Nudging the World Towards Improvement

For the last five days, all I can think about are nudges. A nudge is a subtle influencer, a quiet reminder. Its a cue, a signal to gently push you towards an action. My wife, Megan, sent me a great article about nudges from the New York Times this week. The article talked about the kinds of nudges that can improve our lives in small ways. For example, the cafeteria that puts fruit at eye level and moves candy to a low traffic area nudges you to eat healthier. The company that pays you bi-weekly instead of twice a month nudges you towards saving more money (it turns out that people paid bi-weekly save more because they get two “extra” checks a year -- 26 pay periods versus 24 pay periods).

In a new book called Nudge (which I am currently devouring), Cass Sunstein and Richard Thaler describe how nudges work. Essentially, nudges are about creating a meaningful “choice architecture” -- the context in which people make decisions. In other words, setting up the conditions for the individual to make the “proper” choice. Of course, the use of the word “proper” immediately raises concerns. Its easy to imagine people or organizations designing choice conditions that are not in the best interests of the end-user. But that’s not really what Sunstein and Thaler have in mind when they talk about nudges.

In many cases, nudges are simply intended to move us from “automatic” processing mode, to “reflective” processing mode. Returning to the cafeteria example above, the intention of the nudge is to get the lunch-time visitor to at least consider the apple over the Snickers bar (for those who know my personal nutrition habits, I’m sure you’re chuckling as you read this). What I love about nudges is their subtlety. I love incentives too -- incentives are like nudges but they’re just more obvious. Part of the reason incentives work is that we make them plainly known so that people can take advantage of them. Nudges operate quietly, eliciting desired behaviors without having to pay for it.

For the last five days, I’ve been thinking about nudges and seeing them everywhere. If you went online Saturday (March 29th), you likely saw Google’s “black” homepage -- a nudge about Earth Hour and the need for energy conservation (they are actually getting what I would consider to be silly backlash about their efforts). This is a perfect example of how I believe we can use nudges to improve the world every day. Google updates their homepage all the time -- why not take advantage of that fact by adding in a nudge that reminds people about the need for conservation. The experience planners behind Google’s homepage understand their role as choice architects and they are leveraging their fortunate position in a responsible way (consistent with Sunstein and Thaler’s vision).

The new challenge I take from this nudge-mindset is to find ways to consistently apply it. What are the ways that I can incorporate positive nudges into the experiences that I have a hand in designing? And I urge you (or nudge you if you prefer) to look for the opportunities to design positive nudges into the work that you do.

If you have thoughts about nudges or other examples of nudges, please share them. In my mind, nudges are small ideas with potentially big impacts.

Exploring Social Entrepreneurship

A few weeks ago, I wrote briefly about Muhammad Yunus (a former Vandy alum) and his micro-lending work with the Grameen Bank. Micro-lending is just one example of the new genre of philanthropy called social entrepreneurship. Social entrepreneurship begins with the recognition of a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change. It allows on-the-ground entrepreneurs in the developing world to gain access to the capital markets. This appeals to me because I believe that lasting change comes when those closest to the problem lift up both themselves and one another. Local businesses run by locals are uniquely positioned to leverage the strength and interdependence of the members of a community.

My friend Michael has been helping me learn more about social entrepreneurship. Michael is an extraordinarily bright guy whom I’ve gotten to know since he joined our agency about a year ago. He has an amusing penchant for transforming nouns into verbs. In Michael’s world, we don’t schedule appointments, we “calendar” them. He’s well connected in the venture capital world and there are in fact, a number of venture firms that have philanthropic arms that invest in social entrepreneurs. One of these philanthropic venture groups is run by Vinod Khosla, Sun founder and an early partner at Kleiner Perkins. Khosla Ventures is actively supporting social entrepreneurship in the areas of micro-finance, education, alternative energy, and global health (among others). This is one of the places that Michael is trying to help me make a connection.

Getting involved with a group like this might be an attractive alternative to the large aid organizations. I like the additional accountability that comes with these business-focused (yet still philanthropically motivated) organizations. I know that my personal strength is in evaluating business opportunities and leading results-driven organizations. I worry that I won’t be able to find like-minded people in the large aid organizations (or at least not enough of them).

To test out social entrepreneurship in action, I’ve recently invested in a small African company that provides eco-friendly safari tours in Kenya. As you likely know, Kenya has recently experienced signficant upheaval following its December elections. Kenyan politics tend to fall along tribal lines with no tribe comprising a majority of the population. The current President (Kibaki) is a member of the Kikuyu tribe. He “won” in the December election against Raila Odinga of the Luo tribe, but international election oversight groups cited significant irregularities in the election and did not endorse its result as democratically legitimate. The contentious relationship between Kibaki and Odinga (who used to be part of Kibaki’s cabinet) boiled over into violence for most of the month of January (approximately 1000 Kenyans were killed and numerous citizens were forcibly displaced from the Rift Valley). Kofi Annan has sinced stepped in and brokered a power-sharing arrangement between Kibaki and Odinga and tensions have eased over the last several weeks (Canada has just lifted its travel restrictions to Kenya -- as of this writing, the U.S. still has not).

