Stephen Dubner has no shortage of interesting anecdotes to share. As the best-selling co-author of the Freakonomics book series, Dubner is a master at breaking down the numbers behind so many of life’s seemingly non-analytical situations.
His data-driven mindset was on display last month at Adaptive Live 2015, where he covered the numbers behind everything from how germs spread, to the analytics of artificially inseminating turkeys, to the rise of the experimental monkey economy.
So what does that have to do with a finance conference, you ask?
Businesses operate to solve problems that people will pay to have fixed. I’m in the business of B2B SaaS sales for a cloud-based corporate performance management solution designed to help finance teams improve budgeting and planning productivity. At Adaptive Insights, we’re all in the business of helping CFOs and broader finance teams maximize the value of financial data to get better analytics that drive more strategic business decisions. And CFOs? They’re in the business of not only being the financial leaders of their companies, but many are also becoming broader strategic leaders who help drive competitive advantage. And as an accomplished writer and speaker, Dubner’s business is understanding incentives.
Dubner shared some wildly entertaining stories about incentives in order to highlight three valuable pieces of advice to help finance leaders thrive within today’s fast-paced business environment:
Get data whenever you can.
Find out what incentives people respond to.
Experiment to draw conclusions.
So what was Adaptive’s incentive to put him in front of around 1,200 business leaders? Well, he didn’t make it abundantly clear with his first question: Will you please raise your hand if you don’t wash your hands after you use a public restroom?
It was an awkward/random opening question at best, but I felt a connection to him. I have a bit of a germ thing, plus it was apparent we were both skeptics when he told the audience that they were liars, and I quietly agreed. But germs are a business problem, especially at a hospital. And understanding why people know this, yet still aren’t willing to follow simple hand-washing rules was a challenge to dissect.
Challenge your own findings
Dubner admitted to having a notebook to count the number of men who wash their hands after using an airport restroom. So, when he polled the Adaptive Live audience, he had a data point that 30% of men don’t wash their hands to nicely set up a great lesson on hand hygiene at Cedars-Sinai Medical Center.
Despite being a world-class medical facility, doctors weren’t washing their hands before and after every patient interaction, which could lead to sometimes fatal bacterial infections. (Bacterial infections could kill up to 100,000 patients per year in U.S. hospitals.) Thus, the Hand Hygiene Compliance Committee was formed, and the first order of business was a memo: Wash your hands. That failed. Then, their sworn deputies, The Hand Hygiene Safety Posse begin to berate or reward (with $10 gift cards) doctors according to their hand-washing compliance. That failed. So how did a computer screen saver help get the hospital to 98% hand hygiene compliance?
The person who brought a petri dish into that committee meeting understood that non-compliant doctors were likely too wealthy to care about nominal gift cards, and too secure in their job to care about public shaming. They also understood that doctors would know exactly what that haunting and constant image was – and that germs could be a patient- and career-killer.
Based on how few audience members were multi-tasking on phones and laptops during the keynote, I knew these finance execs identified with the issue from a compliance perspective, and were waiting for Dubner to reveal the secret to motivate employees and customers to behave exactly as planned.
If you are creating incentives to solve problems, you need to find data to understand how people will really act and respond to your “solutions.” For the CFOs in attendance, though there was no magic bullet to cure all business problems, they may now think twice and dig into what incentives are at play before signing off on the next “bold” idea.