- The document discusses research on the brain and its practical applications in corporate settings. It covers three main topics:
1) How too much choice can paralyze people, and companies are limiting options to increase satisfaction and action.
2) The importance of "affective techniques" like storytelling and images that access the emotional brain, rather than just facts alone.
3) How understanding human motivation can increase charitable giving by connecting people emotionally to causes.
How Research Into the Brain Can Transform Companies
1. Practical Applications of the New Understanding of the Brain by Arun
Abey, Chairman of ipac, General Manager Strategy and Corporate
Sustainability, AXA APH, Director of The Smith Family and co-author of
How Much is Enough? (www.howmuchisenough.net)
The rapidly advancing research into the mind and its potential, has many real
world applications, not the least being the complete re-engineering of
companies.
The 20th
Century saw the rise of large companies. These institutions have
strong systems and processes which underpin their ability to grow and be
durable. The typical large company though, is characterised mainly by rational
and logical thinking, reflected in rigid bureaucracy, a lack of customer focus,
limited innovation and low staff engagement, all of which make it vulnerable to
innovative new competitors.
As we understand more about the mind and its potential, the full translation of
this to the corporate world may be to see the evolution of an alternative, more
sustainable institution which has the strengths of a 20th
Century company,
while avoiding the bureaucratic negatives.
I am going to first briefly summarise some of the key findings of research into
the mind from the viewpoint of the workplace. I will then explore three
applications of these findings. Forgive me for what is necessarily a
simplification and generalisation of the great research by scientists, some of
whom are gracing us at this conference,
While the structures of the brain are complex and a complete understanding
of their interactions is still some distance away, broadly scientists have
identified three key parts of the brain. The oldest part, the brain stem or so-
called reptilian brain, controls basic body functions and reflexes that keep us
alive, including the basic urges to eat, protect ourselves and to mate.
The next part of the brain to evolve was the more subtle and sophisticated
mammalian brain, comprising the limbic system, or the seat of emotions.
The most recent phase of evolution saw the emergence of the neocortex,
which controls conscious thought and is what gives human beings our unique
ability to be aware, to have ideas and abstract perceptions.
One of the most valuable advances in the research on the mind is that which
has revealed the relationship between the neocortex and the limbic system.
Because it is the realm of conscious thought, we have naturally assumed that
our actions and decisions are dominated by the neocortex, unaware that
many of our emotional appraisals occur unconsciously. Research on the
operation of the mind, and especially functional magnetic resonance imaging,
means we now know that is not true.
We have come to realise that it is emotions, rather than rational thought per
se, that cause us to take action. Emotions are what motivate and move us.
2. As Gregg Jacobs, Associate Professor of Psychiatry at Harvard observes,
although we attribute our feelings to ongoing conscious experience, they may
actually occur for reasons of which we are unaware. That is, the source of our
feelings may be very different from the rational reasons we employ to explain
these feelings to ourselves.
The fact that we rationalise our decisions in the neocortex – why we decided
to marry Sally or Tom, rather than Amy or Dick, should not be confused with
where the decision mainly originated – in the limbic system.
The implications of this research for the workplace are enormous, both at the
basic levels of trying to improve productivity and at the higher levels of
developing a sense of meaning and purpose.
For decades management theorists have worked on mechanisms to increase
motivation and productivity. Many of the mechanisms, such as financial
rewards, have focused on appealing to the cortical parts of the brain and not
sufficiently to the limbic system and its interaction with the neocortex.
It is becoming clearer that appealing to intrinsic motivation, through having a
noble purpose and highlighting how each individual worker can make a
contribution is equally, if not more, important.
More generally, understanding the mind is becoming more important to a
leader who has the vision of wanting to build a genuinely sustainable, socially
responsible company. At the highest level, such a company seeks to integrate
more holistically and powerfully, both the cognitive and emotional parts of the
minds of all of its stakeholders. It does this by not focusing narrowly on
shareholder returns, but instead by trying genuinely to solve real and enduring
customer needs, albeit in a commercial context. It engages and motivates its
staff by making sure that they have a holistic understanding of what the
business is trying to deliver to customers and how it makes a difference to
their lives.
It engages all its stakeholders, including the community, through an exciting
and consistent message of the difference to peoples‟ lives that it makes and
emphasises to each stakeholder that its aim is to achieve a fair balance
between the needs of each. It is painstaking to avoid a situation where any
one stakeholder in the long run feels unvalued, unfairly treated or exploited.
