Familiar with Friction? You should be. Why Risk & Compliance Officers need it in their toolkit

Estimated Reading Time: 10 Minutes

Ask any Behavioural Scientist how you can get people to do what you want them to, and you’re very likely to get the same answer. Here it is courtesy of Richard Thaler, the Nobel Prize Winning “father” of Nudging:

“The mantra I always give, is that you have to make it easy”

Given I’m a proponent of bringing Behavioural Science (BeSci) to Compliance, it might, therefore, seem odd for me to focus on precisely the opposite; making things harder. The answer, as is often the case with BeSci, might seem somewhat counter-intuitive.

nick-abrams-197003-unsplash
Photo by Nick Abrams on Unsplash

Slowing things down or making them harder by introducing “Friction” can actually be a good thing. Using it as a restrictive tool to make something we don’t want people to do, less straightforward, is one obvious way.  But it can be equally useful, in situations when the activity in question is something we do want them to do. By understanding the full potential of Friction and deploying it intelligently, Risk & Compliance professionals can arm themselves with an incredibly powerful risk management tool.

However, all too often within organisations, Friction is deployed unknowingly, unthinkingly or without the designer fully understanding the nuances of the impact it will have on the target population.

Increasingly, the proliferation of Friction is blamed on control functions. Whether or not they are actually responsible. Sometimes, it is the processes built or curated by these functions that are guilty of over-deployment of Friction. However, on other occasions, they, along with the bête noire that is regulators, are convenient scapegoats for inefficiencies caused by other parts of their organisation. By highlighting the issue of Friction, I want to help my profession make better use of it. That way we can avoid further tarnishing of our brand and deliver better outcomes, more cost-effectively.

I also want to help my Risk & Compliance peers be more aware of how Friction works in reality, rather than in theory.  This will also allow them to identify poor uses of it by other parts of their organisation. 

Because a mis-deployment of Friction can hugely increase both the Operational and Human Risk profiles of the organisation.  Put the wrong kind of Friction in people’s path, and they’ll find ways around it that are not in the organisation’s interest.  While the right kind of Friction can enhance risk management and inspire innovation. 

In this first blog on Friction, I’ll explore how it arises and highlight examples ranging from “virtually frictionless”, to “good” and “bad” Friction. In later blogs, I’ll explore the impact Friction has on the target audience and then identify ways in which we can deploy it as a powerful risk management tool. To begin with, let’s look at what the word means.

What is Friction?

In the physical world, we define Friction as follows:

(c) Melloo

As the Friction I’ll be referring to is cognitive rather than physical, we need a slightly different definition. While the idea of “slowing a moving object” down is still relevant, cognitive friction isn’t as quantifiable as physical friction. We can measure the Friction on a banana skin, but the Friction inherent in a cognitive process is dependent on the perception and experience of the individual involved.

As a loose metaphor, think of it this way. If I’ve never done something before, then it’s likely I’ll encounter more Friction in the process, than someone who is an expert at it. You only have to watch television cookery or home improvement shows and then try to replicate what is made to look simple on screen, to understand this point. 

For that reason, I prefer to think about Friction along slightly different lines to the physical definition above. For these purposes, what I mean by the word is closer to the way it’s described in a book called, appropriately enough, Friction

 

(c) Friction: Passion Brands in the Age of Disruption by J. Rosenblum & J.Berg 


That doesn’t mean we can’t bring any science into this. Part of what we’re dealing with here is explained by Hick’s Law which states that the more choices you present people with, the longer it will take them to reach a decision. This helps explain why technology companies are often fixated on removing as much Friction as they can. In the words of Facebook’s Mark Zuckerberg:

Our goal is to make it so there’s as little friction as possible to having a social experience

Their key focus is on User eXperience (UX). That’s because poor UX results in Friction which deters users. For my more scientifically minded readers, here’s one UX designer’s take on Hick’s Law:

(c) Kristina Szerovay 

We’ll begin our exploration of Friction by looking at how one tech company removes as much of it as it possibly can.

Close to Frictionless

That company is: 

Amazon Logo

Not only exemplary in reducing Friction, they’ve also been helpful enough to talk about the techniques they use, so we have some useful insight. As highlighted in this fascinating article, founder Jeff Bezos gave his team a specific vision for what he wanted:

“We need something to make the ordering system frictionless. We need to make it so the customer can order products with the least amount of effort. They should be able to click on one thing, and it’s done.”

What came out of this was something called “1-Click Checkout”. 19 pages of patent and hundreds of lines of code later and Amazon was able to deliver the feature that Bezos had asked for. Of course what went on behind the scenes was invisible to customers; all they knew was that if they clicked the button, they could buy things with just a single click.one-click-amazonAs anyone who has used Amazon can testify, this makes shopping dangerously easy. Providing, of course, you’ve previously entered your payment details and delivery address. In reality, then, they haven’t eliminated Friction entirely but have reduced it to the bare minimum necessary.Amazon’s other products serve a similar purpose.