Naturally, the violence and tumult has driven a dramatic downturn in the travel and tourism industry in Kenya and many businesses are suffering as a result. The eco-safari business that I’m supporting is simply one of the innocent bystanders in the situation. I’m still learning about this company and this industry so I’ll save a more thorough discussion of this investment for a future post, but I’m excited by the opportunity to get a first-hand look at social entrepreneurship in action.

Wolf's Uncertainty Principle

You Must Choose That Which You Do Not Know

- steve wolf (March 16th, 2008)

Heisenberg may have come up with the more scientifically enlightening uncertainty principle, but the one above is certainly weighing more heavily on my mind today.

My networking efforts to date are definitely helping-- they are pointing out the need for me to get more focused on what I specifically can bring to the not-for-profit party.

A friend of a friend who works at USAid wrote that, "recruitment in this community is demand-driven. (Steve) may be a person of great merit with lots of experience, but my guess is he can’t supply-drive the hiring process."

In other words, I can't just expect that people will be so blown away by my experience that they'll fall over backwards to offer me some sort of dream opportunity in their organization. At the same time, I got some comforting news that my entrepreneurial experience is likely to be considered a valuable skill in the not-for-profit world. Why? Fund-raising. There is an expectation that fund-raising is likely to be part of almost any not-for-profit role so the ability to help sell the plan behind my business will be viewed positively. Apparently, the Gates Foundation takes a consistently positive view of entrepreneurial experience.

But the overall challenge to get more focused is a bit disconcerting for me. Its the classic uncertainty problem. I need to make a decision about where to focus but I lack sufficient information about the organizations and opportunities to do so with any confidence.  Choose that which you do not know...

My strategy has been to delay the decision to gather more information but that won't be an appropriate strategy for much longer. Essentially, I believe I need to step up the efforts to circulate more directly within the target organizations of interest. The truth of it is that I still don't even have a bona-fide short list of target organizations, but I keep thinking that places like the World Bank or the Gates Foundation have got be somewhere high on that list (once it gets officially developed). Getting some informational interviews in those types of organizations will help clarify things for me I'm sure.

New resources that popped up through contacts this week include:

The Careers section of Philanthropy.com (the not-for-profit online newspaper) and another site called Guidestar. The Guidestar site provides overviews of charitable organizations and also provides budgets and some salary information. This could be really helpful in terms of sorting through organizations and getting to that bona-fide short list of places to actively target.

Is it OK to Bribe People to Do the Right Thing?

If you’re clicking through from an RSS feed, you know from the title that you’ve signed up for a longer post. Here goes.

It started on Friday. My friend Michael and I were talking about the “bountys” that are sometimes paid to motivate programmers to solve specific problems (e.g., I’ll pay $$ to anyone who can fix such and such bug in Firefox).

I really think the idea of a bounty is interesting and has potential play in the non-profit world. Making anything happen is usually just a process of finding the right set of incentives to drive the right behavior. But I hadn’t taken the thought of paying a bounty any further than that for the moment…

As I was noodling about the idea this weekend, the NYTimes Sunday Magazine arrived at the house. The Sunday Magazine is one of my favorite things in the world to read and this week’s was all about giving and philanthropy. As I started reading it, I came across an interesting article from Steven Levitt and Stephen Dubner talking about business models to elicit more effective behavior in the non-profit world (see their related blog post here).

An emerging model in the minds of Levitt and Dubner is the idea of paying a bounty for progress against social issues. They specifically described the success of a program called Smile Train and contrasted its mission with Operation Smile.

Many of you have likely heard of Operation Smile, the non-profit organization that sends medical volunteers to developing nations to conduct surgeries on those with cleft lips or cleft palates. It’s a great organization that has made a big difference in a very focused way.

Smile Train on the other hand has taken a very different approach. They put their efforts into training medical professionals on-the-ground (who live in developing countries) to conduct the surgeries themselves. Very smart. But Smile Train is willing to go even further. They offer mid-wives roughly $10 to bring babies born with cleft lips and cleft palates to the hospital to have these surgeries. Why? Because in some developing nations, the shame of having a child with a cleft lip or cleft palate is so great, that the mid-wives will actually smother the infant to death rather than let it live a life of shame and poverty. So Smile Train decided to tackle that problem head-on by offering a bounty to the mid-wife to have them bring the children in for a cosmetic, but life-altering surgery. Very interesting. But is this an ethical way to use the money donated to Smile Train? I suppose that if there’s full disclosure, the ethical dilemma is reduced. So, for me personally, I can get over the ethical qualms about Smile Train’s approach pretty easily.

But my question is this: How far is too far when it comes to bribes for doing the right thing? Can I set up a bounty system to dis-incent the cultural (and sometimes religious) practice of female genital mutilation? In Kenya, can I pay off the Luos to stop forced relocation of the the Kikuyus? Can I pay off militias to keep them from stealing the food targeted for the starving populations in Somalia? How far is too far?

I love incentives. But I hate slippery slopes. If I wanted to leverage the idea of a bounty going forward, how far can I go? I’m interested in your perspective on this to help inform mine.

