Showing posts with label Behavioral Economics. Show all posts
Showing posts with label Behavioral Economics. Show all posts

Monday, May 04, 2015

Unpacking What It Means To Be An Innovator

I’ve never been one to take compliments very well, a combination of being overwhelmed when lavished by a half dozen crazy (effusive) aunts and a mother who was determined to instill humility into me.

In my now concluded career, I didn’t set out to be an innovator, but when tagged with that attribute while serving three different communities and asked how it might be adopted elsewhere; I began to study what it means.

Fortunately, a new discipline began to emerge early in my now-concluded four-decade career called behavioral economics.  It has been just as important as organizational behavior in helping unwrap the 70% of our decision making that is emotional and seemingly innate vs. rational.

Gallup applies behavioral economics in its relentless study of individuals’ strengths and how some can make such a difference in the productivity of some organizations over others.

In Durham, where I live, we have had a head start.  One of the discipline's “rock stars,” Dr. Dan Ariely is one of our own.

Dr. Roland Fryer at Harvard has use behavioral economics to analyze how impoverished societies around the world, including African Americans and Hispanics in the U.S., often work to hold peer members back from doing what it takes to lift themselves out of poverty.

But I’ve learned the most about what makes some people innovators from a trio of researchers with connections to BYU, my alma mater, who authored a book based on their study entitled, The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators.

The book is jam-packed, but in addition to outlining what makes innovators different, the authors note studies showing that “roughly 25 percent to 40 percent of what we do innovatively stems from genetics.”

“Two-thirds of our innovation skills, they continue, “still come through learning-first from understanding the skill, then practicing it, and ultimately gaining confidence in our capacity to create.”

They also put their finger on why people thought I was somehow innovative.  One of the “discovery skills” they identify as central to being innovative is “association thinking.”

This is the ability to “discover new directions by making connections across seemingly unrelated questions, problems, or ideas.”

This is why I preferred to think of myself as maybe an “early-adopter” or “fast follower,” because it was somehow easy for me to see those unrelated connections to our work.

I won’t get into the other “discovery skills” they found, which differ from associational thinking because they are behavioral, but one is questioning everything, especially the status quo.  Innovators see things as broken.

I was also an entrepreneur in my field of community marketing because I was always involved with startups.  Not all innovators are entrepreneurs but I’m not sure you can truly be an entrepreneur without being innovative.

But all innovative entrepreneurs score very high in two areas, associational thinking and questioning.

In contrast, CEOs who are not innovators focus almost solely on “delivering,” what I affectionately call list-checking while innovative CEOs spend at least 50% of their time on “discovery.”

This is why I was always at my best and able to sustain innovation well in the corporate cultures I led well beyond the startup and growth stages.  I tried to surround myself with people who shared innovation as a skill at some level but who were also skilled deliverers.

Most organizations are not innovative because they don’t foster it as part of their organizational culture, leaving them top heavy at delivering but vulnerable to stagnation.

If an organization can sustain an innovative culture and innovative leadership well past the growth stage, the study found they outperform their peers.

Unfortunately, as the authors who are all business professors note, Business schools teach people how to be deliverers, not discoverers.

Rarely do I see a resume these days that isn’t salt and peppered with self-identified attributes such as strategic, innovative, entrepreneurial and growth-oriented.

Applicants would be better off explaining how eager they are to be in and learn from a culture with those attributes because the process is continuous and never-ending.

If you truly aspire to be innovative, read the book The Innovators DNA and take the assessment at its website.  It will identify your strengths in that regard and where you need to focus on building that skill.

The business professors behind this work are Drs. Clayton Christensen at Harvard, Jeff Dyer at BYU and Hal Gregersen at MIT and INSTEAD, who have also developed the Innovator’s Accelerator, an intensive online learning experience.

Today, organizations that don’t perpetually innovate are doomed to stagnation.

Unfortunately, unless governing boards, which constantly rotate members, are firmly committed to innovative leadership during CEO succession, even cultures where innovation is firmly entrenched can begin to stagnate in a matter of weeks and months.

It is possible to reignite innovation but it is rare.  Being innovative requires a certain nimbleness, what Dr. Christensen calls the ability to pivot strategy.

He often cites research by a Harvard college that found that 93% of successful innovators had pivoted to a strategy different than the one adopted at startup.

Experts at McKinsey & Company recently published a list of factors that distinguish innovative organizations.  Note what the high performers do right.  When it comes to a culture of discovery, high performers in the first quartile outperform those in the next one down by nearly 3 to 1.

Christensen, et al. have documented what they call an “innovation premium” of more than 20 percentage points.  For those able to sustain and institutionalize an innovation culture through all phases of  an organization’s lifecycle, it is 40%.

There is even a bigger dividend for analytical innovators.  As analytics are embraced more and more, the competitive advantage they provide will wane unless organizations are among the 12% an MIT Sloan study found to be analytical innovators.

Being a good manager means minimizing surprises and uncertainty.  It is why “being a good manager can make you a bad innovator.”  An innovation culture “savors surprises.”

