As seen in the previous section, applying creative techniques and persuasive designs to get diverse viewpoints and influence is essential to formulate policies beyond authority.
This section will discuss what tools are available to achieve these goals; we will talk about conflicts and how to manage them, the fundamentals of measuring the effectiveness of policies, and the building blocks to develop robust policies.
This section will give tools that, coupled with the previous processes, allow you to start thinking about the challenges a policy can tackle using a systematic approach.
Suasion tools
With the digital psychology advancements in recent years, especially in social media and behavioral insights (Cambridge Analytica) with a lot of controversies surrounding some elections and how data from users was leveraged to influence the vote, nudging is becoming a valuable tool in policies; this new method, combined with the old marketing premises, makes for effective suasion tools that can be used to steer individuals toward a choice.
Nudging
Standing on the shoulders of Tversky and Kahneman's work on in irrationality, Richard Thaler began to look into this in more detail. He created what we know as nudge theory; we can define it as a way to influence choice without limiting choice or making more costly alternatives in terms of social sanctions. They are called nudges because there are flaws in how individuals process decision-making, and nudges can use those flaws.
Ana Caraban et al.'s Technology-Mediated Nudging in Human-Computer Interaction is an important research paper that focuses on using nudges via technology.
Some real-world examples might be as follows:
- Positioning: In supermarkets, premium products are placed at eye level, while kids' products, such as cereals with cute characters, are placed a bit lower down so that kids see the product and ask their parents for it.
- Opt-out policies: Implicit deny in authorization systems is the default to increase security. In mobile games and applications, a usual pattern is to ask for a subscription to increase revenue, the process of canceling a subscription being more complex than signing up.
- Suggesting alternatives: Commonly used in car rental upselling, as the suggestion can be an improved model for a minimal price. The same can be used in policies for cost savings, suggesting smaller virtual machines when working on development environments to reduce costs.
Nudging tries to influence a person's behavior with subtle changes to guide users toward a choice or behavior. Nudging can be a potent suasion tool, especially for adopting new digital technologies.
Marketing
Another tool that can be used for suasion is social marketing. We can use marketing concepts to influence behaviors that will benefit the organization, individuals, or business units in this approach.
You might think that traditional marketing is geared toward promotions, price, and placement. Still, more recently, it has been used in social media, which is becoming more recognized for its suasion aspects. Let's look at the center of excellence for social marketing. The National Social Marketing Centre (NSMC) has established benchmark criteria, a set of elements included in successful marketing campaigns.
I have adapted them for you to use as a reference; do not think about them as a checklist but as intertwined concepts.
Refer to https://thensmc.com/.
The following table, adapted from the NSMC, shows the key elements that are used in the most successful social marketing efforts, which can be used when developing suasion tools:
Table 1.2 – Marketing key elements (adapted from NSMC)
If we put these elements in a more visual form, as shown in Figure 1.4, feedback loops are present throughout the pieces. All of them feed into the delivery mix, which we can say is the output of the different layers:
Figure 1.4 – Marketing key elements visual feedback loop
The use of behavioral insights and behavioral analytics in policy are increasing. Nudging, in particular, has been receiving tremendous attention as it allows you to improve the existing instruments and understand suitable targets and methods to send the message. For the long term, the marketing benchmark described is also an excellent place to start. It enables policies to be grounded in mechanisms that have worked to the marketing advantage and complement the other tools in this chapter.
Authority tools
In this section, we will be talking about authority tools that are part of coercive instruments. These tools are usually conveyed in the form of mandatory requirements, regulations, certifications, or laws.
This is not an exhaustive list, but an introduction to some concepts around authority tools will be necessary during the policy design phase.
Authorization
Authorization refers to the process of giving an entity, be it a person, group, or supergroup, the ability to do an action. We will focus on authorization models more deeply in the following chapters. Still, it is essential to understand how we can leverage authorization as an instrument to design policies.
If we think about it, authorization is probably the most ancient and powerful used tool, from regulations, licenses, and permits to certificates, accreditation, and more. It is used because it can serve several purposes:
- Recognizes sources of power
- Legitimates sources of power
- Mitigates information asymmetries
Authorization mechanisms are still the most effective way to create an environment of trust, especially in the digital realm. Finally, authorization is essential in risk management; any preventative framework seeks to minimize risk and ensures that those who engage in risky activities are trained, skilled, and authorized.
Regulation
As per the Organization for Economic Co-operation and Development (OECD), the definition of regulation, as seen at https://www.oecd.org/gov/regulatory-policy/, is as follows:
Regulatory policy is about achieving government's objectives through the use of regulations, laws, and other instruments to deliver better economic and social outcomes and thus enhance the life of citizens and business.
