The science of fresh starts, with change expert Katy Milkman

0:00Scaling a business in the US can feel like a maze. Each state has its own payroll, benefits, and compliance rules, pulling your focus away from growth, which is why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert, plus Fortune 500-level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one. So, if you're scaling, make it simple with Deal. Go to deel.com. slash MOS and get up to three months free. One of the patterns I've seen over and over and speaking with successful founders is this.

0:40They don't wait for HR problems to show up. They build solid systems early on so their company can grow without tripping over itself. JustWorks is one of those systems. JustWorks is the human resources platform that helps you scale without sacrificing your team's needs. It handles automated payroll, benefits, compliance, even international hiring, so you can scale your team without slowing your momentum. JustWorks secures your hiring systems so they don't cost you time, money, or people, which is how you scale with confidence. JustWorks for your people. Imagine there is some chore that you are struggling to motivate yourself to pursue.

1:26In my case, when I started doing this, it was exercising regularly. I was just really dreading that, but knew I needed to do it. It was important for my mental health and good for me in the long run. And it felt great afterwards. It's just that at the end of a long day, that is not where I wanted to be.

1:45Katie Milkman is an expert on change, but even she has trouble sticking with good habits sometimes. That's when she puts her social science tool set to work. I was kind of an audiobook addict, and I really enjoyed digging into novels that were lowbrow, and that wasn't the best use of my time. So what I ended up doing to solve my own problem, and others have told me I did the exact same thing, was just engineering a solution where I only allowed myself to enjoy these temptations that I craved, these audiobooks, when I was at the gym. That was my rule. And this rule really transformed my experience.

2:23Suddenly, I would start looking forward to going to the gym to find out what was happening to my favorite characters. The basic idea is called temptation bundling. It can be applied to lots of things in life. Anytime there's a chore that you're dreading and some temptation that you maybe would feel a little guilty about indulging in, if you could combine those two things and only allow yourself access to the temptation when you're doing the chore, what it does, it changes the experience of the chore, and it actually changes the equation in terms of our impulsivity so you look forward to doing that thing you'd otherwise dread.

2:53Temptation bundling is just one of the tools for creating lasting change that Katie Milkman shares on this week's episode. We're kicking off 2025 with science-based approaches to making sure your New Year's resolutions stick. You've got to have incredible talent at every position. It's like this huge push. There are fires burning when you're going home. Can you believe it? Such an idiot. and then you go back to, this is totally going to be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Oops. Working out of a three-bedroom apartment.

3:29Stuff that just seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We haven't made it just how you do it.

3:38This is Masters of Scale.

3:44I'm Jeff Berman, your host. If you're listening to Masters of Scale, it's a good bet you have a lot of big goals for 2025. Personal goals, professional goals, organizational goals. But you also know that change is hard. That's why we've asked Katie Milkman to join us. She's the author of the bestselling book, How to Change, and the co-founder of the Behavior Change for Good initiative at the Wharton School. In this conversation, Katie offers up a brilliant distillation of the most effective ways to approach change in our lives and in our organizations.

4:24Katie, welcome to Masters of Scale. Thank you so much. I'm really excited to be here. We're thrilled to have you. Katie, there are young people who grow up dreaming of being professional athletes or on stage or being firefighters or superheroes. You became a behavioral scientist. When does that become a career dream for you? Not when I was growing up. In fact, I think when I was growing up, my most common answer when people asked was that I wanted to be a brain surgeon, which I had no actual aspiration to be. I think I just liked that it sounded impressive and it made jaws drop and I got that positive feedback.

5:03Like, wow. It still sounds impressive. It does. Yeah. And P.S. I don't like the sight of blood and I get nervous in intense situations. I would be a terrible brain surgeon. So thank goodness I found another calling. I didn't even learn this was a field or a possible path until I was a Ph.D. student, actually, which is a little late in one's trajectory in academia. So I got a PhD in computer science and business, thinking that this wacky thing called the internet seemed to be taking off and maybe learning something about that and how it would affect our choices and the organizations we worked in could be interesting.

5:38And it was actually while I was there that during a required microeconomic sequence, I was introduced to the work of folks like Danny Kahneman, who's a founder of the field, author of the bestselling book, Thinking Fast and Thinking Slow, who very sadly passed in early 2024. So Danny founded this field of behavioral economics and essentially behavioral science is part of behavioral economics. It's a field that focuses on the ways in which people make mistakes, even when they're trying to be perfectly rational. And specifically, it focuses on the systematic and predictable mistakes that we make with our decisions.

6:16Things like our tendency to be impulsive, things like our tendency to find losses much more painful than we find gains rewarding. And so take steps to avoid losses that might look irrational. We do funny things when we evaluate probabilities. So I was really fascinated when I learned about this field and I decided that's what I wanted to do with the rest of my life. Were you more fascinated for yourself in terms of like, how do I make decisions and where am I making mistakes where I think I'm well-intentioned? or more in terms of the effect you could have on other individuals in the world if you went into this field?

6:54I think initially I was just drawn to the truth of it, if that makes sense. So certainly there was an element of me search as opposed to just research. Like I saw myself in the models and in the research findings I was reading, which by the way, I'd never seen myself in sort of the social science coursework I'd been exposed to before. I ended up being an engineer as an undergrad because economics did not make sense to me. I just thought, why would you possibly think that people are perfectly rational decision-making agents and model the economy and their decisions that way? This is absurd. Have you met me?

7:29Have you met my roommates? So I was really turned off by social sciences initially. And when I got to this understanding that actually there's a whole field trying to understand our imperfections, I was just riveted. And it was primarily, again, I just thought it was true. And I thought how powerful to understand how people make choices. I started out just being intrigued by the quirks of human decision making. I'm curious, though, as you were diving into this field, was there an inflection point? Was there some moment where you were like, oh, my gosh, this just clicks. This is for me. Yes, absolutely.

8:06The big moment for me was actually as an assistant professor at the University of Pennsylvania. I worked at the Wharton School, which is the School of Business at Penn. And we have a really amazing medical school as well. And I like talking to people from all different backgrounds. Interdisciplinarity is sort of in my blood. So I started hanging out over at the medical school with a group of people who studied medical decision making just to learn what I could learn from them. And I was in a seminar one day where someone was presenting some of their research and they put up a graph. And the graph was a pie chart showing the percentage of premature deaths in the United States that are due to various causes.

8:42So things like accidents, environmental exposures, genetics. And one wedge in that pie chart was devoted to decisions we make in our daily lives that can add up. So think things like getting a cancer screening, taking your medications, eating healthfully, avoiding cigarettes and alcohol, buckling your seatbelt. So this pie chart kind of blew my mind and changed my life because it showed that 40 % of premature deaths are due to behaviors we could change. I was just blown away by the magnitude of our daily decisions on our longevity. And when I learned that, it really changed my research trajectory because I thought, hey, I've been studying decision making, but doing it sort of out of curiosity for the most part, just trying to learn.

9:33And there's this opportunity to use this science to make a major dent in really important problems like making people live longer, happier, healthier lives. And what I love about it is it actually puts you in a position to save far more lives than you could have as a brain surgeon. For sure. I mean, if you think about that scale, that it's north of 40 % of deaths are due to the choices we make in our daily lives, and you are helping understand what makes us make the better choices and not just toward them, what an extraordinary impact you can have on the world. So this episode is releasing in January, and most people set new resolutions and make decisions about things I'm going to do this year and what I'm going to change.

10:16And for some people, it's framed as a fresh start. Can you talk about what a fresh start is in your world? And as we are setting intentions and resolutions for the year ahead, what's going to be most effective in making them stick? Yeah, I'm so glad that you brought up fresh starts. This is actually something that I've studied extensively with my collaborator, Heng Shen Diet, UCLA, and Jason Reese at Wharton. We have done research looking specifically at this peculiar phenomenon that drives not only New Year's resolutions, but actually our tendency to be healthier and set more goals at the start of new weeks, following birthdays, at the start of new months, and following holidays that we associate with new beginnings.

11:00So at moments in our lives that feel like chapter breaks, we have this sense that we're turning the page and that there's a clean slate that awaits us. January 1st is sort of the biggest of all fresh starts. It's the one where 40 % of Americans step back and set resolutions. Now, of course, there's no actual change, right? January 1 is no more different from December 31st than December 31st is from December 30th. But in our minds, those kinds of shifts, just like a Sunday shifts to a Monday, that demarcate a new period in our life, they make us feel more separated from who we used to be. But a big problem with Fresh Starts is that all they do is they give us a temporary boost in motivation.

11:43So they're actually really great moments to do something that's sort of a one and done. If you're thinking about starting saving in, say, 401k, a tax-advantaged retirement savings fund, and you just haven't gotten around to it, but your employer allows you to do that, and you can set up auto deductions from every paycheck. Well, using your motivation at a fresh start moment is a great idea. You just need that temporary boost. You need to sort of take one action and then it'll carry you forward. And guess what? Like magically, every paycheck will have a little deduction taken and your retirement account will start to grow.

12:14Similarly, if there's some important cancer screening, like a colonoscopy that you've been putting off, you could sort of sign up for that in that moment. And as long as you follow through, it's sort of a one and done. But the problem is most of our New Year's resolutions aren't one and done. Most of them require effort over time as opposed to a single action that will be valuable. And for those, the problem with fresh starts is that they really only give very temporary motivation. Sort of as soon as you get to February, it doesn't feel like a fresh start anymore. And this is one of the reasons we know that gyms are packed in January, but the attendance drops down again.

12:47You need more than just a little motivation. You need more tools, frankly, and science has a lot to offer to sustain the behavior change you are motivated to begin in fresh start moments. So how do we optimize for those changes that need sustained work, whether that's exercise or eating healthy or whatever it might be? How do we set ourselves up for success so that we're still hitting that gym in June or in October and not just in January? Yeah, it's a great question. And the beginning of the answer is that it requires understanding what are the obstacles that you face. And by the way, there's sort of a cute term for this.

13:23We've been talking about medical decision making. So it's a medical term. It's called a premortem as opposed to a postmortem. A premortem is just thinking, you know, if you fail, what will have gotten in your way? And it can be really valuable to think like this. It sounds kind of pessimistic and negative, right? But actually contemplating carefully what are the obstacles that might hold you back from achieving your goals is a really important step. And once you do understand what are those obstacles, you can solve for them using science. Some of the big ones are the challenge of impulsivity, that we are really drawn to things that feel good in the moment.

13:56And we tend to care less or weigh less the long term returns to our investments. On the flip side is procrastination, which is sort of driven by impulsivity. But I like to think of them as distinct because I think they have slightly distinct solutions. Laziness. I mean that actually in the most positive possible way. So my PhD is technically in computer science and we worship laziness when it comes to algorithms, right? The best algorithms take shortcuts. They don't search the whole possible space for solutions. And the human algorithm turns out to be similar. We're very well designed to seek the path of least resistance.

14:28We develop habits so we don't have to think about what we're doing and just fall back on those habits. However, the tendency to be a little lazy and look for the easiest way out can be a major barrier to change. Confidence. If you don't believe that you can achieve something, it's really difficult to get there. You don't believe in yourself. Like, oh, I just I'm not the kind of person who can run a 5K or I'm not the kind of person who can save reliably or who can get that promotion and sort of scale the ladder at work. If you don't believe in yourself, it's really hard to invest the effort necessary to make that kind of progress and achieve those goals.

15:03And then the final one I want to highlight, and this is the one that sort of bridges a little bit from internal to external, is conformity. So we're very influenced by the people in our social circles. They shape our beliefs about what's possible. And when we are surrounded by people who are sort of cheering us on and also showing us what's possible and who are good influences, that really shapes internally what we believe we can do and accomplish and how far we push. So having that support structure and sort of recognizing the power of conformity and how it can both hinder or help is critically important.

15:37So that's sort of the list of the most important things. And then we have different solutions depending on which of those obstacles your premortem suggests might be important for you. Well, and so if these are kind of the seven deadly sins that keep us from achieving change, what are the most effective things that tend to knock out a significant portion of these seven deadly sins? First of all, you need to set a goal. I'm just sort of taking that for granted. So critically, you have to know what it is you're trying to achieve. And then you need to plan how you're going to get there. So say you want to exercise more regularly.

16:09Some people think planning means saying something like, well, I'm going to exercise more regularly by joining a gym and going. That is not a plan. A plan is detailed. A plan has an if-then statement. You would stipulate exactly when will you go to the gym and for how long. So, you know, Thursdays, Fridays, and Saturdays at 5 p.m., that's when you'll find me at the gym and I'll stay for 30 minutes and I'll do a cardio workout on the elliptical. That's what I mean when I say a plan. You also might stipulate, how will you get there? And do you need to arrange childcare so that you can get there? So the more you get into those details, the better.

16:42And another thing that people overlook that comes up a lot is just finding a way to make your goal progress pleasant. If you find it miserable to pursue your goal, if you're just sort of hating every second of it, you will quit very quickly. So it's in contrast to sort of the ethos of Americans sometimes, and certainly the Nike just do it mantra. We think we should just push through pain and maybe pain, in fact, is even good for us and sort of builds character. But the science shows that it's a terrible strategy and that what we actually need to do is try and find a way to make it enjoyable to pursue our goals.

17:21Anything you can do to sort of follow the Mary Poppins advice that a spoonful of sugar makes the medicine go down will improve outcomes. So I appreciate that the new year is an obvious fresh start point. Are there hacks or tricks to help yourself get to a fresh start mid-year or off-cycle or whatever it is? Yeah, no, New Year's is just one. So actually every Monday seems to be a very powerful fresh start when we look at our data. And they come around conveniently once a week. So that's a great one to peg yourself to. The start of a new month also seems to do it for some people. And by the way, I think the psychology of fresh starts exists because it is so common for us to have these setbacks when we're pursuing goals.

18:07And it's essentially our psychological immune system giving us a way to set that aside and be optimistic despite what has gone a little bit wrong in the past. So that's my sense of why we probably notice these naturally and naturally go about life in a way where we're sort of looking for the next clean slate. I want to talk about two other terms that come up a lot in your work and in the field. Somewhere on the bookshelf behind me is a book by my law school professor, Cass Sunstein, or co-authored by Cass, called Nudge. You talk about nudges. What are nudges and what are the most effective nudges to generate the behavioral change you want to make in your life?

18:43I love that you brought up Cass. He's one of my favorite people and my favorite co-authors of mine. Cass is amazing. So nudges are tools that motivate behavior change without changing your incentives or the information you have, sort of not using the typical policy levers that we think of, right? Like, oh, tax sugary beverages and that's how we'll get people to drink less of them or I'll ban them entirely. Those are the kinds of tools policymakers usually use, but a nudge would just make something more psychologically attractive without actually making it more expensive or say sharing calorie count information that might update your beliefs.

19:19So there are quite a lot of nudges that can be effective when it comes to behavior change. And actually this whole research body is really at the heart of what I study. So Cass's co-author on the bestselling book, Nudge, Richard Thaler likes to say my research is all about snudging, self-nudging, which I'm glad I didn't name my book Snudge because I don't think it would have been a bestseller. But you never know. Richard is brilliant. He won a Nobel Prize. Maybe his title would have been superior to mine. We talked a little about making a plan, sitting down and saying, like, when will I do it?

19:55Where will I do it? How will I get there? Being prompted to do that, that's a nudge. If someone who cares about you is trying to encourage you to follow through on your goals, they might prompt you to form a plan. Another example of a nudge, maybe the most well-known nudge, is a default, a change in default. A default is the outcome you will get if you don't take some other action. So think of, you know, you get a new computer, you boot it up, and it has like defaults. You know, it has a default font size. You don't have to decide where you want all the icons to appear on the desktop or what font or sort of what color scheme.

20:33It will automatically choose a bunch of things for you that are normally popular and that are normally good choices. So you don't have to make 100 ,000 decisions before the computer works. And we want to think about how we can snudge ourselves into better decisions with defaults. You can think about defaults in your home in terms of like, what are the snacks available in the pantry? That's the default. It's low friction to reach for whatever's there. Do you have carrots and hummus that are available to you when you get the munchies or Doritos? Of course, if you're dying for Doritos, you can hop in the car or walk around the corner and get some, but you've created a default when you set yourself up so that the thing that is most available that's on hand is the thing that's good for you.

21:17So making the lazy and easy path the one that is healthy and beneficial in the long run. Still ahead, I talk with Katie Milkman about how to translate these tools into ways to achieve organizational goals.

21:38Real leaders don't back down when the stakes are high. They innovate, they push forward, and then they take the stage at the Masters of Scale Summit. Join us in San Francisco, October 7th to 9th, to hear from the CEO of the New York Times, scientists using cutting-edge technology to find cures, the leader of crypto powerhouse Coinbase, a retired four-star general, and many, many more. Apply now at mastersofscale.com slash apply25. That's mastersofscale.com slash apply25. If you're ready to take your startup from idea to impact, then AWS is your launchpad. From data storage to machine learning to secure app hosting, AWS gives you the tech trusted by the world's fastest scaling startups.

22:28And here's the best part. Join AWS Activate today and you could score up to$100 ,000 in AWS credits tailored to your stage and network. Go to aws.amazon.com slash activate and start building. Expanding your business in the U.S. can feel like a maze. Every state has its own payroll, benefits, and compliance rules, which can pull your focus away from growth. That's why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one.

23:12So if you're scaling, make it simple with Deal. Go to deel.com slash mos and get up to three months free. Welcome back to Masters of Scale. You can find this interview and more on our YouTube channel. Are there systemic nudges that leaders can put in place for their teams? Yeah, absolutely. So I think there's a lot of different ways to think about nudging that might lead to more productivity benefits. you might, for instance, do something like set defaults on everybody's calendar regarding deep work time. If you feel that's something that's missing, maybe you, um, if there's something that you'd like to see people do more of sort of sending calendar invites and breaking out time, of course, people can decline it.