I Am a Cat That Knows Behavioral Economics

Information Reframing: Which is more appealing? A black cat with a white belly or…
…a white belly with a black cat?
Active Choice: Would you rather prepare for your PhD viva or pet me?
Choice Overload: Do you find it difficult to choose given all of these books?
Behavior and Technology: Daniel Kahneman intimates that technology may eventually be better than humans at decision making, so I am going to be wary of this robot for cat welfare worldwide.

What Can User Experience (UX) Designers Learn from the Field of Behavioral Economics?

This post is based on a question that I answered previously on Quora.

Although it’s not exclusively from the realm of behavioral economics, the notion of A/B testing is something that I often try to work with companies to include. On the one hand this includes the capabilities of companies to integrate specific aspects of their product management, software development, UX, data science, and marketing processes. But it also means developing a research mindset that comes from the experimental side of behavioral economics. For example, if one really wants to nail down which aspects of a UX or customer experience affect behavior and outcomes, the gold standard is using randomized assignment, A/B testing, and discipline that between testing conditions only one item is changed. In setting up the A and B test conditions for a behavioral insights based UX isolation test, one can add, subtract, or substitute a single element between two test conditions. If you change more than one element, then your findings will be confounded between the multiple elements changed, and you won’t be able to tell what change worked or didn’t. UX teams should become used to working in worlds that include testing harnesses like Visual Website Optimizer, Optimizely, and the like.

For a little more on A/B testing, see this WSJ article by one of my colleagues. It describes a simple, but extremely powerful A/B test we worked on with a FinTech company’s UX. It’s Time to A/B Test Your Financial Life

If you are interested in other aspects related to the digital UX world and behavioral economics, you might also want to check out a book that was written by two of my colleagues: The Smarter Screen: Surprising Ways to Influence and Improve Online Behavior.

What Does a Chief Behavioral Officer Do?

This post is based on a previous question posed to me on Quora.

The role of a Chief Behavioral Officer (CBOs) varies, but a common theme I’ve seen is that they analyze, plan, innovate, and implement aspects of the business using insights and methods from the behavioral sciences (e.g., behavioral economics, psychology). Some of the companies with CBOs do mostly marketing communications or thought leadership (e.g., research) while others may get involved with bringing insights and designs to product development (e.g., applied research). Some CBOs may directly manage people, such as a team of PhDs, analysts, etc. as well as partnerships (e.g., with academic researchers). The approach of CBOs may also vary in terms of the science. For example, some may leverage pre-existing research. Others may work with big data (e.g., proprietary) and correlational or instrumental variable type analysis. Yet others may take an experimental approach (e.g., A/B testing) and work with product and service teams to directly measure how designs affect behavior and outcomes.

A key aspect of determining the activities of the CBO really come down to setting goals for the larger organization, assessing gaps and resources, and developing a tactical plan to meet the goals over time. As an example, for the past few CBOs I have helped, we often worked to develop 30–60–90 day plans to initially get the organization rolling with longer-term planning and thinking happening in parallel.

Behavioral Science Casebook Project

In my free time I have been developing a course, tentatively called Applied Behavioral Science in the Digital Age to be taught to business school students at either the undergraduate or graduate level. In the course, students will study how the pervasive reach of digital technology into our lives affects our heuristics, biases and other behavioral patterns. In addition to learning about behavioral science theories in the digital age, students will then learn how to apply those key theoretical concepts through discussing actual, corporate case studies and participating in hands-on exercises related to nudging and experimental design. The class will discuss key elements to starting and implementing behavioral science initiatives within a company. The course will be especially geared toward those interested in professional careers within consulting, product development, marketing, services, and technology app (e.g., FinTech) settings.

As related to that course, I have started to develop a short book that will cover specimens and cases based on the real world, such as sample websites, app designs, email campaigns, and customer journeys with ideas about how to evaluate such designs though the lens of behavioral science. If you have interesting examples and specimens for me to consider including (can be disguised or made anonymous as needed), please feel free to correspond with me at sds77@cornell.edu. If the specimen is from your company and you are interested, I can potentially perform a behavioral audit on the materials provided.

Repost Which Explains Management Consulting Using Layman’s Terms

This is a repost from an answer I wrote a couple of years ago on Quora.

I usually fail miserably at explaining this for some reason.

Probably the most common definition out there is that management consultants are like doctors for companies (instead of doctors for people).

This analogy probably works for most cases. However, in the spirit of consulting analogies used by guru David Maister, there are probably sub-analogies. For example, there are some management consultants that are more specialized like brain surgeons. Brain surgeons work directly with patients, but possibly for shorter periods of time and using more specialized skills (and hence, brain surgeons charge higher rates). There may also be management consultants that operate more like pharmacists. In that regard, they may be more in the backoffice doing specialized work, interacting with patients less frequently.

