When you hear "Nobel Prize," the first thing to come to mind is probably peace, and maybe some theoretical scientific research that has no real impact on your business. Before working in behavioral economics, I felt the same way--but not anymore.
This year, the Nobel in economics was split among three researchers from Harvard and MIT (including the second woman ever to win in the category). Their research is focused on ending global poverty and has already helped five million children in India receive remedial tutoring and improved the outcomes in schools across Kenya.
You can apply this important research and findings, made possible by three credos, in your business to reach your own goals. Here's how:
Break big problems into smaller, more precise questions.
Global poverty is a huge topic that would be impossible to tackle in one study--or even by one team. Similarly, your business probably has gigantic goals, projects, or problems you are trying to solve that are too big for real progress. Instead of looking at the entire problem, the team looked for smaller issues (still large in their own right) to research.
They focused on education and looked for root causes to what could be limiting learning: access to textbooks and going to school hungry. The team then built out a research study to see which of those was having the most impact (or if it might be something else).
In your business, how can you break up your big problem into smaller, more precise questions that are actually testable?
For example, instead of saying "We need more leads to convert into paying clients," you can ask questions like:
- Who is buying right now?
- Who isn't buying?
- Where are we losing those leads?
- What do they have in common and where do they differ?
- Is there a sub-demographic where the message is really resonating?
Look beyond the "obvious" answers.
In the Kenya research, the obvious answer was that either lack of access to textbooks or hunger was a likely culprit for limited learning. When you read that in the last section, you probably thought, "Of course, that's completely logical." Actually, neither one had a significant impact on the children in the real world.
It took a little more digging and work to find that the problem was with the teachers. Many were not motivated to show up or teach to the needs of the students, and high absenteeism among the educators was common. When incentives and accountability were enforced and teachers were given training to help students with their own specific needs, there was a positive impact.
In your business, it is easy to fall into the "way we have always done things" or "my gut tells me" trap. Unfortunately, it is really easy to come up with the right answer to the wrong question. If you don't put in effort to think beyond your own paradigms, you may end up on the wrong path and pouring resources into solving a problem that isn't really at the root of your issue. This leads me to the next point:
Test before you throw resources into a solution.
Asking smaller and more precise questions gives you an opportunity to conduct smaller tests to see if your gut is right or if you might be missing something. If the researchers had jumped right in and started a nonprofit raising money to bring textbooks to Kenya without doing the testing, they would have been solving the wrong problem and not made the same level of impact. Conducting field research on their core ideas allowed them to test their "obvious" causes and some others to find out what was really going on--and then build programs to solve the real problem.
In your business, look for opportunities to test more on your small questions, instead of putting all your proverbial eggs into one giant test basket. If one big test is a bust, you have nothing to show for it. If you use the same time and money to run 10 smaller tests, you might find something worth acting on that can truly impact your business.