University Connections

Had another good networking opportunity come up just the other day… Hiring and developing a diverse work force is a key priority for our leadership team, and I’m currently leading a diversity initiative for us. As part of that effort, I reached out to the new Chair of the Marketing Department at Wright State University (Dr. James Munch). I did my undergraduate work at Wright State but its been years since I’ve been back on campus, so I called Jim to learn more about how the program has evolved and to understand the types of students that are currently graduating from the University. Had a great call with him and a couple of nice follow up email exchanges. I’m planning to make a campus visit soon to get set up with their placement office and to see ways to develop a more formal relationship between my agency and the University. The exciting part in terms of my not-for-profit transition is that Jim is also looking to expand his board of advisors and he asked if I’d be interested in participating. For me, this is a no-brainer decision. Educational Institutions often have great connections into the not-for-profit sector so participating as a board advisor makes total sense. I’ll have to see where this one takes me, but it certainly feels like a promising step to be considered.

It also immediately got me thinking about connecting with my other school – Vanderbilt where I did my MBA. I know that Vandy has a number of great philanthropic ties. Most recently, Muhammad Yunus (a Vandy alum) won the Nobel prize for his work on the Grameen bank. The Grameen bank is essentially a micro-lending institution. It allows for entrepreneurs in developing countries to obtain very small loans that help them get their businesses started. Surprisingly, poor entrepreneurs in the developing world have a very difficult time securing funding of even tiny amounts of capital (< $100). They have to pay outrageous interest rates if they go through traditional lending institutions, and this makes getting their small business off the ground almost impossible (the surest way for any business to fail is for it to run out of cash, even that secured through debt). Yunus’ Grameen bank created a vehicle for entreprenuers to secure small loans through a community-style bank. The community aspect of the lending drives very high repayment rates (less than 1% of loans go into default) and numerous businesses have successfully launched that could never have made it in the traditional lending environment. I love to see bottom-up solutions like this that have the potential to scale up. There are now micro-lending institutions popping up all over the developing world – Yunus uncovered the need and provided the necessary market liquidity to improve the lives of many.

For me, this just points up the need for me to reconnect with folks at Vanderbilt. I’m not sure who to reach out to yet, but I know there are valuable connections to be made there…

Using Data to Tell a Great Story

My friend Hank sent me a link the other day that still has me thinking. It’s a presentation from the TED conference held each year in Monterey. The TED conference was originally focused on innovations in technology, entertainment and design, though its subject matter seems to have broadened over the last several years. I find that most TED presentations are pretty impressive, but the following link blew me away.

http://www.ted.com/index.php/talks/view/id/92 (Warning: note that this presentation is about 20 minutes long, but you can tell whether or not its grabbing you in the first three or four minutes)

First, let me set up the subject matter of the presentation – its focused on global aid and its impact on health and economic development (e.g., life expectancy, child survival rates, family size, per capita income). That puts it right in the sweet spot of the kinds of problems that I’m interested in – measuring big problems, and evaluating scalable solutions in the parts of the world that need it most.

With such dense subject matter, you’d expect a very dry, sleep-inducing presentation. This is the exact opposite. If you recognize beauty in the elegant display of information, you’ll be fascinated by this. Seriously, anyone involved in visual design should take a look at this. The presenter, Hans Rosling runs a not-for-profit in Sweden that focuses on the representation of complex, global health data. The software that he developed to bring that data to life is on full display here. Incidentally, this software (http://www.gapminder.org/) has been purchased by Google and is in the process of being made publicly available (for free natch). Rosling has office space at Google now too – I should try to find a way to connect with him…

Anyway, what’s so powerful about what has been done here is that Rosling has simplified the narrative around global aid. He uses animated, time-series charts to immediately show the real story behind the data. For example, in an animated chart early in the presentation, Rosling demonstrates the generally positive growth that all developing nations have experienced over the past 30+ years. But as the time period reaches the late 80’s and early 90’s, it clearly highlights the tipping point for when things began to turn negative for the countries in sub-saharan Africa. What this presentation and the software behind it allow for is easy exploration of high level hypotheses -- How does per capita wealth affect infant survival rates? Plug in the data and watch…Did China’s change to a market driven economy improve health, wealth or both? See what the data tell you…

And Rosling himself is a fun and engaging presenter. He dances around in front of the big screen like a conductor orchestrating the colored dots as they move and tell their data-story. He helps you believe that the high-level problems we are facing globally are surmountable – that the problems are more understandable than we’ve trained ourselves to think they are. It highlights the intersection of two passion areas for me; decision making and data analysis. All too often, I believe that our decision making becomes paralyzed by the overwhelming amount of data that we have on a given topic. As Mark Twain once said, “there are three types of lies – lies, damned lies and statistics”. When confronted with important choices, we feel compelled to look at the data from all angles, and when viewed from all angles the data tell you different stories. What I love about Rosling’s approach is that he cuts through the mountains of data and takes it back to its fundamental elements – the dependent variable (e.g., life expectancy or infant survival rates), the independent variable (e.g, per capita income) and and lets the story tell itself over time (roughly 30 years). Simple and beautiful.

Thank you Hank, for the link, it has definitely led to another step in the journey.