When presented with options, most people choose the option that aligns with whatever they’re incentivised to do within their workplace — even if it is at odds with that they believe to be right. This doesn’t mean humans are inherently evil (well not most of us). We will simply generally do whatever we’re incentivised to do.
Incentives drive behaviour. So you better incentivise the right things. This isn’t rocket science and most of you will have heard or seen this many times before.
Reflecting on the initial fallout of the Hayne Royal Commission, Peter Collins, Director of the Centre for Ethical Leadership said:
“…businesses continually set up incentive schemes and talk of being committed to the best interests of their customers, yet incentivise their employees to sell. It’s an ethical trap…and it is almost impossible for rational employees not to sell.”
This poses a few questions, most significantly, why are staff incentivised to do things at odds with the best interests of customers? Particularly in organisations that say they are customer-centred. To answer this, one needs to look beyond the incentives themselves and understand the environment from which incentives are set, to delve into the organisation and culture that sets up these tensions and dichotomies for staff.
Insights from the Hayne Royal Commission
The Hayne Royal Commission leaves us in no doubt that most of the banks in Australia have incentivised behaviour to enable them to meet business targets with dire consequences for customers. One of the major topics has been charging customers for services even when they don’t receive any service — and in some instances continuing to charge customers fees for no service years after the customer dies.
Here is an example of one of the exchanges at the commission involving a counsel and the executive general manager of Commonwealth Bank’s wealth arm, Colonial First State.
“[Colonial First State] would be the gold medallist if [the corporate regulator] was handing out medals for fees for no service, wouldn’t it?”
What distinguishes this inquiry from many previous incidents is that as things have come to light instead of blaming rogue individuals at the coal-face, the commission has been able to reveal that this is the incentivised behaviour of entire organisations. And as a consequence rather than blaming frontline staff, there have been sackings and resignations of CEOs, executives teams and boards.
At AMP the chair of the board, CEO, general counsel and other board members have all resigned. And the market valuation of AMP has plummeted. During 2018 the value of AMP is down over 30% and in one week in April 2018 alone more than $2 billion was wiped off AMP’s valuation.
How can this happen in an industry that spends so much on customer experience and human-centred design (HCD)?
You may think that this is no surprise, after all this is the financial services industry, but this is also the industry that (I estimate) has spent more than any other in Australia on customer experience and human-centred design. How can this happen in an industry that has done so much human-centred design?
If so many experience designers and human-centred designers work for organisations that are shown to do such bad things to customers, yet see their value in the experience they create for customers, are they kidding themselves about the impact they actually have? Have they been asleep at the wheel? Are they really just lip-stick merchants? Or are they obsessively fixating their human-centred efforts on the wrong things?
Human-centred design can be empty rhetoric
The reality is that human-centred design can be empty rhetoric if it is not supported by the organisation. And if this can happen in an industry that has spent more than any other in Australia on understanding customers and designing solutions to meet their needs — couldn’t similar travesties of non-customer centredness be happening in any organisation irrespective of industry?
This is precisely the fear that is rippling through most boardrooms and executive suites in Australia. Three words have sprung from nowhere to the top of the agenda for most boards and executive teams.
Culture, Trust & Customer
Boards and executives are realising that they will personally be held responsible for culture, trust and customer experiences. This wasn’t on their agenda a few years ago — and many are struggling to know how to react. The travesties exposed by the Hayne Royal Commission have not been the acts of rogue individuals at the organisational coal-face, they are the institutionalised and incentivised result of an organisation’s culture.
And it is incredibly deep rooted. Baked into the fabric, the DNA of ‘how everything is done around here’. Very few directors and executives have any idea how they can meaningfully change culture — yet they are discovering in no uncertain terms that they are personally liable for the that culture.
Many human-centred designers are blinkered, ignorant or lucky
Human-centred designers are either incredibly blinkered, wilfully ignorant, or extremely lucky if their human-centred efforts are not being neutered by other factors at play within their organisations. Yet many focus almost exclusively at crafting beautiful experiences for customers – oblivious of this broader context.
Even those working in service design are often only really teasing at the operating models and back of house processes to bring those experiences to life. The Hayne Royal Commission leaves us in no doubt that all this great experience design and service design can be completely neutered if it isn’t supported by the organisation and its culture.
As one reflects on the Royal Commission you quickly realise there can be a low ceiling to human-centred ambitions if we don’t push further and influence the organisational context within which we are trying to work in human-centred ways.
Designing human-centred organisations
To maximise our impact, enthuse the entire organisation with our human-centred goodness and also respond to some very real challenges organisations are facing, we must turn our attention to the design of the organisation itself.
The materiality of what we design needs to shift from customer-facing pixels and experiences, towards the organisation itself. Or at least find a happier balance between the two.