Where the doctor analogy doesn’t always quite sit with me is that I usually think of going to the doctor either when something is wrong or for maintenance purposes. While it is true that a large bulk of consulting is about fixing company problems (e.g., unprofitable company, poor customer service, divisions not working together well, technology systems a mess), there are also management consultants that are more like life coaches or entrepreneurial partners that help with opportunities. These management consultants are not fixing things like doctors do. Instead they are helping companies build new capabilities (e.g., new line of business, new product) like a personal trainer helps a person develop more strength or cardio capacity.

What Best Practices Can Consultants Use to Develop Their Own Toolkit?

This post is based on a question I answered previously on Quora.

Here are some of the techniques I have used over the years in different consulting roles, such as working for a traditional consulting firm, boutique firm, or as an independent:

  • Research and keep a scrapboook of ideas – This can be a folder where you drop killer slides you’ve run into, killer figures, well done models, articles, etc. Your scrapbook may consist of a few islands in the electronic world, such as using programs like Pocket, OneNote, etc. and also the physical world, such as bookmarked pages in key books you have.
  • Share the ideas with others on a small scale – Consulting is based on an apprenticeship model, and part of the value you add as a consultant also applies to how you interact with colleagues. If you can filter out the best information and share nuggets of knowledge with your peers, this can help both parties to learn.
  • Use what you’ve learned to synthesize and create new ideas – Innovation can come from many directions. Sometimes you can apply a method used in one space into a totally new space. Sometimes streams of knowledge are separate and disjoint, and you may find a simpler more holistic way of combining the approaches. Or sometimes you can create models by creating a new relationship between the beholder and the model (e.g., such as creating a stakeholder value view instead of a shareholder value view).
  • Share the ideas on a larger scale – Writing about your ideas can help to flesh out your thinking. I have often created short presentations and then presented them in a setting like a business school class. I may then create an article about a key idea. In some cases, I have written blog posts or written a newsletter type memo to share with newer consultants or clients. I have also expanded presentations into thought leadership pieces (e.g., I’ve published three books).

In summary, I find that having a method to research, collect ideas, interact with the ideas, synthesize new creations, and share those creations is a meta process that works for me.

Will Hiring Happiness Consultants Ever Become a Trend in Big Companies?

This post is based on a question that I answered previously on Quora.

I’m not sure it will become a big thing at companies, but here are some observations that could feed its growth or at least support a niche market:

  • The business schools (particularly in the behavioral science areas) have increasingly added courses that incorporate the science of happiness, and the b-schools feed consulting companies and increasingly entrepreneurial endeavors. Here’s an example of an applied happiness course at the UCLA Anderson School of Management: If You Want to Be Happy for the Rest of Your Life, Optimize It with Scientific Design
  • Addressing areas like financial wellbeing, connections to overall wellbeing, and antecedents to both have started to spread into organizations whether in thought leadership or applied settings. If happiness efforts are tied into mainstream issues related to HR, marketing, or product design, then it might be able to ride on familiar value propositions where consulting engagements could be justified. For example, think about various “random acts of kindness” campaigns that some companies have run (some better, some worse).
  • There appears to be a growing generation of people who are concerned about excessive materialism and consumerism. Leveraging the science of happiness could potentially be a good ingredient to capitalize on. Innovators will figure out how to provide better customer experiences and products to these segments and take some share away from incumbents.

Should An Independent Consultant Focus on Their Expertise or Diversify and Branch Out?

This post is based on a question that I answered previously on Quora.

As an independent consultant it is generally better to focus on services aligned with your expertise. Otherwise, it will be harder to distinguish yourself in the marketplace.

However, as food for thought if you are going to add a new service, consider offering that service to an existing or past client. You may have a better foot in the door in terms of selling to them as they may at least trust you a bit more than the average consultant coming in cold. While you may have some issues with existing and past customers only seeing you as your “old self”, they may be more willing to take some risk with your new services. Then you can leverage this as a reference case when you approach new clients.

Nudging Democratized: A Guide to Applying Behavioral Science

Inside Nudging has been re-released as a special edition book published by The Decision Lab, entitled Nudging Democratized: A Guide to Applying Behavioral Science. Many thanks to my brilliant co-author, Andrew Lewis, for collaborating with me on this release. Also, special thanks to Sekoul Krastev and Dan Pilat at The Decision Lab for making the publication possible and keeping things moving on this project.