How the Introduction of Behavior-Centric Design is Driving New Business Models — And Lasting Impact

Beyond nudges: why should the c-suite care about behavioral design?

The Behavioral Insights Group — or B.I.G. — is a collective of BCG Digital Ventures’ (BCGDV) designers who are actively bringing together the fields of behavioral science and human-centered design to magnify the impact of BCGDV’s ventures.

B.I.G. is pushing the boundaries of human-centered design by thinking about behaviors from the outset of a venture so they’re embedded from the start to create products that stick and have real impact.

In this piece, we caught up with Grace Davey, Partner and Design Director, and Alice Wilson, Lead Strategic Designer, to learn more about behavioral design, why it is needed now more than ever, and most importantly, how to make the c-suite take notice.

BCGDV: Firstly, tell us about the Behavioral Design Group (B.I.G.) and why the time is right to launch this new collective.

Grace Davey: There continues to be a steady stream of research being published around behavioral economics and behavioral science which is providing real insight into the basics of human behavior — both rational and irrational.

At BCGDV, we’ve always taken a human-centered design approach, but what we’re aiming to do with B.I.G is to apply behavioral science by leveraging BCGDV’s world-class design skills to build impactful products that really facilitate a behavior change. Until now, that application step has often been missing. How to successfully do this is the main ambition of B.I.G.

Alice Wilson: We’ve seen behavioral design emerge as a field in its own right; more and more people — and not just designers — recognize it. We believe it’s crucial to have a behavioral lens when designing new products and services to make them impactful. It’s a core part of the overall approach of how we, at BCGDV, build ventures and we wanted to start more conversations around it.

BCGDV: Where did the inspiration for B.I.G. come from?

Grace: About seven years ago, while working on a venture where we were trying to get people to engage in health habits — specifically taking more steps by motivating them with rewards — I stumbled across the work of BJ Fogg. I was hooked!

I attended his boot camp in California where I learned the methods and models of behavioral design approach. Ever since, I’ve been incorporating behavior design as a key component of my design practice, working with our design teams to apply behavior design to our ventures.

BCGDV: How does DV’s approach to embedding behavior design in the early stages of a venture help bring about long-lasting impact?

Grace: We work at the intersection of human-centered design, cutting-edge tech, and venture building. Adding the application of behavioral science to the mix enables us to not only bring impactful products to market at speed, but also keeps users engaged for the long haul, what we call ‘sticky’.

BCGDV: Why should the c-suite care about behavior design?

Alice: The application of behavioral science — behavior design — can enable companies to fundamentally unlock new growth in three ways:

(1) Increase customer acquisition

(2) Drive customer engagement

(3) Develop new behavior-based propositions or ventures

Around the world, we’ve seen upwards of 400 nudge units emerge in the last 10 years as governments realize the potential of applied behavioral science to influence citizens. While the power of behavior science is still to be harnessed in full by the private sector, we’re seeing examples of ‘behavior-centric’ companies, e.g. Spotify and Netflix.

Some industries are recognising this power faster than others. The finance industry in the UK is a good example, with companies like Revolut, Natwest, FCA and many others all establishing and growing behavioral science teams. They’ve recognized that behavior design can have an impact on the bottom line.

BCGDV: Why is behavior design about much more than ‘just’ nudging?

Grace: To effectively drive behavior change and enable users to achieve their goals we should think about how behavioral science can be applied — or designed. A nudge can be a way to do this, but as Cass Sunstein recently reminded us all: “behavioral science is a broader body of study around ‘influence’ — nudging is a part of that”.

Behavior design should never start with trying to nudge. Behavior design should always start with a deep understanding of what your user’s goals are, and the behaviors that will enable them to get to that goal.

BCGDV: Can you share some examples of companies that have successfully managed to go beyond incremental nudges to create features, products or businesses based on applying behavioral science?

Alice: Yes, here are some best-in-class examples from different industries.

  • [Features] Spotify wrapped: This viral feature of Spotify gains a huge amount of engagement each year. Why? In a nutshell, it plays on a huge number of cognitive biases we have — the surprise effect, FOMO, the bandwagon effect, gamification, social norms, but, most critically, it creates a powerful hyper-personalized feedback loop between you (the user) and Spotify, creating an emotional attachment. It explains why in 2020 it resulted in 90 million people engaging with the feature and almost doubled that in 2021.
  • [Product] Strava: Strava’s product is rooted in enabling users to better reach their fitness goals; from making it easier to plan routes, to meaningful brand partnerships that provide rewards directly linked to their goal, like this challenge with Le Col. Everything on Strava is underpinned by an amazingly powerful behavioral tactic: social proof, through its community structure. With this outcome-focussed approach, Strava has bucked the trend of many fitness apps and kept engagement rates high. In 2021, Strava had 95 million active users, up from 25% the year before.
  • [Business] Noom: Noom is one of the best examples of how applying behavioral science at the core of a whole business has enabled the creation of a service that’s massively outperforming the competition. Noom focuses on supporting customers to change the behaviors that will enable weight loss, and is transparent about the psychology to its users. The impact Noom has had is reflected in its most recent $3.7bn valuation.

BCGDV: And finally, why is behavioral science now being recognized as best practice for startups to show meaningful impact?

Alice: We’re moving into an era of behavior-centric companies. Ten years ago, the startups attracting funding were the customer-centric ones. Behavior-centric businesses like Spotify and Netflix have shown us that this isn’t enough to drive meaningful growth and impact.

Many startups, particularly in industries where behavior change is a core part of their services, such as healthcare, finance, energy, cyber security, have recognized that in order to drive actual impact, they have to apply behavioral science principles — and VCs are also recognizing this.

Read more about B.I.G. here

Interested in joining BCGDV? See our current vacancies.

Want to find out more? Start the conversation with BCGDV.

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