Doing demand management better, with behavioural insights

There may still be local authority chief execs and directors in local government who think they can steer a course through the financial challenges to come (the handy headline figure is a forecast £14.4bn shortfall in services by 2020) by reducing staff numbers and service levels, raising efficiency and changing eligibility criteria, but I don’t know them and I’m pretty sure they don’t exist. And, encouragingly, neither do the authors of Managing Demand: Building Future Public Services, Anna Randle and Henry Kippin. As they point out, these measures realise immediate savings but don’t shape services for the long-term.

This report is essential reading if you’re interested in the future of local public services. To me, it marks out the territory that should be occupied by anyone working on developing local public policy and practice. It should be, of necessity, the new black.

DMCover

Anna and Henry cover a lot of territory – perhaps too much. There are dozens of aspects worth writing about, but I’m focused here on the topic closest to my heart, as its my job: using behavioural insights.

Managing Demand and the emerging practice it reveals, is particularly interesting to me because of the coincidence of this stark challenge to public finances and the rapid growth of evidence from behavioural sciences. As I’ve explained to many people, I’d be promoting the use of behavioural insights to policy makers and practitioners right now, even if public finances were in rude health. The fact that they are not, though, provides even more of an opportunity for us to design services that reflect what people are really like: demand management done well means reframing public services and places – and we can knit into this redesign our rapidly improving understanding of just how context-dependent human behaviour is, and of how much less control we have over our actions than we like to think. If local government budgets were ticking along nicely, and the demographics were in our favour, the rationale for change simply wouldn’t exist.

If anything, Managing Demand understates the extent to which public services’ approaches are behaviourally naïve. Here are some examples I’ve come across recently:

  • Experienced Housing officers will often explain to cititzens likely to become homeless what the limitations are to what the Council can do for them, in effect anchoring the conversation at the level of service that used to be possible when supply and demand were less unevenly matched. When resources are scarce, we want them more, for good evolutionary reasons, so officers may be inadvertently encouraging demand that is costly to manage and damaging for residents’ wellbeing.
  • Waste and recycling communications are often framed around the needs of the service, describing the benefits in terms that give the citizen no emotional reward, and using terms (like ‘food waste’) that are at best ambiguous to most people.
  • Letters to a tenant in the process of reducing their arrears often don’t provide feedback in a way that acknowledges their success; they may receive an identically-worded letter to that sent to tenants with increasing arrears. So we miss the chance to embed the key behaviour: paying off the arrears.
  • Councils involved in projects to give away home efficiency measures often have limited success. One reason is endowment effect: our inclination to see something free as valueless. But it is also because they tend to introduce cognitive barriers into the conversation immediately, referring to ‘retrofitting’, not the emotional reward to the resident: a cosy, draught-free home.

There are plenty of demand management approaches to issues like these which don’t utilise the insights from behavioural economics and psychology that are needed to reframe what’s on offer in a way that works with the grain of human nature. So what are the emerging approaches that do explore these, and which look like becoming part of the toolkit of the behaviour-smart local authority?

One is behavioural auditing. This is a way of examining the way a service works to identify where demand is created, track this back to the need that the demand expresses, and use this as a starting point. For many services, apparently identical need will lead to differing levels of demand from different residents; analysing the behaviours of those who create little or no demand helps re-design in a behaviourally-smart way, as it give us insight into which behaviours to encourage.

Another important aspect (not new, of course) is ethnographic research and observation. When we focus in on the behaviours that create service demand, understanding what it is that people do and how they do it is much more important to re-design than the reasons people give to explain them – and the rationale that officers apply. There is plenty of evidence that we adjust our views to accord with what we do, much as we would like to believe the opposite to be true!

A third is co-production. Guided by a behavioural practitioner, officers, managers, service users, citizens, community representatives, etc (I’ve worked with teachers and nurses, for example) are able to understand and work with real insights from behavioural sciences and generate many of the approaches that they go on to put into practice.

A word of caution, though. We are realising how difficult a behaviourally-smart approach can be to put into practice – for good reason.

Why shouldn’t we be surprised at this? Individually and collectively, our default model for influencing people is to try to change their mind and persuade them. It’s based on the rational actor model. My experience on a wide range of demand management projects with local government and public health is that policy-makers and managers can accept the overwhelming evidence that behaviour is context-dependent and so target behaviours need to be made easier and appear more normal … but implementing this, when it challenges the mental models we have worked with since we were toddlers, is not straightforward.

