The Behaviour Business. Richard Chataway

The data seemed to confirm that the actions of the teacher were working. They criticise, then the student performs better. But, as any statistician can tell you: correlation does not equal causation. In business, we too frequently use data to support an existing viewpoint of what works, and not to challenge it.

Secondly, the teachers were so convinced they were right, they had not sought to independently verify if they were correct.17 There was no incentive for them to challenge this received wisdom. Most of us would probably have done the same, and believed that praise and criticism work in this way.

      It was only by independently verifying this through experimentation that they found it was a false assumption. If a business does not value the scientific method, then its understanding of what really influences behaviour will always be limited – because why challenge what you intuitively think works?

Kahneman later wrote: “it is part of the human condition that we are statistically punished for rewarding others and rewarded for punishing them.”18 It is only if you accept that it is also part of the human condition that we make these systemic, system-1-led errors, and are frequently flawed decision-makers as a result, that you arrive at the often counter-intuitive insights and solutions that deliver business success.

      Thirdly, what the teachers reported was happening was not what was actually happening. Because a greater proportion of our actions than we realise are subject to the unconscious heuristics and biases studied by behavioural scientists (i.e. we are Homer more often than we think), simply taking at face value what people say about their behaviour only gives you part of the answer. Or, as in this case, a completely wrong one – because they were focusing on one isolated data point, which was not representative. They were concerned with the output of this process (the next flight), not the overall desired outcome (delivering a consistently successful pilot).

      The Israeli Air Force subsequently changed its approach to assessing and feeding back on performance as a result of this research – no longer reviewing based on isolated incidents and biased perceptions, and providing feedback accordingly.

      If, as a business, you want to get to the truth about behaviour, you need to look at the data based on observed, actual (and not claimed) behaviour over time. And focusing on accurate measures of actual behaviour – rather than other metrics that focus on attitudes, awareness, or opinion – is the only way to truly become a behavioural business.

      In the remainder of this part, we will look at what we can learn from this approach to build a behavioural business – and how the correct use of observable data on actual (not claimed) behaviour, via the scientific method, can give a competitive advantage. But first, we shall look at what we can learn from how governments have been applying science to change behaviour.

      3 If you are interested in that story, and the people behind it, then I’d strongly recommend reading Michael Lewis’s account of the work and friendship of those two pioneers: The Undoing Project.

      4 If you have read Thinking Fast and Slow, Nudge or other books, or have an academic background in behavioural science, then much of the following paragraphs will be familiar.

      5 Largely based on the work of Swiss mathematician Daniel Bernouilli and expected utility theory. There is a lot of lively academic debate about how the seminal 18th-century economist, Adam Smith, was actually well aware of the irrationalities of human decision-making and incorporated it into his theories – what he called the ‘passions’ versus the ‘impartial spectator’ in The Theory of Moral Sentiments. But whether he was truly the first behavioural economist is outside the scope of this book.

      6 The (Honest) Truth About Dishonesty, Ariely D, Harper Collins (2012).

      7 In this case, this possibly creates a negative social norm, explained on page 10.

      8 www.theguardian.com/uk-news/2018/dec/12/london-homicides-now-highest-in-a-year-for-a-decade

      9 Explained on page 14.

      10 Such is the influence of online review sites that restaurants, hotels etc. have become somewhat obsessed, and the system has been gamed by some unscrupulous practitioners. This was hilariously demonstrated in 2017 by Vice journalist Oobah Butler, who created a fake restaurant called The Shed at Dulwich, based at his garden shed in south-east London. Using his experiences writing fake reviews for £10 for real restaurants, he got his friends to write fake TripAdvisor reviews in sufficient volumes to become rated in the top 2,000 restaurants in London. As part of the hoax, he shot fake Instagram pictures of the food (including a ham hock that was actually a close up of his ankle) and created made-up dishes such as vegan clams. He leveraged scarcity bias (explained on page 29) by creating a phone number and website for appointment-only bookings (which was never answered). Despite not actually existing, it became the top-rated restaurant in London in 2017. Butler staged an opening night for the restaurant, serving thinly-disguised £1 ready meals to ten customers. Despite having been blindfolded and then led down the alley past his house to the end of the garden and the shed, some said they wanted to come back and would recommend it. (www.theshedatdulwich.com)

      11 citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.470.522&rep=rep1&type=pdf

      12 Thinking Fast and Slow, Kahneman D, Penguin (2011).

      13 Undoubtedly his long-time friend and colleague Amos Tversky would have jointly been awarded this prize also, but he sadly died in 1996.

      14 I am a board member for the Association for Business Psychology in the UK, and the majority of our members are business psychologists whose role at least partly involves assessing performance of people and teams in work.

      15 The Undoing Project, Lewis, M, Penguin (2018).

      16 This is where an event is assumed to be more likely because it shares characteristics of its category – even though this has no effect on likelihood. In this case, criticism led to a better performance, so the assumption was this was the cause and effect.

      17 An example of confirmation bias, explained on page 143.

      18 The Undoing Project.

      Chapter 2: Nudging For Good – How Governments Use Behavioural Science

      How to change an irrational behaviour: smoking

      To demonstrate how governments have been leading the way in applying behavioural science, let’s look at an example of a behaviour successfully addressed using these principles: smoking.

Smoking is the single largest driver of health inequalities in the UK, killing nearly 78,000 people every year in England alone.19 I spent a large part of my public service career addressing this