Building Behavioral Science Capability in Your Company

If you’re interested in behavioral economics, then you probably heard that Richard Thaler, one of the discipline’s founding fathers, was recently awarded the Nobel prize in economics. You might also be sold on how insights from behavioral science can make a big impact in your organization. You may even have piloted a couple of nudge-based interventions in your organization and are now asking yourself, “What’s next?” You aren’t alone. Increasing numbers of companies are looking to build a behavioral science team — one that is located at the very center of their business and that the whole organization can benefit from. This makes sense, because the alternative is for behavioral insights to be tried out by individuals or specific departments, and their knowledge and skill are likely to vary: Someone in marketing might use their behavioral knowledge to develop more-effective campaigns, while at the same time someone in HR uses theirs to focus on employee engagement. Sales could be developing a behaviorally informed strategy, while operations looks for ways to cut costs. While the initiatives may produce some success, it’s likely that they will lack coordination and optimization. Building an embedded and sustained behavioral science unit, with expertise and resource at the heart of the organization, increases the chances that knowledge is shared, coordination is improved (rather than departments all trying to do their own thing), and outcomes are improved for all. Here are six things to consider when building a behavioral science group in your organization. Get the Vision Right This first step isn’t exactly groundbreaking, but that doesn’t make it any less crucial. All the best strategies, policies, and plans start with a vision — that is, being clear on how you intend for your company to benefit from behavioral science. Getting your vision and scope right is essential and will require you to ask yourself some pretty detailed questions. Here are more than a few to get you started: Why do you want to have a behavioral science team? What challenges are you hoping behavioral science will help you solve? Which departments are already motivated to get involved and are likely to benefit most? At this stage is it also important to think about what is not on the behavioral science agenda. Having a clear, defined scope and vision will guide you through some of the choices and trade-offs you will face while building the team. Be Honest About the Resources You Will Need Once you’ve set a clear, realistic scope, it is vital to be honest about the budget and resources you will require and any time constraints. Have you got the funds to bring in experts? The market for behavioral science is specialized and not yet mature, so your go-to consultancy may not have the expertise to advise you. If you plan for the team to be self-financing after an initial period, how long do you have to make it work — a couple of months, or a couple of years? Being clear about this will help you direct your resources to those programs that stand the best chance of early payback. With your vision and resources in place you are now ready to… Consider the Team’s Requirements When you think about it, behavioral science is a wonderful example of successful collaboration: It pools insights from across the social sciences, including psychology, sociology, economics, anthropology, and neuroscience. Your behavioral team should be the same: a successful collaboration of various skill sets and functions. Depending on the vision and ambition you have set out, it’s likely that you will need a team with specific specialties. In our experience, a good starting point for a balanced behavioral science unit typically includes: A behavioral scientist or economics expert schooled in the major models and theories. Remember that increasingly there is an experimental angle to behavioral science, which requires knowledge of experiment design and econometrics that might not have been part of previous psychology or economics degree curriculums. (At least not before the PhD level.) So be open to looking at young graduates from up-and-coming master’s programs in behavior and decision science. A behavioral analyst or project manager who can undertake parts of the behavioral process such as designing surveys, collecting data, carrying out field observations, literature reviews, and some simple statistical analysis. Each of your behavioral interventions will be a project, and it will need to be managed as such. Timelines, risks, scope, change, budget, and stakeholder management will be important factors, as in any other part of your organization. A data scientist who has the ability to work with and extract value from a large, diverse set of data scattered across your organization and beyond. This role requires having skills in algorithms, machine learning, and programming. But depending on the goals of the behavioral projects being undertaken, this skill set might not always be needed. A good behavioral scientist should be able to handle medium-size data sets, but a data scientist is usually required for larger data sets. Knowledgeable representatives, folks with expertise and experience in the specific departments and businesses that have consulted with your team. They understand the business context, industry, market, internal processes, customers, employees, and suppliers. As a result, it’s likely that they will change from program to program. They can provide context, help scope your project, and give advice on what is possible (both practically and from a regulatory perspective). Surprisingly, it can help if they are benign rather than evangelical to behavioral science. Given that most of your team are on