customer’s problems, the chances are they’re going to do more business with us, for the commercial aim, but ultimately, they’ll probably manage their money some better and actually meet their own aims.
Peter Brooks: So everything that we try to do starts with that customer and tries to embed it in our design and then embed it in our build, and then embed it in our feedback loop so that we try to do it. I’ll give you one example, because I’ve worked an awful lot in designing wealth management platforms and how you try to encourage good investing behavior. So in the UK, we have our own brokerage platform; people come in there, they choose what they want to invest in, they don’t get advice, they don’t ultimately get I was telling them as a bank what they should do. But we wanted to design that entire platform with the customer in mind to see what we could take out, de-bias, with good design.
Peter Brooks: And one of the bits that I was really passionate about in designing that was that for the target customer, that person who comes and invests a little bit money, is hopefully going to leave it invested and untouched for many years to come so that it can benefit from growth over at least a market cycle and hopefully many more, why on earth do we default to showing them day change performance? Every brokerage platform that I’ve seen, that’s just one of their expected views, that’s what you get. Actually for investors, that gives you a real sense of risk and no real sense of returns, so it’s not clear why you’re actually showing that.
Peter Brooks: So we take that and go, “We’ve got this data point, does it encourage good behavior or not? No, all the evidence suggests it probably doesn’t, so is there something else that we could do? Is there some other way that we could show this data point?” At the time, a few years back, we didn’t have the ability to go and do lots of testing, go and do lots of user research to find out what was ultimately going to get there. But actually, what we came up with was a really good theory, that example that actually people are very used to seeing interest rates on savings accounts that are expressed annually, on their borrowing that’s all expressed annually, so why don’t we show them a 12 month rolling return? And actually, then you’ve got a better chance of showing people the return from their investing and not the risk, and hopefully that reduces that sense of anxiety, gives them the sense of comfort that actually investing is something that’s actually easy and something they should be doing.
Brooke Struck: So if I can prod you to enjoy a time honored pastime of slinging mud at the people who came before you, how is it that we got into a situation where products were not designed with the user first from the beginning?
Peter Brooks: It’s a real awkward little bit of a debate, I think, but it’s a strong point. In some organizations, I think, it’ll be “where does the power lie?” And it almost goes back to that point, you started the conversation about how do we… That reorientation of the bank’s understanding of the consumer has also probably led to a reorientation of the power base within many organizations as well. So the reason why you design products that are not necessarily going to lead to good customer behaviors is because they’re probably quite profitable. And in a bank, or any institution that has shareholders, your ability or your mandate almost is to grow profits and reward the shareholders for investing in you, you don’t necessarily have to focus on all the benefits and the good behaviors of your consumers.
Peter Brooks: So actually, one of the things I think you do see is that tilt towards, actually, taking care of the customer and the profitability will take care of itself. And in the past that possibly was more tilted towards design the products that actually increase your profitability in the commercial aspects of your organization more than actually focusing on a consumer need.
Brooke Struck: I wonder whether there’s a temporal aspect to that as well. I gather that your value proposition in putting forward the design changes that you’re making is that what’s in the best interest of the customer is also in the best interest of the company, but perhaps on a longer timescale, and that what may have been potentially driving the kinds of behaviors that I was mentioning before, where the customer’s best interests are not front and center in the design process, is perhaps not just a focus on profitability, but specifically on short term profitability. That actually ties back very nicely to the example that you were talking about before.
Brooke Struck: This experiment that you’re running about what timescale you show returns on, investors perhaps would have benefited from that intervention 20 years ago, to have different expectations about when they would be cashing in their returns. So If you’d had your intervention 20 years ago maybe we would never have ended up in this problem in the first place.
Peter Brooks: Oh, that’s a great thought experiment. I might just warp my brain to try and battle on that one. But I think the point you made about short-term profits, the commercial aspects, is really well made and it’s going to be a constant source of tension, particularly in those larger listed organizations that have a requirement to report quarterly and chief executives who live and die by the results day. It does create that tension between what do I need to do to hit numbers and commitments, and what do I need to do to engender long term relationships with consumers?
