Grouped, by Paul Adams
The Effect of Language on Economic Behavior, by Keith Chen
Millennials: A Portrait of Generation Next, Pew Research
Saving is like a good relationship. Consistent, stable, and there for you when you need it the most. Your challenge this week is to make a deposit of any amount 5 out of 7 days.
Quick Tips: Try setting an amount that you can commit to depositing into your account each day. This number can be large or small, but start modestly. Your challenge the first week is consistency. Not quantity. Don’t worry! the first step is always the toughest. If you decide that your daily amount is too big or too small, change it! remember. consistency is key.
Based on the research I have done this past week around saving behaviors, design, and behavioral economics, here are just a few of the things I am thinking about as I work through this initial prototype:
- Draw attention to the goal. Not the action
- Make a separate account for each savings goal or initiative
- Make deposits automatic
- Don’t make users deal with details, preparation, nuances, complexity or evaluation
- An element of risk may actually encourage participation
- Limit the number of user decisions
- Let the participant determine the success that brings the reward
- Use reminders to impact lack of attention rather than lack of self control.
WHAT: This week, I have started my first thesis prototype in earnest. I am trying to design more relevant ways for people save money for the things that matter most to them. I believe this is accomplised by setting short and medium (rather than long) term goals, providing them with social motivation and relevant and timely notifications that remind them of their goal, rather than their deposit.
WHO: I reached out to students in the first and second year here at SVA, and have also set up a group among my cousins who are scattered across Missouri, Kansas and Colorado. I am interested to see what role geography plays and how easy (or difficult) it is to coordinate people when they are not in each other’s immediate surroundings. My cousins also all have stable jobs, and are not designers, or students - another dynamic that I am interested in playing out.
In total, there are 9 people who have agreed to participate. 6 from the studio and 3 cousins. I have separated them out into three groups. The cousins are in one group; Michael Yap, Tina Ye, and Tash Wong are in another group; and Benjamin Gadbaw, Allison Shaw, and Cooper Smith are in a third. My intention in making groups was to provide a team environment where people could work together towards specific savings goals. I organized each group a little differently placing more emphasis on group action in some groups and more emphasis on individual action in others.
HOW: I have provided each group with a Daytum page that tracks their progress and created GroupMe accounts for each group to facilitate communication. Savings deposits will be made to “the bank,” which is my Venmo account. My role in the prototype is to identify the ways that people are participating, what motivators help them work towards their goals and what things are difficult. Otherwise, I play the role of the computer. I am interested in also testing tone of voice and content of notifications to see what is most effective.
CHALLENGES/OPPORTUNITIES: Shifting thinking from the fulfillment of present needs to the anticipation of future goals. Not an easy task. Stay tuned over the next 4 weeks to see how it’s going!
The other thing I did today was meet up with Jeff Kirsch to chat about thesis. It was his 30th birthday and admittedly thesis was a terrible thing to be talking about with such things to celebrate. I apologized. He didn’t seem to mind, and our much anticipated conversation began.
Here are some of the things we talked about:
APPLYING AND EXTENDING THE METAPHOR OF THE COMMUNITY BANK:
He talked about pre-depression era banks and I talked about Christmas clubs, and we rambled on about the things that banks did before we were all encouraged to put our money into more risky investment products. In case you missed it, because likely I didn’t post it, the Christmas club is not really a club at all (much to my chagrin), but a savings program that banks offered during the Great Depression. If you were part of a Christmas club, you deposited a particular amount into a special savings account each week. At the end of the year, customers would get the money back and be able to use it for their holiday shopping. They reached the height of their popularity in the 1970s.
The idea was brilliant- A simple product that motivated consistent behavior towards a defined goal. It categorized savings behavior in a way that reframed people’s perception of and access to money. Both Jeff and I wondered if there were other such schemes that early banks employed and if any of these would have similar relevance to my project.
IT’S A WONDERFUL LIFE MEETS VIRTUAL COMMUNITIES AND TECHNOLOGY
Can the model and values of a community bank be applied when people don’t live in the same community but are drawn together through other means besides geography? I discussed this in a bit of detail in my earlier post about using social capital within a financial context.