The secret is finding and sustaining the right balance between execution and exploration.

Are you sure you want to warrant “innovator” on your resume?

Then roll up your sleeves and start reading for understanding and then begin practicing.  Don’t skim looking for thunderbolts, look for unrelated associations.

Not your cup of tea or strength?  Then hire people who are innovators with an appreciation for execution and build it into your organizational culture and values.

In the words of marketer Tom Martin, seek out “explorers, not experts.”  Resist peer pressure trying to pull you back into the status quo.  Get used to being different.

Savor surprises.  Embrace uncertainty.  Question everything.  Hang on tight.

Monday, October 28, 2013

Work Hazards

Work can be hazardous to your health and I don’t say that just because I retired from a forty-year career to move on to researching and writing eclectic essays for Bull City Mutterings.

Using swabs in the typical workplace, researchers determined that the average person touches 300 surfaces every 30 minutes becoming exposed to 840,000 germs.

That’s more than 13 million germs each workday, and that doesn’t count the germs transferred when shaking hands with someone who doesn’t always wash up.

The biggest source of germs?  Break room faucets.

I recently had my shots to inoculate me from getting the flu and pneumonia just as a text arrived from my health insurance provider with the tip that regular hand washing with soap could save more lives than any vaccine.office-germs

Unfortunately, studies show that only 78% of workers say they wash their hands often and surveys reveal that 1-in-3 have been observed by coworkers leaving restrooms without washing their hands or using sanitizer.

Researchers have learned that “normative messaging,” e.g., reminding people to wash up and telling them “why,” is effective, increasing that behavior by 20%.  Giving the percentage who do isn’t as effective as just the subtle reminder of “what to do.”

It also appears that the “observer effect” is just as powerful.  Read Kevin Charles Redmon’s blog at Pacific Standard for links.

Dr. Dan Ariely, a behavioral economics researcher who is based in Durham, North Carolina, where I also live refers to this as “reputational risk,” in his book The Honest Truth About Dishonesty.

This is the single most powerful influence to ensure ethical behavior.

Judging from what my lobbyist friends tell me about a few of their colleagues, especially those roaming free in local government, I suspect there is a correlation between sliminess and those who are too important to stop and wash their hands.

In her book You – According to Them published last year, Sara Canady explains that these people suffer from the “Don’t Fence Me In” syndrome.

They bully people, often in view of officials and under the noses of the news media because they feel entitled – entitled to operate under a separate set of rules.

They feel invulnerable because they are henchmen for powerful interests who would never sanction their behavior but use them anyway, giving them “plausible deniability” as protection from risking their own reputations.

Because people turn a “blind eye” or are embarrassed to report them, or are so revolted they just abandon the civic process entirely, this crowd feels no reputational risk.

And from my observations, they also don’t wash their hands either.

Monday, January 14, 2013

Republicans Strongly Oppose Give-Away To Billboard Companies

Using estimates by the North Carolina Department of Transportation and applying the updated values economists attribute to trees in ecosystem services alone, a handful of Republicans lawmakers handed out-of-state billboard companies a $5 billion gift when they pushed through a bill permitting these firms to clear-cut trees along public roadsides, even letting them sell the wood to cover the cost of harvesting public property.

It was repulsive to some other Republican lawmakers and drew criticism from newly-elected Republican governor, Pat McCrory.  Now a new scientific measure of public opinion shows why, especially when it comes to Republican voters and women of all affiliations in the state.

By 218 to 1, each of these groups strongly believe it is “unfair for billboard owners to cut down trees in front of billboards on the state’s right of way without fully compensating the citizens of North Carolina for the use of this public property.”  This is higher than the 76 to 1 ratio of those strongly opposed statewide.

Overall, Republicans and women in North Carolina oppose the give-away by 19 and 15 to 1 respectively, higher than the state average of 11 to 1 with only 4.6% undecided.  Registered Independents and Democrats were only slightly less opposed at 14 and 7.6 to 1 respectively.

Independents and Democrats were strongly opposed by 79 and 63 to 1 respectively as were men by 42 to 1 in the statewide poll conducted by North Carolina-based NanoPhrades.

In an earlier poll by Public Policy Polling, also based in North Carolina, 80% of North Carolinians were opposed to permitting billboard companies to cut any additional trees at all, but the voters were ignored by lawmakers.

State lawmakers pushing the bill also ignored poll results showing that overwhelmingly North Carolinians believe local communities, not the state, should have authority over outdoor billboards on roadways in or passing through their communities.  Voters also overwhelmingly opposed overriding local tree ordinances.

It is unclear if the give-away will be remedied or if it is, that NCDOT will have updated its formula which currently values trees only as pulp.  Many lawmakers I know at every level, seem slow to grasp scientific public opinion polling, riveted instead on a spate of less generalizable but angry voice mail or email messages.

Of course, lawmakers may be responding to lobbying or campaign contributions the outdoor billboard industry uses to get its way past voter sentiment.  Of course, I know far too many who are much more honorable than that.

