Nudge Tech: What it is and why it’s so important for Human Capital Management

There is a wealth of opportunities for technological innovation in the Human Capital Management (HCM) sector, and these opportunities will increase greatly over the next few years. According to research by Gartner, the digital transformation trend is a fast-growing one: by 2025, large organizations will devote 35% of their budgets to implementing innovative solutions in the HCM field alone. And one of the most interesting innovations is nudge tech.


Substantially, it’s the application of Nudge Theory to digital technology: i.e. choice architecture based on digital tools and software, the purpose of which is to positively impact individuals, teams, and organizations overall.

What do we mean by ‘nudge’ and ‘nudge tech’?


What exactly is it all about? Let’s start precisely with the definition of nudge, borrowing from the words of R. Thaler and C. Sustein: “A nudge is any aspect in choice architecture that alters people’s behavior in a predictable way without prohibiting the choice of other actions”.

As the authors point out, it’s a matter of generating a type of behavioral change, obviously toward a desired direction, but keeping an individual’s ability to choose unaffected. Although this is a persuasive action, it shouldn’t be associated with the negative connotation of manipulation since it’s about “suggesting the best choice” in an ethical manner and, most importantly, generating positive change for people.

 Instead, adapting Nudge Theory to digital transformation and technological dimensions, we talk about nudge technology. It always indicates a form of choice architecture, which, however, can be supported, for example, by artificial intelligence. In this specific case, it’s more effective to personalize experiences. The aim here is also to stimulate behaviors that positively impact individuals, teams and organizations as a whole, without compromising individual freedom and choice.

Why is it important for Human Capital Management? 


Daniel Kahneman, in his book Slow and Fast Thinking, identifies two systems of thinking: system 1 -- fast, automatic and involuntary -- and system 2 -- rational, slow and reflective.

For example, system 1 enables us to react promptly to a sudden situation and requires less cognitive effort to be activated. Acting on this system thus allows us to promote desired behaviors in a contextual logic, requiring less “cognitive effort” from people.

Here, the effectiveness of nudging becomes apparent, especially in situations in which it’s necessary to quickly adapt people to organizational changes, align teams on certain strategies, improve communication, incentivize tech adoption practices and processes, accelerate processes, and engage people.

However, as the Nature article “Nudges that don't nudge” reminds us, obviously nudges alone are not enough to effectively generate behavioral change. These need to be supported by an analysis of the context, use cases, cognitive biases that are put in place, and above all by building habits that are sustainable over time.

This is why relying on nudge tech software, for example, allows people to build specific experiential journeys, making things contextual on the job and personalizing them through artificial intelligence algorithms.


How to use nudge tech in your business


For example, one of the most interesting benefits of nudge tech is combining the principles of behavioral economics with the personalization possibilities thanks to artificial intelligence. A major change regarding human behavior is thus generated, in return for a low investment on the part of the individual and by embedding the process within a harmonious flow in the management of the individual’s working time.

Technology becomes an essential driver for promoting small changes that generate great benefits for managers, employees, and the organization. These small changes are precisely designed in a scalable way so that the set goal is achieved of being able to reach and engage, thanks to digital transformation, the entire population or specific groups.

One of the main challenges for change in organizations is being able to maintain scalability even in very targeted and personalized actions. It is precisely this challenge that underlies the value generated by nudge tech, which enables us to bridge the behavioral gap between “where I am today” and “where I ideally want to be tomorrow”.


Use cases and applications for nudge tech

The main use cases and applications of nudge-tech include:

  • Agile culture
  • Diversity & Inclusion
  • Leadership
  • Digital dexterity and digital skills
  • Adoption of tools and technologies
  • Cybersecurity culture
  • People’s wellbeing.

In terms of software and platforms, one is nudge tech solution hi platform, which was also selected by Gartner in its “Hype Cycle for Human Capital Management Technology 2022”.