Tag: change

Arguments Don’t Add Up. They Average Out.

What’s the best way to win an argument? If you think it’s by coming up with as many reasons why you’re right as you can, you’re wrong.

This seems counterintuitive at first. Surely the way to make a case stronger is by adding more arguments in favour? But the person you’re trying to convince doesn’t see your arguments adding up — they see them averaging out. If you have a strong argument and then add some more supporting points that aren’t as convincing, you’re weakening your case.

In an experiment by Christopher Hsee, one group of people was asked how much they would pay for a brand-new 24-piece dinnerware set, while another was asked how much they would pay for a 40-piece set, which had more brand-new items than the smaller set but also included a few broken items. The result was that the smaller set was judged to be worth more than the bigger set. By adding a few inferior items, the seller weakened the overall proposition for buying the product.

Niro Sivanathan found that people react in the same way when dealing with arguments against doing something. Drugs that are advertised in the US as having side effects of “heart disease and stroke” are judged to be more risky than those advertised as having side effects of “heart disease, stroke, headache and dry mouth”. The major and minor risks are averaged out, so the drug with more side effects is seen as less risky.

This matters not just for advertisers, but for anyone who is trying to persuade someone. A CV with a few strong arguments for why you should get the job looks better than one with all the arguments. And a three-word slogan is more effective at winning an election than 105 pages of policies. The quality of arguments, and how they’re delivered, are more important than the quantity of arguments.

Watch out for

This dilution effect not only shows how to make arguments more convincing, but also affects how people make judgements in a variety of situations. People given a mix of relevant and irrelevant information about an individual come to less extreme conclusions than people given only the relevant information, helping to reduce the effect of stereotypes.

With thanks to Ivan Edwards who wrote most of this post. Thanks Ivan!

Resources

Hsee, Christopher K. (1998), Less is Better: When Low-Value Options are Valued More Highly than High-Value Options, Journal of Behavioral Decision Making, Vol. 11, pages 107-121
Nisbett, Richard E.; Zukier, Henry & Lemley, Ronald E. (1981), The Dilution Effect: Nondiagnostic Information Weakens the Implications of Diagnostic Information, Cognitive Psychology, Vol. 13, pages 248-277
Sivanathan, Niro (May 2019), The counterintuitive way to be more persuasive , TED
Sivanathan, Niro & Kakkar, Hemant (February 2019), How Drug Company Ads Downplay Risks, Scientific American

Nudge Theory: how a little psychology can go a long way

This is how you can change people’s behaviour without anyone realising.

In a perfect economy, people faced with a decision would choose the best, most rational option for them, every time. What’s more, the more choices you give to people, the better their decisions will be.

We all know the world doesn’t work like that. If it did, I would buy an apple when I’m hungry instead of half price crisps at the checkout. Therefore, the solution is to ban crisps so everyone makes better choices. Right?

Nudge theory rejects both of these extremes. Firstly, it says that the way choices are presented affects the decisions people make. Secondly, the best way of helping people make good decisions is not by restricting their choices, but changing how they are presented — nudging them.

To understand how to present choices, we need to understand how people make decisions. Richard Thaler and Cass Sunstein, the creators of nudge theory, gave a few examples of what sways us when faced with complex decisions:

  • Loss aversion
    As prospect theory shows us, people hate losses more than they like gains. Telling someone they’ll lose hundreds of pounds if they don’t switch their car insurance is more effective than saying they’ll gain hundreds of pounds if they do.
  • Status quo bias
    People tend to stick with default options, because that’s easier and it’s assumed the default is the best. When workplace pensions changed from ‘opt-in’ to ‘opt-out’, millions more people started saving for retirement. The choices are exactly the same, but the decisions have changed.
  • Following the herd
    If you can convince someone that everyone else is doing something, they’re more likely to do it. It’s why adverts claiming a product is the most popular in the country are so effective. And why voter-turnout campaigners should stop loudly complaining that lots of people don’t vote.

Advertisers and the food industry have known how to influence people for decades — that’s why the supermarket puts half price crisps at the checkout instead of apples. How can nudging be used for good? Thaler and Sunstein call for nudges in situations that are “most likely to help and least likely to inflict harm.”