BUILDING TOOLS FOR MULTIPLE USERS
Making and managing money used to be an activity done by a single individual. Eventually women started managing the money, but it was the men who made it. Though there was still a distinction and separation between roles and behaviors, there were two people involved in the overall activity. However, now many of our financial behaviors not only involve more than two people, but require more than one person to manage. Roommates, partners, teams, spouses, parents, clubs, groups. All of these people are now required to share, split, monitor and manage expenses in ways that traditional banks and services are still ill-equipped to handle. Mint.com, is a wonderful service for managing and understanding a household income, but as Jeff noted, only one person can access the account, which means that only he or his wife can access that financial data… not both. Can we design tools and services that are, by design, made for small groups rather than singular users?
An obvious consideration, that still needs considering. I don’t envision this being a place where comprehensive data is made public or even a required part of the system. The savings information that is immediately necessary is “what is your goal” and “how much do you want to save?” This is a model similar to Kickstarter rather than Blippy. The other thoughts around privacy are these: to what extent does this demographic - people who have grown up with social technology- care about privacy? Does sharing of savings goals and the act of depositing money towards a goal help keep them accountable and give them a greater awareness of what one could (or should) be saving for? When talking about the social motivations and boundaries of information sharing in my thesis, I often use Weight Watchers as an analog. How is it that groups of women, who, under most circumstances will not go near a conversation about weight, come together and not only talk about their weight, share their struggles with losing weight, but also support each other as they work towards their weight loss goals? All of this is done in an open environment where women are encouraged to share only what they feel comfortable sharing and what will personally motivate them. There are few things more uncomfortable and personal than talking about money. Weight, especially for women, is one of them. Weight Watchers is one example of a service who has made the issue of privacy a non-issue. They have achieved this through by providing a framework through which communities can motivate and support each other and individuals can work towards personal goals in ways that are meaningful to them. WW gives users control of the information and also a platform to communicate this information. These insights are driving my decisions around privacy and information sharing.
Jeff and I also talked about business models, continuing use of the service once a goal has been reached, collective lending strategies and some other things that have, by now, slipped my mind but are certain to reappear in future posts. It was a great day. Stay tuned.
If I think about the idea of tension in relation to my thesis, I immediately think of the tension between saving and spending. Saving is a long term action tied to purposeful and intentional behavior. This kind of action and behavior pattern is HARD to maintain or develop. Much like weight loss, healthy eating, or quitting smoking, the benefit is for our future, rather than present selves. In a world where gratification is immediate and easy - and the alternatives are undesirable to our present circumstances, it is difficult to convince people that the sacrifice of immediate pleasure in exchange for long term satisfaction is worthwhile.
Spending on the other hand needs little introduction or encouragement. It is slippery. Frictionless in the short term, but potentially sticky in the long term if not managed properly. We get ourselves into trouble with spending for the same reasons we don’t find stability in saving - we don’t anticipate the future.
The tension is between spending and saving, present and future, long-term and immediate, easy and hard.
I’m very excited that Charles Adler, co-founder of Kickstarter, has agreed to be my thesis advisor. I reached out to Charles because of his experience launching a social product/service and his industry expertise in crowdfunding. He was eager to hear my ideas and I am thrilled to be able to learn from his experience and expertise.
We meet again next Monday to talk more specifically about schedule and next steps.
When I was a undergraduate, I documented everything. I wrote down what I was thinking, made quirky lists of the things I had to do and comments I overheard. I kept track of the number of minutes it took me to write a journal entry and then annotated it with information about my environment and mood. I was obsessive about it. The photo above is a page from one of my journals.
Sometime between then and now, I stopped. I still keep track of things, but not as obsessively or purposefully. I realized this today, and got so mad at myself, so frustrated and disappointed, I couldn’t form sentences.
Once I calmed myself down, I realized that while I still write down much of what I am doing and thinking, I don’t do a very good job anymore at documenting or externalizing my thoughts in a way that makes connections clear for others.
I recently sat down with Paul Pangaro and talked through the deck that I had presented to Frank and Liz on my thesis progress.
His first comment to me was, “This is great, but 90% of what you said is not written down.” To which I replied, “What do you mean? Of course it is written down, right there.” I quickly realized that I had only really written down a fragment of the idea that I actually was communicating.
