POINT OF VIEW

“I my­self am made en­tirely of flaws stitched to­gether with good in­ten­tions”. -Au­gusten Bur­roughs

Rotman Management Magazine - - CONTENTS - Rot­man fac­ulty re­search is ranked in the top 10 world­wide by the

D. So­man + Kim Ly

WE IN­VITE THE READER TO PAUSE FOR A

and think of in­stances in which MO­MENT you set out to ac­com­plish a par­tic­u­lar goal or task, but failed. We sus­pect that it would not be dif­fi­cult for most peo­ple to iden­tify more than one such in­stance. In­deed, our re­search and work with or­ga­ni­za­tions in busi­ness, gov­ern­ment and wel­fare do­mains has con­vinced us that fail­ing to ad­here to our good in­ten­tions is a hall­mark of be­ing hu­man.

Set­ting and ac­com­plish­ing goals has al­ways been a fun­da­men­tal driver of hu­man be­hav­iour. Goals can run the gamut from run­ning a marathon to learn­ing a new lan­guage to com­plet­ing an ex­er­cise or weight loss reg­i­men. They can even be as rel­a­tively mun­dane as wait­ing in line to ob­tain a ser­vice, com­plet­ing a trans­ac­tion at a bank, or fin­ish­ing up the draft of an ar­ti­cle by its dead­line. In­deed, there is a very ac­tive sec­tion of hu­man en­ter­prise— pro­duc­tiv­ity gu­rus, ‘life hack­ers’, per­sonal coaches, apps, ad­vi­sors and self-help books—ded­i­cated to help­ing us set goals, make plans and ex­e­cute on those plans.

Yet, as in­di­cated, we do not of­ten suc­ceed at com­plet­ing the things we set out to do. Some of us never even get started, while for many oth­ers, mo­ti­va­tion (and hence per- for­mance) flags in the mid­dle of the task. Au­thor Martha Wells de­scribed this com­mon ‘flag­ging mo­ti­va­tion’ in a re­cent es­say:

Writ­ing the be­gin­ning of a book is ex­cit­ing; ev­ery­thing is new, you’re cre­at­ing the world, meet­ing the char­ac­ters for the first time. The end is also ex­cit­ing, be­cause all the plot threads are ty­ing up and you should be done soon. The mid­dle is the hard part, where you have to make the magic hap­pen and start pulling things to­gether.”

This ‘mid­dle slump’, as re­searchers call it, hap­pens with all sorts of tasks. Re­search by one of us (Prof. So­man, with Joonkyung Kim, Rot­man PHD ‘18), as well as ear­lier re­search by North­west­ern Univer­sity re­searchers An­drea Bonezzi, Miguel Brendl and Mat­teo dean­ge­lis showed that due to the mid­dle slump, peo­ple are more likely to per­form poorly, to pro­cras­ti­nate and de­lay, and per­haps even drop out al­to­gether around the mid­point of a task.

Re­search in Be­havioural Eco­nomics not only doc­u­ments the ex­is­tence of a gap be­tween peo­ple’s in­ten­tions and ac­tions, it also pro­poses an ex­pla­na­tion for why this gap oc­curs. One cen­tral model first pro­posed by No­bel Lau­re­ate Richard Thaler and Hersh She­frin is called ‘The Plan­ner– Doer Model’ of hu­man be­hav­iour. It ar­gues that the hu­man

ap­pa­ra­tus can be di­vided into the plan­ner, an en­tity that is for­ward look­ing, wise and makes plans that are in the best in­ter­est of the hu­man; and the doer, who has to ex­e­cute on all these plans, but be­ing at­tached to a hu­man be­ing, is im­pul­sive, short-sighted, bound­edly ra­tio­nal and of­ten has to deal with many com­pet­ing goals and ac­tiv­i­ties.

The in­ter­play be­tween the plan­ner and the doer within each of us is best un­der­stood from a sim­ple ex­am­ple. Imag­ine that the plan­ner within ‘Jack’ thinks about the fu­ture and rec­og­nizes the need to save for re­tire­ment. The plan­ner in him has ev­ery in­ten­tion of in­creas­ing his sav­ings rate at the ear­li­est op­por­tu­nity. Ad­vi­sors, self-help books and other prod­ucts and ser­vices are great at help­ing peo­ple like Jack de­fine and pri­or­i­tize wor­thy goals and lay out the sub-tasks re­quired to achieve them; but they are not great at help­ing Jack and oth­ers ac­tu­ally ac­com­plish their goals.

That’s be­cause, when it comes time to take a re­quired ac­tion (i.e., to speak with a wealth man­ager), the doer in Jack takes over and gets way­laid by com­pet­ing pri­or­i­ties, or might choose to pro­cras­ti­nate be­cause re­tire­ment is ac­tu­ally pretty far off and in­creas­ing his sav­ings to­day just doesn’t seem as ur­gent as some of his other pri­or­i­ties. Al­ter­na­tively, do­ers might get started and com­plete some of the tasks re­quired to com­plete a goal, but as in­di­cated, get way­laid in the mid­dle.

