Why should mission-driven startups and impact investors apply behavioral science?

Views reflect those of the author(s).

Businesses created to solve social and environmental problems.

Let me take you on a quick journey. It was back in 2016 that I started following the sustainable development space more closely.

We were in Stockholm, Sweden. Hundreds of attendees from around the world in a packed conference room discussing how food can be the cure to human health issues and to the environmental challenges driven by unsustainable food systems. Even Elon Musk’s fabled brother, Kimball, was in attendance to talk about his new business venture.

EAT Forum, Stockholm, Sweden 2016

EAT Forum showcased several industry-changing startups, but one in particular caught my eye. Memphis Meats, by Uma Valeti and his team, which (at that time) had a breakthrough — the world’s first cell-cultured beef meatball. Delicious, healthy meat harvested from cells instead of animals. If their technology didn’t immediately impress you then perhaps the scale of the problem that they are addressing and the potential for impact will. See below.

From BBC Climate change food calculator: What’s your diet’s carbon footprint?

https://www.bbc.com/news/science-environment-46459714

Aside from sounding like a brilliant idea, while also tackling multiple Sustainable Development Goals, Memphis Meats was a business. A financially sustainable business with social and environmental impact at its core.

In other words, the more successful they are as a company the bigger is the positive impact they have on the people they serve and the planet. If they could scale exponentially, so would their impact.

HRH Crown Princess of Sweden Victoria, when speaking at that EAT Forum, said: “If your business is part of the problem than the problem is your business, and you need to be involved in the solution”. Businesses created to solve problems sounded even better. In the last few years I discovered many other exciting businesses that were addressing(explicitly or not) sustainable development challenges:

• Tally helping people to pay off debt (SDG 1)

• Lark providing digital programs to increase the uptake of healthy behaviors (SDG 3)

• Alma making it easy to find high quality, affordable mental health care (SDG 3)

• Eat Just and Daring Foods, and Veestro empowering people to adopt plant-based diets (SDG 2, SDG 3 and SDG 13)

• Too Good To Go and Mori tackling food waste (SDG 12)

• Greenly making it easy to track and reduce your CO2 emissions (SDG 13)​

• Blueland and Repurpose reducing plastic waste (SDG 12 and SDG 14) and so many more.

When you look at this list what stands out to you? My guess is that you will look for topics or features that are relevant to your life.

Years ago, the features that used to stand out to me were teeth (bare with me here). This was relevant as a graduate of a medical university and a former dentist. My friends used to joke that this was an occupational hazard. However, in the last 10 years of my life, it has been the actual study of “behavior”, specifically applying behavioral science in public and private sectors that has occupied my professional career. As a byproduct, this also means that people can feel safer smiling around me these days, because my new occupational hazard is paying attention to behaviors instead.

So how does this relate to the list above? It relates in that what stands out to me now, is that all of the businesses in the list above are aiming to change behaviors.

The social and environmental problems before us need behavioral science.

Businesses addressing the Sustainable Development Goals, and the goals themselves are asking individuals, organizations, communities, and governments to change their behaviors.

Human behavior is no doubt complex, but its understanding is essential to building successful products and services aimed at changing it. After all, it is behavior that ultimately drives impact, not technology. Equitably and ethically implemented technology increases access and frequently its affordability, but on its own it won’t motivate someone to stop smoking or switch to a plant-based diet. Think about all the products and services that you do have access to and can afford, yet choose to not use. Why?

To continue to be financially sustainable, and to keep generating social and environmental impact businesses need to have scalable models. To have scalable models aside from having impact built into their DNA and excellent technology, businesses need to design for the behavior they are trying to change. They need to know whose behavior(s) are linked to their impact measures and how, what is influencing these behavior(s), and what strategies can bring about the desired change.

In other words, there is a need to prioritize understanding of the behavior driving the impact and invest in running behavioral experiments to inform their product or service design. It is never too late but considering and acting upon these understandings earlier is always better. Mainly, because what you learn from these behavioral experiments can influence some of the fundamental assumptions, features, and functionalities of your solution, and not just your communication around it.