I am most comfortable talking through my ideas, rather than writing the down or drawing them out. Verbal communication “flows” a lot smoother than written for me. Oftentimes I think a conversation with a classmate or advisor counts as “documentation.” And while this verbal “documentation” helps me to cement the idea in my head and talk through new possibilities, features, concepts or directions, it does not provide a tangible artifact that can be referred back to. The only place the information lives is in my head…. which is scary enough most days.
Writing for me, while enjoyable, has become increasingly difficult in a formal context. I think part of this is that I don’t have the time to organize my thoughts much less write them down. Today, however, I have decided to make a better effort at externalizing my day to day process and internal conversations. I hope that this will help me to communicate more clearly to others and revive some of the writing practice that has slipped away these past two years.
I want to change the way people interact with money.
I am not making a bank. I am making a social saving and P2P micro-loan service that will help GenY reframe their perspectives.
Specifically, I want to use positive methods within a social context, so that they see savings as a stabilizing force and begin to replace credit cards with micro-loans from their social circle
My next steps include beginning to prototype, filling the gaps around the lending model, continuing to work out the social motivations, and of course, the inevitable business model.
Jan 22, 2012
In a recent New York Times article, John Tierney writes about motivation and says:
Young people who seem hopelessly undisciplined in school or on the job will concentrate for hour after hour on video games because there’s a steady series of prizes. That’s the feeling to aim for in the real world.
Wow. I am not convinced. As many know, or might not know, before I delved into the world of design I spent many years as a collegiate athlete and coach. My coaching experiences taught me something very valuable about motivating people to work towards a goal. Sometimes this motivation was external. Most of time, however, I found that my teams’ greatest successes did not result from the promise external rewards, (medals, trophies, a win over a hated rival) but from something much more subtle.
My athlete’s greatest performances usually followed their realization that they already possessed a way to move beyond their own shortcomings and seemingly insurmountable obstacles to achieve something great. To achieve this “eureka moment”, my secret weapon was motivation; not reward. I did not promise them a better seat, tease them with the thought of easier practices, or tell them that if they mastered this one skill they could “level up.”
My first step was recognizing that the key to success was not in telling them to work harder at something they already sucked at, but by giving them the tools to improve upon their existing strengths. By identifying these strengths and giving them a context in which to practice and use these strengths, I could build more confident athletes. This confidence ensured stability and mitigated any risk of error. With errors minimized and confidence maximized, I could play their strengths off of one another to build stronger teams. Stronger teams win races. Teams that win races get rewards.
People will concentrate on something not because there is a steady stream of rewards, but because they excel at it and are affirmed in their efforts.
The strategy is pretty straightforward: Tell people what they are good at. Make sure you mean it. Also make sure that other people (in this case athletes) know their teammates’ strengths. It builds trust. It puts everyone’s focus not on who is going to fuck things up and ruin everyone’s chances at victory, but on their individual responsibility to the entire team’s success. I hope to successfully steal my own strategy and apply it to my thesis work.
In my experience, the feeling to aim for in the real world, is not a series of prizes. The feeling to aim for is an authentic sense of worth and value - ideals that cannot always be gained from external rewards.
Summed up nicely by Daniel Pink when he said: “We do not need to entice people with a sweeter carrot or threaten them with a sharper stick. We need a whole new approach.”
Several weeks ago, I wrote some quick thoughts on building reputations and trust networks within the service I am creating. My thoughts echo Kiva Zip’s pursuit to find a substitute for credit scores. The Fast Company article I mentioned in my last post writes,
“Shah’s hoping ‘trustees’ will emerge as stamps of approval… [and] argues that [they] can be a substitute for a high credit score. He suggests that the administrator of a beauty school could, say, vouch for the top three graduates each year. So does that mean they will be safe loans? ‘I don’t know, is the short answer,’ Shah concedes. ‘This experiment could dramatically increase risk to lenders.’”
Premal Shah’s ideas about the role of trustees are interesting within this context, but I think part of the reason he is unable to provide a more definite answer lies in the kind of relationships that exist between a trustee, lender and borrower in the Kiva Zip model.