The Amazon Echo might be sold as a voice-controlled smart speaker, but the real end game for the Alexa virtual assistant is to provide a voice interface for…you guessed it: more shopping.  Voice is even more frictionless than a keyboard and mouse or smartphone screen.

One day, the Internet of Things will mean we’ll have washing machines that can order their own liquid supplies. Until then, Amazon is bridging the gap with has “Dash” buttons. These allow us to order things, from Amazon of course, “in situ”. After all, we’re most likely to remember we need more washing powder when we’re in front of the washing machine. 

(c) Amazon

Amazon clearly takes Friction seriously; it takes time and effort to conceptualise and then implement interfaces of this kind. In an interview, Amazon Director Kintan Brahmbhatt explained the taxonomies (my word not his) that they use to categorise the different causes of Friction that they have identified:

Source: First Round Review

 

What I like about their approach is that it is user-centric. Friction either exists to help the user; what Brahmbhatt calls “by design”. Or it doesn’t, in which case it is something that they seek to eliminate.  Their approach is based on understanding how users think:

This is what we’re trained to do as human beings — take the easiest route. Reducing friction is all about creating a path of least resistance. 

To help find it, Amazon has identified three factors that induce a perception of friction on the part of the user.  

The first is anxiety, caused by having to make decisions and from a cognitive bias called Loss Aversion. We all understand the former; taking decisions requires effort. Loss Aversion is the idea that we intuitively feel losses disproportionately more than gains, so if in making a choice we risk losing something, it weighs more heavily on us.  Of course, most choices do precisely that: in a choice of A or B, we lose one of the options.

When Amazon first introduced digital music, consumers who had historically bought CDs and vinyl might reasonably resist the new format. After all, you’ve invested in your existing collection, and digital might not be as good as what you’re used to hearing. So to remove anxiety on the part of customers, Amazon launched a feature called AutoRip where they automatically gave people digital versions of any music they bought in physical format.

AutoRip
(c) Amazon

What’s more, they did the same for all the music people had already bought on Amazon.  This meant customers inherited a pre-existing library (at least for what they’d purchased on Amazon) and no longer had to choose between formats.  Above all, they wouldn’t feel a sense of loss by missing out, and as a result, Amazon helped make the shift to digital as frictionless as possible for the customer.

I discovered recently that they do something equally clever with books. My local bookshop didn’t have something I wanted, so I ordered a physical book from Amazon. Because a Kindle version of that same book is available, Amazon also let me read the first few chapters for free straight away.  A cunning way of eliminating the Friction of having to wait for the book to arrive, which also introduces buyers of physical books to the benefits of e-books. Of course, this costs them nothing, because all they’re doing is giving me the free sample that I could get for myself from their site. But it feels like they’ve made my life better and added value to the purchase I made.

The second factor is reducing the cognitive load on users.  In other words: the amount of effort something requires. Amazon only asks you to make decisions if really necessary, and each decision is carefully framed to be as straightforward to understand as possible. Take a guess at how many products they have on sale. It’s probably a lot more than you think. This chart shows the size of the product range a year ago:

Source: Scrapehero.com

Under normal circumstances, offering people that many products could be somewhat overwhelming, thanks to something called The Paradox of Choice. We think we like optionality, but in reality, we don’t.  This was wonderfully illustrated by some research that experimented with offering consumers a more or less extensive selection of jams to choose from.  Surprisingly, selling a smaller range, meant people bought more. That’s because we find making choices with lots of options difficult and we’d prefer to walk away. 

Amazon counteracts this with menus that are extremely easy to navigate:

(c) Amazon

The final factor that induces Friction is minimising the need for context switching.  This is arguably a subset of reducing cognitive load. Put simply it means “letting people do everything in one place” without requiring them to go elsewhere. Storing the customer’s credit card details means they don’t need to go to their purse or wallet to retrieve it. All of Amazon’s services are available direct from their website. Order a Kindle book, and you can read it right there without needing to load an App or change device. 

Compliance as Friction

Next time you’re on the Amazon website, think about how easy it is to find what you want and order it. Now imagine we could achieve similar aims in meeting our Compliance objectives. It sounds crazy and yes there are differences between what Amazon is trying to deliver and what the Compliance function in regulated industries is there to do. But that doesn’t mean we can’t learn from them and that we shouldn’t try to adopt some of their user-centric philosophy. Particularly in how they analyse Friction.

Notice how the criteria they outlined was from the perspective of the customer, not Amazon. What they look to address are things that make it harder for the customer and, critically, things that make the customer feel like things are hard. Customer perception might not match reality, but that’s irrelevant. It’s like justifying an offensive comment by saying  “I didn’t mean to offend you” and assuming this automatically means something isn’t offensive to someone else. The intent is irrelevant when it comes to how people perceive things. When it comes to Friction, perception matters a lot.

