This week’s book learning is from ‘Predictable Irrationality’ by Dan Ariely.
Continuing on last week’s learning on social and market norms. A few years ago, a group of Professors studied a day care centre in Israel. The centre faced a problem of parents showing up late to pick their kids up. As this involved a social contract, parents who showed up late felt were guilty about it and tried being punctual!
As an experiment, the Professors introduced a fine for a group of parents who showed up late. As soon as this was done, the social norms were replaced by market norms. The result, however, was that there was a significant decline in parents showing up on time. Since they were being fined, they frequently chose to be late with no guilt!
Few weeks later, the day care centre removed the fine. Now, they were back to the social norm.
But, the behaviour didn’t change amongst the test group..
The conclusion the researchers came to was that the collision of a social and market norm results in the market norm taking precedence. Eg: Lawyers were happy to provide free services to the elderly but unwilling to do so at a reduced rate..
So, when building a culture within our teams and companies, the conclusion seems to be that we are better off building them around social norms vs market norms. Of course, the question is whether that is the right conclusion?
A friend pointed out that the most successful businesses in the world are family run businesses – a mix of social and market norms. And modern management has repeatedly shown that the best teams have an intersection of these kinds of norms thanks to close personal relationships being forged amongst team members.
These two stories bring forth an interesting insight into behavior and I’m still thinking about how to apply them. Look forward to your thoughts in the comments..
Here’s to keeping a watch out for social and cultural norms in action this week!
A Learning a Day 