The explanation for being so out of synch with citizens may be as simple as not reading bills and relying too much on what others say.  Or it be relying far to much on their own opinions and self-interests or, perhaps, the powerful condition of “reciprocity” upon which lobbyists rely so much to exploit conflicts-of-interest.

Dr. Dan Ariely, a Durham, North Carolina-based behavioral economist and researcher discusses this type of “reciprocity” in his new book, The Honest Truth About Dishonesty, explaining its power to influence irrational and unethical behaviors unless there is reputational-risk.

Even at this latest $4-to-5 billion dollar give-away, which should be prohibited by the interpretation many give to the state constitution, trees are only symbolic of the preferential treatment given billboards as a special interest.

Even though studies now show that fewer than .02% of consumers rely on billboards for purchasing decisions, and courts have long-held that their only value as property is parasitic on tax-payer constructed and maintains roadways, these businesses pay almost nothing in fees and local property taxes.  They also contribute nothing to the cost of the roadways upon which they leech.

In the opinion of economists, these nearly obsolete devices are not worth sacrificing the much greater value placed on roadside vegetation in terms of such benefits as climate control, water and air purification and soil retention alone.  We should add to that the central role that forested roadsides and view-sheds contribute to visitor-centric economic and cultural development as well as the appeal to relocating executives and businesses

If we are going to tolerate them at all, we should assess them as we do similar societal liabilities such as tobacco and alcohol. Under full-cost accounting, outdoor billboards should not only be assessed to offset the destruction and blight they create but these companies should also be required to shoulder the full share if not all of the cost of constructing and maintaining public roadways.

Wednesday, June 08, 2011

Litter’s Link to Racism, Other Behaviors and a Possible Cure

Why people litter is something behavioral economists such as Professor Dan Ariely here in Durham at Duke University may want to closely examine one day.

Research published last month by other social scientists in the Journal Science shows that people encountering litter may not only be more likely to litter themselves (broken windows theory) but the “environmental disorder” to which they contribute fuels condescending perceptions and other stereotypes that underlie discrimination such as racism and other anti-social behaviors.

By an unheard of ratio of 17 to 1 with little ambivalence, Durham residents say they are proud or very proud of this community, so you would think Durham wouldn’t have a piece of litter visible anywhere.

Typically, even communities presumed to have a high level of community pride, including Durham’s neighbors, run at best a 1 to 1 ratio with a full third ambivalent.

It has been twenty years since I read a paper published in a journal by a team of researchers in behavioral economics led by Nobel-laureate Daniel Kahneman, but I’ve been thinking about how an understanding of the behaviors that their experiments provided may apply to litterers.

I suspect there is some aspect of what they termed as the “endowment affect” that contributes to litter in Durham.  An extremely high proportion, two out of every three people working in Durham, is a non-resident commuter from another community.

They may be good and caring people but just as it seems to be human nature not to be as careful when they travel or rent, non-residents lack a sense of ownership for the community.  Part of the “endowment affect” is that people value something more once it becomes theirs.

The research noted above about forms of condescension coupled with the endowment affect may be a clue to the stubborn sources of virulent negativity about Durham still remaining in neighboring communities.

Another behavior at work could be the “status quo bias” which means that people tend not to change an established behavior like littering until the incentive is compelling.

But people are shown in studies to be 50% more successful at change when motivated by the risk of losing something, say in the case of litter, a substantial fine or their driver’s license.  This is why traditional bonus or incentive compensation plans misfire when they don’t also put some existing or base pay at risk.

Failing to understand what behavioral economists term as “loss aversion,” Durham’s failure traditionally to enforce no litter laws compared to peer communities is contributing to the inability to change the behavior of litterers.

Only by studying “why” can we change the behavior of littering.  Maybe the solution is in the new book and website entitled Change Anything as illustrated by this humorous 6-minute video showing what it takes to get kids to adopt another behavior, washing their hands.

By applying the findings to litterers we should expect that when:

  • jumpstarting personal motivation by providing good rationale…no change
  • add making it easier and more obvious such as vehicle trash bags… still no change
  • adding “deliberate practice” as in drivers training and license exams…. 3 of 12 will change behavior
  • adding peer pressure… 11 of 12 change behavior

I haven’t been able to find any research behind “Litter is Wrong Too”, the new trendy and thoroughly-executed social media campaign by  Keep America Beautiful.

The agencies that created it for KAB may have forgotten the advice from a peer, Laura Ries, at this link.  “Social media is a communication tactic, not a strategy” best used for new subjects with news value.  But regardless, in isolation, the campaign has little chance of changing behavior anyway.

According to the authors of Change Anything, there must be at least three more sources of influence added simultaneously to this peer pressure before the likelihood of changing the behavior of litterers will increase 10-fold.

My bet is changing the behavior of litterers will require all six shown in the image with this blog.

p.s. Don’t worry.  If you checked out the link to the new KAB campaign and saw a cute little billboard still at the top.  It won’t be there for long.  In consideration for a sister-organization, Scenic America, KAB realizes the incongruity of including billboards, aka littler-on-a-stick, in a campaign to show that litter is well, wrong.