Behavioural insights can help GCC states to transform, says Strategy&

26 February 2018 Consultancy-me.com

Strategy consulting firm Strategy& has suggested that the governments of the GCC should consider setting up centralised behavioural science units to support the efficacy of policymaking, as traditional measures fail to account for common cognitive biases.

As an era of change sweeps through the region in response to the flattening of oil prices and the consequent need to diversify local economies away from a reliance on resources, the governments of the GCC member-states have embarked en masse on ambitious national transformation programmes, such as the Vision 2030 and Vision 2021 projects of Saudi Arabia and the UAE, and the similar projects underway in Bahrain, Qatar, Kuwait, and Oman.

Yet, in a report released at the World Government Summit in Dubai in collaboration with PR and communications group WWP, strategy consulting firm Strategy& has said that such programmes can only succeed if they meet key social, economic, and environmental objectives, and, its authors argue, traditional policy-making involving incentives and regulations will be insufficient to affect the necessary changes in behavior due to common cognitive biases.

Such biases outlined by the report include, for example, a bias toward the present, which provokes a leaning toward instant gratification insomuch as things are perceived to be of greater value now rather than later – demonstrated by the imprudent use of credit cards rather than saving for a purchase. A further example given is ‘negativity bias’, by which prior negative experiences can impact on future decision-making and ultimately impede change.Examples of cognitive biasesThese common biases, however, aren’t uniform from population to population or even within populations; hence the need for dedicated behavioural science centres to first garner greater localised insights, which, according to the CEO of WPP’s public sector practice, Michelle Harrison, form the ‘foundation for every part of the execution plan, including measurement and optimisation.” WPP’s public sector Executive Director, Philippa Clayre, adds;

“Behavioral science uses psychology and sociology to understand what makes people tick, exploring beliefs, attitudes, and emotional triggers that can make them ignore rules, regulations, incentives, and penalties - even when this goes against their self-interest. It then designs interventions that can nudge people toward the desired outcomes, without restricting their freedom of choice.”

Noting that they should be transparent and not misleading, the report highlights a range of tools and levers which can be adopted to achieve successful outcomes, such as; ‘framing communications messages’; ‘promoting discursive consciousness’; ‘designing interventions’ in schools and through the media; ‘leveraging role models’, like popular brands or public personalities, and; ‘incentivising individuals through gamification’ with the creation of reward systems for meeting personal targets for example or by setting up competitions on social media.Opportunities for behavioral interventions in the GCCDelving deeper, the authors of the report analysed the current transformation programmes of the GCC member-states and identified 12 specific objectives where behavioural interventions could potentially be applied, further categorising the expected effectiveness of interventions on each objective from highest to lowest, with goals toward promoting environmental sustainability, healthier lifestyles, and civic engagement featuring at the top.

Looking closer at environmental sustainability, the GCC nations are said to consume more water than the world average – as much as between 10 and 39 times more than the amount of renewable water available to them – while electricity usage continues to rapidly increase in the region. Further, while GCC countries rank in the top ten in terms of waste generation, waste recycling rates in the region are relatively poor by global standards, with Saudi Arabia and Qatar, for example, recycling only 1% each of their municipal solid waste in comparison to the 64% achieved in Germany.Increase recycling rates; GCC municipal wasteThe report states: “Part of this problem is the limited consumer awareness of the value of recyclable goods for the economy and environment…coupled with an insufficient recycling infrastructure and a lack of related policies... However, cognitive biases also interfere in the way people recycle (or don’t). For example, people tend to sort intact papers, cans, bottles, and the like, for recycling, but prefer to throw away objects in the trash when they appear too damaged, even if they are recyclable, something known as the ‘distortion bias.’”

To counter such behavioural roadblocks, the report gives an example of a successful intervention from China’s Environment Protection Agency (which had tried unsuccessfully for 20 years to educate the public about sorting recyclable waste), with a campaign targeting "Chinese citizens’ sense of peer pressure and attention to social standing" by linking greater levels of waste segregation with higher corresponding IQ levels marked on the bins. In just a single day, nearly 90% of the waste collected had been placed in the correct bins.

Fadi Adra, Partner at Strategy& says in summary; “GCC states are involved in historic transformations that are crystallising new futures for their countries, further driving social, economic, and environmental development. However, these policies, whilst certainly ambitious, depend to a considerable extent upon changing peoples’ behaviors. Conventional policy levers alone - such as penalties, incentives, taxes, etc. - have not always succeeded in altering behaviors. Hence, over the past decade, the use of behavioral science in policymaking has become mainstream in many governments.”

