Nate-Andorsky

39 / Behavioral Science and Product Design

Description

As product builders, we use data science and behavioral science to help us design software solutions that line up with our users’ initial intent. Data science helps us understand who’s likely to take some action. Behavioral science looks at the factors that drive us to take action in the first place. With so many inputs influencing our decision-making process, it’s hard to know where to start.

In this episode of the Product Momentum Podcast, Sean and Paul welcome Nate Andorsky, CEO of Creative Science and author of Decoding The Why. His many contributions to our space appear at the intersection of human behavior and the ways in which it can improve human outcomes.

Nate recommends taking a behavior-first approach to solving product design challenges. “Zero in on the behavior you’re trying to change and work backward from there,” he says. “Oftentimes when we build products, we get into this habit of thinking solution first.”

We collect all sorts of information about users from focus groups, surveys, and in-person interviews. Much of it lands in two big buckets: what people say and what people do. All that is great. But too often the say and the do don’t line up. So as product leaders we need to continue our discovery process to better understand the “Why?”

Tune in to the pod as Nate shares insights around his concept of “say data, do data, and why data.” The why data explains the subconscious factors that are actually driving user behavior, the types of things your users aren’t even aware of themselves.

Once you understand that, Nate adds, you have a foundation and a decision-making framework to create amazing products that make a positive impact in the lives of others.

[02:28] Behavioral science vs. Data science. Behavioral science looks at what factors drive us to take action? Data science looks at who’s likely to do what.

[03:06] The $64,000 Question. How do product builders get people to do that thing. That’s where behavioral science layers back in.

[03:47] How to institute change in a product ecosystem. Zero in on the behavior that you’re trying to change and then work backward from there.

[05:09] Say data. Do data. Why data. Decode the WHY to understand the subconscious behaviors that drive user behavior.

[06:36] The 15-year delay. Academic research precedes implementation by about 15 years.

[07:17] The need for sophisticated individuals. It takes a sophisticated individual to understand how to convert academic theory into product solutions.

[09:16] Hyperbolic discounting and present bias. How we think about our products doesn’t always align with how our users feel in the moment.

[13:39] The ethics of product design. Use your powers for good; that is, design product solutions in ways that line up with users’ initial intent.

[16:06] How do product managers discover the delta between say-do data and extrapolate the why?

[18:25] Top 2 behavioral economics heuristics. The identifiable victim/beneficiary effect and the power of storytelling.

[20:24] Personalities and behaviors. Behavior might not be driven by one’s personality, but even more so by one’s environment.

[21:34] Digital experiences as motivators and organizers of behavior. Hopefully, behaviors we want to see in the world.

[22:35] The value of personas. They’re definitely informative. But they’re neither industry specific nor individual specific. They’re human specific.

[25:22] Advice to generate new ideas. It comes with experience and getting your hands dirty.

[25:56] The biggest breakthroughs come with a new intervention or a new design that is pieced together from four or five different things that we’ve seen work.

[26:51] Add fuel, remove friction. Avoid swimming against the current. Share a path with your users that matches the narrative they want for themselves.

[27:59] Innovation. It’s the cross-discipline of different studies and ideas. Innovation is when you start to break down the silos that separate these disciplines and understand how they all fit together.

Nate’s Recommended Reading

Nudge: Improving Decisions About Health, Wealth, and Happiness, by Richard H. Thaler and Cass R. Sunstein.

Thinking, Fast and Slow, by Daniel Kahneman.

The Elephant in the Brain: Hidden Motives in Everyday Life, by Kevin Simler and Robin Hanson.

Decoding the Why: How Behavioral Science is Driving the Next Generation of Product Design, by Nate Andorsky.


About Nate

Nate Andorsky is an entrepreneur who uses behavioral science to build digital strategies and technology for today’s most innovative companies and nonprofits. He believes the key to unlocking the potential of technology lies within our understanding of the psychological factors that drive human decision-making. By combining scientific findings with outside-of-the-box thinking, he helps turn human understanding into business advantages.

As the CEO of Creative Science, he leads a team focused on this mission. He is a frequent international speaker, has been featured in Forbes, INC Magazine, and Huffington Post and his team’s work has earned accolades from Fast Company and TopNonProfits.com. Prior to Creative Science, he was a team member at the Startup America Partnership, a nonprofit led by Steve Case to help build entrepreneurial communities throughout the US. He geeks out about the intersection of human behavior and the ways in which it can improve human outcomes.

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Mark-Zawacki

38 / How To Recapture Lost Innovation ROI

Description

Investment in innovation will bring business energy, they say, and will enable new revenue growth. Investment in innovation will lead to more efficient business operation and will deepen your brand’s hold on existing clients while attracting more prospects. Investment in innovation will help level up your team’s skill set. 

Innovation is powerful. Investment in it is a necessary condition for any growing, visionary organization. But investment in ITD (innovation, transformation, and digital) is a means to an end. Growth remains the objective. According to Mark Zawacki, it’s a difficult lesson many have learned the hard way. 

In this episode of the Product Momentum Podcast, Mark joins Sean and Paul to closely examine true impact of investment in innovation on organizations large and small. As Founder and CEO of 650 Labs, Mark is intimately aware of the challenges confronting today’s businesses. And the news is troubling.

“We’re experiencing a real crisis in corporate innovation,” Mark says. “Tens of billions of dollars invested every year, and it doesn’t appear things are coming out the other side. We’re finding it difficult to see the relationship between investment in innovation and ROI.”