Brooke Struck: Yeah, ultimately someone needs to have the incentive to keep their eye on the best interests of the company 20 years, 50 years, 100 years down the line, especially for these larger established institutions. Banks have a reputation, there’s a bit of inertia to this, for a number of years, whether they still are or not let’s not get into that, but for a number of years banks seemed to be only really engaging clients when there was a moment to upsell, certainly every time I see my phone ring and recognize my bank’s phone number. But every time I see the phone number, the expectation is there’s some shiny new product that they’re going to try and sell me on my credit card.
Brooke Struck: As banks try to not only change their practice but change their image, how do we navigate those tensions that you highlighted and the conflict of interest? Or maybe we need to reframe that idea a little bit, not the conflict of interest between the customer and the bank, but the conflict of interest between short-term interests, where the bank and the customer might not be aligned, with longer term interests where, hopefully, the bank and the customer are more aligned, how do banks and innovation and behavioral units specifically manage those tensions? Ultimately somebody somewhere has to decide which outcome we’re going to optimize for in a given situation.
Peter Brooks: Yeah, it’s a really great little thought. I’ll tackle it by explaining a little bit where I think the state of technology is, and I think it gives a rise to why I think the conflict you’ve just described is really a very timely thing to be thinking about. So having come from background to behavioral science and being convinced by all the power of personalization to try and help people understand and do stuff and how delivering education way ahead of time has generally been shown to be pretty ineffective because people’s ability to recall it at the point of time they need to is pretty low. So you take that and go, “What do I really need to do? Personalize, great, I can do that now a little bit more because my real time analytics capability within a large organization with the power of the cloud is now kind of there.”
Peter Brooks: And with the rise of the smartphone and the ability to use push notifications, my ability to put insight in the hands of consumers in real time is now also getting there. So now my experiment is “what’s the insight?” What is it I’m going to use these insights and analytics and this channel of notification to actually put in the hands of consumers.
Peter Brooks: And you’re absolutely right, there are lots of people who are going to have competing interests in that. So if I took the traditional marketing approach and maybe built a propensity model, the top two or three things on that propensity model might say, “Here are the three things this consumer’s most likely to buy.” It’s not necessarily the three things the consumer most needs.
Peter Brooks: So I might go talk to somebody who’s a financial advisor or with a planning background and go, “How would I of augment this model with some understanding of what it is a customer needs to hold in terms of product,” and maybe recheck the ordering with that and change the prioritization.
Peter Brooks: But then I come in with the behavioral science and go, “All right, cool. Maybe it’s not about products at all, maybe it’s about behavior. Maybe there’s something else I need to do. Maybe the problem I have is not to nudge people to take out a new savings product, but actually what I need to do is just give them a big pat on the back for starting to have a savings behavior at all, irrespective of what product it’s in and that can have the biggest effect on their long term well-being.” Now that’s pretty unproven as to whether that’s going to be successful, so you have to have that test and learn and that feedback loop.
Peter Brooks: And as yet, I haven’t seen a case where there’s one good solution to who holds that power and who has that ability. And maybe your listeners will have examples that they’ll no doubt comment on and send in to educate me, but it’s really tricky to understand that, actually, who’s even equipped in an organization to make those trade-offs? Because you do have somebody in the organization who wants to get more product out and can meet the commercial aims and grow the business. And people in my sort of teams, I’m a behavioral scientist who sits in a broader customer insights and design function, so we’re sat there going, “Actually, if you do some of this stuff, you might have a real strong improvement in things like net promoter score, or you might be able to drive down complaints, or you may actually holistically, when you look across your product suite, improve the value of the overall relationship with a particular customer by doing more of this other stuff.”
Peter Brooks: And maybe you get to a model that… And we certainly haven’t got that, that I know of it within the bank yet, but there is one that is based on what the customer values and that’s possibly much more difficult thing to guess, to measure, to react to in those kinds of feedback loops. One of the bits that I’ve been really excited about that use of technology is that it becomes a really fascinating behavioral science feedback problem that uses all the great stuff that we’ve learned over the years about personalization, and just in time.
