I have used the nudge theory to foster digitalisation.

Here’s why you might choose to do the same.

The Amsterdam airport was decisive to reduce the spillage in men’s toilet when they came up with the idea of “flies”. They put stickers of flies in the urinals and the men had something to aim at — even only virtually. The spillages were reduced by 80%.

This is the example by which the nudge theory of behavioural economist and Nobel prize winner Richard Thaler became famous.

Digitalisation is a change and a CDO or innovation manager is at the same time a change agent to enable and empower change. How do you convince people to do things differently than how they have done in the past? How do you take away the fear of job (or power) loss? How do you make them follow you — or even better — how do you bring them to a state where you follow them?

In change management, there are 2 options. Either top-down or bottom-up. In top-down, the complete change initiative comes from top management and is to be executed at all levels. It is effective and can happen fast, though it is a question to what extent the management is committed to the change, and how ready they are to “force” the adoption down the chain.

The other way is bottom-up, where the change is pioneered by the company employees. It can be rather slow, but changes, if and when they happen, come with acceptance and commitment. One method of bottom-up change management is the nudge theory.

A nudge, as we will use the term, is any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food does not. — Richard Thaler

As you see, nudge theory:

• has no enforcement or obligations
• is based on indirect encouragement and enablement
• aims to guide people in their decisions by offering them the choices in a way that has been designed to enable the intended outcomes

Here is an innovation workshop structure you can use to motivate teams to reap the benefits of digitalisation, go in a different way than the ‘always done that way’ way, without forcing or mandating any actions, similar to the nudge theory.

The main objective in this workshop is to bring state of the art technologies in traditional teams, by helping them understand different use cases and how they could benefit from it. So you just give them a “nudge” to think and act differently, and make it easy to make this choice.

1. Ask your participants to identify challenges

Ask the participants to come to the workshop with a list of 3 challenges they face. During the workshop have all team members explain ‘their’ challenges and have the team prioritise and come up with overall 3 most important topics.

How this plays into the nudge theory:

• Team buy-in to work on the topic increases. It is either their own problem, or another one than that they agree is more important than theirs
• The participants are ready to work on the different choices you will be offering later, as they have a need.
• They want to help themselves or their colleagues get rid of the problem. As a result, their commitment to execute will be higher. In most of the nudge theory examples the execution is done by the ones who want to “enable” the choice. In this case the ones who are making the choice are also responsible for its execution. Therefore commitment becomes a key factor.

As an example here, let us assume in an insurance company the team comes up with the following problem:

“Customers want to get quicker confirmation of their car damage claims. Using the current systems, we are not able to deliver this.”

2. Provide tools to work on solutions

Warm-up

Only if the team is directed in the right way, they would be in a position to come up with solutions that are different than always done. Here are some of the steps you could follow:

• Provide examples of use cases with different technologies (AI, blockchain, etc.) from different industries
• Illustrate & brainstorm around how this could be applied to their industry

After this warm-up team is well prepared to go to the next step.

How this plays into the nudge theory:

• Here is the first step in presentation of the choices. As the teams just discussed about these topics, it will be easier (and more natural) that they relate their solutions to these topics.
• The understanding of the different technologies and their implementation sharpens so the choices are more clear

In our example, the team sees the AI solutions around image recognition in E-Commerce search results and how some governments are planning to use it for the payment of public transportation.

Forced Brainstorming

In this step teams come up with their own solutions on how to solve the identified problems. Here the key is using a problem-technology-solution matrix. Using the matrix, each problem needs to be solved by using one of the technologies from the warm-up exercise. Participants are also free to come up with other emerging technology solutions.

This is a hybrid brainstorming exercise. First every individual develops the ideas by themselves. Afterwards they discuss their solutions and choose 1 solution for each problem. Meaning, you would have 3 problems with their respective solutions.

How it plays into the nudge theory:

• By providing the option to come up with other technology use cases you are actually not forbidding any other solutions
• But the probability that the technologies that are outlined in the matrix and last been discussed about would be utilised is much higher because it is still on their mind
• You enable people to make the intended choices by putting them in the right situation for it

In our example, having analysed the possible solutions, the team agrees that using AI for damage recognition & estimation could be a good solution to this problem. Head of claims management department says:

“Technology cannot replace humans but I see it can support us a lot. And I can concentrate my team on supervision of the algorithms and other means to increase customer satisfaction.”

3. Support with resources to develop the solutions

Now that you have a fully motivated team who wants to solve their own problems using a different method, it is time to get the resources for them. For this, you need the buy-in from the management team.

Before the management team gets to see the ideas, it would be important to put the problems and solutions in form of concept cards and make some mini-business plans coming with it to make it more clear. At this stage it is only an estimation which will be further refined after the workshop.

At the end of the workshop the management provides the OK to further work on the ideas. Normally the first step after this one is to do more research and make a better estimation of ROI.

How it plays to the nudge theory:

• This is more about the execution, making it happen in an organisational set-up.
• Most of the nudge theory examples are provided in a way that they end when the intended choice is made.

Conclusion:

Digitalisation is a change that may initially cause some discomfort. Sometimes teams need a little “nudge” to get out of their comfort zones. This is one example of how organizations can provide an atmosphere for people to accept digitalisation and make it happen. Teams who work on these solutions will also be fast in adoption when the system is ready to implement.

If you need more detailed information and the tools used, feel free to get in touch with me.