Inside Nudging is written for management professionals and scientists to feed their thinking and discussions about implementing behavioral science initiatives (which includes behavioral economics and finance) in business settings. Situations include the incubation of innovation centers, behavioral science overlay capabilities, and advancement of existing organizations. Companies need to develop grit – the ability and fortitude to succeed. The book introduces the Behavioral GRIT™ framework and covers key takeaways in leading an organization that implements behavioral science. Behavioral GRIT™ stands for the business functions related to Goals, Research, Innovation, and Testing.
The chapters are complemented by an appendix which covers ideas to introduce behavioral science initiatives. I argue that first a company needs to identify its goals and identify what type of predominant organization model it wants to pursue. There are five predominant organizational models I’ve seen. I also offer that a company should consider a number of implementation elements that may play a role during execution. Example elements include an advisory board and a behavioral science officer.
Note that the purpose of this book is not to teach people about behavioral science; there are many other books out there for those purposes. That said, Inside Nudging introduces some behavioral science concepts to provide context and help develop a common language between management professionals and scientists.
I see the application of behavioral science as still being in the early adoption phase. Many companies will benefit if they take time to develop the right approach. I hope Inside Nudging helps you with your journey.
Praise for Inside Nudging
Presenter: Steve Shu
Seminar Purpose: To introduce PhD students in Behavioral Decision Making to key considerations and processes for pursuing field research projects with corporations.
Seminar Agenda (3 hours):
Part 1: Academic Realm – What do researchers care about and what strategies do they use to proceed with research?
- Qualitative review of academic researcher needs
- Discussion of research platforms
- Open discussion on field versus lab research
Part 2: Company Realm – What strategies can companies use to develop the right level of commitment and fortitude for behavioral science initiatives?
- What it takes to get behavioral science initiatives implemented
- Behavioral GRIT™ concept for planning
- Role of information, choice, and process architecture during planning
- Role of mass and personalized concepts during planning
Part 3: Field Research Case Examples – How might one both succeed and avoid trouble?
- Case 1: Lens on the business development process and pitching research ideas to corporate hosts and collaboration partners
- Case 2: Lens on a large enterprise host, aligning goals, working implementation details, and leveraging opportunities
- Case 3: Lens on the digital world and a venture-backed host
I thought I would re-post an answer to a question I was asked to answer on Quora, as it illustrates a conceptual flavor of how knowledge of behavioral economics can be applied to help navigate behavioral obstacles and opportunities.
How do behavioral economists think we should deal with reason and emotion in our decisions?
The balancing act is tricky, and I think context and desired outcomes matter. For example:
- A thirty-year old might have problems saving for retirement because they think of savings as being for stranger. The solution might be to increase emotional connection between the thirty-year old and their future self so that the right behavior of saving can be achieved.
- A person might be emotionally attached to their home, and as a result, they might try to sell their home at too high of a price. It might be better if they can loosen their emotional attachment and feelings of endowment. Getting 3rd-party perspectives might be helpful to the seller in terms of distancing themselves so they can set a reasonable market price.
- Sometimes it’s hard to control emotions and desire, and people may try to precommit to a state so that proper decisions are more likely to be made in spite of the situation. I have heard of behavioral economists pouring salt over desserts at dinner (after they’ve had a few bites to get the taste) so they are less inclined to eat the whole thing.
The main takeaways are that there are essentially “two minds” at work, and they work in concert in different ways. Sometimes you need emotion. Sometimes you want less of it. Sometimes you can’t really change your emotions so you need self-control devices and external perspectives. Other times you need to try to slow down thinking. There are many different approaches to applying behavioral economics concepts.