Stephen Shu, PhD – Page 11 – Professor of Practice of Behavioral Economics

July 29, 2017July 29, 2017

What is the Best Organizational Model for Implementing Behavioral Science?

During a recent conversation about user interface design and the differences in approach compared to behavioral science, the topic quickly turned to a question about what is the best organizational model for implementing behavioral science?

While behavioral science has been on the rise worldwide, the organizational model is still an important, unresolved question. Should the function sit within marketing? Within the user experience team? As a separate Behavioral Science Officer or Office of Behavioral Science to make the quality high and initiatives vivid? Or perhaps the behavioral science function should lie within the product team? Maybe within the digital strategy group?

In my work with Digitai in the past year, I’ve done work with companies in countries like Australia, Germany, Spain, UK, and the US. Although anecdotal, I’ve seen significant (albeit still emerging) activity with setting up behavioral science initiatives which go beyond pure marketing and are attached to innovation. This inherently requires more cross-functional integration of behavioral science with other existing functions within a company. Furthermore, this sometimes means helping to elevate the sophistication of the innovation ecosystem. This might include new technology partnerships, partnerships with researchers from the scientific community, and upgrades to a company’s testing and production platforms.

Yet while I have worked across many types of companies in the behavioral science area, it’s been somewhat skewed toward large companies with some increasing activity in the middle-market company space (e.g., which see the potential to disrupt the market by leveraging behavioral science principles). What about other companies that have more modest aspirations or resources compared to the large companies that are committed to more substantial investments?

The answer to that would need to be addressed separately to be responsible, but it does brings me back to the original question, which is “what is the best organizational structure for implementing behavioral science?” The key to answering this question is to think about strategy and goals first and then to design the organizational structure to fit the strategy. If your strategy is to innovate, then you may need a model that allows for a lot of cross-function interactions both within and outside of the company. You might want a behavioral science officer and an advisory board. If your efforts are focused mostly on marketing, then you might be fine with a simpler model and hiring or assigning some specialists to the department. If resources are even more limited, then perhaps the solution could include occasional use of outside resources, some training, or use of some do-it-yourself thinking tools (e.g., checklists and things to think about for behavioral science). A key to implementing behavioral science initiatives is to really think about strategy and goals first. Then you can think about the predominant organizational model that you’d like to follow plus any elements that might help with implementation.

Think strategy first, then tactics.

Readers of this post might also be interested in the following short video on implementing behavioral science initiatives

July 18, 2017

Tips on How to Sell Consulting Services Without Giving Away Everything During Pre-Sales

A lot of consultants fear that they will give away too much in terms of advice during the pre-sales process. Here are some thoughts on how I’ve tried to keep sales processes on track:

As you are engaging the client prospect, try to envision the big picture for the solution approach to the prospect’s business problem. For example, you may see that the client needs to a) better articulate the problem statement and the key priorities (vision), b) decide on an approach (strategy), and c) execute on all the tactical operational things to carry out the strategy (tactics).
Communicate the big picture approach to the client.
Try to add some value by helping them to articulate and refine the problem statement and perhaps also add a detailed item or two that they should consider as part of the more detailed solution approach workstreams. Yes you might consider this giving something away, but you will need to be able to add value and show the client how you are thinking to be able to sell to them consulting services. The client prospect needs to be able to trust you.
Keep your pre-sales activities pretty tight. For example you might limit your pre-sales sessions to 2 to 3 meetings of 1–1.5 hours each. This will also help to provide some separation between planning and doing the work. If you are doing a good job selling your services, you should be able to tell within say the first 1-3 sessions whether you have a serious sales prospect and what the high-level requirements are to close the deal. Note you might be able to get to a high-level proposal or conceptual approach after the first 1–2 meetings.
For many deals, you should be making it clear to the prospect that you are trying to better understand the problem statement so that you can propose the right approach to solving the problem; you are not solving the problem right there as solving the problem will take days, weeks, or months of collaboration and work.

