Behavioral economics – researched approaches to managing change
There has been a lot of talk about change management and its challenges. Texts (including our own!) cite how high a proportion of changes fail. They talk about resistance to change and how easy it is to fall back into old patterns and get stuck.
More Than Training Company is one of many companies in the industry that helps its clients implement changes. Our range of tools includes tried and tested observations from our own experiences, models from non-fiction, and researched information. One direction in science from which we draw ideas and thoughts is behavioral economics.
We won't go into the definition of the discipline itself – those most interested can quickly find it in their chosen search engine or artificial intelligence tool. Instead, we want to introduce one behavioral economics tool for smoothing change.: nudge principle.
Nudges: small changes have a big impact
Nudge principle is based on the idea that people's decisions can be subtly influenced without coercion. In practice, this means that people unknowingly make different choices when their environment is designed to support desired behavior.
Practical example: You may vaguely remember the media 'buzz' about the Helsinki City Vegetarian Day in the early 2010s. In short, the buzz was that the Helsinki City Council decided in 2010 that schools would have one vegetarian day a week. This caused some political uproar, and vegetarianism still comes up in politicians' speeches from time to time. So the change was and is being opposed, even though it is an idea to promote health and environmental friendliness.
In 2019, Cambridge University studied how to increase vegetarian eating without political upheaval. The research team's simple method was to increase vegetarian options in the canteen and place the vegetarian option in the first or most central position. The study found that the change did not reduce overall food consumption or canteen sales, but rather people switched to eating more vegetarian options without being forced to simply change the order of presentation – and the proportion of vegetarian dishes in the total increased by about 40%. (You can read the study here: https://pubmed.ncbi.nlm.nih.gov/31570584/)
How does this relate to change management?
Many change projects fail because people continue with their old ways, even if the new operating model would be clearly better. To make the change successful, it is worth considering how small changes to the environment and processes can unknowingly guide employees in the right direction.
Applications in the business world:
- Communication and visual cues: If you want your employees to use a new IT system, make sure it is easy and attractive to use. Place the new system in the easiest place on the intranet to find it, and minimize the hassle of opening it and logging in. It won't hurt if you start to make the old system harder to use at the same time 😉
- From remote work to the office: Could people be pushed to the office not by force but by sensible and comprehensive work environment planning? If you can get things done at work that should be done anyway, and it's easy to get there, then why wouldn't you? For example, there's an opportunity to wash your car in the parking garage during the working day, the laundry service will pick up dirty shirts and suit jackets from the office and deliver clean, ironed clothes back to the workplace, or you can buy a snack for your child from the workplace cafeteria kiosk before you leave to take your child to his or her hobbies. All conveniently under one roof!
- Changes in meeting culture: If you want efficiency in your meetings, you can try standing meetings, which are naturally shorter than traditional seated meetings.
Conclusion: Leverage people’s natural ways of making decisions
Leading change is made much easier when you consider how people actually make decisions. The nudge principle can be used to create small but effective changes to employees' environments so that the desired behaviors become natural. Harnessing the power of default choices, in turn, supports the idea that change is 'driven' rather than resisted.
Instead of trying to force change from the top down, it is worth focusing on how people already act and how their natural behavior can be guided in the right direction.
