Harnessing Behavioural Insights: A Playbook for Organizations

WHILE THEY GO ABOUT THINGS in very different ways, at their core, every organization is actually in the same business: behaviour change. Whether it is a for-profit firm encouraging consumers to switch to its product; a government agency trying to get citizens to pay taxes on time; or a health agency interested in improving the consumption of medication, behaviour-change challenges abound.

Many organizations struggle to make behaviour change happen due to a fundamental empathy gap. ‘Econs’ — as depicted in Economics textbooks — are hypothetical individuals who have well-defined preferences, are able to accurately predict the future consequences of their actions, have immense computational abilities and are unfazed by emotion. Humans, on the other hand, are cognitively lazy, impulsive, emotional and computationally constrained. The empathy gap occurs when organizations design products and services for econs, when in fact, the end-user is a typical human being.

Not surprisingly, the day-to-day behaviour of humans differs significantly from that of econs. Factors including context, cognitive laziness, procrastination and social pressure play key roles in human decision-making. The emerging field of Behavioural Insights works to connect the psychology of human behaviour with economic decision-making to explain these phenomena.

Over the past 10 years, we have seen a great deal of progress in the application of behavioural insights (‘BI’). With thousands of trials being run by hundreds of public and private-sector organizations around the world, human behaviour has become a key focus of activity in the policy, welfare and business world.

Inspired by the growing interest in BI from all sectors—as well the absence of any formal guidelines for embedding them within an organization — Behavioural Economics in Action at Rotman (BEAR) has published a ‘playbook’ to help interested leaders navigate the realm of BI. In this article we will summarize its key messages, beginning with a description of the four roles that BI can play to create value for virtually every organization.

We can proactively design a ‘choice context’

The early years of BI as a field were marked by a need to score quick wins and find proof-of-concept for this approach to engineering behavioural change. Now that the field has gained broad acceptance, we expect organizations to start using it to tackle more complex behavioural and policy challenges going forward. In our view, BI can — and should — play a key role in important societal domains such as the environment, business sustainability, preventive health, and diversity and inclusion. Consider this article as a  to get you started.