Too much of our collective human-centred effort is spent on things that customers directly interact with. To truly drive change in organisations, to ensure our organisations have fertile ground for our customer-focussed outputs to flourish — not environments that completely undermine our efforts, we must explicitly tackle what Dan Hill refers to as the “dark matter” that is organisational culture, the DNA that defines ‘how things are done around here’. And we can no longer expect this to be a given by-product from our work.
This will not be easy. This isn’t some 10 week project that spits out a shiny app. And there will be few if any medals to be won for doing it. But by influencing organisational culture one can push beyond well-meaning human-centred rhetoric and ensure the travesties we’ve heard about over the last year are only ever the work of evil rogues and not the desired and institutionalised output of organisations.
If you are truly interested in having the most positive impact you can on improving the lives of people as they interact with the world around them — if you want to help organisations become better versions of themselves, rather than simply putting human-centred band aids at the coal-face between the organisation and its customers, I think you too should be thinking more about the design of organisations and their culture. This isn’t going to be easy. So buckle up for the ride!
There is a growing acceptance that short termism is the root cause of these woes. Some call it “the church of finance”, others “shareholder primacy” and in the public sector it is called “electioneering”. Whatever you label it, an over-indexing of short over longer term ambitions is the root cause of bad decision making in both public and private sector organisations. And people are talking about this more and more.
Dr Simon Longstaff, Executive Director at The Ethics Centre, said:
“We now see on display at the royal commission the bitter fruits of a focus on shareholder primacy. A challenge to the prevailing orthodoxy is long overdue.”
David Gonski, the Chairman of ANZ Bank said:
“A realisation is beginning that for companies to be successful they have to have a broader purpose than just making profits in the short term.”
And we hear precisely this same refrain about the public service. Addressing the Institute of Public Administration, Jennifer Westacott, CEO of the Business Council of Australia said:
“I fear that many modern politicians have lost sight of the fundamental role of the public service. Its custodianship of the long-term policy agenda has been eroded by short-term thinking…”
And this fixation with short-termism is also at odds with the rhetoric inscribed within the Duties of Directors according to the Australian Institute of Company Directors and traditional Business Management theory.
But thankfully one doesn’t need to look hard to find highly successful organisations stating that it is only through a focus on the longer term and customers that they are deriving their success. In an open letter to shareholders, Jeff Bezos, CEO of Amazon said:
“Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.”
You need to be an optimist
So how might human-centred designers help organisations refocus from short-termism? It would be easy to put this in the too hard basket, or to think of it as a problem beyond one’s pay grade — and certainly there will be few of designers that are actively sought out to help organisations find a solution to this problem.
But as we’ve discovered through the Hayne Royal Commission, if we don’t tackle this it is possible that our best work will be undermined by short-term decisions made by our organisations.
As a foundation stone you need to be an optimist. You need to not be completely cynical about the individuals running organisations. These people are humans too. You need to believe that these senior individuals do not make these decisions fully conscious of the consequences of their actions.
And this optimism appears to be borne out by reactions from many directors to the Royal Commission. When presented with insights, most recoil in horror at the realities of the situation and wonder how these situations have occurred. Ann Sherry, non-executive director of NAB said:
“…we need to really unpick the cultural issues that have got us to this point, where people who in their day-to-day lives would see themselves [as] abiding by a set of moral principles, when at work somehow let those principles slide.”
Senior decision-makers aren’t on the whole evil. Most don’t inherently want to do things that hurt people. But their role hasn’t traditionally afforded them access to customers and what its really like for them. It is far easier to make decisions that have positive implications for customers if you better understand the customer and their experiences.
The more senior they get, the more distanced they become from customers, yet the more impact decisions actually have on customers lives. It isn’t just the things customers directly interact with that impact the customer experience — and I think human-centred designers are only just beginning to fully realise this.
Consider the audience beyond the project team
So an easy and impactful thing designers can all do when conducting research with customers is to consider the audience beyond the immediate project team. Every project is an opportunity to build empathy and understanding — not just within the project team, but within the entire organisation — and this includes your executive and board.
Every engagement with customers is an opportunity to obtain customer insight that can be used to enable your organisation to make better, more customer informed decisions. Now that doesn’t mean bombarding senior individuals with 50 page research reports every week — that isn’t going to do anyone any good. It means synthesising data further or conducting meta research, i.e. research on research to reveal higher level insights and to create materials — such as documentary films — to enable your insights to have a life beyond that which you personally communicate.
Shifting how we think about the role of human-centred designers
Embedded in this is a shift in thinking about the role of human-centred designers. Most currently think about their role in terms of outputs (e.g. research reports, journey maps, wireframes, websites, apps, etc).
