PropertyLab - Nudge Theory and why technology alone is not the answer.
Welcome to behavioural economics 101. Let's learn about 'Nudge Theory', the ways in which we make decisions and why PropertyLab holds much more than just technology development potential.
PropertyLab is in full swing and we're overwhelmed with the positive feedback on our innovation programme so far. Over the next few weeks, PropertyLab will tackle some of the biggest issues landlords face in keeping their properties safe by focussing on the key aspects of the regulatory compliance process in the residential sector - specifically fire and gas safety.
At Plentific, we understand that no matter how great the technology one develops to streamline and augment housing operations, its positive outcomes won't be fully realised without due consideration of the people using it - managers, operatives and tenants.
Fortunately, we see opportunities to combine our technology with your expertise through simple, but powerful theories like 'Nudge Theory'. Let's look at it in some more detail.
How do we make decisions?
Let's start with a familiar example. The NHS cites missed appointments as one of the biggest issues it usually has to contend with.
Despite reminders via text, many patients still continue to miss their appointment slots. This is bad for everyone - doctors, attendants, anyone else on a waiting list following the absent patient.
In searching for ways to combat this issue effectively, the NHS borrowed a theory from behavioural economics and put it to the test. Future reminders to patients via text began including an additional line mentioning that 'missed appointments cost the NHS £160'. This almost immediately reduced the number of missed appointments by 25%
Why? Because 'Nudge Theory', a behavioural economics staple, is really that effective at understanding the sometimes irrational ways in which we make decisions. It provides fertile ground on which to create 'behavioural nudges' - approaches that can influence behaviour for the better.
Let's look at a few more examples.
Have a heart.
Take organ donation, for instance. As of 20th May 2020, you'll no longer be asked to 'opt in'. Instead, you'll be asked to opt out. The NHS site asks a question that 'flips' the benefits too, making it easier to see why it's important -'If you needed an organ transplant would you have one?'
Putting away or putting it off.
Another good example can be found in UK pension policy. The Government mandated employers to establish an “automatic enrolment” scheme in 2012, to address the very low pension saving rates amongst private sector workers. The theory: that people wanted to put money aside for retirement, but feared that it would be complicated to do so. The idea: auto enrolment would make it effortless to help people achieve that goal, while drive saving rates up. The result: since 2012, private sector pension scheme memberships have jumped from 2.7 million to 9.9 million in 2018.
Now, let's consider a case within the context of compliance management for housing providers. There's one recurring issue well-suited to a more behavioural approach.
“It's like leaving your homework to the last minute.”
In a recent interview with Executive Director of People and Business Services at a leading housing provider, we learned how challenging it can be to gain access to a tenant's property to carry out essential gas, electrical or fire safety compliance.
Sending letters ahead of such compliance activity - a method utilised by many housing providers - has proven ineffective over the years.
"If you receive a letter saying you need to have your gas check done in 3 months most of us wait until the final moment to get it done; it’s just human nature. Like leaving your homework to the last minute."
Lucy extended this thinking beyond the current issue of access to the larger issue of digitisation within the housing environment. She explained that most processes behind digital journeys follow the staff's internal journeys, as opposed to the customer (tenant's) journey. She explained that developing a credible, result-oriented solution to the access problem - and indeed automating compliance activity effectively - will involve "taking a real step back and looking at it in a different way to see how we can actually design around customer needs."
We couldn't agree more.
Technology alone isn't the answer.
At Plentific, we understand all too well the impact a behavioural nudge can have on the adoption of a new tool or service. When developing our technology, the question we ask ourselves is 'what is the default?' and if you change the paradigm, could you positively change the outcome of the choices your tenants make?
It's because, by using 'Nudge' and the approaches pioneered by Richard Thaler, we've been able to understand that tenants rely on intuition and are often guided by the way the choice is presented.
Whether it's encouraging a tenant to let a contractor in to service a boiler or a simple system to check front doors and fire alarms, technology cannot exist without lateral thinking and the people behind the process.
Nudge is not always used for good.
Many companies try to nudge customers into buying their products and services using psychology. But Uber famously hit the headlines in 2017 for using Nudge with their workforce. The idea: that drivers set earning goals, and don't make rational decisions about their time to reach them. And that more drivers keeps costs down and service levels high. The result: more drivers on the road. Cheaper fares for customers. Less money for drivers. And a big PR scandal.
How do we use this in PropertyLab?
People, process and technology go well together. To get the most out of a project, we know that any solution must consider all of them. That's why the PropertyLab programme starts with interviews. We map out service blueprints, ecosystems and journey maps. It enables us to identify opportunities for change across all areas, using theories like Nudge to get the most out of a solution, tech, people and all.
If you found these insights useful and want to learn more about the exciting innovation coming out of PropertyLab, join our mailing list at firstname.lastname@example.org.