What is the business value of behavioral science?
For almost half a decade now, we get asked some variation on the question of “How can behavioral scientists help organizations?”. Sometimes ‘organizations’ is replaced by teams, departments, or businesses and other times the question focuses on behavioral economics or neuroscience. Often the real question behind it is “What is the business value of behavioral science?” and it is about time we give a proper answer.
Behavioral science in business
Broadly, behavioral science builds an understanding of how people react psychologically and respond behaviorally to interventions, environments and stimuli. In business, an understanding of behavioral science can help drive better company performance through human-centric improvements in management, HR, growth, innovation, and other business areas.
Over the past two decades, the integration of behavioral science in organizations has been growing rapidly and has been described in hundreds of scientific articles and popular books like The Behavioral Business (Chataway, 2020) and Behaviorally Informed Organizations (Soman & Yeung, 2020). This probably does not surprise you if you have a clear idea of what organizations are: a system of people, processes, and technology that creates value with a product or service by solving a problem for their clients. And with few exceptions, people are the glue that holds the system together.
These ‘people’ include your employees, customers, partners, investors, and even outside forces such as journalists and critics. The interesting part is that this is easy to forget in the daily business of KPIs and OKRs. As economists found in the 20th century, it is easier to just focus on the numbers and ignore the ‘soft side’ of how people’s decisions and behavior affects the bottom line. But that tide has changed.
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With the rise of behavioral economics, the impact of our predictably irrational behavior on ‘the numbers’ could no longer be ignored. The implications are so wide-spread that we and many other behavioral scientists believe this is a key part in the multi-decade trend towards more human-centric organizations that do not think of people as just resources (e.g. HR) but as an integral part to an organization’s culture, growth, and innovation.
The business value of behavioral science
The business value of behavioral science can be clearly observed in areas such as HR and marketing because these fields deal with people directly. Building a motivating reward structure or designing a persuasive marketing campaign requires a strong understanding of what makes people tick and why we do what we do. Both areas also have clear metrics which indicate whether there was an actual improvement (e.g. employee engagement & retention or campaign ROI).
In other areas such as leadership, management, and innovation, the business value of behavioral science is less apparent but just as influential. Strategic decision-making nearly always involves assumptions about (future) human behavior. Motivating and coaching your team requires empathy and a certain tact that comes from an intuitive understanding of how people react. And although innovation nowadays often involves technical know-how, mindset and creativity are still at the core of this process.
In short, behavioral science can create and add value in pretty much all people-facing activities in an organization. Take a company like IKEA, for which behavioral scientists have identified 17 use-cases for applying behavioral science and counting.
The fact is, you can only change what you can see and behavioral scientists have been trained to see all kinds of sub-optimal behavioral dynamics that can be improved. Great behavioral scientists also know how to change these behaviors with evidence-based and human-centric interventions. And of course, this requires a certain level of business expertise and often a close collaboration with other stakeholders.
Naturally, each company has unique ways in which behavioral scientists can help. Over the years, our clients have involved us in a wide variety of projects, including a project where we provided behavioral research and insights to improve the passenger experience during the redesign of one of the largest airport terminals in the world. Other times we analyzed which interventions would promote sustainable behavior in the residents of a yet to be built neighborhood.
When to involve a behavioral scientist?
This depends largely on your goal and type of project but we can give more context. It helps to understand how behavioral scientists look at the challenges that organizations throw at them. At the risk of overgeneralizing, it seems most behavioral scientists -including us- follow some variation on the scientific method. And for good reasons, this approach has stood the test of time and provides a reliable framework for seeking truth and making progress.
In short, the scientific method goes through a circular process of six phases:
- Purpose: what question are we trying to answer?
- Research: what can we learn about the topic?
- Hypothesis: what do we predict as outcome or solution?
- Experiment: how do we test the hypothesis?
- Analysis: what is the result of the experiment?
- Conclusion: is the hypothesis true or false?
At Neurofied, our methodology is to break projects down into four phases:
- Behavioral Strategy: how to approach the project? (entire process + purpose)
- Behavioral Insights: what should we take into account? (research + hypothesis)
- Behavioral Design: what is the best implementation? (experiment + analysis)
- Behavioral Change: how to make it truly lasting? (conclusion + finish/loop)
For each of the four phases above, we have a set of evidence-based change interventions that solve known organizational challenges with behavioral science. This methodology can usually be mapped over an existing project that the client proposes and provides a good overview of when you can involve a behavioral scientist.
In the Strategy phase, we can help identify critical risk- and success-factors with a premortem and reduce the risk of budget overrun by actively debiasing for e.g. planning fallacy. In the Insights phase, we combine scientific research with company data and stakeholder interviews to ensure a strong foundation with a clear set of principles to follow throughout the project.
The Design phase is all about selecting and testing the chosen interventions to ensure an effective implementation, for example the Public Narrative. And finally, the Change phase focuses on implementing and optimizing the interventions to make sure the change is positive and lasting. Some projects involve all these phases, other times we are involved exclusively for Behavioral Insights, Design, or Change.
Hopefully this article helped you gain a better understanding of the business value of behavioral science, the approach behavioral scientists tend to take, and when to involve behavioral experts in your project and for what purpose. If this article was useful, consider sharing it with your team or colleagues or reach out for an intro call.
Neurofied is a brain & behavior agency specialized in training, change programs, and consulting for large organizations. We help a wide variety of teams drive evidence-based, positive, and lasting change in areas like growth mindset, customer journey, diversity & inclusion, and much more. All our services are based on insights from behavioral science and neuroscience.
Since 2018, we have trained 2000+ professionals and worked with 75+ teams of companies like ABN AMRO, Tesla, Calvin Klein, and Adidas. We are also frequent speakers at universities and conferences.
If you see any opportunities to collaborate, please contact us here.
Soman, D., & Yeung, C. (Eds.). (2020). The behaviourally informed organization. University of Toronto Press.
Chataway, R. (2020). The Behavior Business: How to apply behavioral science for business success. Harriman House Limited.