Behavioral Science is a growing field in business. It applies to everything and everything we do. We hosted two interesting guests on a recent podcast that might have one of the most important new business jobs today. Today, we will take a closer look at what they do and what they wish everyone understood about behavioral economics in business today.
Anne Wilson, Ph.D., is a behavioral scientist who received her doctorate in Behavioral Science and marketing at Harvard Business School. She now works in behavioral finance. Lauren Cheatham, Ph.D., received her doctorate in marketing and behavioral science at Stanford University, taught at the University of Hawaii, and worked at Apple as a data scientist. Now Cheatham works at a large tech firm. Wilson and Cheatham’s goal is to apply behavioral science to guide decision making, whether that’s clients, advisors, or people within our company.
It is exciting that both behavioral scientists are employed in large organizations that value their skills. I find that encouraging. I asked both of our guests to explain their job description. In other words, why did those firms hire a behavioral scientist?
Wilson says at her firm, she is working to improve financial decision making using behavioral theories, internally and externally. Her job targets enhancing how financial advisors help clients make better financial decisions for themselves, and she uses behavioral science to optimize these areas.
Wilson says it’s harder to stay at the cutting edge of finance without using behavioral science. For a long time, the data science component led these efforts to create different models to understand what people will do next. However, now people realize there’s also an impetus to understand why people are doing things, especially if you want them to do something else. Wilson says her job is to guide more processes through a behavioral science lens beyond applying the principles in practice. Modeling is useful in a static environment, she says, but changing people’s behavior necessitates using behavioral science principles.
Cheatham says in the tech field, the purpose of her employment is to explain “the why” behind a behavior. Organizations need to understand that underlying process to shift that customer behavior.
Cheatham says data science and predictive models own product development. However, the ability to predict that something will happen doesn’t necessarily make it the thing that the organization needs to happen. Wilson says without a behavioral science background, and you might not understand why the product is not working the way you wanted. Her job is to tell people why customers feel the way they do, and how you can see that in customer behavior, so the tech firm can optimize the product experience to get the outcome they want.
Wilson adds there’s also greater recognition of the cost-effectiveness of behavioral science. You can improve metrics or change outcomes using behavioral science without creating a new product, reinventing the wheel, or rebranding.
Wilson and Cheatham shared a couple of challenges with us about being an actual behavioral scientist in the real world. One of the things that drive both Wilson and Cheatham crazy is that people think they know a lot more about Behavioral Science than they do. People read Thinking Fast and Slow or any other behavioral science books and think they understand the science. While those are excellent books written by brilliant people, Cheatham says, there is a lot more to it than that. Wilson adds that learning the basics is excellent, but it takes years to get the skillset and the thinking required to be a behavioral scientist.
(We have the same problem in Customer Experience. We often have to manage people that have designed a Customer Experience, so they think they know how to create a good one. The reality is, they don’t.)
Cheatham finds an exciting challenge to figure out how to put nuance and context back into a lot of the research. When you strip those elements out, it makes the environment conducive to over-confidence in the principle from the inexperienced. For example, the principle of the Paradox of Choice is that too many options drive people to make suboptimal decisions. However, in its original form and every form since, the paradox is context-dependent. It’s not that too many choices are a bad thing in all situations, but it was in the context of the research parameters used for that study. In the real world, context matters, and taking away choices in certain conditions makes the experience worse, not better. Cheatham says her challenge daily is bringing that nuance and context back. With the incredible computing power at their disposal, they can shift the context depending on the situation or bring that nuance back, which she finds encouraging.
One of the things we can all agree about is that behavioral science principles influence us in many ways, everywhere. I asked both of our guests to give us examples of how they identified something happening in the customer space where they could change or modify to get a better outcome using their skill sets.
Cheatham and her tool kit came into play with customer satisfaction measurement. She had access to large-scale global tracker survey responses that numbered in the millions. Customers rated customer satisfaction metrics on a 5-point scale. Often, the service experience and the experience provided by the individual agent helping the customer result in different levels of satisfaction. For example, perhaps the customer didn’t get what they wanted for whatever reason, but the person helping them was supportive and helpful. In that case, Cheatham wanted the questions framed differently to reflect that variance from policy to individual service for the agent. Cheatham wanted to use language that made it clear to customers that they were judging two different things in the survey. They experimented with ways until they found one that worked to separate them.
Wilson said that at her firm, they spend a lot of time thinking about why people make bad financial decisions and how they could encourage them to make smarter ones. However, their behavioral science training meant the team would not just tell customers they were blowing it. Instead, the team looked at the fundamental need met by their bad financial decisions and determined different ways of helping customers fill that need so customers would take their financial advisers’ expert advice.
I agree with this approach. It’s essential to know what your customers’ needs are and what you need to do to provide them for them. If you don’t know, you should undertake research to find out, like our Emotional Signature research.
Finally, I asked our guests if organizations thought of hiring a behavioral scientist, why they should do it. What advantages would an organization stand to gain?
Cheatham said that a lot of what behavioral scientists bring to the table is how we think about the world and the way we think about problems. She says they often come in and say, “Let’s think about this from a more human-centered process.” Behavioral scientists provide that overarching understanding of why you need to understand humans’ underlying behaviors and motivations. Then, having the skill set to test, measure, and understand them is critical.
However, one thing that happens per Cheatham is that once somebody intervenes and designs an experience, organizations want to put it in place in perpetuity. However, humans habituate, and if you do not continue to analyze, test, and ensure that the intervention continues to be effective, you will have a situation on your hands, Cheatham explains. The assumption will be that behavioral science failed and that it doesn’t work. Cheatham says this is why you need somebody who’s done more than just read a book or watch a TED talk. Behavioral scientists always question the process.
Wilson agreed, adding that employing a behavioral scientist allows an organization to have better starting points for answering questions and facilitating better question asking. Training in behavioral science can facilitate a quicker ability to look at a problem and understand the potential context and competing influential processes at play.
Moreover, a behavioral scientist can set expectations or companies, per Wilson. Many people want the silver bullet for themselves or their elixir to all problems. But finding a silver bullet is an unreasonable expectation. However, Wilson says research that helps you ask better questions, understand your customers better and make incremental improvements over time is a reasonable expectation.
However, organizations should enable behavioral scientists to do what they need to do. It can be challenging to know the best way to use behavioral scientists from both sides. If you allow them to do experiments on behavioral principles and be patient about the results, you will have more success, Wilson says.
I agree about the importance of asking the right questions. Too many organizations still look at problems from a simplistic view. Moreover, they do not undertake enough customer research. I wish I had a dollar for every time a client told me about the research they just did seven years ago.
Many write-ups of behavioral science case studies make it sound as if it’s magic, and changing one small thing will always produce massive results. Behavioral Science is not magic, and you can’t have unrealistic expectations for the value it provides. The value it does provide is small incremental changes that provide small incremental advantages. Over time, those build up and accumulate. It is about understanding the “why” that’s driving behavior and how advantageous that can be over the long term.
What’s impressive about behavioral science, like all science, is it’s unfinished. We don’t know everything, and there is still so much opportunity to identify new biases, new nudges for combating prejudices or capitalizing on decision tendencies. The more companies that can enable behavioral scientists to find new things, the more value we will discover.
To hear more about this idea in more detail, listen to the complete podcast here.
Colin Shaw is the founder and CEO of Beyond Philosophy, one of the world’s leading Customer experience consultancy & training organizations. Colin is an international author of six bestselling books and an engaging keynote speaker.
Follow Colin Shaw on Twitter @ColinShaw_CX