People will need nudges for decisions that are difficult and rare, for which they do not get prompt feedback, and when they have trouble translating aspects of the situation into terms that they can easily understand.

Richard Thaler & Cass Sunstein, Nudge, p. 72

Watch out for

Nudge theory became influential for policymakers around the world, especially in the administrations of Barack Obama (for which Sunstein worked) and David Cameron. So unsurprisingly, it’s controversial.

One of the major criticisms is that nudges may be used as a cheap and ineffective substitute for policies that are more ambitious or costly. The UK government was criticized for relying on nudges and behavioral science at the start of the Covid outbreak while other countries were locking down. Sunstein himself said in 2014 that “nudges are not a sufficient approach to some of our most serious problems”.

With thanks to Ivan Edwards who wrote most of this post. Thanks Ivan!

Resources

O’Brien, Hetty (May 2019), Cass Sunstein and the rise and fall of nudge theory, New Statesman
Thaler, Richard H. & Sunstein, Cass R. (2008), Nudge: Improving Decisions About Health, Wealth, and Happiness, Yale University Press
Selinger, Evan (July 2013), When Nudge Comes to Shove, Slate
Sunstein, Cass (April 2014), There’s a backlash against nudging — but it was never meant to solve every problem, The Guardian
Yates, Tony (March 2020), Why is the government relying on nudge theory to fight coronavirus?, The Guardian

John Kotter’s 8 stages of change management

Most major change programmes fail because of a lack of proper planning, according to John Kotter. He proposed eight steps to overcome this.

Kotter’s 8-step model of change management was first published in a 1995 Harvard Business Review article and followed up in his book Leading Change. His steps comprise:

  1. Create a sense of urgency
    Find what’s going wrong or what needs to change and make it dramatic. A new competitor is a crisis, a new technology is a once-in-a-lifetime opportunity. Make a statement that communicates the importance of acting immediately.
  2. Build a large, powerful coalition
    One executive isn’t enough. Get the chairman, division managers and more on board. Build a coalition outside the normal business hierarchy — after all, if the corporate structure was working well, there would be no need for change.
  3. Develop a vision for change
    Go beyond the numbers and talk about a direction, a picture of what the future looks like and how it will be different from the past. It doesn’t have to be fully formed. Something that customers, investors and employees will understand and throw their weight behind.
  4. Communicate the vision
    This is about rallying the troops. One meeting isn’t going to do it. Make the vision part of everyday activities, appraisals and reviews, and make it exciting. Broadcast it through every channel. Leaders should walk the walk in everything they do.
  5. Remove obstacles
    These may come in the form of narrow job categories, a stubborn boss, or an incentive system that goes against the vision.
  6. Generate short-term wins
    This is not the same as hoping things go well. Plan what goals you’re going to reach and when, make them happen and celebrate them. Keep morale high to keep people on board.
  7. Build on wins
    Declaring victory prematurely kills momentum. Instead, use those short-term wins to tackle even bigger problems. Changes to corporate culture take at least five years to set in.
  8. Embed changes into culture
    Once you’ve transformed the corporate culture and values, make those changes stick. Show employees that performance improved because of the changes. Promote those who personify the new way of doing things.

Watch out for

Kotter said the two most important lessons from successful transformations are that they take a considerable length of time, and that failure in any one of these steps can be catastrophic.

He also argued that change requires leaders, not managers. (The book is called Leading Change, not Managing Change after all.) Leadership is “the engine that drives change”, taking risks and entering uncharted territory. Without disparaging the skill of management, the mindset of simply making things work as they are is doomed to failure when it comes to the transformation of a company.

Support from senior management is essential to any big change so make sure you have identified the stakeholders whose support you need, and make sure you dedicate the time and resources to persuade them to be strong advocates for your project.

With thanks to Ivan Edwards who wrote most of this post. Thanks Ivan!

Resources

Kotter, John P. (May 1995), Leading Change: Why Transformation Efforts Fail, Harvard Business Review
Kotter, John P. (November 2012), Leading Change, Harvard Business Review Press
Hamel, Gary & Zanini, Michele (October 2014), Build a change platform, not a change program, McKinsey & Company