After Richard Thaler won the Nobel Prize for economics, the most googled term last week must have been Nudge Theory. The behavioural economist, who wrote the best-selling book Nudge: Improving Decisions about Health, Wealth and Happiness with Cass Sunstein, has got many governments hooked to his ideas. The UK, the US, Singapore and Australia have all set up nudge units to get some public projects moving. Last year our own Niti Aayog set up a nudge unit to improve implementation of programmes such as Swachch Bharat.
Nudge is basically a tiny prompt that can get people to adopt a new behaviour even as the freedom of choice is left to them. Thaler was influenced by the works of Israeli psychologists Daniel Kahneman and Amos Tversky on human decision-making and the irrationality attached to it when he wrote his book.
According to Nudge theory you can identify and predict specific kinds of irrational behaviour among people and, through a simple nudge, direct them to a behaviour you want. In an interview to an American newspaper, the Nobel laureate said that in 75 countries around the world, people are using these ideas. And that it is exploding.
Thaler’s ideas have entered the workplace too. Nudge management is being touted as the new, scientific way of improving workforce productivity. Can employees be nudged to work in line with the objectives of the organisation? That’s what nudge management is all about.
Process efficiency vs behaviour change
The old school of scientific management believed in process efficiency to improve worker productivity. But, drawing from Thaler’s works, Philip Ebert and Wolfgang Freibichler, who coined the term ‘nudge management’, have suggested that focusing on behaviour is a better way to improve productivity.
An example they cite in their article in the Journal of Organisational Design is the way Google lays out healthy food options in its cafeterias. By doing so, it gently nudges employees to eat healthy.
Other examples are putting in certain software to stop employees from constantly checking e-mail, using social media, etc. Virgin Atlantic has used nudges to get pilots to reduce fuel consumption.
Although there has been some criticism about the efficacy of nudge management and its manipulative nature, there are now several proponents to this method. Boston Consulting Group, for instance, talks about the merits of using digital nudges at the workplace. In an article, “The Persuasive Power of the Digital Nudge”, Julia Fetherston, Principal at BCG and her two co-authors, Allison Bailey and Stephanie Mingardon, describe how digital nudges are inexpensive and simple and can yield great results. Digital nudges are SMS, e-mail, and other notifications sent to employees to take desired actions.
Tech nudges
An example of a really effective use of digital nudge is scheduling of meetings on Google Calendar. Several companies now use the ‘Speedy Meeting’ setting on the Calendar to close meetings quickly and have succeeded in shaving off precious minutes.
According to the BCG article, tech-based nudges can spread quickly throughout an organisation to induce people to think or act differently. What’s more digital nudges also produce data that companies can analyse to see how successful the interventions are, and recalibrate if necessary. You could first test it on a small user group and then modify it or scale up what works.
The term nudge management may be fancy but it’s all pretty much common sense actually. In our day-to-day lives there are plenty of examples in which parents gently nudge children to certain actions. It certainly works in one-to-one situations; the question is whether it will work across hundreds of employees. And then, of course, there are the fears of organisations taking things too far — especially as technology is pretty invasive.