Organisational behaviour – Page 2

Removing call queuing can improve customer service

Published November 7, 2017November 7, 2017 by Anand Damani

The call queuing system is the most basic tool of customer support (welcome to … press 1 for … press 2 for … press 9 to speak to a customer service executive. All our executives are busy. Please hold your call is important to us…). But in one instance employees of a company were using it to avoid talking to customers. They did so because customer service interactions were viewed as costs that were to be minimized. Therefore, if the calls weren’t answered, better would be the company’s profits.

The company we’re talking about is Rackspace that hosts Internet sites for other companies. In 1999 Graham Weston – the founder hired David Bryce to be the head of customer support to change the behaviour of employees dodging its customers. They decided that from now Rackspace would provide ‘Fanatical Support’ to its customers. But providing great service would cost more and if they offered both premium service and cutting edge technological expertise, they would be forced to set their prices high that would reduce their sales.

So Weston and Bryce implemented a small but powerful Behavioural Design nudge. They ripped off the call queuing system. Without it now, there was no safety net. Initially the phone would keep ringing until somebody picked it up. But now it became impossible to dodge the customer. The company also followed it up by launching awards for employees who were fanatical about service. In 2001 Rackspace became the first Internet hosting firm to turn a profit and over the next 6 years, it averaged 58% annual growth.

Rackspace employees didn’t see the need to improve customer service, but neither did Weston and Bryce do anything to make them feel the need. Instead, they chose to simply nudge them into action.

Source: Dan Heath (author of Switch) and Graham Weston’s (founder of Rackspace) interviews in 2007 and 2009

How an IT company benefited by creating a sterile cockpit

Published October 24, 2017 by Anand Damani

‘Sterile cockpit’ is one of the rules of the airline industry, according to which anytime a plane is below 10,000 feet – whether on its way up or down – no conversation is permitted in the cockpit, except what’s directly relevant for flying. No talk about cricket, football, sex, nothing other than focusing on flying. The rule was developed after investigations showed that some aircraft crashes during the 1970s were caused when flight crews were distracted from their instruments by idle chatter in the cockpit.

Meanwhile one IT company had reduced new product development time from 3 years to 9 months due to competitive pressures. That led to a stressful environment. So when workers fell behind schedule, they tended to interrupt their colleagues for quick help and the managers would constantly wander by asking to be updated on projects. This led to software engineers getting interrupted more and more, leading to increased work hours and a vicious cycle of more work and more stress.

Leslie Perlow, a Harvard Business School professor, was apparently responsible for the company trying out a Behavioural Design experiment. They established quiet hours on Tuesday, Thursday and Friday mornings before noon. The attempt was to create a sterile cockpit allowing them to focus on complex bits of coding without being derailed by periodic interruptions.

In the end the group managed to meet its stringent 9-month development goal.

Though this was a very small simple nudge, such ‘right’ behaviors don’t happen naturally – they need to be designed.

Sources:

Sterile cockpit – http://en.wikipedia.org/wiki/Sterile_Cockpit_Rule

Leslie Perlow – http://leslieperlow.com/

How a teacher changed the lives of school kids

Published September 26, 2017 by Anand Damani

Her name is Molly Howard, a teacher who taught at a school in Georgia, US, where 80% of the kids lived in poverty and only 15% of the kids went on to study in colleges. Many teachers had a defeatist attitude – some children can and some children can’t.

But Molly challenged that view. Once she joined she abolished the school’s two-track system that separated the college bound students from the vocational students. She beefed up assessments and tutorial programs. She matched students with teachers who would be their on-campus advisors. But the biggest impact came from how she graded the students – A, B, C and Not Yet. No D-F.

In her view the students had accepted a culture of failure. These students didn’t used to do their homework or turned in shoddy work. They behaved as though they were complete failures. Getting a D or F seemed to be an easy way out for not trying enough.

In her new system of ‘Not Yet’ if the students did substandard work the teachers were made to say ‘Not Yet’. The students said to themselves, “My teacher thinks I could do better.”

Molly Howard had transformed her students with a simple Behavioural Design nudge. Test scores went up. The graduation rate increased dramatically. Howard was given the U.S. Principal of the year award in 2008.

Let’s not give up on North Korea, not yet.