Peter Brooks: And do I deliver this to Brooke at 3:00 in the afternoon via this channel because I know that’s where it’s most likely to engage him? And does he need the authoritarian tone version of this insight versus the handholding tone of this insight? And just using all of what I get to know about you as a consumer in order to best be able to help the right thing in front of you to help you lead a better financial life in my context, but it could be other things that people are trying to do with these joined up models of data analytics and notifications.
Brooke Struck: So it sounds like there are a couple of ingredients in what you talked about in terms of navigating those tensions. The first is that it seems to be important to have within that ecosystem a diversity of incentives, that some people are professionally incentivized to drive engagement on the platform and perhaps shorter term commercial goals, whereas others, and you mentioned yourself in this lot if I’m understanding correctly, are more focused on client satisfaction, perhaps longer term commercial goals. So having that diversity of incentives in the ecosystem seems to be valuable, along with attention in the discussion. There’s not a clear winner between those two sides, that one is not consistently overruling or besting the other.
Brooke Struck: It reminds me of a professional relationship that I had with a colleague in a previous life, if you will. I was much more focused on the client use case and business case for the analytics we were doing and he was really focused on the methodological side, and I always felt that the best work we did was when we emerged from our discussion either in his office or in mine, and we both felt that we had a really productive argument about it and neither of us really felt that we had conclusively won the argument. We felt that we had put our perspective out there and that it had been heard and challenged and given a good once over, and that we had to make concessions but that neither of us walked away totally happy or totally disappointed. Does that resonate with your experience as well?
Peter Brooks: You’d probably be familiar with all the insights on good corporate decision-making and how many others approach meetings as almost a battle of advocacy, “I’m going to go in and not accept that other people could have a valid opinion, but also just to push my own aims.” And in some respects that leads to some terrible corporate decision making behaviors where I’m almost incentivized to not tell you all my own worries because what I need to do is beat you into the ground and make my idea work. So you’re absolutely right, there’s a cultural argument to that, that comes from accepting that lots of people have different incentivized reasons for raising the points they make. And collectively, once you create and accept that culture of tension, you get to a much better creative output because of it, but you do need that acceptance, that actually you’re not trying to just force through your idea by sheer personality or authority.
Peter Brooks: And actually, if you have key stakeholders together who will approach the problem in different ways you will get that diversity of opinion and view that will challenge your thinking in a much stronger way, so I think your point is really well made. It’s exactly how we have seen that problem play out many times.
Brooke Struck: Just speaking in terms of sectoral representation, I’ve seen a lot of that kind of tension well supported and sustained among some of my more academic colleagues. The challenge there is that it doesn’t always lead to follow through, that the tension is allowed to persist but concrete decision making and action doesn’t follow from there. So just want to flag the risk, that either end of that spectrum holds some dangers. If you’ve got this extremely competitive, authoritarian, putting on your armor and marching out onto the battlefield approach to meetings, that can lead to some bad decisions being made. But the answer is not always just more attention and more openness and fluidity, because sometimes that can also lead to no decision being made or a decision being made but not carried through because there’s not enough impetus behind it. How do we navigate that tension? How do we find a healthy balance there?
Peter Brooks: The way you described that, it makes me think there’s a strong link to some of the work on procedural justice within organizations and the decision-making, actually. There’s a danger that if I go that authoritarian route, people don’t feel like they’ve had a fair crack at disagreeing and therefore the only thing they can do to control that is go slower on the ultimate decision that was made, and you get stuck in this treacle within an organization that doesn’t allow you to plow forward with the speed or the execution that you might, that that you see is we’re really bad at just getting stuff done.
Peter Brooks: And that might not be the problem, the problem might have been we’re just really bad at actually how we frame taking the initial decision, that everyone wasn’t bought in to make it happen. And actually that sense of procedural justice, making sure that people feel like the decision was made in a fair and open enough way, then that they can get behind the decision that ultimately someone’s responsible for, that might not be them, and they’ll go and carry it out without becoming that sticky wheel in the gear system that is not going to get stuff done as quickly as they like.
