How
At behavOR we believe that recognizing and influencing behavioural risk requires financial services firms to embrace scientific rigour, research and insight.
Too often the topic of human behaviour is considered a “soft” subject in contrast to “hard” disciplines, such as the physical sciences, mathematics and engineering.
Headcount and budget is often concentrated in traditional business, risk, compliance, surveillance and control functions, with little resource devoted to a deeper understanding of what drives the behaviour of people.
In other public and private sectors applied behavioural science has made significant progress, with hundreds of teams, thousands of practitioners and successful use cases in government, health, transport, education, safety, consumer and employee experience.
If your firm values curiosity, has a commitment to genuine understanding and change, or is frustrated by reported issues and a lack of progress, then it is time to embrace a behavioural approach.
What is behavioural Science?
Behavioural science is the systematic study of human behaviour, aiming to understand why people and groups make choices and take actions, and how to influence those decisions. It draws on various disciplines such as organizational psychology, behavioural economics, neuroscience and sociology to explore the mix of cognitive, social, and environmental factors that are key to shaping and driving behaviour.
From behavioural science to the science of behaviour
The term behavioural science is broad and does not mean the same thing to everyone. For example, the popularity of books such as Thinking Fast and Slow by Daniel Kahneman and Nudge by Cass Sunstein and Richard Thaler throw a spotlight on how decisions often deviate from those implied by traditional economic theory, the importance of heuristics and biases, and how context can affect behaviour. A more extensive interpretation of behavioural science is multidisciplinary, building on the insights from both the biological and social sciences, and is important in finding commonalities and differences in the way people process and act on information and understanding what drives behaviour.
Applied behavioural science
Applied behavioural science explores it’s use to understand and influence behaviour in real-world settings. This practical application can involve identifying both drivers and barriers to specific behaviours.
How does behaviour link to culture?
One way of defining culture is to think about it as behaviour in aggregate. It is important to focus on what actually happens, and not to view it as an aspirational or abstract set of values. A working definition is that: “Culture is the detailed behavioural landscape of the organization as it currently is, encompassing the behaviours and decisions that are made by individuals and groups, with a particular emphasis on those patterns of behaviour that predominate or are missing, and areas that are common or are outliers” A key element of culture is therefore the imperative to understand the drivers behind individual and collective behaviours and decisions, which may be personal, social, organisational or environmental.
Behaviour and culture key principles
- Behaviour and culture need to be looked at and understood using the rigour and lens of science. - This approach encourages systematic experimentation, observation and analysis of results. - Context is important and care needs to be taken in extrapolating findings and interventions from one situation, team or location to another. - There is a need to understand the underlying factors that drive behaviour, many of which will not be visible or obvious. - Focus should be on understanding social, structural or organizational factors that influence behaviour, and not just individual attributes. This often requires a rebalance of attention from the “apple” (personal) towards the “barrel” (environmental). - Culture is a complex system, not a linear system. This means that there is very rarely a single cause and effect, and that it cannot be fully understood without looking at both the individual components and at how they interact. - Culture is not a single uniform phenomenon that exists and is consistent across a whole organization. It is better viewed as a collection of many sub-cultures, which will have different attributes, drivers, strengths and weaknesses.
The need for a common understanding
A particular challenge in understanding, assessing and seeking to change behaviour inside organizations is that ownership, responsibility and capability are often spread across different teams, with limited co-operation or consistency of approach. Unlike a particular business line, or an area of expertise, such as credit risk or cyber security, behavioural work is in danger of being “everywhere and nowhere”. It is important that all those areas which are pursuing behavioural and cultural insight, awareness and change work together on developing a common understanding, key principles and where practicable share best practice and expertise.
Tools
Behavioural science uses a diverse toolkit to understand why people do what they do, and what drives their decisions and actions. This may involve qualitative work, such as ethnography, observational methods, case studies, structured interviews and focus groups; and quantitative work through surveys, existing data interrogation and more advanced techniques (such as organizational network analysis). The rapid rise of big data and AI has augmented the insights that can be gathered. Increasingly, behavioural science combines both quantitative and qualitative methods to provide a more comprehensive understanding of the phenomena being studied. This can involve using qualitative data to inform the design of quantitative studies, or using quantitative data to provide broader context for qualitative findings. Experimental methods remain central to behavioural science to ensure a robust understanding of cause and effect.
For more information on the work of behavOR see here.
Ethics
It is important that the use of applied behavioural science is ethical, both in the techniques used and in driving better outcomes.
An example of an ethical framework and approach is as included in the LSE’s FORGOOD initiative