What it takes to be an innovator

Published August 22, 2017August 22, 2017 by Anand Damani

Most of us tend to think that innovators are born geniuses. It’s in their blood. Either you have it or you don’t. But reality is anything but that. Innovation like anything else is a habit that can be designed. Just the way a company called Brasilata has done.

Brasilata is a US$ 170 million manufacturing firm from Brazil that makes various kinds of steel cans. Manufacturing may seem boring but Brasilata is one of the most innovating companies in Latin America. For example in 2012, employees submitted 1,71,916 ideas – an average of 170.4 ideas per employee! Many of the suggestions led to the development of new products. The decision regarding approval and implementation of these ideas is made most of the time by the front line.

For instance, Brasilata came up with a new approach for steel cans designed to carry flammable liquids to meet UN standards. These cans needed to withstand a drop from 4 feet. Most manufacturers did this by thickening the metal layers, which ended up using more raw material. But Brasilata’s employees created a new steel can inspired by car bumpers that collapse on impact. The new steel can be deformed on impact, reducing stress on critical seam. This also reduced the amount of steel used.

In another instance, when the Brazil government rationed energy in 2001 due to severe energy crisis, Brasilata’s employees reduced its energy consumption by 35% and even resold extra energy saved to other companies.

Innovation is so embedded in the employees that two employees came up with a suggestion of eliminating their own jobs! Beat that.

Is innovation in their blood? Are they born with it or has been it designed?

Let’s see what their founders put in place for this to happen. To begin with the employees are called ‘inventors’. It isn’t simply feel good language. When they join the company they are asked to sign an innovation contract. It challenges them to come up with ideas for better products, improve production processes and squeeze costs out of the system. Procedures have been made for them to submit their ideas. Brasilata distributes 15% of its net profits amongst its inventors.

I have no doubt that the journey would have been a difficult one. It probably took a while for employees to become good at inventing. And initially employees might have even felt like imposters with themselves being called inventors. The founders would have created an expectation of failure – not the failure of the mission, but of failure on route.

And yes I forgot to mention that the idea of the two employees of eliminating their job was accepted. Their explanation was that they had eliminated their job positions to increase company profitability and this would in turn be distributed to all; as mentioned previously 15% of Brasilata net profits are shared by the employees. But the two were placed in a new roles because Brasilata has a no dismissal policy. In the opinion of the chief executive officer “job security functions as a safety net which enables the trapeze artist to perform to his best ability without risking his life.”

Source: Brasilata

What to do when people don’t see the need to change

Published June 27, 2017June 27, 2017 by Anand Damani

A lot of times people don’t see the need to change. Even if they intellectually understand that change is required, rarely does it materialize. We mean haven’t you ever faced a situation where you have made a powerful case via a powerpoint presentation filled with charts and graphs and inspiring quotes, and everyone in the room understood exactly what you meant and even noded their heads with enthusiasm, but nothing really happened after that? No? Then you must be so damn good looking! For the rest of us, things needn’t be this hard. There can be a better way as described by the following two examples.

Jon Stegner worked for a large manufacturing company and figured there was an opportunity to cut purchasing costs that would result in savings of $1 billion over five years. But to reap these savings, a big process shift would be required and for that to happen the bosses would need to believe in the opportunity and for the most part, they didn’t.

Let’s face it, if you were in his place the natural and most likely thing you would have done is make a presentation with all the savings data, the cost-cutting protocols, a recommendation for supplier consolidation and the logic for central purchasing.

But instead, Stegner hired a summer intern and asked him to identify all the types of gloves used in all the company’s factories and find out what the company was paying for it. They found that the factories were purchasing 424 kinds of gloves, using different suppliers, and all were negotiating their own prices. The same pair of gloves that cost $5 at one factory cost $17 at another.

Stegner piled and tagged each of the 424 kinds of gloves and invited all division presidents to visit the Glove Shrine. The presidents were like, “We really buy all these different kinds of gloves?” “This is crazy” “We’re crazy”. “We’ve got to fix this”. The company changed its purchasing process and saved a lot of money. (Source: The Heart of Change by John Kotter and Dan Cohen)

Another example is of Robyn Waters who worked at Target as a Trend Manager at a time when Target was a ‘discounter’ and was lagging the trends and not starting them. That was Robyn Waters’s mandate. But the merchandizers in various departments were traditionally copycats.