Part of the risk to the lender is the fact that they have no pre-existing relationship with the borrower and don’t have a definite measure by which to evaluate the borrower’s ability to pay them back. A trustee steps in and mitigates this risk, but there is nothing that connects the trustee with the lender. A trustee can be validated by a 4th party as a reliable trustee, but there is no assurance that the potential lender trusts these people either. Because there is no relationship between lender and borrower, no relationship between trustee and lender, and also no way to validate the opinions of “recommenders” there are some huge social leaps that participants of this system have to make… Leaps that are potentially very risky.
By working with existing relationships and communities, my concept uses Mark S. Granovetter’s idea of the strength of weak ties to mitigate some of that risk.
I’ve included a rough sketch of how these relationships work in my concept, but the essential idea is that there will be a strong tie between a borrower and a “trustee” (for consistency, I’m using Kiva’s language, but in the diagram this person is labeled as “friend”). This strong tie will allow the trustee to vouch for the borrower in ways that are meaningful and authentic. However, this strong tie prevents the “trustee” from wanting to lend to the borrower because they fear that their deep relationship will be compromised if the borrower defaults. Instead, the trustee uses their endorsement to attract potential lenders that might be outside of the borrowers immediate network. The tie between trustee and lender can be strong or weak depending, but most likely there will be some relationship between the two. This way, if the borrower defaults, they are not only hurting their own reputation but also that of their friend. If the trustee doesn’t make a good recommendation, it publicly devalues their worth in the system and also affects their relationship with their friends and connections. This kind of feedback loop seems to be entirely missing within the Kiva Zip model.
I ran across this article the other day in Fast Company about Kiva Zip, Kiva’s new project that does what people always wanted Kiva to do: offer Americans ways to lend directly to poor entrepreneurs around the world. It is an exciting initiative not only for the ways it extends generosity, but more so for the potential it has to connect people.
For obvious reasons, I was drawn to the ways that Kiva is focusing on unbanked populations and those who have limited access to formal banking services. In the article, Kiva president Premal Shah says:
“[Kiva Zip] is a largely unproven idea that we are trying to test”
Which surprised me. The idea of using social capital as a financial mechanism in unbanked regions is definitely not a new one. Savings Clubs as informal banking structures have existed and thrived on trust based networks and apart from banks for decades. The unproven idea is not, as Premel Shah suggests, whether the system of social capital will work within financial behaviors; rather, the unanswered question is if the introduction of technology and distant geography into these social systems will affect their efficacy within particular communities.
What I am trying to accomplish with my thesis is a kind of amalgamation of KivaZip and traditional Savings Clubs. Can I design a framework through which communities, who have come together through common connections, goals and relationships but not necessarily geography, save, lend to and borrow from each other? My ideal framework does not necessarily depend on financial histories or resources. Kiva Zip is attempting something similar by introducing “trustees,” who can vouch for potential borrowers, which is exciting. I want to push their framework a step further and ask, “Can’t we all be trustees within our own social communities?” The first step is in defining that social community, and identifying the parts of those communities that would make these relationships thrive. Next, we have to create safe and participatory environments for these relationships to exist (online and off).
With Kiva Zip, Kiva has made an incredible step in defining a more social relationship with our money. However, what happens when you put borrower and lender on opposite sides of the world, with no common community or local knowledge? The success of traditional African and Asian savings groups is most definitely tied to the responsibility and accountability that comes from a face to face transaction with someone in your immediate community.
The question I am trying to answer in my thesis is specifically related to how technology can work in concert with these existing social relationships to build more sustainable, personal and meaningful financial futures across geographies.
I am fascinated by this TED video (9:10) from Daniel Pink on motivation, but before I launch into some more thoughts on intrinsic vs. extrinsic motivations, I wanted to make a comment on presenting and pitching ideas, (a topic that has come up a lot around here lately.)
I begin to wonder how much more engaging our presentations could be if we emulated his style; focusing not on telling stories but on weaving our stories together with researched facts in order to present a compelling case for why our products, services, ideas should (and will!) succeed in the world. This kind of approach is powerful, and we should not shy away from the power that our ideas posses by hiding their value in stories. We should stand up and stand behind the things we create, and argue for their merits.