Nudge theory (or Nudge) is a concept in behavioural science, political theory and economics

which argues that positive reinforcement and indirect suggestions to try to achieve non-forced
compliance can influence the motives, incentives and decision making of groups and individuals,
at least as effectively if not more effectively than direct instruction, legislation, or
enforcement.
Nudge theory's most celebrated influences include the formation of a British Behavioural
Insights Team, often called the Nudge Unit, at the British Cabinet Office, headed by Dr David
Halpern[1] and US President Barack Obama's appointment of Cass R. Sunstein as administrator of
the Office of Information and Regulatory Affairs.[2][3][4] In Australia, the government of New
South Wales established a Behavioural Insights community of practice.
The "Nudge" idea has been criticised. Dr Tammy Boyce, from public health foundation The
King's Fund, has said:
We need to move away from short-term, politically motivated initiatives such as the 'nudging
people' idea, which are not based on any good evidence and don't help people make long-term
behaviour changes.[5]
Other scholars have echoed similar concerns, particularly with regard to the need to better
understand the psychological factors that predict long-term behavioral changes.[6]

Contents

1 Definition of a nudge

2 Notability

3 Applications

4 See also

5 References

6 Weblinks

Definition of a nudge

Typical example of a nudge: housefly into the mens room urinals (Germany, 2014).
At the heart of nudge theory is the concept of nudge. This was originally defined by Richard
Thaler and Cass Sunstein as:
A nudge, as we will use the term, is any aspect of the choice architecture that alters peoples
behavior in a predictable way without forbidding any options or significantly changing their
economic incentives. To count as a mere nudge, the intervention must be easy and cheap to
avoid. Nudges are not mandates. Putting fruit at eye level counts as a nudge. Banning junk food
does not.
One of nudges most frequently cited examples is the etching of the image of a housefly into the
mens room urinals at Amsterdams Schiphol Airport, which is intended to improve the aim.[7]

Notability
Nudge, as it is often referred, is usually credited to Richard Thaler a prominent professor of
Behavioural Science and Economics at the University of Chicago Booth School of Business.
Thaler's role in developing the Nudge Theory is usually discussed in parallel with Daniel
Kahneman, an American psychologist.
Nudge theory rose to global prominence in 2008 with the release of the book Nudge: Improving
Decisions About Health, Wealth, and Happiness, by Thaler and legal scholar Cass R. Sunstein.
The volume not only brought the discourse on Nudge theory to the wider public, but secured a
significant following among contemporary US and UK political personalities as well as the
private sector involved with public health and related fields.[8] Nudge theory and similar policy
frameworks have been criticized by some psychologists for failing to take into account the
psychological determinants of the behaviours that they are trying to change,[9] despite the ethical
implications.[10]
Most recently, the political machinery of both President Barack Obama in the United States and
Prime Minister David Cameron in the UK have sought to employ Nudge Theory to advance their
respective domestic policy goals. In both the UK [11] and the Australian state of NSW [12] there is a
Behavioural Insights Team in the government.

Applications

Nudge theory has also found its way into the business management and corporate culture. Health
Safety and Environment (HSE) and Human Resources are two areas that have applied the theory
to internal safety or management culture. Regarding its application to HSE, one of the primary
goals of nudge is to achieve a "zero accident culture".[13]

See also

Default effect

References
1.
https://www.gov.uk/government/organisations/behavioural-insightsteam/about#responsibilities
Andrew Sparrow (2008-08-22). "Speak 'Nudge': The 10 key phrases from David
Cameron's favourite book". London: The Guardian. Retrieved 2009-09-09.
Carol Lewis (2009-07-22). "Why Barack Obama and David Cameron are keen to 'nudge'
you". London: The Times. Retrieved 2009-09-09.
James Forsyth (2009-07-16). "Nudge, nudge: meet the Cameroons new guru". The
Spectator. Retrieved 2009-09-09.
Lakhani, Nina (December 7, 2008). "Unhealthy lifestyles here to stay, in spite of costly
campaigns". The Independent (London). Retrieved April 28, 2010.
van der Linden, S. (2013). "A Response to Dolan. In A. Oliver (Ed.)" (PDF). pp. 209
2015.
R. Thaler and C. Sunstein. (2008). Nudge. Penguin Books.
See: Dr. Jennifer Lunt and Malcolm Staves
van der Linden, Sander (2013). "A response to Dolan". In Oliver, Adam. Behavioural
Public Policy. Cambridge University Press. pp. 209215. ISBN 9781107617377.
Fischer, Mira; Lotz, Sebastian (2014). "Is Soft Paternalism Ethically Legitimate? - The
Relevance of Psychological Processes for the Assessment of Nudge-Based Policies". Cologne
Graduate School Working Paper Series (05-02). Retrieved 2014-05-30.
http://www.independent.co.uk/news/uk/politics/first-obama-now-cameron-embracesnudge-theory-2050127.html
http://bi.dpc.nsw.gov.au/
1.

