Life
Why people say no (and what to do about it)
Changing a good product to entice reluctant buyers is the wrong approach, according to the author-practitioner of ‘The Human Element’. Instead, ‘friction forecasting’ is the answer. Bermuda:Re+ILS reports.
On the surface, it seems that David Schonthal is an unusual choice of keynote speaker for the annual gathering of Bermuda’s life re/insurers, but his theory about resistance to new ideas could be a game-changer for the industry.
The founder of several startups and then a venture capitalist for two decades, Schonthal entered academia 12 years ago, and became interested in “not just that things happen, but why they do”, he said.
As the professor of strategy, innovation & entrepreneurship at the Kellogg School of Management, he found a kindred spirit in Loran Nordgren, professor of management and organisations. Nordgren’s background in “influence, persuasion and psychology” and Schonthal’s experience in innovation meant they complemented each other in their quest to discover why people say no to things that are actually good for them—such as insurance.
“This was a unique collaboration between Loran as a researcher and myself as a practitioner, looking at this question through both the theoretical and the applied lens,” Schonthal said.
Together they went on to write the Wall Street Journal-bestselling book “The Human Element: Overcoming the Resistance that Awaits New Ideas”.
Speaking to Bermuda:Re+ILS ahead of his appearance at the 2022 Bermuda International Life & Annuity Conference on September 19, Schonthal explained that insurers should focus less on the idea (policy) and more on the audience (policyholder).
What’s stopping them?
There are two forces at play that incite or oppose change, which “The Human Element” calls “fuel” and “friction”.
Fuel is the “default mindset”, Schonthal said, because people tend to see behaviour as a result of internal forces. At the same time, however, they minimise the sources of friction, of which there are four: inertia, effort, emotion and reactance.
Each of these poses a question: does the idea represent a major break from the status quo? (inertia); what is the cost of implementation? (effort); what negative feelings might the idea produce in others? (emotion); and does the audience feel pressured to change? (reactance).
The goal of friction theory practitioners, Schonthal said, is to turn inertia into familiarity, effort into ease, emotion into empathy, and reactance into involvement.
“Life insurance is a good idea, not least because it protects you and your loved ones financially. So why don’t more people have it? The reason is the frictions that stand in the way of people’s desire to buy it.”
The friction of inertia is the overwhelming tendency to stick with the status quo.
“Even when the status quo may mean doing nothing, often the pull of the status quo is stronger than innovators, including insurers, typically understand,” Schonthal said.
Effort—the cost of the change people are being asked to make—can be physical but is often cognitive.
“If a policy document is overly complicated, that could trigger the friction of effort as ambiguity could take effort that is overwhelming,” he said. “There’s also the actual time and effort in getting the policy—you have to get a physical and file a bunch of paperwork and, God forbid, you may have to amend the policy. All of that carries effort.”
The friction of emotion relates to the unintended negative feelings created in the audience.
“In order to be comfortable with adopting an insurance policy, you first have to be comfortable with the idea that unfortunate things could happen to you,” he said.
Reactance is somebody’s aversion to being changed by others.
“They will resist that change with equal, if not greater, force than they feel is being applied on them, no matter the merits of the concept.”
Schonthal continued: “What we encourage any salesperson, manager or leader of a company to appreciate is that any time you are asking someone to change from what they know to something they don’t, all of these frictions are probably there in some sense, quietly undermining your efforts.
“The thesis of my talk at the conference is: how well do you understand the frictions in your industry but also within your own organisation?”
Internal change can include, for example, a company’s environmental, social and corporate governance (ESG) policy.
“Friction theory applies to any topic in which you are trying to get someone to adopt a new idea and that idea faces some kind of resistance, and the topic of organisational design and evolving culture, like ESG, is a big one,” Schonthal said.
Asked how he, as a keynote speaker, anticipated friction from delegates at the conference, he laughed and said: “When I’m delivering friction theory to an audience, the concepts may be new and it’s my job, in overcoming the friction of inertia, to make the unfamiliar ideas feel familiar to the audience.
