Behaviour design - predicting irrational decisions

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  • This is Tony Hsieh In 1998 he sold his startup, LinkExchange to Microsoft for a tidy sum With the proceeds he started an investment company called Venture Frogs, which funded an online shoe retailer we now all know as Zappos in 1999. Tony then stepped in as the CEO and has been there ever since. The funny thing is, Tony ’ s not really interested in shoes. He ’ s more interested in having a great place to work.
  • After performing many experiments internally, Zappos is now consistently rated in the top 10 companies to work in America 75% of their sales are repeat customers. These are impressive statistics for any organisation. Of course, there are many factors involved in this success, but it all starts with the staff training.
  • Customer service staff get 10 days of paid training They ’ re shown the ropes and normal processes
  • They play some games & get involved in team building exercises. Basically, the trainees are immersed in the Zappos culture
  • At the end of 10 days, they ’ re told: “ Welcome to the family! We love you and would love for you to stay. But we know Zappos isn ’ t for everybody. If you think it ’ s not for you, we ’ ll give you $4000 not to take the job. ”
  • This is what ’ s known as “ The Offer. ” Now, being in customer service doesn ’ t pay very well. In fact, Zappos pays around $12/hr - just above the minimum wage, so $4000 equates to a couple of months worth of pay. So, why does Tony insist on The Offer? There are two reasons: First, it ’ s better get rid of people who aren ’ t serious up front.
  • There ’ s nothing more toxic to a customer service environment than unhappy employees They ’ ll complain about customers, management, the organisation, their co-workers. Grumpiness is infectious - not what you want with customer facing staff. The second, more powerful reason for The Offer is Cognitive Dissonance
  • Cognitive dissonance is the sick feeling you get when you try to hold conflicting beliefs, ideas, and actions. Your mind needs to quickly relieve that dissonance. If you act a certain way, then realise your beliefs aren ’ t consistent with that action, you can ’ t go back in time and change your actions, so you have no choice but to change your beliefs. Now, the trainees are given 48 hrs to consider The Offer before they have to decide. Plenty of time to mull it over. This makes the effect even more powerful. Now the model of cognitive dissonance predicts that if a staff member that has rejected The Offer ever feels dissatisfied by their work, they ’ ll ask themselves “ Why didn ’ t I take the $4000? ”
  • To which they ’ ll reply: “ It must mean I really love this company, and I ’ m really dedicated to my job. ” This of course makes the person happy. Happy people are also infectious. This is great for customer service, the working environment and the organisation as a whole. Their past behaviour of rejecting The Offer keeps them happy with their job. This is a really elegant application of Behaviour Design
  • Behaviour design is simply using what we know about systematic biases to design environments that intentionally influence behaviour We tell ourselves stories to fit the idea that we are good, intelligent, rational people. ...and we don ’ t consciously attend to every decision we make. In fact, we rarely do.
  • One of the most recent models of cognition in Neuroscience is the Dual Process Theory. Two systems that can compete with each other. System 1 - Doesn ’ t stop to think. It reacts on the fly and jumps to conclusions. System 2 - Is a thinker, not a doer. It solves complex tasks that require attention and reasoning. System 2 usually produces better outcomes, but concentration and reasoning are finite resources.
  • Think about last time you did user research or usability testing. By the end of the day, it feels like you ’ ve run a marathon. Consciously attending to something requires large amounts of energy. That ’ s why most everyday mental tasks are left to System 1 - Homer ’ s in charge, leaving us wide open to biases. The great thing is we already know about many biases. They ’ re systematic errors in perception and cognition. In the words of Dan Ariely we are “ Predictably Irrational. ”
  • So how do we leverage people ’ s inner-Homer and affect their decisions? Thaler, Sunstein & Balz suggested constructing “ Choice Architectures. ” This is simply designing systems using things like smart defaults to subtly nudge people in specific directions, whilst giving them every opportunity to exert free will if their inner-Spock kicks in.
  • Many years before this, Kurt Lewin, Father of Social Science expressed the same sentiment in another way. He proffered a behaviour equation, which is basically Behaviour, is a function of a Person and their Environment. If you can ’ t reliably change the person, you can still change their behaviour by changing their environment.
  • Choice Architecture is only 1 facet of Behaviour Design - how to affect a specific decision. Behaviour Design draws from many fields like Compliance Psychology, Captology, Human Factors, and Behavioural Economics. It also looks at behavioural triggers, developing skills and habits, and shaping behaviours over time.
  • Of course, we ’ re all Behaviour Designers. The design choices we make - no matter how small - will affect people ’ s decisions, whether we design them with intent or not.
  • This is something I ’ m passionate about. It ’ s the hidden side of design. The little things that can have a huge impact.
  • Behaviour design - predicting irrational decisions

    1. 1. Predicting irrational decisions
    2. 2. @BehaviourDesign
    3. 3. @BehaviourDesign “Zappos is a customer service company that just happens to sell shoes.” - Tony Hsieh
    4. 4. @BehaviourDesign
    5. 5. @BehaviourDesign
    6. 6. @BehaviourDesign
    7. 7. @BehaviourDesign The Offer We’ll give you $4000 NOT to take this job.
    8. 8. @BehaviourDesign
    9. 9. @BehaviourDesign Cognitive dissonance We tell ourselves stories to justify our actions.
    10. 10. @BehaviourDesign
    11. 11. @BehaviourDesign Behaviour design Using known perceptual and cognitive biases to design environments that will intentionally affect specific behaviours and attitudes.
    12. 12. @BehaviourDesign Dual process theory of thought System 1 System 2 Fast / Automatic Emotional - Impulses / Drives - Habits - Beliefs Slow / Effortful Logical - Reflection - Planning - Problem solving
    13. 13. @BehaviourDesign System 2 burns through resources
    14. 14. @BehaviourDesign Choice architecture “Decision makers do not make choices in a vacuum. They make them in an environment where many features, noticed and unnoticed, can influence their decisions.” - Thaler, Sunstein and Balz
    15. 15. @BehaviourDesign If you can’t change the Person You can change their Behaviour by changing the Environment B = f( )EP Kurt Lewin, Founder of Social Psychology
    16. 16. @BehaviourDesign Choice architecture Motivation Triggers Shaping behaviour Creating habits Developing skills Usability Shifting attitudes Behaviour Design
    17. 17. @BehaviourDesign Organ donation consent Opt-in Opt-out
    18. 18. @BehaviourDesign “This is not about how to make Zappos a great business, but how to change the world and make it a better place.” - Tony Hsieh, CEO Zappos

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