Behavioural Design

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

To overcome big problems, think small

Published August 7, 2017August 7, 2017 by Anand Damani

Most of the times, when we think of big problems, for example, bad hygiene habits of a nation, we tend to believe that the solution also needs to be as big. But it may not require lots of resources to overcome the big problem. Time and again Behavioural Design has proven that the solution needn’t be big in terms of budgets, effort and resources. Here’s one more nudge/ intervention of Behavioural Design that illustrates the same.

In 1990, Jerry Sternin used to work for Save the Children and was sent to Vietnam to fight malnutrition amongst children. Sternin had read a lot about malnutrition and conventional wisdom indicated that malnutrition was a result of intertwined problems like sanitation, poverty, lack of access to clean water and lack of awareness about nutrition.

Sternin instead chose not to be overwhelmed with such theoretical knowledge. Rather, he traveled to rural villages to find out if there were any very poor kids who were big and healthy than the typical kid in Vietnam. He thought that if these kids were staying healthy against the odds, why couldn’t every kid be healthy?

After observing lots of such families for deviations between healthy kid families and unhealthy kid families, he discovered that mothers of healthy kids were feeding them the same amount of food as mothers of unhealthy kids, but were spreading it across four meals rather than two. Second difference was in the style of feeding – mothers who hand-fed the kids had healthy kids vs the norm of kids feeding themselves. Third most interesting finding was that healthy kids were fed tiny shrimp and crabs, considered appropriate food only for adults by most mothers. The mothers of healthy kids also tossed in sweet-potato greens, considered a low-class food.

Conventionally one would tend to believe that if somehow all the mothers would get to know about these 3 healthy ways of feeding their kids, malnutrition could be eliminated. But Sternin knew that mere awareness does not change behavior. So instead of building an awareness program, Sternin created a community program, in which fifty malnourished families in groups of ten, would meet at a nearby hut each day and prepare food with shrimps, crabs and sweet-potato greens.

Mothers got first hand experience of keeping their sons and daughters healthy. Soon neighboring mothers were convinced by the power of social proof. Within 6 months 65% of the kids were better nourished in that village. The experiment moved to other villages. The community cooking program reached 2.2 million Vietnamese people in 265 villages. A big dent in malnutrition done with a small team and a shoestring budget!

Source: David Dorsey, Fast company, Dec 2000. Jerry Sternin’s presentation at Boston College Center for CSR in April 2008

Investor biases and behaviour talk (SBI MF)

Published November 7, 2017August 1, 2017 by Anand Damani

We were in Goa over the weekend for delivering a talk on investor biases and behaviour for SBI Mutual Fund’s financial advisors. We spoke about several biases and how advisors need to be aware of them for handling their own portfolio as well as for managing their client’s expectations and behaviour. Biases like action bias, loss aversion, mental accounting, choice paradox, social proof, etc. make people their own worst enemies in investing. That’s why markets multiply money by hundred times but investors don’t get such returns. It was also fun interacting with fund managers and understanding their perspective on investing. Since these are commissioned talks they can’t be shared. However you can read all about investor behaviour and how to not make investing mistakes by clicking ‘Investor Behaviour’ in ‘Click on your topic of interest’ on the homepage right hand column. Happy reading, learning and investing!

Post-edit: The second round of the talk happened in Hyderabad.

Why we need a new label for ‘Climate Change’ (HuffPost)

Published July 19, 2017July 19, 2017 by Anand Damani

This article of ours first appeared in Huffington Post on 17th July, 2017.

Nineteen of the G20 countries have affirmed their commitment to the Paris climate agreement, which sets guidelines for each participating country to mitigate global warming. Sponsored by the United Nations, it aims to slow the rise in global temperatures. The US is the lone outlier on climate change while India remains committed on the issue of climate change “as per its own values and requirements.”

On the face of it, climate change seems like a problem that may be happening but is still some time away in the future. So perhaps it can be handled sometime in the future. After all there are so many urgent problems facing our country—poverty, malnutrition, black money, terrorism, lack of infrastructure, etc. Plus, there is this diffused sense of responsibility because it’s affecting almost every country in the world. So the question arises, why should India take the lead to tackle climate change? After all it’s the developed countries that are responsible for much of the industrialisation that’s causing global warming and climate change. But what really matters is which countries are facing and will continue to face the maximum harm from climate change. And India is right on top of that list according to research by the Notre Dame Global Adaptation Initiative. The group measures vulnerability by considering the potential impact of climate change on six areas: food, water, health, ecosystem service, human habitat and infrastructure.

Climate change is a wicked problem. As this New Scientist article points out:

“It provides us with no defining qualities that would give it a clear identity: no deadlines, no geographic location, no single cause or solution and, critically, no obvious enemy. Our brains scan it for the usual cues that we use to process and evaluate information about the world, but find none. And so we impose our own.“

It is wide open for interpretation causing constant uncertainty. Climate scientists say people don’t get the science about the environment. Environmentalists say political will is being corrupted by vested commercial interests. Commercial interests deny climate change. Individual minds are left confused.

