Consulting

What changes in your organisation would create the greatest advantage for you?

Recruitment

The cost of getting the selection wrong is at least three, if not seven times salary

Coach or Train

What skills do your people need to make the greatest sustainable improvement?

Nudge nudge, wink wink, say no more

Nudge, nudge, wink, wink – say no more!


Once upon a time, when you heard the word “nudge” you’d most likely think back to that famous Monty Python sketch, where Eric Idle uses the phrase “nudge, nudge, wink, wink – say no more” as innuendo. But that was many years ago and now “nudge” has a new connotation which is gaining credence in political circles, and seems to be popular with David Cameron.


Within Whitehall is a ‘behavioural insight team’ – known colloquially as the ‘nudge unit’ – which looks to applying the theory expounded by US professor Richard Thaler, who has been to the UK and met with Mr Cameron.

Prof Thaler is director of the Center for Decision Research at the University of Chicago, where he “studies behavioural economics and finance as well as the psychology of decision-making which lies in the gap between economics and psychology”. He also “investigates the implications of relaxing the standard economic assumption that everyone in the economy is rational and selfish, instead entertaining the possibility that some agents in the economy are sometimes human”. Which – when you look at it – is pretty obvious, but sometimes it takes an academic to spell it out. If we were rational we’d all take exercise and eat healthily, but we don’t; if they were rational, young people would put their spare money into savings or a pension, but they invariably prefer to opt for the latest iPhone or iPad.


So what is nudge theory, and how can it be applied usefully to businesses?

The current manifestation is that the carrot is more powerful than the stick and considerably more cost effective.

For the State, nudging means just that – nudging people into behaving sensibly instead of ordering them to do so. An example is the NHS scheme operating in some areas, which pays obese people to lose weight (£1 per 1lb, roughly); the aim being to change behaviour over time, with a supportive nudge or three, until it becomes a sub-conscious habit not because it they are being forced or bribed – more because it feels like the right thing to do and builds a person’s self-esteem. 


As for businesses, nudging could be a useful tool and, in many cases, operates successfully already – but just doesn’t use the fancy name ‘nudge theory’.  

  • For instance with Carbon Reduction Programmes with initiatives that praise “green champions” or make sustainability a fun interactive, socially competitive and rewarding activity. 
  • Or work incentive scheme, such as a commissions and bonuses, these fall under ‘nudge theory’ in that they encourage employees to work smarter and possibly harder without the boss having to use a heavy stick. 
  • Even Customer Loyalty Programmes can be set up to “nudge customers” to repeat purchase – try new products – buy greater quantities, buy more often or ideally a combination of all angles… Of course you’ve never personally spent a little more to gain those precious points have you… “nudge nudge – wink wink – say no more..!”

There are many ways nudge theory can help bring out the most in people whether they are your staff – to make them work effectively, or your customers to encourage greater trading.  If you would like more information about how, please get in touch for a no obligation chat.

 

Leave a comment...

Thoughts on Thursday - Free Webinar Series

Expert-Led Webinars on key business topics

Update and refresh your skills with expert-led free weekly webinars. Invest 60 minutes each week to sharpen your skills, increase your options and improve your chances of making the most of your opportunities. All from the convenience of your office or your home and at no cost.

Needed Now.

Practical. Pivotal.

Would you like to sell more at a higher margin?

Whether you are completely new to sales or have many years’ experience as a business owner, the Profit Secret reveals something that has been hiding in full view for years, something that frequently means we lose out on profit even though we win the sale.

Order yours now