FINEX Folio
Reynaldo C. Lugtu, Jr.
“Human behavior is going to be at the center of the massive shift that we’re witnessing globally today.” This is my quick reply to various types of audience in conferences and public fora when they ask me about my forecast for 2018 and beyond. I usually get blank stares as this is concept is still hard to comprehend. This is because we are constantly bombarded with technology concepts such as in data science, artificial intelligence, and digital transformation.
Indeed, the fusion of different technologies in the digital, physical and biological spheres, commonly referred to as the 4th Industrial Revolution (4IR) is disrupting businesses and organizations the world over, having a profound impact on the way we live, learn, work, and relate to each other.
But at the core of this are people who need to adapt to this new environment in order to maximize its benefits to society and minimize the associated risks. In fact, the World Economic Forum (WEF) established a council to exactly do this — composed of experts in various disciplines of behavioral science such as organizational behavior, behavioral economics, and consumer behavior.
Merriam-Webster defines behavioral science as “a branch of science that deals primarily with human action and often seeks to generalize about human behavior in society.” It explores the effect of human actions and interaction trough observation, appreciation, and integration by the behavioral scientist. It can address behavioral anomalies such as biases, overconfidence, and others, that can hinder behavior change, for example, adapting to new ways of doing things through the use of technology.
In a report of WEF, Iris Bohnet, Global Future Council on Behavioral Sciences, avers that “the discipline is helping to break new ground in multiple areas, from health care and education to social inclusion and consumer finance.”
She cites “education is an area where traditional approaches have held sway for a long time — and where increasing effectiveness is widely recognized as key to making the most of the 4IR, as the pace of technological change will lead to rapid shifts in the skills required. Behavioral scientists are looking now at possible ways to help students learn and teachers teach more effectively.”
In health care, “it’s been shown that small things like prompting people to take their medicine at the right time can have a huge impact in improving the efficacy of treatment. I expect we’ll see more behavioural science-inspired innovations in preventative care.”
She further cites a consumer finance example where “huge impacts from small tweaks to how credit card bills are presented, making it easier for people to understand the implications of being in debt, and what interest rates really mean.”
A more practical example was featured recently by the New York Times which headlined that Uber “has undertaken an extraordinary experiment in behavioral science to subtly entice an independent work force to maximize its growth.” The ride-hailing company said that they had “under-invested in the driver experience,” and expressed “its determination to treat drivers more humanely, it is engaged in an extraordinary behind-the-scenes experiment in behavioral science to manipulate them in the service of its corporate growth.” To do this, Uber has rolled out new features that allow drivers to set goals and view incentives for driving more.
This may seem manipulative and debatable, but it shows the potential of behavioral science to drive behavior change.
Take another practical example — Lemonade, an app-based peer-to-peer insurance company based in New York, who hired behavioral economics guru and author of best-seller Predictably Irrational, Dan Ariely, as its Chief Behavioral Officer. His job is to transform the experience of consumers in dealing with insurance as well as business processes, by influencing behaviors within the company and among consumers.
Behavioral science will become an integral part of business strategy in the future, just like how data science emerged and precipitously rising.
The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX. The author may be e-mailed at reylugtu@gmail.com.
Reynaldo C. Lugtu Jr. is the Managing Director of The Engage Philippines, digital marketing and customer engagement solutions company, an information and communications technology firm. He is the Chairman of the ICT Committee of the Financial Executives Institute of the Philippines (FINEX). He teaches strategic management in the MBA Program of De La Salle University. He is also an Adjunct Faculty of the Asian Institute of Management