Much of Mark’s analysis stems from his work with large multinational organizations, but he makes clear that the same issues scale to the business unit and team levels too. “When you unpack it, we see the same issues appearing in five key areas: Structural, Organizational, Methodology, Cultural/Political, and Advisorial.”

Here’s a quick look at the root causes of what Mark refers to as poor ITD performance:

  • Structural. Large organizations are built for stability, reliability, and predictability with executive compensation aligned with near-term results. This is hardly the environment for nurturing innovation and a new way of doing things.
  • Organizational. Digital leaders in larger organizations are rarely on the fast track to the C-suite. This suggests that they are more interested in securing the incremental innovations that come along and not the big, strategic shifts that innovative organizations pursue.
  • Methodology. The traditional companies, the incumbents, follow a pretty standard playbook. But they’re aren’t showing results for a variety of reasons – mostly because their playbook has become obsolete.
  • Behavioral/Cultural/Political. So many organizations are filled with smart but risk-averse people who tend to hire in their own image. Organizational politics is the result of individuals acting in their own self-interests. Progress grinds slowly in that environment, and radical ideas are ridiculed.
  • Advisorial. These issues arise when your incentive/compensation system is misaligned with actual problem solving.

So, how do we break through these big, hairy challenges to build an environment where innovation and risk-taking are not only welcome, but encouraged?

The answer lies in creating a new “edge” business that operates separately, but in parallel, from the company’s “core” business. Where the core is focused on delivering short-term results with incremental innovations, the edge business is built for flexibility, uncertainty, and long-term growth opportunities.

The key, Mark says, is to make sure you keep separate the core and edge pieces of your organization. Historically, we’ve tried to create the edge business within the core – and that’s where it’s not working. The edge business is designed and operated to ultimately replace the core business’ declining revenue. Why bring a high-growth asset into a low-growth environment?

Tune in to the Product Momentum Podcast to hear more of Mark Zawacki’s insights into the core/edge organizational model and how to bring transformative innovation and ROI to your organization.

[02:06] A crisis in corporate innovation. Tens of billions of dollars invested every year, and it appears there’s nothing coming out the other side.

[05:35] The relationship between investment in innovation and ROI. At a macro level, we’re finding it difficult to find one.

[06:36] At the micro-level, are companies working on the big things to replace declining revenue? If so, where? That’s when the conversation gets a little difficult.

[07:10] What’s going wrong on the inside of these companies? There are five buckets, or problem areas, where large organizations are having difficulty.

[07:32] Structural issues. Large organizations focus on the short term. They’re built for stability, reliability, and predictability. That’s the reverse of innovation and the reverse of doing new things.

[09:15] Organizational issues. The company’s digital leaders are rarely on the fast track to the C-suite. This tells me the business isn’t really thinking about big strategic change.

[10:15] Methodology issues. Start-ups don’t always play nice with corporates. They don’t make an appointment and say, “Hey, how do we partner together?” They break into your house at 3:00 in the morning and steal your stuff.

[12:05] Behavioral, political, cultural issues. These are the issues that slow innovation. Failure is a bad word that translates to “no real risk-taking.”

[12:50] Don’t confuse new ideas and great ideas. A great team with an average idea always beats an average team with a great idea.

[13:28] Advisorial issues. The vast majority of advisors are fee-based; when you have a fee-based model, your incentives are misaligned with solving problems.

[15:22] The hard stuff is easy. Hard stuff doesn’t mean difficult, but “hard” as in more scientific.

[16:18] The soft stuff is hard. The people skills, knowing talent, applying leadership and management models. How do you go about upskilling? How do we build great teams? That’s hard.

[18:43] Recipe for success. Small team, big goal. Get out of the way and they’ll figure it out.

[20:27] Dunbar’s number. Overwhelming evidence that teams of 150 – ideally under 100 – are more high performing than monolithic teams of thousands working on a goal.

[22:15] Merge the core business and the edge organization? No, never. Why bring a high-growth asset into a low-growth environment?

[29:16] “Burn the ships.” Here’s how to test a person’s intrapreneurial spirit. Few people have the risk profile to forego pay for equity, to forego comfort today for opportunity tomorrow. It’s an example the reality that we’re in.

[31:14] Pooh-poohing incremental innovation? Not at all. It’s necessary but insufficient. We are hurtling toward the technological singularity. We know in 10 years AI eats the world.

[34:13] Three horizons of innovation. Incremental, the horizon three, and transformative.

[37:11] Innovation theatre. You get all the buzz words, all the excitement. But when you push on it, when you look down the pipe to see what’s coming out the other side…that’s when results are disappointing.

Mark’s Recommended Reading

Fightback: How to win in the digital economy with platforms, ventures and entrepreneurs, by Felix Staeritz.

Dual Transformation: How To Reposition Today’s Business While Creating the Future, by Scott D. Anthony, Clark Gilbert, and Mark W. Johnson.


About Mark

Mark Zawacki is a business strategist and Board advisor, management researcher, author, keynote speaker, and investor.  Since 2001, he has led or supervised engagement teams on more than 400 clients globally, working through myriad revenue-related initiatives including growth, corporate strategy, disruptive innovation, business and corporate development, organisational change/transformation, and variety of people issues (leadership development, organisational design, talent strategy, corporate culture, etc.)

To date, he has worked in more than 80 countries. His clients span a wide variety of sectors, most notably financial services, mobile/telco, retail, media, automotive, healthcare, technology, and energy.  He has also provided strategic counsel on growth and innovation to the European Union and the governments of The Netherlands, France, Turkey, Singapore, Mexico, Switzerland, Australia, New Zealand, and others.

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