It is useful to shift this thinking, to focus instead on the activities the human-centred designers do that have a cultural impact within their organisations. We help people understand different perspectives, collaborate, learn and iterate, have a growth mindset, reach agreement across the organisational silos, etc. By acknowledging these and other things as a significant part of what human-centred designers do you can reframe your own and others perspective of your role. You not only collaborate with others, but you enthuse others with the ability to collaborate.
Enthusing others with design mindsets
Caught up in this is a shift from thinking about designers learning methodologies so they can deliver design outputs to thinking about enthusing design mindsets for all within the organisation. This is a crucial part of the evolution of an organisations maturity towards becoming a more human-centred organisation.
For HCD to flourish you need to create a fertile human-centred environment within the organisation. One can’t simply continue to put our beautiful human-centred projects into the barren ground of organisational culture and watch them whither, without thinking maybe we need to put something into the soil to make it more receptive for our work.
And although much is being done inside many organisations to increase design capability, much of it is focussed on teaching design methodologies and breeding the next generation of design practitioners. It is very worrying to think of inexperienced designers exposed to such barren unwelcoming organisational wastelands.
In practical terms we need to nurture design mindsets amongst all within our organisations. Grow readiness to be collaborators, procurers and recipients of human-centred work. This means things like design awareness training for all. And things like coaching individuals to understand that it is okay not to have the answer, taking time to reflect, to understand how to collaborate, to celebrate asking good questions rather than only rewarding good answers.
The dark matter can undermine the trojan horses
But we are unlikely to positively impact the lives of people to the maximum effect if we only work on projects where the customer is the focus of our design activities. To paraphrase Dan Hill, the insights from the Hayne Royal Commission have taught us that sometimes Trojan horses don’t work, they can get completely undermined by the dark matter that is organisational culture.
If one wishes to maximise the impact of human-centred design within an organisation AND respond to the crying need organisations currently have around culture and trust — we need to focus on projects where the organisation itself is the explicit focus of our design activity.
These are not human-centred band aids at the intersection of the organisation and its customers, these are projects that cut to the heart of the organisation, defining a human-centred core that will create a fertile environment for more human-centred design projects to prosper in the future.
Human-centred culture change
The key thing for any organisation wanting to get serious about customer experience and improving organisational culture, is a human-centred culture change program. Based on the fears stirred by the Hayne Royal Commission within boardrooms and executive suites, I wouldn’t be surprised if your organisation has a committee focussed on this, or HR already has a program of work underway.
These need to be multi-year programs involving a multitude of activities — such as:
– mindset growth for all within the organisation
– apprenticeships for design practitioners
– review and alignment of organisational methodologies
– redefinition of incentive models
And most crucially of all, defining an overarching human-centred purpose or mission that informs everything the organisation does — every decision it takes. And deriving from that purpose, scaffolding such as values and behaviours to bring the purpose to life in a meaningful way. And collective incentives that encourage the desired behaviours, not rewarding business targets.
Recognition of the role human-centred design can play in changing culture
And this isn’t theoretical. We are seeing human-centred design recognised as having a role to play in this type of work. At Meld Studios we were humbled and delighted to see our work to grow HCD mindsets and capability within Queensland Government recognised as the co-winner of the top overall award at this year’s Good Design Awards.
This is the first time the Good Design Awards has given the award to something that wasn’t a tangible product. Our deliverable was effectively a new way of thinking — a process that could be applied to projects of any size, scale or channel done — thus affecting customers at a completely different scale than a typical human-centred design project.
What can you do?
So what do I want to leave you with? You could continue to consider cultural impact as a ripple, a by-product from the human-centred work you do at the coal face of the organisations interaction with its customers — as I myself did for many years. But I think you are in for a very long journey to make true organisational impact — and don’t be surprised if organisational culture comes and bites you from time to time.
You may think all this sounds like work for someone else rather than you — and don’t worry there is still lots of work to be done on things customer’s interact with.
But what I really want is for human-centred designers to rise to this challenge,
raise our game, set our ambitions higher, step forward and associate ourselves with these topics, find a language that enables us to meaningfully contribute to these conversations, and we need to do all of this without losing our human-centred core.
This is a tough ask. Maybe the toughest we will have faced. But if we truly believe in improving the lives of people as they interact with the world around them we simply must help organisations become better versions of themselves.
And if more of us do this, I am optimistic that we will have a more positive impact the lives of customers — rather than creating ethical traps and dichotomies for front-line staff. For me, this isn’t some theoretical dilemma. I have recently studied with and graduated from the Australian Institute of Company Directors. I am leaning into this challenge and am actively working to create more customer-informed, human-centred organisations.
I encourage you to lean in too. I look forward to talking to you about this topic in the days ahead.
[This article is an abridged version of a talk I gave at UX Australia 2018. Please feel free to reach out to me if you’d like to pick up any of the threads I’ve teased above.]