Peter Brooks: There’s another bit of a point in there that there’s a danger to making a decision too quickly but there’s also a danger to making a decision too slowly. And in that context it’s going to be a tricky thing, and that’s where I suspect leadership is the trained skill that you try to instill in that process.
Brooke Struck: I like that you bring up the concept of justice in this. I think that ties back very strongly to one of the points that we started out on, the 2008 crisis. Not just a financial crisis, right? It was also a crisis of confidence, a crisis of identity for a lot of citizens, for a lot of institutions, who were all of a sudden finding the table upended from what they had come to expect in terms of what was a just relationship to expect between institutions and individuals, especially financial institutions, but not limited to them, of course.
Brooke Struck: To avoid going down potentially the most philosophical root of this conversation, not that I wouldn’t enjoy it, of course. Let’s assume that we’ve done a good job and that we’ve managed to navigate the multitude of tensions that you and I have discussed in the last little while. Let’s suppose we’re on the other end of quite a successful process and we’ve rolled out some new initiatives and we’re seeing good movement on the metrics that we care about, hopefully some balance between short-term and long-term gains. It might be easy to lapse into triumphalism, to say, “Hey, great job team. We really cracked the nut. Now let’s sit back and enjoy the fruits of our labor for the next few decades while the wheelbarrows of money just come wheeling through the door.” That’s anathema to innovation and experimentation and all of the tensions that we’ve been describing that seemed to be critical to get to that point.
Brooke Struck: So noting that we have to celebrate those victories, how do we do so without closing the space for further innovation which will be the thing that gets us to the next victory?
Peter Brooks: One of the biggest things that we’ve looked at is when you set up these programs, you set up your metrics of success to provide you that feedback loop. And that’s not just the “did we sell more”, which is clearly the most obvious one that people will care about, but there’s “what were all the unexpected consequences?” as well. So we might have launched a really successful platform enhancement, or new customer feature, or whatever it is, and you might find that it has exactly the right thing for what you are targeting, more people doing that, using that particular feature, exhibiting that particular behavior, buying more of a particular product, but it could also lead to other things.
Peter Brooks: There might be a stage of that, that people are doing more of this but you’re driving more calls into a contact center that’s actually not reported in a commercial product line, but actually it’s just an overall burden to the operational side of an organization. So once you set that up and you look more holistically at the problem, it provides you with the argument that actually all you ever found was almost like a local optimum to the solution you’ve got, and either the world may change, the organization may change, or our consumers may change, and actually you’ve got to keep moving. You can’t just rest on these laurels because the world will overtake you. So I think that the way we talk about it and frame it internally is that we have the concept, and it will be familiar to many people, that you have a champion and you have the challenger at all points in time.
Peter Brooks: And all we’re trying to do is just trying to find the next new challenge to see if we can improve something. So I’ve got examples from where we try to apply behavioral science, particularly in communications, where we thought we were doing something really badly, and we were. Rewriting a particular communication with behavioral science lens and chunking at the problem a bit of progress indicators in there, and making things much clearer, changing the tone of voice and language and all those good things improves the success and primacy of the account usage four or five fold. Those are non-negligible effects once you’re talking across large numbers of consumers.
Peter Brooks: But there are other examples where we’ve tried to do it and got it horribly wrong, and I can think of one example where we tried to rewrite a text message notification that went up. We had a champion hero that we thought was pretty awful, marketing had to go and rewriting it, and behavioral scientists had to go rewriting it, and we both did a worse job than the existing tags. So it doesn’t mean that we won’t go back and try it again, it doesn’t mean that once we’ve improved something three or four fold on what it was before that we’ve got to the end solution, we’ll look at that again and we’ll try and improve it again.