For a time in retail, trendy clothing was neutral in color. Everything was gray, white, khaki, tan or black. Then, one season color exploded in the retailers in London and Paris. So Waters needed to get her merchants excited about color. But Target had an analytical, numbers driven culture and the merchants would review the past few year’s sales and see that the color hadn’t sold.

So she poured a bag full of bright colored M&Ms on the glass table creating cascades of turquoise and hot pink and lime green. Merchants went “Wow” and she’d say, “See, look at your reaction to color”. (Source: Interview of Robyn Waters by Chip Heath)

In both cases, the change agent was a single employee with not much resource. Both created the change by dramatizing the need for change in a tangible way.

Consumer and employee behaviour (Bajaj Finance)

Published May 29, 2017 by Anand Damani

Last week we spoke at Bajaj Finance on applying behavioural science to improve sales conversions, new product adoption, product portfolio, choice architecture, pricing strategies, employee behaviour change, productivity, performance management systems, learning and team collaboration.

One of the questions asked during the Q&A was what’s the difference between data science and behavioural science and what’s the role of both in business. We answered the question with the example of Uber. To make sure you can hire an Uber within couple of minutes of booking one and to make sure the cab arrives at the exact location around the time promised, Uber must be applying incredible amount of data science – matching user’s data with driver’s data and of course so much more we don’t understand as behavioural scientists. When Uber would use surge-pricing too, they would apply data science to incentivise drivers to reduce customer’s waiting time. But it didn’t go down well with anyone. So Uber changed its tactic from surge-pricing (1.8x) to upfront-pricing (Rs. 167). With upfront-pricing customers no longer feel its unfair because they are informed about the exact fare at the time of booking prior to the trip, which is a certain fixed amount and that puts customers at ease, even though in peak times Uber indicates that fares are higher due to higher demand. On the other hand, surge-pricing (1.8x) pinched people a lot more. But now with upfront-pricing, Uber is still able to charge a surcharge, but without pinching people as much, thereby improving customer experience. Uber’s upfront-pricing is an example of Behavioural Design.

How a surgeon made breast cancer treatment patient-friendly

Published May 15, 2017 by Anand Damani

If you have been through breast cancer or have accompanied someone’s struggle you may like this story. As all stories on this blog, this story has something to do with behaviour, in this case its about patient behaviour, organizational behaviour change, breast cancer treatment and the change brought about by a surgeon – Laura Esserman.

Let’s first start with the typical process of breast care diagnosis and treatment. The woman first notices a lump on her breast. Anxiously she calls a doctor and meets him/her after a few days by taking an appointment. The doctor confirms that the lump should be examined, so the patient is referred to a radiologist to get a mammogram. Getting the results takes few more agonizing days. The mammogram shows something suspicious, so she is referred to a surgeon who she meets after a few more days spent anxiously. The surgeon verifies that the lump is present, gets a biopsy done at a pathology lab to determine whether the lump contains cancerous cells. Meanwhile the woman is waiting for an answer. If cancer is detected, depending upon the stage, she undergoes treatment, which may involve radiation, chemotherapy and surgery, in whatever order recommended by the surgeon. Different departments of a hospital conduct radiation and chemotherapy typically with different booking procedures and delays. The sequence takes weeks and weeks to unfold, while the woman is wondering, “Am I going to live through this?”

This anxiety-filled process appalled surgeon Laura Esserman. She had a vision of a Breast Care Center where a woman could walk in at the beginning of the day and walk out at the end with an answer. But as an associate professor at University of California at San Francisco (UCSF) at that time she had few resources at her disposal. Plus, radiation oncologists reported to medical oncology, surgeons to School of Medicine, nurses to medical center, psychologists to someone else. So you can imagine the organizational challenge to bring them together. Even if she could start a breast care clinic, she would never be able to hire such talent at such salaries.

Like all big changes, Esserman started small. She set up the Breast Care Center for only four hours one day per week. She would see the patients in the morning, send them off for a break and ask them to come back at 1pm. During that time, she would go to radiology, look through all the images with the radiologist and decide the next steps. In the second year, she expanded to two days per week and soon enough the snowball began. Eventually the Breast Care Center got an entire floor. The number of patients skyrocketed and the Center became a major source of revenue for UCSF. Today when the patient walks into the Breast Care Center, Esserman can look at her films, do a biopsy, and consult a gynecologist, psychologist, and genetic counselor in the same place. “For the first time,” said Esserman, “we put the woman at the center.”

