How using behavioural science can help you to make better business decisions

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Ross Dawson, a partner in our Business Transformation practice, shares some fascinating insights from a conversation with David Loseby, Group Chief Procurement Officer at Rolls-Royce. David is a committed advocate of using behavioural science to support a change agenda, having utilised it in various contexts. He has some compelling advice for businesses who want to be sure they are making informed decisions.

When you are making decisions that will affect the future growth and prosperity of your business, it is essential to take all relevant factors into consideration.

However, too many organisations still maintain a strict focus on the processes and systems implied in a change, rather than on the people charged with implementing it.

It has often been demonstrated that simply repeating processes and approaches from the last project are unlikely to deliver a positive outcome. and more specifically, we need an approach that considers the way in which we can engage and connect with all levels of the organisation. Effectively listening and adapting the approach that truly connects with the culture, context and behaviours can lead to a much higher rate of successful adoption of new ways of working for all or a specific part of a business.

The necessity to get business decisions right in a time of change has never been more acute than in the wake of the Covid-19 pandemic, which has placed a premium on the value of adapting to embrace new realities and business environments.

What is behavioural science?

The understanding that systems and processes are not enough on their own to enable an organisation to be as successful as possible has gained increasing recognition in the last decade or so.

Behavioural science is the study of the reasons why and how people make certain decisions. This is ever more so critical when we are all living and working in a period of global pandemic. This greater level of understanding, and some say empathy, will enable a richer comprehension of what businesses should expect, or not expect, in terms of outcomes.

The relevance of behavioural science to procurement, David’s area of expertise, could not be clearer. Most procurement implies change and transformation in a business, which involves persuading people to do something differently from the way they did it previously.

Understanding people’s behaviours is fundamental to knowing whether a new practice will be adopted and accepted, or not.

The mechanics of the decision-making process

Within the behavioural science sphere, there are no fewer than 188 cognitive biases that can be catalogued. The different experiences every one of us has undergone, as well as our inbuilt personality traits, influence how we interpret information and make our decisions.

This is particularly pertinent in areas such as procurement and supply chain management, where decisions mean changing relationships between and within organisations.

New programmes and projects add to what is known as the cognitive load of individuals. Consider the pressures on people during the pandemic; they are worried about their job, the impact of the crisis on their friends and family. This, in turn,  can impinge on the impact of change and, crucially, their ability to assimilate it.

It is important that businesses factor in the possibility that people’s ability to engage with change is compromised by distractions like this.

Consequently, businesses should gauge the extent and frequency of connecting with people undergoing change, whether that takes place during a time of extreme distraction or not.

Leaders must understand the competing influences the individual is trying to deal with and the best way of providing them with salient and timely messages to ensure effective acceptance of change.

How behavioural science helps in the adoption of new digital systems

Like many companies who are in the process of implementing a new digital platform, or will do in the near future, the understanding of behavioural science is ever more critical.

This is a compelling illustration of how and where the positive impact of adopting a behavioural science-based approach can and does make a difference. Simply focusing on the technological advantages of the new system does not deliver an outcome of seamless acceptance of the new platforms.

As David pointed out, it is also essential to consider the messaging that accompanies the new technology to reduce friction around its adoption. This can be done through tuition at the point of use and also by offering non-financial rewards for logging in a certain number of times, to echo the popularity in the social world of reward and loyalty schemes.

A change that brings significant benefits to a business but is accepted by only 50 per cent of its people is far less valuable than one that provides a smaller level of benefit but is met with 100 per cent acceptance.

This is the science of the future

Bringing more people with expertise in behavioural science into your business will deliver benefits in the long term. At Eton Bridge Partners, we believe strongly that adoption of new ways of working is possible only with genuine change management.

It is essential that people need to be taken on a journey that leads to acceptance of change and transformation – and that process can be enhanced by behavioural science.

Surveys from leading management houses and the World Economic Forum recognise that within five years the top five attributes required in business will be soft skills that focus on collaboration. We touched on this subject in a recent blog.

This will involve a shift in the balance between an understanding of the commercial dynamics of an arrangement and the people dynamics around it.

As a result there needs to be a shift in the way professional resources are trained and developed to accommodate this broader, more balanced view.

Businesses need to be ready to bring in true change management specialists and/or experts from behavioural science – especially when they have major programmes, transformative activity or changes in the pipeline.

As David put it, in the aftermath of the pandemic, simply rolling out the change management plan that you had for your last major programme will not be good enough.

This is a time for rethinking and pivoting the approach to ensure relevance to the times and the ways in which businesses are now operating and engaging with people.