Peter Brooks: And it’s almost this use of behavioral science and this almost evolutionary mindset that you need to create in what you’re doing; that, yes, we’ve got a little bit further along the line. But probably, I’ve worked for Barclays now for 13 and a bit years, I probably know less right answers now than I thought I knew 13 years ago. It’s one of these levels of humility go up with how much you recognize you don’t know and the confident, relatively recent PhD graduate joining a bank was like, “Yeah, we know it all. We’ll do this and this, and these really easy wins.”
Peter Brooks: And then you get into the slightly harder wins and how much they’re hard to come, and you just recognize that people are messy and experimentation is key, and recognizing that you don’t know the right answer is just the most rewarding mindset you can have in a role like the one that I have, because you’ll sit there in front of some of the more senior people in an organization and you just go, “I don’t know, but I’ve got a framework for finding out an answer. Let me go and have a go.”
Brooke Struck: Framing those victories as local solutions, not global solutions, that seems to me a really valuable part, that, what we’ve achieved is something better here and now not the best thing, point final, no further discussion needed. Interestingly, when you brought up the example of a whole bunch of crack teams sitting down and trying to improve some communication only to realize that, in fact, you’d all made it worse, and the notion of evolutionary pressures there, it made me think that a lot of the discourse around innovation suggests that actually we aren’t doing that many things well already. And if I think about large institutions like Barclays, other large banks, insurance companies and other industries as well, these institutions that have been around for a century or more, it’s not by accident that they have managed to establish a very dominant market position and to sustain that over time. That suggests that at least some of what we’re already doing is probably not terrible.
Brooke Struck: And if we want to think about this in evolutionary terms, there are sharks out there. Lots of organisms have changed enormously over the last millions of years, sharks have remained almost unchanged because they’ve just continued to be well adapted even to a changing context. If we assume that nothing out there is evolutionarily well adapted, we’ll think that we need to change everything. But this kind of humility, as you noted, to say, “Okay, well, we’ve got a limited resource of innovation to apply, we shouldn’t think that everything out there is terrible and needs to be completely upended.” How do we identify where the greatest opportunities are for innovation? I was going to finish that sentence by saying, before we go out and spend all our innovation budget… Perhaps I’m rigging the deck a little bit, so I’ll step back and stop that question pretending I’d never finished it that way.
Peter Brooks: And I think it’s one of those questions that you sit there, you scratch your head and you often go, “I don’t know the answer to it,” because certainly our attempt at approaching that question would be, you could almost go into that jobs to be done type framework and say, “What are the jobs that are most important for our key customer groups? And are we doing them?” And if we’re not doing them, that gives you a drill site to go away and innovate within. Or simply, you look at some of the competitive threat that’s out there, slightly bigger shark, or who could come in to try and eat your lunch. You’re going to probably try and stay a little bit out of the pack and stay nimble for the core customer group that you’re in, but whether you get it right or not, only time will tell. And trying to do that ahead of time has won that.
Peter Brooks: I think the design thinking approach is really a strong way of taking it in. You start with a customer, you start with a need, you start with who it is you’re trying to do something for. And if you’re generally doing those things… Well, firstly, you’ve got a right to attempt to innovate for them, and you’ve got a chance of succeeding once you do innovate, but you also, I think, have to accept that some of the things you attempt to innovate over are going to be wrong and throw away, or you try and take too big of a step and actually what you do is create something that people aren’t ready for.
Peter Brooks: One of the things that I’ve seen many times from working in banking is there are some really deep rooted views that people have of the way things should work. Yes, you’re trying to innovate, but if you completely radically innovated how people see and operate with their accounts and you’re a relatively large incumbent organization, what you can do is completely disenfranchise a large section of your customer base to a point where they don’t know what they’re doing and innovation there could have actually had the complete opposite effect, it could have been doing something really great.
Peter Brooks: And actually sometimes has a really great relationship with what you might see as the FinTech type startups who can test, learn, be really nimble based upon having smaller customer bases and probably slightly more nimble technology solutions in the background, that actually larger organizations do benefit from those players being in the market because they do create new norms, new expectations. That actually, we get the feedback all the time that X, Y, Z relatively new FinTech startup is doing this, and it’s great, and we go, “Cool, if that’s what people find great, what’s our way of bringing that same vision, dream, to our customer base? But in a way that doesn’t cannibalize what we already do to a point where people don’t have to use it.” So it’s probably a long-winded way of saying it’s just really complicated.
