Business leaders often struggle to understand why their employees and customers behave the way they do. More often than not, the answer simply comes down to human nature, but this is still news to many people. Over the years, classic economic theory has assumed that individuals make decisions based solely on rational thinking. In fact, some have suggested that economic decision making is up to 70% emotional and 30% rational.
Our work with clients is guided by an emerging discipline known as behavioral economics. Led by the thinking of such notable scientists as Nobel laureate Daniel Kahneman and Angus Deaton, this new discipline considers the intersection of human nature and economics.
But behavioral economics isn't just a theory on paper. Gallup has found that it contains the secret to driving higher levels of growth and profitability. According to our analysis, companies that apply the principles of behavioral economics outperform their peers by 85% in sales growth and more than 25% in gross margin. Gallup analysts have found there is more low-hanging fruit in behavioral economic strategies than in the valuable processes of Six Sigma and lean management.
Every company has an enormous -- but largely untapped -- potential for breakthrough improvements in employee productivity, customer growth and profitability. Our products, services and consulting are designed to help business leaders understand and leverage human nature to drive real growth.
- The Next Discipline: Applying Behavioral Economics to Drive Growth and Profitability
- The Business Impact of Human Emotions