Regulations usually are made through an independent body for a specific sector, for example, in the case of banking in the UK, it is the Financial Conduct Authority (FCA) that creates regulations on how UK financial services should conduct themselves and what guidelines to adopt, and also to investigate, ban, and freeze assets of organizations and individuals. There is also the European Banking Authority (EBA), which is the European counterpart.
A regulation that is quite famous nowadays is the General Data Protection Regulation (GDPR), which requires an organization that processes EU citizen data to process and maintain that data in a specific way, with fines and penalties for organizations that don't respect it.
In Chapter 2, Operationalizing Policy for Highly Regulated Industries, we will be covering regulations in more depth for the different sectors.
Licenses
Licensing is one of the many tools that governments and organizations use as a form of authority to provide access in specified terms and conditions. In the open source world, there are more than 100 licenses (https://opensource.org/licenses/alphabetical); all these types of licenses can be used as a form of authority to provide the following:
- Customer protection
- Information asymmetries
- Recovering costs
- Integrity
For example, the license for an encryption algorithm, OCB, limits its usage for military applications:
2.2 Restrictions
2.2.1 The preceding license does not apply to and no license is granted for any Military Use of the Licensed Patents.
Certifications
Certification is a system of formal recognition that an event has happened; for example, birth, death, education, or professional achievements are examples of authoritative declarations. These can be used to convey authority and expertise.
For example, a certification from Google, Cloud Digital Leader, can be used as proof that the person passed an exam that allows them to articulate Google Cloud products' capabilities and how they can benefit an organization.
A more mundane example is using a certified electrician to check your house's electrical wiring. The certification proves that the electrician underwent a course and has met the requirements to pass the exam and become certified.
Financial tools
Governments often use financial tools in traditional policy design, such as subsidies, grants, tax concessions, or a mix, as we have seen previously. Financial tools can be a powerful incentive, primarily in organizations creating policies around digital adoption.
It's essential to understand how the different groups in their journey and equitably use financial tools to produce positive outcomes for all groups.
The following figure shows the difference between equity and equality:
Figure 1.5 – Equality versus equity
For financial tools to be effective, it is essential to understand that different teams and business units will require different levels of support. As shown in the preceding figure, it is essential to be aware of those nuances and create policies that equitably use financial instruments.
Conflict management
Policy design is a process that, due to its nature, encourages or penalizes groups in a system, effectively exposing, strengthening, or destabilizing existing relationships. Be mindful when designing policies, as in any good process design, of the need to collect feedback and incorporate it when necessary. Clarifying interest, generating good alternatives, and clear communication should be used to address conflicts.
Understanding the three Cs for effective policy design
As we have seen in the earlier sections, a policy comprises several instruments with multiple analysis levels in between. As such, assessing the effectiveness of a policy requires a layered approach. First, we need to understand the interactions between the tools and how policies can be mixed.
Asking questions from within the organization would allow a policy designer to construct policy mixes that are effective, taking into consideration Table 1.1.
Those questions could be as follows:
- What tools does an organization have?
- How can these be classified?
- Have they been applied in the past?
- Has there been a usage pattern?
- How can we improve on past patterns?
These questions allow someone to break down the elements and understand previous and future potential interactions.
We can decompose the various components, goals, instruments, and calibrations/settings. These are the elements that will make up the policy.
If we refer back to Table 1.1, we can see the overall interaction and the components and position of the policies.
We should notice that typically, there are two types of designs:
- Theory inspired, generally used in areas that haven't had past policies, for example, nanotechnology or the cloud, which require a built-from-the-ground approach. It requires policy actors to be highly technical in the field to minimize the risk of poor design emerging.
- Secondly, real-world-inspired policies, built on top of established ones, are more common than theory-inspired policies.
Both these policies during their life cycle can suffer changes characterized by the following:
- Layering: New elements are added to the policy without removing the previous ones, usually leading to incoherence between the goals or inconsistency between the instruments.
- Conversion: This happens when most of the elements are kept to serve another goal; while consistency can be achieved by not changing the instruments, incongruency is introduced as old instruments mix with new goals.
- Drift: This happens when the policy elements are still maintained even though the policy's environment has changed.
Usually, a combination of several policies might be in place. As such, it is essential to understand whether one will replace an existing policy or create another layer in the policy.
Good policy design will involve a mix of instruments to address the required governance context and policy matching within an environment. In other cases, it will require the reshaping of an existing policy.
The basic principle of a sound policy design, regardless of the context, is to ensure that consistency, congruency, and coherency are achieved.
The following figure represents the three Cs and how each C ties to the goals or instruments:
Figure 1.6 – The three Cs of policy
This section highlighted how you could use the instruments presented within this chapter to achieve a policy goal. It discussed the types of policies that you might encounter and how to design for new or already established policies considering the effective combination of goals, instruments, settings, and calibrations coherently, consistently, and congruently.