Brooke Struck: Yeah. So there were a few good touchstones there that I heard you go across along the way. The first is figuring out the jobs to be done. So how valuable would it be to significantly move the dial on this? Competitive threats is another one. How ornery are the other players in the market in this area? Who’s really moving and shaking to try to disrupt us here? The third, and this is the one where I cut off the end of my question early because I didn’t want to rig the deck, is you mentioned that you probably can’t know until you jump in a little bit, you need to start innovating and seeing how people respond. So that reframes the question a little bit, it’s not how do I figure out what the right innovation site and the right innovation project are before I do any work, the answer is to do a small piece of work and then see how it’s going and decide whether it’s worth continuing.
Brooke Struck: That I think also hearkens back to the idea that we were talking about earlier about creating good dynamics around institutional decision making. If you create a decision ecosystem where once you’ve decided to start something, you’re committed and your personal and professional worth now depend on the success of this initiative, you don’t position yourself to be able to implement exactly this kind of strategy of doing a small thing and seeing whether it’s worth continuing.
Brooke Struck: The last point that you made though, is an interesting one, staying plugged-in to this wider ecosystem and seeing what competitors are doing with their innovation. You noted as well that for large institutions what the smaller startups are doing can be really important to keep track of because they, in a sense, as you mentioned, have an opportunity to develop a new type of client expectation in a way that an established incumbent firm might struggle to do because the startup isn’t beholden to the same kind of expectations from its clients as the incumbent might be.
Peter Brooks: That’s definitely something that I’d see happen quite a lot of the discussions that we have, certainly, internally. It’s not, “See what somebody else is doing and copy it,” kind of model, it’s just you do get that sense that there’s a broader set of influences out there. And what we do, it’s not necessarily a competitive response to everything that everybody else does, but that slowly shifting sands of what consumers expect, and what they get value from, and who’s innovated, and what people are using, that does come up over time and new technology makes new things possible. And somebody will go and be the first mover and they will either be great or bomb, and people’s expectations, as you rightly say, will shift. Because as I’ve said, things that are very new today may just be a hygiene factor in three years time and we’ll all be doing it, so you do need to be plugged into that.
Peter Brooks: And I think more broadly in terms of staying plugged-in, there’s being plugged-in in lots of different ways as well. I lead a series of behavioral science practitioners within a financial organization, but as I said before, I’ve been inside that organization now for well over a decade. I need to stay plugged-in to other behavioral scientists working in other institutions and other industries in order to understand what’s working for them. I don’t have any monopoly on what’s good behavioral science in financial institutions, I certainly don’t have any monopoly in terms of what’s good behavioral science interventions in other industries, and I don’t expect everything to have a crossover, they will in many cases be very domain specific.
Peter Brooks: But at least working with partners who either have worked across multiple industries or just joining conversations and, weirdly, the growth of podcasts has been really great for staying in touch with what other people are doing. They keep that creative juices going within the organization and just, again, reinforce our humility, that there are lots of other people doing lots of other interesting things. And actually we don’t need to get so stuck in our own, for me, Barclays’s way of thinking, with all the limitations and constraints of what I know we can deliver or what people will have the appetite to go and deliver.
Peter Brooks: And if I got stuck into that for anymore than a short period of time, my effectiveness within an organization would fall quite rapidly. And actually, looking outside is by far the most important part of my role, I think, in terms of staying fresh and innovative to bring stuff that we’re seeing elsewhere, good practices, ideas, just weird and wacky stuff that may have worked elsewhere, and going, “Is there something that’s even got a little kernel of something that we could use or apply within a bank?” And then you just see where it takes you.