Source: Victoria Chang and Jeffrey Pfeffer 2003, Laura Esserman, Stanford Graduate School of Business Case Study OB-42A and Chip Heath’s interview of Laura Esserman in May 2009.

Crowd control, emergency evacuations, monetary incentives, team building & pedestrian crossings

Published February 9, 2017February 7, 2017 by Anand Damani

Behavioural Design interview on Radio One 94.3 – Part 3

Why Behavioural Design is more effective than Advertising at changing behaviour

Published November 8, 2016 by Anand Damani

Advertising is useful for creating awareness of the the brand and making the brand likable through a story. However its too much to expect that viewers would choose that same brand or product when they are actually in ‘buy’ mode. Because today consumers are subjected to thousands of associations everyday and the human brain cannot be expected to revive the desired brand connection at point of purchase or consumption. Behavioural Design, on the other hand, works at this moment of truth and is far more effective at making people act in the desired way. Let us give you an example.

Suppose we wanted to encourage students to drink alcohol in limits and not go overboard. And say we chose advertising as a way to influence them to reduce their drinking. And say we even use the proven persuasive technique of using social norms – people are motivated to behave in line with perceived social norms. So we advertise that 85% of students drink 2 or lesser than 2 drinks when they party. The thinking is that when students know that their peers don’t drink much, it will reduce the amount that they’ll want to drink when they party. And we advertise via posters in colleges in prominent places so that the students would surely notice them.

Though the technique of social norm is persuasive, by the time the students get to the pubs, clubs, parties, wherever drinking occurs, they forget about that piece of persuasive messaging. The disparity between where the students see the persuasive message and where they are when they drink means that the distant voice of the message is likely to be drowned by the here-and-now sounds of cheers, fast music, laughter and an ambience created to shed inhibitions.

It’s unlikely that the same message would work if placed inside the pubs or clubs, especially if students see other students drinking more than 2 drinks. But what if the pubs put playful ‘light cubes’ in students’ drinks. Light cubes that are LED lights enclosed in plastic, emitting flashes of blue and white light, making the drink look like it were flashing the police car lights (blue, white and red in US). That could subliminally remind the students of the presence of cops around and restrict them from going overboard and getting into trouble. That’s why Behavioural Design is more powerful at changing behaviour.

Know the basics of creating habits

Published September 6, 2016 by Anand Damani

This is the story of Claude Hopkins, who helped establish tooth brushing as a daily habit. Yup there was a time when tooth brushing wasn’t a habit .

So how did Hopkins get people to brush? He found a cue, a reward and a craving for that reward.

Faced with the task of selling Pepsodent, he sat down with a pile of dental textbooks. Dry reading, much of what we do to keep the blog stories interesting. That’s when he chanced upon mucin plaques on teeth. It’s the film that builds up on teeth regardless of what you eat or how often you brush. The film is a naturally occurring membrane that you can get rid of by eating an apple, running your finger over your teeth, brushing or vigorously swirling liquid in your mouth. Toothpaste didn’t do anything to help remove the film. But that didn’t stop Hopkins from exploiting his discovery. He decided to use this film that was universal and impossible to ignore, as the cue to trigger the habit of brushing.

Moreover the reward was enticing – a prettier smile making you look beautiful. All it took to get rid of the film and look beautiful was to brush with Pepsodent.

But countless studies, including famous ones of the brains of monkeys by Wolfram Schultz, neuroscientist at University of Cambridge, have shown that a cue and a reward, on their own, aren’t enough for a new habit to last. Only when your brain starts anticipating the reward, will it become automatic. The habit only emerges when in Schultz’s experiments the monkey began craving the juice upon seeing the cue or when a smoker’s brain starts anticipating a hit of nicotine upon seeing the pack of his/her favourite cigarette brand or when your brain starts anticipating the momentary distraction of checking your cell when it vibrates or lights up with a new message.

Likewise, Pepsodent had created a craving. Unlike other pastes of its period, Pepsodent contained citric acid and mint oil that created a cool, tingling sensation on the tongue and gums. Once people craved that cooling, tingling sensation – once they equated it with cleanliness – brushing became a habit. The tingling doesn’t make the toothpaste work any better. It just convinces people its doing its job. Two weeks after the campaign launched the demand exploded.

Many product categories can get kicking, if only they get back to the basics – cue, reward and craving for the reward.

Source: The Power of Habit by Charles Duhigg

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