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Nudge Theory

Developed by Richard Thaler and Cass Sunstein, Nudge Theory was made popular in the self-named book that capitalized on their works Nobel prize in economics. The theory focuses on how our brains have built-in cognitive biases that prevent us from making the right decisions. For example, numerous people continue to drink soft drinks knowing full well that it is bad for them.

Humans display systematic deviations from 100% rational decision making and these deviations prevent a person from making decisions in their best interest. Because of these hardwired biases, it is difficult to make rational decisions. Looking deeper at the why of human behavior it becomes clear that environments influence your choices. Thaler’s Nudging Theory is based on influencing peoples’ environments to make the decisions that they would want to make.

Change Management Because of Nudging

While there is a multitude of variations of Nudge Theory in policymaking and social science, the philosophy aligns closely with change management as well. Offered in a step by step approach that resembles Kotter’s change model, the Nudge Change Model begins with clearly defining the change. Secondly, to consider the change from the employees’ point of view and then using evidence to show the employees the best option. Next is to present the change as a choice and to listen to feedback. Lastly, the role of the change agent is to limit obstacles and to keep the momentum going by delivering short-term wins.

Nudge Theory has numerous positives as its intent is to put people in positive environments and people-centric cultures. Hence, it has empirically demonstrated effectiveness at behavioral changes and incorporates autonomy and individual decisions. Conversely, it can also come across as manipulation to the team, especially if used inappropriately. In addition, it brings to light the question of if the change is ideal for the individual or for the organization.

Key Steps:

1. Clearly define the change
2. Consider the change from the point of view of the impacted stakeholder
3. Develop a change roadmap with key decision points & provide transparent data
4. Engage those being impacted in the decision-making process
5. Listen to feedback
6. Reduce obstacles
7. Keep momentum with short term wins

References

Organizational Change. Theory and Practice

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