My view? Let’s keep the focus on demand management; let’s make our approaches as behaviourally-smart as possible; and let’s build the capacity in local government and communities to use behavioural insights.

Doing it better

Below is a post I wrote for the Behavioural Design Lab a short time ago. The aspect that has attracted the most interest is the use of proposed use of defaults to move from a project management-centric view (where residents make a fresh decision at each stage of the process that has been mapped out) to a citizen-centric approach (where, once someone has chosen to have a warm home, the default is that they are taking part.

Two quick points, drawing on conversations that I’ve had with people since writing this.

First, this is a really good litmus test for whether we are comfortable using behavioural insights. Personally, my view is that our choices always have a context, and that framing the choice in this way makes it clear and easier to make a decision that is salient to the person making it. But I know that some people not used to working with behavioural insights are a little uncomfortable with it; because it seems a little, well, sneaky. In a world where there are numerous websites on which I can click a ‘buy now’ button, before verifying a host of details, I’m comfortable with it, and that’s why I see it as a litmus test: it only seems sneaky if you compare it with a context in which people have to repeatedly decide.

Second, reflecting that most of the feedback I’ve had has been of the “what a great idea!” variety, there is so much that we can do better in public services, and it is within our grasp. I hope that this helps demonstrate the value of what I’ve been trying to do with With The Grain over the past couple of years. There are so many behavioural effects that we know can affect our decisions; and there is an ever-growing body of evidence of how and when they work. So let’s generate new approaches drawing on this knowledge. This idea was generated in a workshop of stakeholders brainstorming ideas based on different effects, of which defaults was one. Most of them hadn’t been exposed to much behavioural science before; if they can do it, so can you. This is one of our best chances of meeting the demand management challenge.

“Did I just use behavioural science? But I’m not a designer!”

So said a dozen or so stakeholders of a project aimed at retrofitting 160 draughty homes in Crawley, West Sussex. With good reason. They had co-produced a wide-ranging set of design and communication ideas for the project.

The project offers work such as external wall cladding, funded by the Energy Companies Obligation, through which the Government is obliging utilities to fund energy efficiency work on Britain’s coldest, draughtiest and most energy inefficient homes. The problem many have found is that, in the absence of existing demand (that is, people who are aware that they want their home retrofitted but haven’t been able to do it yet), building demand for something free is tricky. Price perception tells us that if something is free, it doesn’t have value. Homo economimus might see free cladding as a no-brainer; real people don’t.

So, when introducing the opportunity to people, we decided to frame the choice as being between a cold home and a warm home – not as the chance to choose a named process or product. And we avoided terms (such as ‘retrofitting’), known by professionals but which may provide a barrier if not familiar to residents. Crawley-ECO-leaflet-section

Adding the use of behavioural insights to the team’s existing expertise in community engagement had a major impact immediately, speeding up recruitment 4-fold, compared with similar projects being undertaken elsewhere in the South East.

Another innovation is that, when people say ‘yes’ to a warmer home, this becomes the default setting. So, instead of initially agreeing to an “assessment” which leads to another choice once the surveyor has visited, householders make a single choice: the surveyor will make a recommendation of the measures to adopt “ … unless you drop out”. From a project management viewpoint, we’re moving from a process whose success depends on people saying ‘yes’ at several different stages to a process designed to support and prove people’s positive choice to have a warmer home.

There are a dozen other ways in which we are using – or plan to use – behavioural insights. Rob Bennett, who leads the community engagement team, says, “It is really important that we find ways to encourage communities as a whole to get behind these initiatives, So whether it’s the initial decision to participate in a scheme, or ensuring that residents communicate what works best by sharing good practice and experiences – we expect behavioural evidence to play a critical part in successful ”delivery”.

We think we’ve learned what the With The Grain tool has also demonstrated in other settings: that behavioural insights are accessible and usable; that these insights help make approaches more people-centric and therefore more efficient; and that it’s possible to get away from the default setting of trying to persuade people.

So we now have a platform for using behavioural insights in the future. And we have a group of stakeholders who are comfortable with knowingly using behavioural insights to affect the context within which people make decisions.

In the future, this won’t be unusual. Right now, it feels revolutionary.