I think we can learn a lot from Amazon because we’re both in the business of trying to influence human decision-making. Amazon wants to make it easy for people to buy things. We want to make it easy for people to be compliant. The processes we deploy to manage risk can cause similar psychological responses in our target audience.  Yet we don’t often think about things like anxiety or cognitive overload when designing Compliance processes.  This is a missed opportunity.Sometimes we’ll want to minimise Friction, just like they do. But on other occasions, we’ll want to actively deploy it to achieve our goal. 

With that in mind, it helps if we understand what “Good” and “Bad” Friction look like.  We’ll start with the Bad.

“Bad” Friction

You’ll intuitively know what “Bad” Friction is.  So I won’t spend as much time explaining it as I did with the Amazon case study. The most obvious example is what Cass Sunstein calls Sludges; so called because they’re the opposite of Nudges. 

“The term should be taken to refer to a kind of friction, large or small, that people face when they want to go in one or another direction. People might want to cancel a subscription to a magazine in which they no longer have the slightest interest, but to do that, they might have to wade through a great deal of sludge”

Sadly Sludges are commonplace, and we’ve all been on the receiving end of them. For more on Sludge, I recommend this helpful summary by Wilte Zijlstra, an enlightened BeSci practitioning Dutch regulator. 

Though I was pleased to see a recent announcement from Mastercard with the headline “Free Trials Without The Hassle”.  In it, they stated that they will now prevent merchants from billing users at the end of a free trial, without getting their approval.  Sadly and inexplicably, its only for physical purchases, but its a start.

The types of situation that Mastercard is, belatedly, looking to prevent are obviously intentional; the person who has designed the Sludge, purposefully wants to make it hard for the end user. However, its also possible to achieve suboptimal ends, with the best intention.

Take password security. For understandable reasons, websites require us to enter passwords with a certain level of complexity to make them less hackable.But you don’t have to go too far to find a website that takes this idea a little too far and imposes password requirements that are feverishly difficult to comply with.

Like this example from the Attorney General of Texas Child Support website. It’s worth reading them in detail to understand quite how ridiculous they are; it’s not even clear what are requirements and what are recommendations.  What is clear, is that picking a password is going to be hard.  And good luck if you forget it and need a new one!

Source: AG of Texas, Child Support website. Image capture by ITSP Magazine

The end result here is user frustration and, ironically, a higher likelihood of security being compromised as people write down their fiendishly hard to remember passwords. And that’s before we consider what impact the sludge might have on the process of claiming child support, which appears to be the purpose of the website. It’s almost as if they don’t want to pay any out!   

As I said at the outset, “Bad” Friction is something we’re all familiar with.  But that doesn’t mean that all Friction is bad.  Let’s now take a look at an example of what I think is exemplary Friction. 

“Good” Friction

It comes, perhaps surprisingly, from a tech company.  Even more surprisingly, it’s from a company that hasn’t exactly always had a good reputation. Though as we’ll see, the Friction was introduced in response to a customer backlash, so when I give credit, it’s not necessarily for coming up with the idea.  The execution, however, works well. 

The company in question is Uber, and the Friction is introduced whenever “Surge Pricing” kicks in. Depending on your perspective, Surge Pricing is either a way of ensuring that there is always a supply of drivers available to meet customer demand (the Uber position) or a piece of usurious price gouging (the argument used by quite a few customers).

It works as follows: if the demand for cars exceeds supply, Uber puts prices up to try to recalibrate supply and demand.  Or to increase their profit margins. Take your pick. Following complaints by customers, Uber introduced additional confirmation steps to ensure that users couldn’t plead ignorance of what multiple of the standard price they would be charged for their journey.

Order a car when surge pricing is in force and two things happen. Firstly you’re presented with the multiple of normal fare price you’ll be paying which you have to click to agree to. Then you have to re-type that multiple yourself.

Source: Forbes

As a result, riders can be in no doubt, before they get into the car. They might not like it, but they will be aware of it. It’s two small steps that slightly delay a generally friction-less process and in doing so discharge a moral responsibility.  For that reason, I see this is “good” Friction. 

Uber isn’t the only tech company that sees benefits in introducing more Friction. In an article entitled The Internet Needs More Friction, Justin Kosslyn argues that the obsession with frictionless services has resulted in some bad outcomes:

The internet is facing real challenges on many fronts. If we truly want to solve them, engineers, designers, and product architects could all benefit from the thoughtful application of friction. The philosophy of the Internet has assumed that friction is always part of the problem, but often friction can be central to the solution.

What’s remarkable about the article is that Kosslyn leads product management at Jigsaw, a unit within Alphabet, who are the parent company of Google. Echoing this, a recent New York Times article headlined “Is Tech Too Easy to Use?” asked a simple question:

Could some of our biggest technological challenges be solved by making things slightly less simple?

In the spirit of that question, in the rest of this series of blogs, I want to explore how we might use an improved understanding of Friction to manage Human Risk.  

Until next time…

In my next blog, I’ll look at obvious and less obvious use cases for Friction and explore the impact these have on the target audience.  In the meantime, keep an eye out for examples of Friction in your world and share them with me. I guarantee that once you start looking for them, you’ll see lots of it about.

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