The Power of a Nudge
A simple method for driving better decision-making in our businesses.
Impactful Ideas - At a Glance:
We all want to work on teams that make good decisions, but many of us have a flawed understanding of how decisions are actually made.
The majority of decisions are not driven by a deliberate, reflective process; they are made rapidly and unconsciously.
Nudge Management leverages this insight to steer decisions in a positive direction using subtle cues and positive reinforcement.
Nudge Management reduces/eliminates the need for coercion by simply making it easier for people to make positive choices.
As leaders, one of our core roles is to help our teams make good decisions. Yet we often overlook the way that people actually make these choices. There’s an implicit assumption that the decision-making process is driven by logic. We believe it’s methodical, deliberate, and rational.
Economists have a name for this model of human behavior—homo economicus. A phrase coined by John Stuart Mill in the 19th century, homo economicus describes a hypothetical decision-maker with a boundless capacity to make rational choices and maximize his own utility. Nobel Prize-winning economist, Richard Thaler, paints a clearer picture when he describes homo economicus as a person who “can think like Albert Einstein, store as much memory as IBM’s Big Blue, and exercise the willpower of Mahatma Gandhi.” If you happen to find this teammate, hold on tight to them. For the rest of us, we’ll need to find a better way.
Enter the Nudge
Thankfully, there is Nudge Theory. Nudge Theory is the idea that we can subtly steer people toward making better decisions. The theory proposes that we can use positive reinforcement and indirect suggestions as a way to influence the decision-making of individuals or groups. Thaler and his co-author, legal scholar Cass Sunstein, popularized the concept in their 2008 book Nudge: Improving Decisions About Health, Wealth, and Happiness.
Underlying Nudge Theory is the work of Nobel Prize-winning psychologist, Daniel Kahneman, which states that human beings have two distinct thinking systems. In his book, Thinking Fast and Slow, Kahneman calls these System 1 and System 2. System 1 is the automated, "fast" thinking part of our brain that processes our intuitions and snap judgments. System 2 is the "slow" part of our brain that processes our reflective and logical thinking. Whereas most behavior management strategies have traditionally focused on System 2 (i.e. appealing to logic), Nudge Theory aims to harness the power of System 1. It does this by creating environments where fast, intuitive decisions are more likely to be made in a positive direction.
In short, where other change management models seek to drive change forcibly by, for example, stating rules and setting punishment, Nudge Theory is about making it easier for people to make the right choices. Consider a simple example. Let's say you want to decrease the amount of trash being left around your office. One approach might be to declare a new zero littering policy. You might place signs around the office and send out an announcement email threatening punishment for anyone violating the new rule. It might work. Then again, it might not. In any event, it's a large expenditure of energy and not great for company morale. After all, no one enjoys being told what to do.
Nudge Theory would steer you to a far simpler and more effective solution—simply place more trash cans around the office, especially in the areas where trash tends to collect. The idea is that people will naturally gravitate toward making more positive choices—like putting properly disposing of their empty fro yo containers—if friction is removed from that process.
Research has demonstrated that nudge theory is an effective tool to drive positive behaviors ranging from driving charitable donations, encouraging people to increase their savings, and even getting them to go to the dentist. Which begs the question—how can we leverage this powerful model of human behavior to drive positive decision-making inside on our teams?
Nudge Management is the name for a branch of nudge theory that is applied directly to organizational contexts. Practitioners of Nudge Management leverage the principles of nudge theory to align employee behaviors around company goals. An experience we recently went through at OneVision, where I work, perfectly illustrates the power of nudges to drive good choices in the workplace.
Like many companies, we've had our fair share of struggles with calendar overload. Endless meetings had started to become a serious drain on productivity and employee morale. As a team, we began to explore various ways to solve this problem.
In one experiment, we implemented a tool we call Requests for Comment (RFC). I stole and slightly modified the idea from Kevin Fishner, Chief of Staff at HashiCorp, who shared it on this excellent podcast interview. At their core, RFCs are nothing more than a short written document—we use a simple Notion template—describing a problem and soliciting input from other members of the team. The simple insight behind our RFC process is that the written word can be used to gather input from groups of people without the need to pull everyone into a large, disruptive meeting.
The RFC process has been a big success so far. On any given week, there are at least a couple of RFCs circulating in the company. Not only has this cut down on the number of meetings we all need to be in, but I'm consistently amazed at the quality of ideas and feedback being generated through this process.
What's been most interesting to me, however, is not the quality of the results this process is generating, but how RFCs caught on. When we introduced the process several months ago, it was done with zero fanfare. I had a series of questions related to a project I was working on. Instead of calling the group into a meeting, I created the first RFC in Notion and sent it out to the team with a short explanation. A couple of weeks later I did it again. Soon, I saw a close colleague of mine send one out. Then another. Slowly and organically the RFC process started to be leveraged by different departments. In a few short months, RFCs have become a commonly-used practice across the company.
This is Nudge Management at its finest. Consider that there was no formal declaration made that RFCs should be used instead of meetings; we didn’t even make a public announcement. No mandates. No kickoff meetings. No lists of requirements, nor threats of punishment for holdouts. Just quality results (and some much-needed white space on all of our calendars).
In short, RFCs provided our team with a new and better way to gather input from their coworkers. Writing an RFC is usually far easier than finding an opening on everyone’s calendar and the results are often superior. With a better choice available, people didn’t have to be coerced into scheduling fewer meetings; they simply made the decision on their own.
Put Nudges to Use
Want your team to make better decisions? The first step is to remember how most choices are actually made. Don’t fall into the trap of assuming that deliberate, reflective thinking is driving most people’s daily habits. If it was, we’d all be eating healthy and working out five days a week. In reality, none of us are the logical, rational beings we like to fancy ourselves as. The majority of our daily behaviors are driven by unconscious whims. Nudge management allows you to leverage this simple insight to your advantage.
The next time you find yourself lamenting the fact that your team isn’t better at <insert behavior here>, ask yourself a few simple questions:
What specific behaviors are consistently happening today?
What alternative behavior would I consider to be a more positive choice?
How can I make it as easy as possible for my team to choose the best alternative?
Nudge Management is an attractive model for driving change. Other methods that rely on appealing only to logic and rationality often result in the need to bludgeon people over the head with directives and threats of punishment. This sort of coercion isn’t just exhausting, it’s ineffective. By instead tapping into the power of subtle, unconscious cues, we can steer behaviors in a desirable direction without all the heartburn. It turns out, all we have to do is make it easy for people to make the right choices.