Brooke Struck: In speaking with a number of senior practitioners, but also with a lot of people who are just at the outset of their career and trying to figure out how to make a go of being a behavioral scientist, one of the themes that I’ve heard over and over is that it’s sometimes hard to make the business case for doing exactly what you just described; namely, staying in touch with the broader community. So how is it that we can clarify the value of that? And if I can take a first pass at a tongue in cheek way of expressing it, the cheapest way to learn is to watch somebody else do it wrong rather than to do it wrong yourself.
Peter Brooks: For me, the big things that I think have made my career in behavioral science one that I can be hopefully rightly proud of, but one that has meant that as an organization we have become a champion in behavioral science over the time. I think there are two things I would point to and the first one is getting the right level of senior sponsorship. If you’re new to an organization try to determine where you think that senior sponsor is and how senior are they. Are they going to be the evangelist that gets you having the input of the right tables to really champion… You could be a behavioral scientist in a small corner of a large organization and have absolutely no impact or you have a very narrow field to play in.
Peter Brooks: So I’ve been immensely lucky that in my career, we’ve been given fairly broad playing fields within the bank, so I can spend one day thinking about customer credit card behaviors, and the next day thinking about investing, and the next day working with an analytics team on a piece of customer research, it’s incredibly broad and moving, but that only really comes from my senior sponsorship. The second part I think about, certainly making that business case for staying connected with the wider organization, is actually that that doesn’t need to be too much of a business case. Actually a lot of what you can do as a practitioner to stay in touch with other practitioners is costless to the organization’s time, and whether that’s finding the network that’s local to you, we’re very fortunate that London’s got a very active set of behavioral finance and behavioral science practitioners that you can bounce ideas off, it doesn’t have to be buying expensive conference tickets to go and jet halfway around the world to be part of some big society get together.
Peter Brooks: There’s lots of other interesting ways to hear the views of people. It can cost you a podcast subscription, it really can be that simple, it doesn’t have to be much more than allocating time in your day to stay plugged in.
Brooke Struck: I don’t understand what you mean, Peter. The Decision Labs podcast is free, there is no cost. I think I survived several dozen episodes without any plug as shameless as that, but there you have it.
Peter Brooks: I teed it up for you.
Brooke Struck: Thank you. So this has been a really valuable conversation. I think for me, what I’m taking away from this is that innovation is something that needs to take place if it’s going to be done well in an ecosystem of tensions between short-term incentives and long-term incentives, tensions between more typically corporate incentives that you’d see on a quarterly earnings report versus these longer term incentives that might be more oriented towards the client.
Brooke Struck: But fundamentally, those tensions and navigating them rather than collapsing them is the thing that we need in order for innovation to continue and hopefully to be successful. Is there something else that you feel is an important ingredient that I’ve missed in trying to sum that up?
Peter Brooks: See, you’ve done a much better job of summing that up than I would have done. No, I think possibly the one other bit that I would throw into the mix is just bring the enthusiasm with that. Probably the one thing I’ve found in trying to help a large organization innovate and use behavioral science widely is that people really enjoy listening to it, irrespective of what their role is or what they’re trying to achieve, they genuinely can leave a session that’s been focused on behavioral science having got something out of it, whether that’s a reflection of their own behavior that they didn’t recognize and something they want have improved themselves, or whether it’s going to be something they can take back to solve a particular business problem.
Peter Brooks: So capitalize upon that as much as you possibly can because actually within an organization, that’s a big part of your currency to people, and that is often your get in to many of these innovative teams, because you do have a different perspective when you bring that behavioral science knowledge and thought process into this. And then you can really do all the things you just so eloquently summed up around, navigating tensions, being the person with a different perspective in those decision-making forums.
Brooke Struck: All right. Well, Peter, thank you very much for joining us today, we appreciate your time, we appreciate your insights and we hope to speak with you again soon.
Peter Brooks: It was a real pleasure, thank you.
Brooke Struck: If you’d like to learn more about applied behavioral insights, you can find plenty of materials on our website, thedecisionlab.com. There, you’ll also be able to find our newsletter, which features the latest and greatest developments in the field, including these podcasts, as well as great public content about biases, interventions and our project work.