board with behavioral science, these representatives can provide a healthy balance and prevent biases from forming. Consider Your Sourcing Model Who do you need to hire? Do you look to partners or outside vendors? If so, who possesses the competencies you need? What will their roles and responsibilities be? These are questions that should be front of mind when thinking about your sourcing model. Each organization’s needs and current level of competence will be different, so there aren’t definite answers. The chances are that your needs will evolve as you move through the lifecycle of building a behavioral science group. During the early stages, many organizations rely on external partners with established expertise in delivering behavioral solutions. Be prepared to seek out partnerships with established academics, specialized consulting groups, and noted practitioners. Also be sure that academic partners are motivated to apply their work to the real world, that consulting groups are genuinely skilled and not simply agencies jumping on the behavioral economics bandwagon, and that chosen practitioners can show you their past work rather than just being well read on the subject. Smart selection of the right partners will greatly improve the credibility of your initiative and reduce the risk of blunders or even failure. Ultimately, the challenge in selecting the best behavioral scientist option for your organization will be a question of cost and competency versus scale and reach. Of course, if you are serious about building an internal capability, don’t leave everything to external partners. We advocate a blended-model approach, where you pair up internal project managers with external experts. With the right support and training, these internal project managers will be your future behavioral analysts. Be sure to ask external partners about their willingness to help you build internal competence. As your behavioral capability evolves, aim to reduce your dependence on external partners, replacing them with in-house capability. But avoid cutting ties completely. Identify external partners that share common values with you and negotiate an ongoing advisory role for them. Find the Right Home for the Team There are many places where a behavioral science group can sit in the organization. An obvious place is within an existing operational excellence or performance department. Transdev, a large global transport operator, has set up a behavioral science capability called CHANGE by Transdev as part of the Performance and Development department. The arrangement works well because many of the projects are closely related to promoting efficiency and increasing productivity, as well as supporting Transdev competitive position. Alternatively, human resources might be the right place. We recommend HR be involved anyway, because its cross-functional view makes it a good advocate for demonstrating value-added activities that connect to all parts of the business. But if blue-sky thinking is where you are, and you really want to embrace the behavioral revolution, how about creating a chief behavioral officer? This might sound unnecessary, but if your company is planning a large volume of strategic interventions, then you should certainly consider it. The benefits are clear: a fully recognized, dedicated team with a direct connection to the CEO. Be Clear About Governance The approval processes and governance you put in place for your behavioral science capability will depend on your corporate culture and risk appetite. Whatever these may be, we strongly recommended two things: Have an ethics committee. At its heart behavioral science is about understanding, predicting, and influencing behaviors, so the ethics of these efforts will be an important consideration. Select your ethics committee carefully, ensuring they span a variety of positions and levels. These people should be cautious, but not so much that they bring you to a standstill — so avoid the ultra-risk-averse. At least one representative should come from your legal function, and committee members should agree up front on a transparent decision-making process. Engage functional representatives. Before behavioral science interventions are deployed, identify people from the departments that will be affected by your interventions and seek approval from their managers in advance. Having access to these people and their managers’ support will save time, petty negotiations, and filibustering when it comes to putting your team’s insights into practice. Finally, look for opportunities to piggyback on established governance. If you have a running enterprise portfolio process, find ways of embedding behavioral science into the project approval process. Doing so will ensure that your organization considers the behavioral impact and the required behavior changes of any project it undertakes. You may already have considered some of our points above. But if you are just starting out and are ready to take the first steps, we recommend you begin by: identifying issues important to stakeholders where a behavioral approach could work thinking about low-risk, high-impact challenges where you can demonstrate early success telling people what you are doing and seeking out internal behavioral advocates finding an appropriate external partner(s) We’re certainly not going to guarantee that following this advice will win you a Nobel prize anytime soon. But it may earn you and your organization a different type of plaudit: a reputation as an organization with an efficient, effective behavioral science capability that is ethical, sustainable, and that delivers competitive advantage.

Building Behavioral Science Capability in Your Company

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