The power of the nudge

It has been a long while since I last added to this site. Much has happened on the business front, including opening in Australia and changing the company name to MWS Technology Ltd. I have also become chair of North Hertfordshire College – a wonderful role where the team and I have the opportunity to improve life options for thousands of people each year.

One of the things I have been giving a lot of thought to is how those who deliver programmes affecting large numbers of people can improve what they do.

It doesn’t matter whether an organisation is selling baked beans or running welfare to work and skills programmes – successful enterprises focNudgeus on results. It would be nice to think there is some performance enhancing magic bullet, however, in reality there are rarely single actions that transform effectiveness. Both baked beans merchandising and welfare to work / vocational training rely upon doing certain basic things well and then looking for small changes that can create incremental improvement.

This is where nudging and technology come in. Given my day job – and as I have reached the limits of my baked beans knowledge – my focus is on the world of welfare to work and skills programmes. Let’s assume that a provider is competent and is doing all the standard things well. They know how many people are on various programmes, who is responsible for each person, the delivery status and success rates. I am interested in how technology can help them drive additional performance.

Hiring better staff is an option. But this is hard to do and in a low margin business potentially counterproductive. A good service delivery model is helpful, however, ensuring it is followed is challenging – and meanwhile one size does not fit all.

Nudging is the art of suggesting small behaviour changes that are relatively easy for a person to make. And so long as the volume of transactions are high – i.e. the number of events where there is an opportunity to nudge – a percentage of successful nudges will add up to a material outcome improvement.

It was this thinking that resulted in our developing the Nudge Engine® several years ago and more recently the Aptem Performance Manager®. We have been working with providers on how to make nudging work and tend to use a five step model:

Segment
Not all programme participants are the same. Some are more engaged, some have particular barriers, some have circumstances that positively or negatively affect them. We advise providers to use their experience and knowledge to create some segments they believe are meaningful. Allocate half to two thirds the individuals to the relevant segments and the rest to a control group.

Hypothesise
They should then consider each of their segments and how and why modifying their programme for a person in the segment will make a positive difference. They decide upon actions and suggestions for each cohort that they believe will be helpful.

Nudge
The third step is to code into their platform (such as MWS’s Aptem) workflows,

Nudge iteration process

Nudge iteration process

the nudges that they believe will be beneficial. These may be suggestions for the participant or staff members. It may be delivered content or choices. It may be tasks or rewards. Our advice is to make it small things that should be relatively easy for a person to do or follow.

Track
The provider needs to measure the impact of its nudges and contrast them with the control group, noting which ones work and which ones don’t.

Refine
The final step is to use the results to consider which of their segmentations and hypotheses prove correct. The provider drops those that are wrong, tries to improve the ones that seem to be working and creates new ones to trial.

As this process is iteratively repeated the organisation starts seeing improvements. They can swiftly cease actions that have a negative impact and ensure they maintain the ones that work. This type of approach brings several benefits to a provider.

First and foremost, they improve the quality of their programmes, improving the outcomes for the individuals they are here to help. Given that funded delivery is now largely payment by results this has a profound effect on organisational success and sustainability.

As a technology developer, what we are doing is providing a mechanism to determine and then lock in processes that evidently work. We are enabling providers to create know-how in their organisation that can be both protected and ongoing developed.

As a provider develops its bank of proven nudges it also builds up a capability that they can prominently feature in their tenders alongside their superior outcome data, increasing their bid success rate.

It is just over 20 years since Tesco introduced the Clubcard and over the years they have got very good at understanding their customer and how to sell a lot of beans. My view is that this approach is as meaningful in our sector. We are putting considerable resources into researching and implementing the technology that permits those in our sector to pursue similar innovation.