This sort of thinking was an important influence in the new ambitious strategic
plan that AXA Australia announced in 2008. This plan included seven
strategic imperatives, in addition to the financial goals. These imperatives
were regarded as key to allowing AXA to achieve its financial goals and the
first imperative was based on understanding the research on the mind and
behaviour, to improve the experience that AXA customers enjoyed. AXA
recognised that this would also require cultural change and a simplification of
parts of the business and these were included in the imperatives. An
overarching theme of how the company could enable the delivery of quality
3. financial advice was used to inspire, unify and help focus the business as a
whole.
While AXA seeks to be a leader in applying this research in the financial
services industry, other industries are seeing similar leaders emerge: for
example, Google in the computing industry and Toyota in automobiles.
Let us now focus on three major ideas and practical applications from
research into the mind and what it means for work, broadly defined.
1. Why do our minds love the idea of choice, but become disabled by it?
2. How do we enhance communication and learning by the use of 'affective'
techniques?
3. How can we engage people to feel greater joy in giving and how is this
revolutionising charitable fund raising?
Why we love choice but are disabled by it
We all love choice. Imagine what life would be like without our favourite
yoghurt; the array of restaurants just around the corner from our office or
home; new books or a DVD on just about any topic; jeans that perfectly fit our
body shape; or simply a cup of tea made just as you like it. Companies that
offer choice, both to their customers and their staff, attract more of both.
But here‟s something that Professors Sheena Iyengar and Barry Schwartz
have also found out about choice that is less intuitive. The more choice we
have, the less likely we are to take any action at all, even if it‟s in our self-
interest. More generally, increased choice tends to lead to diminished
satisfaction and in some cases to stress, anxiety and depression.
Stores which offer too much choice find that they attract more customers, but
they buy less. Even the simple act of offering a choice of different chocolates
causes people to report that the taste of the chocolate picked is diminished,
compared to the situation in which they had no choice. Professional services
firms offering a large number of choices find that many prospective clients do
not go beyond the first exploratory meeting.
In perhaps the most extreme case, companies in America have found that if
they offer too many retirement savings options, then employees tend to take
up none of the options. They will even forgo up to $1,000 of „free money‟ –
many employers offer to match the first $1,000 of retirement savings that an
employee contributes to encourage enrolment in a retirement savings plan.
Underpinning this is the problem that most people measure their satisfaction
relative to what they perceive the satisfaction of others to be. To illustrate,
suppose that you are undertaking one of the nightmares of the modern world
– trying to buy a plan for your mobile phone. You eventually walk out
reasonably satisfied that you have bought a plan that is affordable and suits
4. your needs. And that should be that. But then the geek who sits in the cubicle
next to you at work says that he bought a similar plan from a rival firm, got
25% off and got a free camera to boot. Dissatisfaction suddenly replaces
satisfaction.
Choice is especially hard for what Professor Schwartz calls maximisers, who
always seek out the best. They spend hours, days, weeks, wading through all
possible choices. When they make a selection they often descend into
feelings of regret when something „better‟ becomes available.
Many workplaces are finding that because of poor decision making when it
comes to savings, investment and financial management generally, many
older employees cannot afford to retire. This has been a particularly serious
problem in legal and accounting partnerships where the failure of senior
partners to make good financial choices forces them to stay on long after their
productive value has diminished. This causes resentment and the departure
of the most prospective of the next generation of partners.
These insights are causing a slow revolution in various workplaces.
The firms that understand the research on the mind, are moving towards
applying the following principles, when they provide choice to either their
customers or staff.
Limit choice to a few clearly defined positions. For example, in
supermarkets the trend over decades to offering more and more choice
within individual categories of goods has been reversed. Choice is being
increasingly restricted to a premium brand, a cut price brand and a value
for money brand, which the leading grocers are trying to appropriate for
themselves.
Provide „navigation‟ aids to help people feel confident about making the
right choices. In something simple like a variety box of chocolates, this can
be as basic as a guide to the taste of each variety. In more complex
matters such as retirement savings plans, the clearer labelling of different
funds and redesigning default options have been effective. In fact the US
amended its pensions‟ legislation some years ago to allow employers to
automatically enrol employees in retirement savings plans and to
automatically choose a sensible long term fund as a default – with
employees retaining the right to opt out or change funds if they wished.