Applying behavioral science can help businesses scale their impact.

The chart below is one way to visualize how all of this is connected and why it is important. Behaviors are at the very center of solutions. On the left side, they are linked to the problem the business is solving and the outcomes they are measuring to estimate the impact. On the right side, they are determining what strategies should be delivered and how they should manifest in the solution.

Solution Assessment developed by Olga Elizarova, Play Collaborate Change, 2021.

Try to walk through the solution assessment above from left to right using this hypothetical example.

Step 1. Let’s say you are building a business that is developing a solution addressing the problem of food waste at restaurants and cafes.

Step 2. One way you could measure the impact of your solution addressing the problem of food waste at restaurants and cafes is by measuring how much food was saved from being wasted. For example, you could count the number of meals saved.

Step 3. Now comes the most interesting part. Your impact is driven by behavior(s). In order to save the meals someone should start, increase, reduce or stop doing something. Who is the someone, and what should they start or stop doing? Is it the behavior of the restaurant’s or cafe’s operations manager who is ordering supplies and placing the extra meals on sale? Maybe the consumer should buy the unsold meal at a discounted rate at a specific time throughout the day? What about a chef who decides to cook a certain amount of food? It could be all of the above to an extent. How often should these behaviors occur to generate an actual impact? In the real world often times you would need to address multiple different behaviors occurring several times throughout the day. For the purpose of keeping it simple, let’s say you chose to focus on consumer behavior of buying unsold meals at a discounted rate at a specific time throughout the day. This behavior in its turn is made up of at least three other sub-behaviors — learning about the offer, finding the offer, and making a purchase.

Step 4. Once you have defined your target behaviors in Step 3, you should continue your research to find what influences these behaviors. Think about your target behavior (buying unsold meals at a discounted rate at a specific time throughout the day) and sub-behaviors (learning about the offer, finding the offer and making a purchase). What factors act as facilitators and make behaviors more likely to occur? For example, when (1) the offer comes recommended by a friend or when (2) it is located within 10 min distance walk. What factors act as barriers and make behavior less likely to occur? For instance, when (3) the offer comes from an unfamiliar restaurant or when (4) consumers have anxiety about the food safety. Different consumers would certainly have different barriers and facilitators influencing their behavior, hence behavioral customer segmentation, as well as quality primary and secondary research informing it, would be essential.

Step 5. Now that we have identified four barriers and facilitators influencing the behavior in Step 4, we might want to find strategies or techniques to address them. Part of this process is to leverage research and evidence to identify what behavior change strategies are available and which ones have shown to be effective at addressing these barriers previously. Let’s say that through our research we were able to identify that the best strategies to address the barriers would be to use framing/reframing, provide information about others’ approval, leverage credible source and social norms. These are the techniques that we would want to test in our solution.

Step 6. That’s the fun and creative part of the process. What would these techniques look like in our solution? How could they be delivered? Who is a credible source for our customers when it comes to food safety? Should our solution be playful or fun? What should the experience feel like? Should the unsold meals be delivered to people or would we want them to come and pick them up? How should the meals be packaged? Could something on the package indicate food safety? There is an endless number of possibilities around designing your solution. Be creative and test your concepts to find the best one. Three heuristics that are helpful in guiding your solution design are to be people-centered, research-driven, and behaviorally informed. I will leave it up to you to decide what your creative solution to this problem would be.

Sample Solution Assessment developed by Olga Elizarova, Play Collaborate Change, 2021.

Above is an overly simplified and condensed version of an actual process that should take place when you are developing a new solution, or are trying to design new features for an existing one. The purpose of this was to demonstrate the importance of behavior and how it influences everything from impact to the design of a solution. Building your solution centered around behavior in a way that allows you to constantly test and learn what works, for whom, under what conditions, how well and why will allow you to scale your solution and consequently its impact.

Personally, I would love to see more businesses created to solve social and environmental problems. I would love for them to be very successful, so they can scale the positive impact they have on the people they serve and the planet. So, here is one idea of how this could be done.

Prioritize understanding of the behavior driving your impact and invest in running behavioral experiments to inform your product or service design decisions.