Rewarding Behaviour – How To Get What We (all) Want


All is not well in the Golden State of California. A 4-year drought has left scorched fields and wilted trees, and yet until recently, few have faced up to it. Consumers still want lush green lawns and golf courses, and farmers are unwilling to cut supply to their thirsty crops. Moreover with the State acting as America’s engine of agriculture, contributing $48bn in sales (2012), it’s unlikely to want to risk productivity anytime soon. But the problem is deepening, with scientists warning that the short-term solution of pumping groundwater to make up the shortfall is simply storing up even worse problems in the future, such as land subsidence, and salination.*

It’s a classic study of the case for change being held back by conflicting needs. And its relevance goes way beyond how to manage natural resources.

Within our work at Customer Faithful, I’ve seen the same supply & demand conflict in another industry – healthcare. We are currently supporting a 2-year project to find ways to reduce missed appointments in the UK’s National Health Service (NHS). Currently, as many as 19m hospital and GP appointments are missed each year, costing the NHS around £900m at a time when it is tasked with billions of cost savings to respond to a growing and ageing population.

From our research into why appointments get missed, it’s clear that there is no single cause, nor one ‘silver bullet’ to fix it. But we suspect that any sustainable solution will require tangible benefits not just to patients and the NHS, but to the public-at-large. Even something as simple as a text-message system for appointment reminders requires more than just a technology investment from health providers. It needs sensitive, yet impactful messaging, sent at the right time, in an appropriate language that respects patient privacy but also the scarce appointments resource it is trying to manage. Even then, success requires patients who are socially understanding enough to recognise that not cancelling or attending their appointment deprives someone else of using it too.

Since 2008, the popularity of influencing behaviour through so-called ‘nudge theory’ (Thaler) has steadily grown. The essence of this is simply offering some optional encouragement to the consumer, such as the often-quoted example of adding the image of a housefly into the men’s room urinals at Amsterdam’s Schiphol Airport, intended to ‘improve the aim’.

However, I’m skeptical of the broad application of this, and find such nudges are the exception rather than the rule. In healthcare for example, few in the Western world can still be unaware of the risks of obesity, given the ‘weight’ of public health campaigns, encouraging us to make healthier choices. Yet, here in the UK, obesity levels have continued to rise steadily for two decades.

Instead, I believe that only a 3-way contract has a fighting chance of changing behaviour:

  1. Rewards for ‘Me’ – individuals are inevitably drawn towards products and services that meet the needs of themselves (and sometimes loved ones) first and foremost
  2. Rewards for the Provider – suppliers need to find ways of meeting this consumer need in a sustainable and/or profitable way. Even not-for-profit organisations have to be able to keep their promises to stakeholders
  3. Rewards for the Greater Good – this can be interpreted in many ways. Typically it’s seen as helping Society as a whole, such as by widening availability to all, and in more recent decades, benefitting the environment (‘saving the planet’) fits here too.

The problem is that the rewards need to be perceived as equitable in order to create the ‘everybody wins’ mindset that’s required to enable behaviour change to reach the Holy Grail of a ‘no-brainer’. That means not only sharing out the benefits, but communicating them clearly, consistently and persuasively.

Back in California, I believe these 3-way contract principles deserve an audience. Drought management could start with finding ways to incentivise the further development of albeit costly desalination plants. No amount of nudging will make this happen, so a carrot-and-stick offer of tax-free building grants along with tiered pricing to discourage existing water usage above an upper threshold would be a good start. More creative ideas include swap deals with other States, trading California’s abundant sunshine as solar power in exchange for piping in water resources from elsewhere. And for consumers, adding water consumption labelling with a corresponding tax levy could persuade shoppers to look for drought-friendly bargains and so change their buying behaviour, to reduce demand for thirsty products.

Rewarding behaviour is as important to behaviour change as it ever was. But ‘softly-softly’ approaches to a single benefit group will not achieve scale, speed or sustainability. It’s time for a more active, less cautious approach to supply and demand challenges, especially involving public services and natural resources.





  1. Atul Gawande wrote a piece for the New Yorker about why some innovations spread rapidly, and others don’t. The difference seems to be whether the change in behavior has immediate, positive effects. Mr. Harris’ three way contract seems to combine more tangible reinforcers and a “greater good” incentive that will take some time to manifest itself.

    Gawande writes. “But technology and incentive programs are not enough. ‘Diffusion is essentially a social process through which people talking to people spread an innovation,’ wrote Everett Rogers, the great scholar of how new ideas are communicated and spread. Mass media can introduce a new idea to people. But, Rogers showed, people follow the lead of other people they know and trust when they decide whether to take it up. Every change requires effort, and the decision to make that effort is a social process.”

    I suspect changes to decrease water consumption in California need to target agriculture (e.g. such as cessation of production of water sucking produce such as avocados) and would require both an incentive to farmers and a social process that makes it chic to forgo the avocado.

    Last week in the New York Times, Cass Sunstein of Harvard summarized a recent survey, albeit small, that shows that a surprising majority of Americans support “soft interventions” (aka nudges) by the government to inform or influence customer choices to improve health, safety, economic security, and environmental quality. I’d like to see the data on how effective these soft interventions are. I’d also like to know more about the variables involved in patients’ missed appointments in the UK. Perhaps individual behavior around missing appointments can be modified with less effort then it takes to initiate and sustain behaviors that enable weight loss (which often have an emotional, if not an addictive core — that is why reinforcing social interaction is often beneficial). If so, a nudge might be worth a try.