The science of behavioural economics has fundamental application to business and the choices we make in our purchases, our brand loyalty and our interpretation of a customer experience. But it also has massive application to government, politics and how the state interacts with its population.
For 2 days I have been studying (and speaking) at the Financial Services Forum. When I spoke I particularly focused on the creation and significance of the Tynedale Community Bank, which I, and others, helped launch last November after a 4 year struggle to get it off the ground.
For those interested in the bank there are reports of our launch and links to our website here:
More recently the team were able to update the Northumberland community with progress as reported here:
Present at the forum were some of the biggest financial service providers with major representatives from big insurers to banks and all aspects of FS. Full credit to the FSF. But the speakers brought in to make us think differently and reassess our lives and businesses were particularly fascinating. I would happily hear them all again, and took copious notes.
4 in particular stood out:
Paul Craven discussed and set out the details of Nudge Theory: his talk "What makes a good Nudge?" was fascinating: examples of Nudge theory are many but always astounding.
- the university of Newcastle did a power of the unconscious when doing an honesty bowl - where there was a picture of a pair of eyes next to the honesty bowl people paid more than when there was no eyes next to them. The theory of this is the power of suggestion on the brain. Nothing is said. There is simply a pair of eyes "watching over you". And yet this makes people more honest. Likewise:
- where you put a picture of someone's car on the form when the person receive a fine for the actions of that car / driver, the individual is more likely to pay than if you send them a straightforward bill. The French authorities saw a massive rise in payments by putting a picture of the offending car on the bill.
- I smiled and loved the sign as you enter a restaurant that says:
"Please remember to turn your phone back on when you leave the restaurant." This worked to persuade people gently to turn off their phones by a positive suggestion, rather than the usual - Turn your phone off!
- opt in or opt out of organ donation: if you ask people to opt in very few do. If you ask people to opt out of organ donation then they rarely do refuse to donate. It is the same question just asked in a different way.
- hospital and doctor appointment texts the day before the appointment greatly increase attendance.
- in hospitals hand sanitisers are rarely used by members of the public. Yet if you put up a sign in such a hospital that says "here we use hand disinfective in order to protect your relatives" - the result is massive increase in such usage.
In some companies they have got people to sign an affirmation of the truth of the contents of a document eg a tax return or expenses claim - at the start of the document then it will be way more accurate and truthful than if someone has to sign such an affirmation of truth at the end of the document.
And Philip Davies, of Siegel + Gale, is clearly a king of brand management. He discussed how businesses and brands attempt to make things simpler for people. His simplicity index of firms and brands and the way they go up and down was fascinating. His most simple and successful brands for 2016 were Aldi and Lidl and 1st direct.
A couple of points jumped out of his talk:
- simple is smart. Work hard to make things simple. Be ruthless in driving simplicity. Overcome complexity by having clarity in everything you do. Have a clear purpose, remove uncertainty and have engaged people.
- "strategy is about understanding future implications of today's decisions".
- In 2000 the attention span of an adult was 12 seconds. In 2015 this had reduced to 8 seconds.
By contrast, a goldfish has an attention span of 9 seconds!
- His simplicity index has various rules: is it easy to understand? Is it transparent and honest? Is the customer experience good? Is it innovative and fresh? and finally is it useful?
- His definition of a great CEO ascertained that all such people had empathy, were logical and were authentic.
The advice was to entertain before you sell, to get noticed but don't disrupt, but, above all, keep it simple.
Rory Sutherland of Ogilvy + Mather took us on a 100 minute discussion of the science of knowing what economists are wrong about. His treatise on trustanomics was fascinating.
A couple of phrases jumped out at me:
- "successful innovation is behavioural change"
- "marketing is simply the signalling of faith in your own futurity"
His examples/phrases were numerous = "a flower is simply a weed with an advertising budget"
I liked his cou ter intuitive tales, like the story of the impact of reducing ticket prices on actual sales of theatre tickets (actually you sell less tickets and at a lower price!)
Yet bizarrely everyone does this because there is a bias in corporate decision making (and civil service) against innovation and a push to defensive decision making.
His conclusion that economic theory presupposes perfect understanding and trust, and therefore can often be wrong as such things rarely exist,was hard to argue with.
Finally the futurist Rohit Talwar dazzled with his assessment of what the future holds
His three horizon approach assesses:
A 1-12 month approach as to what are we bringing into land / completing in this period
A 1-3 year search for growth areas and future events
A 4-10 year understanding of future drivers.
His treatise on the
- massive likely increases in life expectancy,
- and the ever growing number of automated jobs (1 Billion more such jobs automated by computers / robots by 2030)
- and the exponential growth in artificial intelligence and its permeation into all forms of our lives at an ever faster speed is so rapid that we, as a Society, are only just beginning to grapple with both this opportunity and its consequential effects.
His advice as to How we embrace the future was clear:
1. Create a team of future scouts - involving people who don't fear change.
2. Scan the future, share the insight and shape the change.
3. Develop key insights and build key muscles
But above all simplify - that word again.
His last Moment I liked: all of us have a To Do List but none of us have a To Stop List. And we definitely need this!