Do consultants have a legitimising effect in the Middle East?

19 April 2019 Consultancy-me.com

Do the often kowtowing international consultants operating in the Gulf simply grant legitimacy to local rulers? The answer’s not so simple says regional expert Calvert Jones, who has conducted a fascinating research study on the local consulting industry.

Now valued at $3 billion annually in the GCC alone, the Middle East management consulting industry has exploded since the global financial crisis, growing at a heady 20 percent clip up until 2014 when the dive in global oil prices and attendant austerity measures briefly applied the brakes; ‘brakes’, in this context, meaning growth which at its lowest point in 2015 dropped to around 6 percent.

The slow-down was brief. With the plummet in oil prices spurring regional governments to act on economic diversification – captured in a range of ambitious national transformation agendas – together with the emergence of a range of digital advances now sweeping the public and private sectors, fresh impetus was given to the local consulting market; this year forecast to return to double-digit growth.

Of that $3 billion consultancy price tag – with close to half of it handed over in Saudi Arabia – the public sector accounts for approximately a third of the take, the vast majority of that paid to foreign consultancies and in particular the advisory wings of the Big Four and global strategy giants such as McKinsey and BCG. Scrutiny of these practices – especially in the wake of the Khashoggi killing – has also increased.

Copping much of the media flak, McKinsey for its part has backed itself as a force for good in the region, contributing greatly toward local economic, education and healthcare development. But the question remains, even if making a positive difference, do international consultancies confer legitimacy on authoritarian governments – “helping to prop up and even strengthen repressive, illiberal regimes?”Does the Middle East consulting industry have a legitimising effect?One person well-placed to address that question is Calvert W. Jones, an Assistant Professor in the Department of Government & Politics at the University of Maryland and author of ‘Bedouins into Bourgeois: Remaking Citizens for Globalization’. Jones spent 19 months between 2009 and 2017 conducting field research in the region, including into the consulting industry and the notion of conferred legitimacy.

According to Jones, some of the consultants she interviewed themselves expressed this concern, particularly when due a range of market factors they may have grown less inclined over time to voice too strong of an opinion. Yet, whether this is indeed the case is not so clear. Among other findings and areas of research, Jones conducted several experiments on the subject of legitimacy at universities in Kuwait, involving some 650 students.

“Conventional thinking about experts in politics suggests not only that experts rationalise governmental decision-making, but also that they confer legitimacy – meaning that the public may be more likely to support government initiatives when experts with the relevant knowledge, training, and experience are involved. In the Gulf, both experts and ruling elites tend to think along these technocratic lines,” she states in an article for the Harvard Business Review.

Experiments

While not addressing potential international legitimacy or other geopolitical or business and trade issues, Jones sought to test the idea of conferred legitimacy as to public opinion in the local polity. For the experiments, she asked participants to imagine that their country’s leaders were launching a major reform to improve either education or infrastructure, exposing them to a variety of mock news articles outlining the likely benefits from the government initiative.

In the first experiment, half of the reports featured reference to a team of top international experts assisting with the hypothetical reform, including their credentials and extensive experience elsewhere, with this detail absent from the remaining half. She found that subjects who read that experts were involved were far less likely to support the reform – indicating the ‘involvement of experts’ may have led to a significant drop in legitimacy. The results, however, are somewhat murky.

In the second experiment, Jones explored the impact of nationality on opinion, with otherwise identical reports on expert-advised infrastructure reform referring to either American, Chinese, or Kuwaiti advisers. She found two surprising results. Support for the reform did not differ significantly whether led by Chinese or Kuwaiti experts, but did however for the American-led reports, with subjects expressing significantly lower support.

The Chinese were also considered far more capable than their American counterparts, which may in itself provide a clue. “It’s not necessarily evidence of profound anti-Americanism, let alone a new love for Chinese experts,” Jones cautions; “Most likely, it reflects Kuwaitis’ longer experience with American experts, which includes their frustration with the lack of progress on various reforms.” The Kuwaitis, she suspects, are just far less familiar with Chinese consultants.

“This experimental evidence raises doubts about the ability of experts to rationalise and legitimise authoritarian rule,” Jones concludes. “Indeed, my research suggests that international experts can actually undermine legitimacy, potentially reducing domestic support for autocrats and weakening their regimes… In my experience, residents of these countries are increasingly critical of their governments paying hefty fees to foreign experts and consultants for little in return.”