“I do that by anchoring the concepts into examples that everybody can relate to, so that they are able to internalise the message. That’s what I do day in, day out, as a professor at a business school—I try to find ways of making complicated topics understandable, accessible and usable by my audience.”
“Friction theory applies to any topic in which you are trying to get someone to adopt a new idea.”
David Schonthal
Overegging the pudding
An example that would resonate with insurers is the social good they do because it illustrates what “The Human Element” defines as “fuel”.
“Fuel is the word we use in the book for all of the motivations that catalogue or inspire change, while friction is the word for the forces that resist change,” Schonthal said.
“Reminding people of the benefits, the upside or all of the goodness they will experience from adopting a new plan, idea, policy, or whatever it may be, you are providing more sources of fuel. And while fuel is important, what we have framed our argument around is less about how to create the right fuel—such as a great insurance product—and more about understanding why, if it’s such a good idea, that people still refuse to adopt it.”
Friction theory is therefore less about the idea and much more about the audience receiving it.
Schonthal continued: “The instinct of most managers, marketers and leaders is that if they add enough fuel, then people will say yes.
“If they’re not saying yes, then I’m not explaining properly, or pricing it properly, or adding the right features to it, or creating a message, or running a promotion around it.
“So, most people who are fuel oriented, or commercially oriented, will continue to add features, but our view is that this is usually a race to margin erosion and it almost never does the job because, in many cases, the argument is not about an absence of fuel, it’s about the presence of friction.”
A classic example of the mistake of focusing on fuel, he said, is the “instant cake mix”.
This invention from the 1930s required nothing more from the consumer than to add water to dried ingredients. In spite of this good idea—a convenient, cheap and easy way to bake—sales were low. In response, cake mix producers found new ways to enhance it—adding fuel, in other words—until one of them had the idea of consulting a consumer psychologist.
General Mills, owner of the Betty Crocker brand, hired Ernest Dichter, who applied Freudian psychoanalytic concepts and techniques to business.
“Dichter was the pioneer behind the focus group, and he concluded that the cake mix product made consumers feel guilty because it required minimal effort to produce something for their friends and family,” Schonthal explained.
The response to overcoming this friction of emotion was to require the baker to add a fresh egg.
“The instinct of General Mills had been to start messing with the packaging, price and advertising and none of that had any effect on sales,” Schonthal said. “But asking consumers to add a fresh egg changed the effort calculus, made it their cake, and homebakers have never looked back since.”
As the ease of the cake mix created emotion, can the four frictions overlap?
Schonthal replied: “It happens to be the case in the cake mix example, but it’s not always true that the removal of one friction increases the presence of another.
“We recommend looking at what we call a ‘friction map’. With that framework, you would analyse your desired agenda through the lens of friction and ask: ‘Might we trigger any of these frictions inadvertently?’. Adding forecasting to the discussion early on is always smart because frictions are much easier to address upfront.”
Tesla stalls
A more recent example of a failure to anticipate friction is Elon Musk’s order that his staff get back to the office if they want to keep their jobs.
“Any company that is mandating their employees come back to the workplace after two years of working remotely or, maybe even more commonplace, trying to incentivise people by adding fuel to the idea, such as by offering free lunches and paying for their parking, will sit back and wonder why that is having no effect,” Schonthal said.
“What they’re not understanding is the reason people don’t want to come back to the office is not the absence of perks. They’re not coming back because something interesting happened in the last two years: they’ve had autonomy.”
This autonomy has meant workers have for the first time had the freedom to organise their own schedules to include, for example, spending time with their children after school.
“They still get their work done but they’ve had this control over how they manage their time. So now, when employers are saying: ‘Here’s a bunch of perks to come back to the office’, they are solving the wrong problem. They think getting their employees to come back in is a fuel issue when it’s actually an example of reactance friction,” Schonthal said.
“The Human Element” isn’t only for those in positions of leadership, he stressed, but for anyone who is trying to create change.
“If something isn’t working, instead of looking at adding more fuel, follow the trail of breadcrumbs to the friction,” he concluded.
Click here for a digital copy of “The Human Element”.
Image: Shutterstock.com / Thoranin Nokyoo
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