To recap, make sure that both parties understand the problem statement. Both parties should understand the approach and should appreciate that solving the problem will take both time and work. Offer some value to the client in advance of sale; this does not necessarily have to be much, but you need to establish credibility and trust. Finally, set some expectations on the cadence and timeline to get to a proposal or no-go decision.

July 4, 2017

Reflecting on Innovative Methods That Management Consultants Can Use to Pitch Clients

I wrote the following post in response to someone on Quora who asked me about innovative methods that management consultants use to pitch clients instead of using PowerPoint presentations.

Surprisingly, one can go a long way with Powerpoint presentations. Outside of that, to sell to clients I have used these methods in more rare to less common circumstances (generally only in cases when I was an independent consultant):

Facilitating an imagination exercise – Essentially having a person imagine that we’re at the end of the project, we’re looking backward, and we’ve gotten good results working together. I have them explain the kinds of things that happened to make the project go well, and I help co-construct the path that we used to get there.
Writing a job description that is needed and that I could fulfill – In some cases it might be easier to outline general problem areas, desired outcomes, and probable activities as opposed to using a very linear project approach with engagement workstreams. So I created a new role within the company by writing a job description, and I filled that role on an interim basis via contract.
Helping advise another person to get an executive role – As an example, I essentially provided coaching feedback to a person that was interviewing and pitching to lead a new business within another company. That person brought to the table specialized experience within a field. I brought perspectives on starting up new business initiatives. When they got the job, I was in the perfect position to continue to advise more formally.
Using product exhibits – Essentially using software products or mock-ups as a centerpiece to describe the end goal of where we could potentially go together and then verbally describing how we would get there. This approach can make outcomes more tangible and vivid.

July 4, 2017

Coping With the Transition from Management Consulting to a Startup

I wrote the following post (edited slightly here) in response to someone on Quora who indicated that they were having a hard time coping with the transition from management consulting to a startup in terms of the more experimental nature of the startup world and feeling like they were not using their past skills and knowledge.

When I first left a traditional management consulting firm, I went to a startup. The modes of working are quite different. Here are some things to consider for making the transition to the startup world from consulting:

As opposed to focusing exclusively on the 80/20 principle and working on things that will work, use your experience to try to avoid the things that won’t work. Often this can be of significant help in a startup because startups cannot afford to make too many errors of large significance.
In consulting, one has usually built up a lot of endurance to work hard. Use this trait to your advantage for working within a startup.
Consulting teaches one to be systematic and to measure results. One often needs to do the same thing in startups in terms of measuring sales processes and figuring out what is working and not working (e.g., in operations or product management). If you haven’t read The Lean Startup by Eric Ries, dovetail the concepts of cohort measurements and startup accounting in that book with the stuff you probably learned in consulting.
Often in traditional consulting, one has been trained to put in lot of processes in place for mature companies. Don’t overapply these concepts to a startup. Rather, think about how the startup is discovering its business model and how the organization might mature over time to include more formal processes often implemented by consulting firms (the “startup learning curve”).

June 25, 2017

How to Become a Go-To Person Within a Consulting Firm

I was asked to answer a question about how to become a go-to person when employed within a consulting firm. Here are some thoughts based on my past experience:

Be known as a consultant that gets things done on projects in general. This goes a long way in consulting circles.
Play a key role in developing new intellectual property or approaches for the firm. For one firm I worked for, I came up with “standard” framework approach for doing business plan analyses for municipal wireless deployments. My team also created an approach for doing wireless spectrum valuation.
Pursue mastery in business development if you can (aka sales). If you can sell business (even if in a lead, supportive role) this will also help develop your name in partner circles or at least align you with a key partner in the firm that may sponsor you down the road.
Publish articles in a focused area or practice (aka marketing). Although it depends on your firm, consider writing articles, whitepapers, or books. I should have done this more in my career, but when I did eventually publish a book on implementing behavioral science initiatives, it helped solidify a specialty in people’s minds.

May 18, 2017

Reflecting on Heuristics

I was recently asked on Quora, “Should one use heuristics at all as they are prone to cognitive biases?” What follows are my thoughts.