Weblinks

http://www.rydermarsh.co.uk/pdfs/SHP.0112.pdf

Advantages & Disadvantages of the

Structure of an Organization
by Lisa Magloff, Demand Media

Each type of organizational structure has its own advantages and disadvantages.
Each company tends to use the business structure that suits it best -- there is no absolute right or
wrong way to structure a business. Whether a particular structure is advantageous or
disadvantageous for a company depends on the type of business, the strategy of the company, its
target market and the style of the management.
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Types of Structure
The four most common types of organizational structure are functional, divisional, matrix and
horizontally linked. Many companies, especially very large ones, may use more than one type of
structure. For example, the sales division may use a functional structure, while the research and

development division uses a matrix structure. In addition, companies may need to change their
organizational structure over time, as the size and business goals of the business change.

Functional Strategy Advantages And Disadvantages

In a functional structure, all of the decision-making occurs at the top levels of management. This
ensures that upper management has complete control over the organization. It also provides a
clear career trajectory for employees, from junior-level positions, up to the top decision-making
positions. A functional structure provides stability and efficiency, especially in large and complex
organizations, because everyone uses similar processes. This also allows large businesses to take
advantage of economies of scale. However, this type of structure can also lead to poor
communication between departments, situations where departments do not work together and
inter-departmental conflict. Customers may also become frustrated by lack of cooperation if they
have to work with more than one department.
Related Reading: Business Leadership Structure

Divisional Structure Advantages And Disadvantages

In a divisional structure, divisions are organized geographically or by product line or marketing
area and each division includes people from each area of the business. For example, the
European division of a company may handle all of the firms' business with Europe and include
its own accountant teams, sales teams, research and development teams, and human resources
teams all of whom report to the division head. This allows the company to respond quickly to
customer needs and helps more employees develop managerial skills. The disadvantage of this
structure is that there can be a lot of redundant effort and competition between divisions.

Matrix Advantages And Disadvantages

Organizations with a matrix structure have no chain of command. Employees work in teams,
which they develop and organize. Employees can change teams to work in areas where they are
needed or are interested in working. This works very well in smaller organizations and in those
businesses where resources and specialist employees are scarce, as everyone is kept busy and can
be moved around to where they are most needed. This structure increases employee skills and
involvement but can lead to employee confusion and frustration because lines of reporting are
unclear. It can also be difficult to set priorities when employees are moving between competing
projects.

Horizontally-Linked Advantages And Disadvantages

This structure is primarily found in the IT and high-tech sectors. In a horizontal structure,
employees are grouped by function into three areas planning, building and running. For
example, the planning department is responsible for developing new projects and may include
employees from research, development and finance. The building department would then

construct or assemble the projects; and the running department would include sales, marketing
and maintenance. This structure allows the company to respond quickly to changing market
conditions and technological advances but may not work as well for companies that produce
products with a longer lifespan, or for service industries.

Advantages & Disadvantages of Divisional Organizational Structure

by Jason Gillikin, Demand Media

A divisional organizational structure gives a larger business enterprise the ability to segregate
large sections of the company's business into semi-autonomous groups. These groups are mostly
self-managed and focused upon a narrow aspect of the company's products or services. As with
any organization structure, divisions have both strengths and weaknesses.
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Definition
A divisional organizational structure usually consists of several parallel teams focusing on a
single product or service line. Examples of a product line are the various car brands under
General Motors or Microsoft's software platforms. One example of a service line is Bank of
America's retail, commercial, investing and asset management arms. Unlike departments,
divisions are more autonomous, each with its own top executive--often a vice president--and
typically manage their own hiring, budgeting and advertising. Though small businesses rarely
use a divisional structure, it can work for such firms as advertising agencies which have
dedicated staff and budgets that focus on major clients or industries.

Advantages
Divisions work well because they allow a team to focus upon a single product or service, with a
leadership structure that supports its major strategic objectives. Having its own president or vice
president makes it more likely the division will receive the resources it needs from the company.
Also, a division's focus allows it to build a common culture and esprit de corps that contributes

both to higher morale and a better knowledge of the division's portfolio. This is far preferable to
having its product or service dispersed among multiple departments through the organization.
Related Reading: Advantages & Disadvantages of Divisional Organization

Disadvantages
A divisional structure also has weaknesses. A company comprised of competing divisions may
allow office politics instead of sound strategic thinking to affect its view on such matters as
allocation of company resources. Thus, one division will sometimes act to undermine another.
Also, divisions can bring compartmentalization that can lead to incompatibilities. For example,
Microsoft's business-software division developed the Social Connector in Microsoft Office
Outlook 2010. They were unable to integrate Microsoft SharePoint and Windows Live until
months after Social Connector could interface with MySpace and LinkedIn. Some experts
suggested that Microsoft's divisional structure contributed to a situation where its own products
were incompatible across internal business units.