So, how can we help the doer within each of us stay on track when our per­for­mance and mo­ti­va­tion start to flag in the mid­dle of com­plet­ing our goals? The fact is, plan­ners are al­ways at a dis­ad­van­tage, be­cause their con­tri­bu­tion pre­cedes the doer’s, and hence the plan­ner has no ac­tual con­trol over what the doer does. How­ever, a crafty plan­ner can an­tic­i­pate his/her doer’s be­hav­iour—and proac­tively use a self-con­trol de­vice to im­pose a con­straint on the doer’s be­hav­iour.

Con­sider a prod­uct called Clocky— an alarm clock that lit­er­ally runs away from sleepy fin­gers seek­ing the snooze but­ton, hid­ing un­der nearby fur­ni­ture. A plan­ner like ‘Jill’ could in­vest in a prod­uct like Clocky to con­strain the doer within her. Af­ter all, by the time Jill finds Clocky un­der her dresser and si­lences the alarm, she will prob­a­bly be so awake and alert that it would be dif­fi­cult to snooze again. Or con­sider Ksafe— a cookie jar-style con­tainer with a timer­con­trolled lock that one of the au­thors (to re­main un­named) has used suc­cess­fully to lock away mo­bile phones and other po­ten­tial dis­trac­tions in or­der to fo­cus on com­plet­ing tasks such as writ­ing this ar­ti­cle.

Per­haps the two most fa­mous ex­am­ples of self-con­trol de­vices come from the do­main of on­line com­merce and fi­nan­cial prod­ucts. The web­site Stickk.com was de­vel­oped by be­havioural econ­o­mist Dean Kar­lan. On it, users can sign up and pre-com­mit to achiev­ing any goal — for ex­am­ple, fin­ish­ing up the draft of a man­u­script by a given date. The web­site as­signs the user a coach, a ‘cheer­ing squad’, and a judge who will even­tu­ally cer­tify that the goal has been achieved. Im­por­tantly, fail­ure to achieve a goal of­ten has a mon­e­tary con­se­quence: Up front, users are asked how much the ac­com­plish­ment of the goal means to them in mon­e­tary terms, and if they fail, they must pay Stickk that amount. If this hap­pens, Stickk do­nates the amount to a char­ity—but not one of the user’s choice. In­stead, the funds go to an or­ga­ni­za­tion that the user will likely be op­posed to. A re­cent visit to the Stickk.com web­site in­di­cates that there were up­wards of $35 mil­lion worth of con­tracts and about 402,000 com­mit­ments in place at this point in time.

An­other pop­u­lar tool is the Save More To­mor­row (SMART) pro­gram de­vel­oped by Richard Thaler and Shlomo Be­nartzi, which ad­dresses the fact that while a vast ma­jor­ity of Amer­i­cans say they would like to save more, only a small frac­tion of them ac­tu­ally do so. The most com­mon rea­son for not sav­ing more re­lates to present needs, in that the act of sav­ing more would im­ply a drop in cur­rent con­sump­tion. Em­ploy­ees who sign up to a SMART pro­gram make a com­mit­ment to save more—not to­day, but later. In par­tic­u­lar, they com­mit to set­ting aside a per­cent­age of each and ev­ery fu­ture salary in­crease in a sep­a­rate sav­ings ac­count. For these em­ploy­ees, the act of sav­ing more does not im­ply con­sum­ing less. In ad­di­tion, the doer in them doesn’t have to do any­thing to in­crease con­tri­bu­tions, and in this sense, the sav­ings prod­uct re­moves the abil­ity of the doer to ‘mess up’. Re­cent es­ti­mates sug­gest that the Save More To­mor­row pro­gram alone might be re­spon­si­ble for an in­crease of about $29.6 bil­lion in re­tire­ment sav­ings since its in­cep­tion.

The re­search on the in­ten­tion-ac­tion gap is clear: The ma­jor­ity of us have good in­ten­tions to do a num­ber of good things, eat health­ier food, ex­er­cise daily, quit smok­ing, learn new skills and spend more time with our fam­i­lies. But gen­er­ally speak­ing, we tell our­selves that we will start to­mor­row. One im­por­tant corol­lary of this in­sight is the limit on the ef­fec­tive­ness of fi­nan­cial lit­er­acy in­ter­ven­tions. In BEAR’S [Be­havioural Eco­nomics in Ac­tion at Rot­man] on­go­ing work in the area of fi­nan­cial well-be­ing, we have found that

Plan­ners are al­ways at a dis­ad­van­tage, be­cause their con­tri­bu­tion pre­cedes the Doer’s.

fi­nan­cial ed­u­ca­tion is not enough: We need to go be­yond that and take steps to fa­cil­i­tate be­hav­iour.

Our ex­pe­ri­ence across a broad swathe of be­haviour­change chal­lenges sug­gests that there are three seg­ments of peo­ple.

These are peo­ple who make sure MO­TI­VATED EN­THU­SI­ASTS. they act on plans at the soon­est pos­si­ble op­por­tu­nity.

These are peo­ple who might be op­posed DIEHARD OP­PO­NENTS. to the be­hav­iour change that is be­ing asked of them, based on per­sonal be­liefs or philo­soph­i­cal grounds.

The third seg­ment is per­haps the largest, NAIVE INTENDERS. most in­sid­i­ous and there­fore the most ig­nored seg­ment: These are peo­ple who be­lieve in what is be­ing asked of them and fully plan to do it, but their in­ten­tions might never con­vert into ac­tion.

In gen­eral, we need to do very lit­tle about the mo­ti­vated en­thu­si­asts, ex­cept to re­in­force their be­hav­iours; and we might be able to use ed­u­ca­tion and ev­i­dence to con­vert diehard op­po­nents. The seg­ment that we need to fo­cus our at­ten­tion on are the naive intenders, who will not be in­flu­enced by ed­u­ca­tion or ev­i­dence. Put sim­ply, these peo­ple need help to make things hap­pen.

The first step for any self-con­trol prod­uct is to get peo­ple to pre-com­mit to fu­ture ac­tions that will help them ac­com­plish their goal. Re­search shows that peo­ple are very will­ing to com­mit—as long as the task doesn’t have to be done right away, in the mo­ment. The sec­ond step is to im­pose a ‘lock’ on the doer’s be­hav­iour. Locks can be tech­no­log­i­cal (Clocky), be­havioural (Save More To­mor­row), con­trac­tual (stickk.com) or so­cial in­ter­ven­tions (e.g., buddy-based sav­ings schemes where peo­ple can­not with­draw money with­out a sec­ond per­son know­ing about it). Or, they can take the form of a lit­eral lock—as in the ksafe ex­am­ple men­tioned ear­lier.

At BEAR, we con­duct an an­nual Mar­ket for SelfCon­trol chal­lenge in which stu­dent teams from across the Univer­sity of Toronto pitch new prod­uct con­cepts to a jury of judges drawn from the busi­ness, aca­demic, pol­icy and start-up com­mu­ni­ties. Win­ning teams from the past have in­cluded the ‘Nudge Ring’, a mo­tion sen­sor em­bed­ded in a ring that alerts a com­pul­sive skin-picker who is look­ing to re­duce their scratch­ing be­hav­iour, and ‘AVAIL’, a dig­i­tal so­lu­tion that helps fam­i­lies cut down on In­ter­net us­age. Other prod­ucts and ser­vices have tar­geted dis­tracted driv­ing, in­ter­rupt­ing peo­ple in meet­ings, seden­tary life­styles, med­i­ca­tion ad­her­ence and low sav­ings rates, to name a few.

In clos­ing

The mar­ket for self-con­trol is large and grow­ing, and the dol­lar es­ti­mates of the im­pact of Stickk and SMART show its po­ten­tial. Given the growth of such in­no­va­tive tools and the si­mul­ta­ne­ous in­crease in dis­trac­tions in to­day’s world, we be­lieve that the in­ten­tion-ac­tion gap will only in­crease over time, open­ing up sig­nif­i­cant op­por­tu­nity for in­no­va­tors.

Govern­ments and busi­nesses are only be­gin­ning to take no­tice of this sig­nif­i­cant and un­met mar­ket op­por­tu­nity. Will we soon see a self-con­trol aisle in our lo­cal Wal­mart, or will the de­vel­op­ment of self-con­trol prod­ucts re­main in the realm of start-ups and aca­demic in­sti­tu­tions? Will con­sumers de­velop the fore­sight to be able to an­tic­i­pate the need for such prod­ucts and de­ter­mine their value? Will in­vestors fund prod­ucts that—iron­i­cally—will only be deemed a suc­cess when they are not needed any­more?

Only time will tell. But in the mean­time we can pre­scribe the fol­low­ing plan of ac­tion with rel­a­tive cer­tainty: The next time you think about an im­por­tant long-term goal, make a pub­lic pre-com­mit­ment to it and iden­tify a suit­able ‘lock’ to bind your fu­ture self to get­ting it done.

The first step for any self-con­trol prod­uct is to get peo­ple to pre-com­mit to fu­ture ac­tions.

Dilip So­man is Pro­fes­sor and Canada Re­search Chair in Be­havioural Science and Eco­nomics, and Aca­demic Direc­tor of Be­havioural Eco­nomics in Ac­tion at Rot­man (BEAR). He is the au­thor of The Last Mile: Cre­at­ing So­cial and Eco­nomic Value from Be­hav­ioral In­sights (Rot­man-utp Pub­lish­ing, 2015). Kim Ly (Rot­man MBA ‘08) is a Re­search Fel­low at BEAR and a lec­turer at The Rot­man School. For more find­ings from BEAR, visit www.rot­man.utoronto.ca/bear

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