Success Story: The Opower Advantage

By Elaine Appleton Grant
Writer

March 20, 2018

Editor's Note: You maybe be thinking, “Yeah, all this research is cool and these ideas are exciting and could maybe even change the world, but there’s no way I’d convince my giant company to try ‘em. We don’t make decisions based upon ‘exciting,’ we make them based upon the bottom line.” Okay. I hear you. Would the figures “11 billion kilowatts of energy” and “$532 million” help?  Read on.

Remember the school yard? At some point, another kid may have pointed at you, said, “Nyah, nyah, nyah, my dad is stronger than your dad," or “I’m a way faster runner than you are!” The tendency to compare ourselves with others is as universal as it is instinctive. At the very least, we want to keep up with our next-door neighbors, the Joneses.

No one likes a bully, of course, but social comparison isn’t always bad. In fact, the human tendency to compare everything from our incomes to the number of times our friends have sex (or we think they have sex) can be harnessed for good.

That’s what entrepreneurs Alex Laskey – a trim, bearded 30-something former political consultant and ad man and his Harvard classmate Dan Yates – a bespectacled computer scientist did in 2007 when they took a leap of faith and formed Arlington, Virginia – based Opower. Passionate about climate change, the two wanted to design a for-profit company whose goal would be to save some of the $400 billion worth of energy wasted in the US every year, and more around the world. Rather than designing renewables or building other high-tech solutions to the problem, they wanted to focus on people. And they needed a scientist who understood why we behave the way we do. They found behavioral scientist Robert Cialdini, now professor emeritus of psychology and marketing at Arizona State University.

'Nudge' experiments for stubborn people

Cialdini had built a career around the idea of using behavioral science to influence people. Like others in his field, he was interested in employing small “nudges” to change behavior in big ways. By the time Yates and Laskey learned of his work, governments had already turned to Cialdini for help solving the vexing problem of why, although we know how to save oodles of energy, we don’t. Over and over again, we fail to take tiny, easy actions, like turning off lights when we leave a room. All those tiny failures add up to a LOT of wasted energy.

Beginning in 2001, Cialdini and researcher Wesley Schultz of California State University, San Marcos, had run a series of experiments to learn the effect of social norms on our behavior. In one, their team distributed signs, randomly, every week for a month to households in San Marcos. The signs appealed to people to conserve energy in different ways: One reminded residents they could save money; another said energy savers were good citizens; and a third sent an environmental message. A control group received none of these signs.

Which message worked? If you believe it was “saving money,” that’s what Laskey and Yates also predicted, Laskey recounted in a 2013 TEDx talk. But they were wrong. In fact, none of the three messages had any impact. None.

But there was a fourth message. And it was this, Laskey said: “When surveyed, 77 percent of your neighbors said that they turned off their air conditioning and turned on their fans. Please join them. Turn off your air conditioning and turn on your fans." That was the only message that had any effect at all, and it was a significant one.

As Laskey added, “If something is inconvenient, even if we believe in it, moral suasion, financial incentives, don't do much to move us – but social pressure, that's powerful stuff. And harnessed correctly, it can be a powerful force for good.”

 They set out to help save the planet by taking advantage of our unquenchable desire to be better than the next guy.

Harvard classmates on a mission

It was a force for good that Yates and Laskey put to work, inspired by their shared passion for fighting climate change. When they decided to start Opower, Yates was fresh off a months-long trip driving the Pan-American highway. Seeing Guatemalan rainforests laid bare had profoundly shaken him. His buddy, Laskey, had just finished advising a political campaign where energy use had been a constant topic. They enlisted Cialdini to consult.

They set out to help save the planet by taking advantage of our unquenchable desire to be better than the next guy –- or at least to do what he was doing.

Opower combined behavioral science with big data and user experience design to help their paying customers – utilities around the world – reduce energy use. Benefits to utilities would include saving them from having to build new energy grids and enabling many to meet new conservation regulations. By parsing big data, they’d be capable of helping utilities send personalized energy usage reports to people like you and me. Cold winter? Ouch: My bill would show me how much more I paid – in energy and dollars – because I don’t wear sweaters, compared to my snuggly-er, more frugal neighbors.  

In practice, of course, none of this was as simple as it sounded. They needed a product designer who would do something counterintuitive. They needed to find one who didn’t want to design stuff.

The un-designer shows up

That’s where Deena Rosen came in. When she met the founders, Rosen, now 40 and an independent consultant living in San Francisco, was becoming more and more concerned with the environment. As such, she had recently become disenchanted with the core work of a product designer. “It was becoming a little ethically ambiguous to design more products,” she felt.

Her task, when she went to work for Opower, was to transform Cialdini’s simple door hanger into a message that could be delivered to millions around the world to “change their hearts and minds at the same time,” she said in her own TEDx talk. In addition to showing people how their energy use compared to neighbors in similar-sized homes, they would also give personalized recommendations for conserving energy. Rosen, and her eventual design team, created paper products, mobile apps and online information.

Today, Rosen gets a big kick out of the paper reports, which she often sees hanging in friends’ houses. Testing showed that paper reports, albeit counterintuitive coming from a business with an energy-saving mission, make more of an impact than emails. “It’s a physical artifact that you can share with your household in a way that you can’t if it’s an email,” she says. Nudge.

Millions of those tiny nudges, for what rapidly became more than 80 utilities around the world, added up to a tremendous energy savings that continues. A few months ago, Rosen reports, Opower had saved about 11 billion kilowatts of energy. One billion kilowatts of energy can power almost 200,000 electric vehicles for a year.

Oracle acquired Opower in 2016 for $532 million, and it is now run as a division of the giant software company.

For Rosen, the journey was illuminating.

“I think behavioral science is an essential toolkit for all designers to understand, and they have to be trained in the ethics behind using [the principles],” she says. “They’ve been used for decades by the ad industry and others to get people to buy more things, and I think it’s the moral responsibility of people creating products and services to use the principles to help people &ndash and to avoid getting them to do things that are not aligned with their best interests in health and wellbeing.”

Indeed, to improve her health and wellbeing, Rosen recently chose to make herself the subject of a behavioral science experiment of her own making. She took a year off after Oracle acquired Opower, with the intention of figuring out not just her next career, but also how she wanted to live a good life outside of her job. Perhaps not surprisingly, the designer decided to, well, design that year –- and also to name it. (She calls it her “Exploratory Year.”) To ensure that she’d use the year wisely, she applied to her personal life behavioral science principles more commonly applied in professional circles, including goal setting and accountability. “What I learned,” she says, “was how effective they could be in designing the kind of life you want for yourself.”

Whether we’re a business on the hunt for profit, a planet in need of a break or an individual in search of meaning – or a way to beat those pesky Joneses – ethically applied and thoughtfully designed behavioral science principles can have a powerful impact. 

By Elaine Appleton Grant
Writer

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