Alternatives
Large organizations that want the focus of a division could instead spin off into a free-standing
subsidiary. Smaller organizations can work through major projects via dedicated departments or
ad-hoc cross-functional work teams.

Making It Work
To be successful, divisions must be well managed. Executive leadership is the single most
important determinant of success for a company using a divisional structure. The top leaders
need to understand what each division is doing and provide leadership to the division chiefs on
how to accommodate new strategic directions or more effectively partner across divisions. In
addition, the executives should have a solid grasp of resource use. Having a shared pool of
centrally-managed resources like administrative support or office equipment can reduce costs
and organizational complexity.
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Functional Vs. Product Departmentation

by Scott Thompson, Demand Media

Departmentation allows specialists to work together for maximum efficiency.

Organizations divide tasks into separate departments so specialists in a particular task can work
with other specialists in the same task, increasing efficiency and productivity. When a company
uses functional departmentation, marketing specialists, for example, work together in the same
department. When a company uses product departmentation, specialists in one product line work
with other specialists in the same product line. Most small businesses use functional
departmentation unless they have multiple distinct product lines or services.
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Functional Departmentation
Functional departmentation organizes employees based on function or skill set. Salespeople and
marketers work together in the marketing department, employees involved in making the
company's products work in the manufacturing department and employees involved in designing
new products work in the research and development department. Specific departments vary from
company to company but are always designed so employees work with others who share similar
skills or functions. This type of organizational structure works best in smaller organizations
without too many distinct product lines. For example, if your business manufactures and
distributes two different types of golf ball, it wouldn't make much sense to divide those two
products into separate departments.

Product Departmentation
Product departmentation organizes employees based on which product line or set of services they
work with. Each product line has a department of its own, and each department has specialists in

all of the functions needed to produce and sell that product, such as marketing, manufacturing,
accounting and human resources. The departments in this type of company operate
autonomously from each other and are often better at responding to changing circumstances in a
flexible way. For example, the salespeople can talk to the design and manufacturing specialists in
their own department to address customer satisfaction issues rather than having to go outside the
department. Smaller businesses would use this type of structure only if they offer distinctly
different products or services. For instance, if your company provides both copywriting and
printing, it might make sense to operate these services as separate and autonomous departments.
Related Reading: Strengths & Weaknesses of Cross Functional Teams

Advantages and Disadvantages

Functional departmentation has the advantage of efficiency, because all of the employees in each
department are specialists in the same or closely related skills. It has the potential disadvantage
of inflexibility, because any issues that involve more than one skill set require communication
and cooperation between departments. This is less likely to be an issue for a smaller
organization, because the different departments may be in frequent contact already. Product
departmentation has the advantage of flexibility but the potential disadvantage that the
departments may compete unintentionally. For example, because each product line operates as an
autonomous department, the actions or strategies of one department may interfere with those of
another department in the same company.

A Combined Approach
Matrix departmentation combines the organizational structures of product and functional
departmentation by using parallel management structures. Employees are organized into
functional departments based on skill sets but also work with project managers who oversee all
employees involved with a particular product line. This type of organizational structure is
intended to combine the advantages of product and functional departmentation, but it has the
potential disadvantage that employees must report to two separate supervisors, who may give
contradictory instructions. Smaller companies usually can remain flexible while using the
functional departmentation structure alone, because the relatively small number of products and
employees facilitates easier communication between different functions.
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A matrix organizational structure is one of the most complicated reporting

structures a company can implement. Read on to learn why a company might

implement a matrix structure, and the advantages and disadvantages for both
company and staff.

Definition
A matrix organizational structure is a company structure in which the reporting relationships
are set up as a grid, or matrix, rather than in the traditional hierarchy. In other words, employees
have dual reporting relationships - generally to both a functional manager and a product
manager.

Example
In the 1970s, Philips, a Dutch multinational electronics company, set up matrix management with
its managers reporting to both a geographical manager and a product division manager. Many
other large corporations, including Caterpillar Tractor, Hughes Aircraft, and Texas Instruments,
also set up reporting along both functional and project lines around that time.

Advantages
In a matrix organization, instead of choosing between lining up staff along functional,
geographic or product lines, management has both. Staffers report to a functional manager who
can help with skills and help prioritize and review work, and to a product line manager who sets
direction on product offerings by the company. This structure has some advantages:

Resources can be used efficiently, since experts and equipment can be

shared across projects.

Products and projects are formally coordinated across functional

departments.

Information flows both across and up through the organization.

Employees are in contact with many people, which helps with sharing of
information and can speed the decision process.

Staffers have to work autonomously and do some self-management between

their competing bosses; this can enhance motivation and decision making in
employees who enjoy it.

Disadvantages
The matrix structure is generally considered the toughest organizational form to work in, due to
the conflicting pulls on resources. The overlaps can lead to turf battles, and difficulty in
determining accountability. The major disadvantages of a matrix structure are: