Nudge

One of the benefits of being a Fast Track student at Babson’s MBA school, is access to great professors like Tom Davenport. Professor Davenport runs the Working Knowledge Research Center at Babson. Recently, I was lucky enough to attend one their semi-annual conferences. Look out for lots of blog posts on my take aways from the event.

One of the most interesting discussions was provided by Cass Sunstein, professor from Harvard Law School. Professor Sunstein in collaboration with Richard Thaler has written a book Nudge. As Professor Sunstein described his efforts to get the book published, he initially called the book Libertarian Paternalism, which many book editors passed on. Eventually they called it Nudge and now I’m telling you that you must read it!

Libertarian Paternalism’s premise is that by architecting the choices that people are given, providing easy, one click opt-out and transparency throughout the process, populations and groups can be nudged into actions that are beneficial for them and society. For example:

  • Having employees automatically enrolled into a 401k plan when they joined the company as opposed to signing up for the plan, leads to more participants in the 401k program.
  • Save More Tomorrow plan – a percentage of an employee’s future pay increase is automatically put into a savings plan.
  • The key ideas to Nudge are:

  • Choice architecture: The default option has a huge effect on how many (or how successful) people participate.
  • Context & Framing: How the options are presented and supported are equally as important. For example, in a study conducted, people were asked whether they would have an operation if there was a 90% success rate, most elected the surgery. If they were told there was a 10% chance of death, most declined the surgery.
  • We each have two brains that take over depending on the context: The Homer Simpson brain and the Spock brain. The Homer brain has unrealistically high expectations of success, adds more weight to the probability of an event if you’ve already experienced it and weight short term decisions more than long term decisions. The Spock brain is high logical and calculating.
  • So what does all of this have to do with knowledge management? Well in my last post I spoke about Culture 2.0. Using the concepts in Nudge around architecting the choices that employees have in each area, I think you can improve the odds of success of building a Culture 2.0 program.

    Advertisements

    Leave a Reply

    Fill in your details below or click an icon to log in:

    WordPress.com Logo

    You are commenting using your WordPress.com account. Log Out / Change )

    Twitter picture

    You are commenting using your Twitter account. Log Out / Change )

    Facebook photo

    You are commenting using your Facebook account. Log Out / Change )

    Google+ photo

    You are commenting using your Google+ account. Log Out / Change )

    Connecting to %s

    %d bloggers like this: