Nudges! Sparking Transformation and Continuous Improvement

Posted on December 12, 2018

“Nudges” are subtle interventions that guide choices without restricting them. In essence they are a technique for influencing behaviour and sparking action.

Born from Nobel Prize winner Richard Thaler’s influential research in behavioural economics, the concept of nudges emerged when Thaler recognised that:

“People don’t always act rationally. In fact, they tend to act irrationally but in predictable ways. It is because those actions tend to be predictable that people can be encouraged to make better choices.” (1)

Responsible use of nudges serve as subtle interventions that guide an action/decision to be made without restraining people from freedom of choice or changing financial incentives.

Nudges can influence behaviour and drive results in solving some major issues for today’s businesses, including: encouraging creativity and innovation, improving efficiency and increasing employee retention.

 Here are some case studies that demonstrate the impact of nudges!

Virgin Airline Pilots – A McKinsey Study

A nudging program was introduced to influence the behaviour of 335 flight captains.

Pilots were split in to 4 groups. “A control group was simply alerted that their fuel usage would be monitored; a second group received monthly reports of their usage; a third received both monthly reports and specific targets to achieve, garnering praise after success or encouragement after failure; and the last group received reports, targets, and were told that a charitable donation would be made for every target they hit.”

The results: the three experimental groups saved more fuel than the control group and the two groups that received targeted goals performed the best of all. The exercise led to savings of 6,828 metric tons of fuel which was the equivalent at the time to £3.3 million. (2)

Executives on the MicKinsey Leadership Program – A McKinsey Study 

150+ senior executives attending the McKinsey Executive Leadership Program in Australia were informed that their help was needed to develop ideas for the 2019 Executive Leadership program. “The Executives were split into two groups.

“Group 1 received a warm, welcoming appeal: A blue paper “Hello!” greeting, the message of “We need your help” and ended with a “Thank you.” They were handed warm tea or coffee to drink, were encouraged to offer drinks to others, and were asked to put individual ideas on post-it notes using coloured pencils.

Group 2 received bureaucratic instructions, emphasising to “Please adhere to these instructions during the session on ideation” and that “You should ensure you are properly hydrated during the session.” These executives were given white-lined paper to write ideas “clearly listed and numbered on the page.” and were served ice water.”

The results: Group 1 developed more than twice the number of new ideas than Group 2 (70 ideas compared to 32 ideas). Group 1’s ideas ‘covered new territories’ while Group 2’s ideas were mainly focused on structural or logistical improvements. (3)

Employee Pension Plan Study – A Practitioner’s Guide to Nudging Report 

In a 2009 study, a retirement plan for company X was created wherein the decision and payment process was simplified.

The results: This planning aid doubled enrolment into an employee pension plan within 60 days.

By using techniques such as “nudging” it’s possible to change people’s behaviour without limiting what they can do. A ‘nudge program’ can serve as the spark that catalyses transformation and continuous improvement across an organisation.

How might you use nudges to spark transformation in your organisation?  

For more information on Leadership Development, Transformation Facilitation and #LearningCreativelyCrafted contact us – we would love to hear from you!

References

(1) A Practitioner’s Guide to Nudging; Kim Ly, Nina Mazar, Min Zhao and Dilip Soman – the Roman School of Management, University of Toronto.

(2) How to nudge your way to better performance; Anna Güntner and Julia Sperling – McKinsey Leadership Blog

(3) A small nudge to create stunning team results; Roland Dillon, Julia Sperling and Jennifer Tietz – McKinsey Leadership Blog

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