But not only do vested economic interests inhibit reforms, our individual brains are not geared to deal with the problem. Climate change is global, complex, somewhat abstract problem, and occurs in a time frame of decades, all of which make it difficult for people to respond appropriately. Costs are short term, benefits are long term and perceived as uncertain, though in fact benefits are massively greater than the costs of action now. Take survival, for instance. But people suffer from loss aversion—the tendency to fear losses more than we love gains. So it’s challenging for us to give up our aspirations to consume and enjoy the pleasures of consumption now, in order to reap the benefits of reversing climate change.

According to the National Oceanic and Atmospheric Association, US Department of Commerce, January 2017’s average global temperature was the third highest for January in the 1880-2017 record, behind 2016 (highest) and 2007 (second highest). The extent of polar sea ice on 4 December, 2016 was about 3.84 million square kilometers (1.48 million square miles) below the 1981-2010 average, according to U.S. National Snow and Ice Data Center satellite measurements. That’s roughly the size of India melted away because of rising global temperatures. The increase in temperature, heatwaves, storms, floods and disruption of weather patterns is being felt by everyone, but it’s still somehow not enough to get everyone to take the necessary desired action. Why?

To begin with, climate change is a soft term, moderate and fuzzy. It could do with re-labeling as “climate disaster”. Climate disaster creates a stronger sense of threat and generates a greater sense of urgency. It brings up vivid images to the mind of typical disasters—storms, floods, wildfires, droughts, etc. So people are more likely see it as harming them and their family, and more likely to see it happening now. Several behavioural science studies have shown evidence that when words are re-labeled it makes a huge difference in people’s behaviour. Imagine 3G, 4G and wifi being reworded as “radiation”.

However, education on “climate disaster” is not enough. It needs to be made more tangible for everyone to act upon it. We need to create behavioural design nudges in our everyday lives that enable everyone to effectively contribute in reducing climate disaster in a tangible, concrete way. For example, just like the Bureau of Energy Efficiency has created an energy saving star rating system for household appliances like air conditioners, refrigerators and washing machines, we need to have an encompassing “climate disaster” star rating system for each and every product and service we consume. Fewer the stars, more the damage caused to the planet. Higher the stars, the better it is for the planet. For example, amongst food items, chicken would get a higher star rating than beef because cows let out methane as they digest food, a potent greenhouse gas, 25 times as powerful as carbon dioxide. And beef requires 28 times more land to produce than chicken and 11 times more water. Vegetarian plant-based food would get the highest star rating in comparison. The “climate disaster” star rating system will, in turn, nudge manufacturers to ensure their products and services have a high star rating. That means relying on renewable sources of energy, efficient use of resources, efficient emissions and better waste management. Sure it can be complicated to work out such a rating for all products and services, but if done, we could have a shot at surviving ‘climate disaster’.

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.

All we need is a nudge

Published June 13, 2017June 13, 2017 by Anand Damani

All of us need encouragement from time to time because species of our kind is known to get easily demoralised. That’s why motivating ourselves or others is so bloody challenging. Especially, when we are on the path of changing a habit or achieving some kind of goal. Sense of progress becomes critical to get us moving. If we don’t get feedback, we could easily get derailed. And that brings us on to one of the most interesting studies we’ve read.

In 2007 researchers Alia Crum and Ellen Langer published their study of hotel maids and their exercise habits. They figured that an average hotel maid cleaned fifteen rooms a day, and each room took 20-30 minutes to complete. Now visually imagine them doing it. Walking, bending, pushing, lifting, scrubbing, dusting for 7-7.5 hours. That’s heavy duty exercising. But before the study began 67% of the maids said they didn’t exercise much! That’s like Arnab Goswami of Republic. complaining that he doesn’t get a chance to speak on air.

As part of the study one group of maids received a document describing the benefits of exercising and were told that their daily work was sufficient to get those benefits – that exercising didn’t only mean hitting the gym – it simply required moving of muscles to burn calories. The maids were also given a list of type of their work activity and calories burned. The maids in the second group were only given the document describing the benefits of exercising.

One month later maids who had been told that they were good exercisers lost an average of 1.8 pounds (about 0.8 kg). The other maids hadn’t lost any weight. Crum and Langer investigated possible explanations. Group one maids weren’t exercising outside of work nor working more hours nor had they changed their diet in any way. So Crum and Langer assigned the weight loss to the placebo effect – awareness of the ‘exercise value’ of their daily work triggered the weight loss – the maids got a mental boost from the ‘daily work is exercise enough’ knowledge.

Chip and Dan Heath, authors of Made to Stick, Switch and Decisive, argue that in placebo effect situations apply to conditions that are self-reported. For instance, instead of a pain medicine, you take an anti-depressant and the doctor asks you “How do you feel?” and report saying you feel better. But in the case of the maids losing weight, the scale reported real weight loss – not just a feeling of the maid. The Heath brothers say “The maids having gotten a jolt of enthusiasm from the good news, may have started scrubbing the showers a little more energetically than previously and maybe started walking a bit more and took the stairs. They exerted extra effort because now they believed they were perhaps closer to their goal of exercising and losing weight than before.”

All we need is a nudge. Nudge is all we need.

Source: Alia Crum and Ellen Langer – Mind-set matters: Exercise and the Placebo Effect – Psychological Science – 18 – 165-171 (2007)

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.

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