Heuristics usually allow people to make quicker decisions. For example, when catching a fly baseball, sometimes people use a gaze heuristic to keep the ball at roughly the same inbound angle by adjusting their position and moving forward or backward. This gaze heuristic allows us to quickly and dynamically make judgments to catch the ball as opposed to having to pull out the slide rulers, calculators, and physics books to figure out where the ball is going to land.

While heuristics can help with speed, sometimes we have the benefit of time to slow down to think about the consequences of potential biases and where the heuristics might lead us astray. For example, people often talk about a 4% drawdown rule/heuristic for using your wealth at retirement (e.g., use up 4% of your wealth each year). But one has to remember that using up your wealth is essentially an irreversible process. What type of risk analysis have you done? Have you assessed your longevity and potential variances both positive and negative? What happens if you live 40 more years? Have you accounted for negative health events? Have you thought about maximizing your happiness in retirement as opposed to economic numbers?

So heuristics can be used with some success. But heurisrics should be audited for their benefits and shortcomings, especially if the consequences of an error are significant enough.

May 18, 2017

Reflecting on Your Consulting War Stories Builds Character

I don’t claim this to be a good war story, but it is a war story has had a deep impression on me.

Early on in my career, I was asked by the managing partner on the project to help a struggling manager to help develop their plan for the business. When I got into the weeds, the problem was essentially an operations strategy and planning project. I brought a little rigor to the analysis, and I worked with the manager to break down scenarios and workflows and applying Little’s Law (i.e., average inventory equals average cycle time times average throughput) to validate the strategy, offer operational improvement suggestions, and calibrate the model. When the results were presented to the executives, they were pretty impressed. I was later privately told that I had helped to save the manager’s job. Take that for what it’s worth, but in any case, that made me feel really good. A key was that I helped to facilitate the strategy and analysis process, not completely do the work on my own.

Years later and in a totally different industry, I was asked to help with an operational assessment where the company had lost a tremendous amount of institutional business in the past year due to sales and operations processing issues. The executive team wanted me to take a look at the total business and dissect where things went wrong. There was some subtext that they believed that the one of the division managers had crashed the ship. Though it was never stated explicitly, I think the executives wanted me to find the implicating evidence. I ended up using similar techniques to the first project; first I tried to determine why people churned out as customers, and then once I attributed it to cycle times, I essentially used Little’s Law to determine why cycle times went up so drastically. In the end, what I found was that cycle time increases drove severe customer churn and that cycle time increases were not due to the manager in question. It was an issue caused by and owned at a broader level. I was done. Along with process recommendations, I presented the analysis results to the executive team. They were happy, but a bit surprised that I had not found implicating evidence for the manager. Once the project was complete, I was happy. I was happy that the client was happy, and I was happy with my approach and sticking to science as opposed to being swayed by biases or internal politics of the client company. Months later, I found out that the executive team ended up firing the manager. I’ve had mixed feelings ever since, ones that have never been fully resolved.

I ask questions like, do management consultants have impacts on people’s jobs? Or do management consultants feel that they are so important that they have impacts on people’s lives? Who owns the results? Is it the management team? Who owns the implications if people’s jobs are lost? What if jobs are gained? The answers to these questions are both debateable and situational. All said, to this day certain project types and situations trigger bad vibes for me, and I try to avoid them where possible.

May 18, 2017

Does a Person Need Passion or Expertise to Start a Consulting Firm?

Here are the situations regarding two people I know:

Person 1 is terribly bored by the work he does in radiology, but he’s extremely good at it, and organizations like product companies, health systems, and providers seek out his consulting services.
Person 2 is extremely excited and passionate about behavioral economics and wants to start a consulting firm. Unfortunately, this person has no experience in the area and can’t figure out ways to both find and close deals with clients.

To start a consulting firm, what matters is being able find clients and close contracts with clients. To stay in consulting for a sustained period, one also needs to be able to deliver the services. Passion (and expertise for that matter) can play a supportive role in all of these areas; it can make it easier for you to find clients, close contracts, and keep delivering quality services. I don’t believe passion is needed to get the ball rolling though. It might be something one should think about before starting to roll the ball, but business development is a must-know-thing for running one’s own consulting firm.