Provide employees with access to advice. In an increasing number of
cases employers are showing a willingness to subsidise the cost of senior
employees obtaining financial advice, having worked out that financial
stress, caused by their employees having made poor choices, is a major
cause of poor productivity. In other cases the employer may sponsor the
development of „smart‟ software or a website to help educate and improve
the choices employees are making.
5. Cognitive versus affective communication
Another key application of research into the mind is reconsidering the way in
which companies communicate with their stakeholders. Information sharing
aside, most work-place communication is aimed at getting someone to do
something.
To get:
the workers to increase the quality and quantity of their work,
the customers to buy more and,
the shareholders to invest more.
Companies are now starting to understand what the advertising companies on
Madison Avenue understood a long time ago. And that is that all action is
stimulated by (an often unconscious) emotion.
Most company communication tends to be cognitive – facts and figures
designed to be processed by the neocortex. And while this is useful for
sharing information, of itself it is often insufficient to ignite action. Trying to
access the limbic system by going via the neocortex results in the signals
being received in a very muffled way. Far more successful is designing
communication systems that allow the cortical system to be by-passed and
the limbic system to be accessed directly. This is the essence of affective
communication. It involves using communication devices that are not
cognitively demanding but resonate more intuitively. There are three main
devices:
Story telling
Stephen Denning has emerged as the leader in communicating through
stories. At the heart of his emphasis on stories is his observation that human
emotions have a narrative character. We dream in stories, our imaginations
consist of stories and our hopes and fears reside in stories. We even think in
stories.
Implicitly recognising the importance of the limbic system in all of this, he
argues that the central triad of every effective leadership communication
implies a shift from the traditional, cognitive focused approach of,
“describe problem >> analyze problem >> give solution”
to the new triad:
“get attention >> elicit desire >> reinforce with reasons
In short, engage the limbic system first and then reinforce this with an appeal
to the rationality of the neocortex.
Pictures
We think in stories and these stories are visualised rather than
intellectualised. In a research project involving AXA and Professor Shlomo
6. Benartzi of UCLA, we considered the impact on decision making of using
cognitive information compared to pictures which conveyed the same
information in an affective way.
As I will demonstrate in my presentation, conveying even relatively simple
information using affective pictures, resulted in much more confident decision
making than relying purely on facts and figures.
Experiential
If the aim is really to change behaviour long term, then nothing beats
experiential learning. This is especially to help instill discipline that
overcomes the more destructive reflex actions that may be imprinted into our
brain. How can we train the mind to help people to remain calm and continue
a certain routine, even when exposed to stressors where their natural instinct
is to flee?
The flight simulator for pilots is a great example of how technology can be
used to help in rewiring the brain. And as computer technologies become ever
more powerful and more accessible, they provide increasing opportunities to
use technology to simulate experiences that improve people‟s behaviours in
many ways. How they save and invest, how they take care of their health and
fitness and how they react to phobias such as public speaking, are but a few
examples.
Engaging People to Give More
How useful is the research and applications that we have discussed above to
social enterprises such as charities? The answer is very useful. In fact
encouraging people to give more may be one of the most valuable
applications of this research.
Three factors tend be particularly important to the amount people give to
charity:
Discovering for themselves the positive impact on their wellbeing of
helping others in need. Psychologists have documented that on the one
hand meaningful giving has an enduring effect on the wellbeing of the
donor, but that on the other, most people underestimate this until they
have the experience.
Developing an emotional connection with the recipient
Being confident that the money is going to the intended recipient and not
being wasted in administrative costs.
Many charities offer various opportunities to volunteer, which allow people to
discover for themselves what they feel about this experience. Most are also
adept at using personal stories to try and connect donors to their cause. The
group which has shown particular mastery at understanding the mind and
what motivates people, as well as combining this with a deep knowledge of
how to use modern technology to good effect is Kiva.
7. Kiva makes it easy to make an emotional connection with the people it‟s trying
to help and easy for you to discover for yourself the power of giving. Try the
following experiment for yourself and your partner (or child or indeed anyone
close to you).
Think of a present that you have bought for your partner or someone close
to you and write down, out of a possible 10, how happy buying that
present has made you and how happy it made your partner.
Next write down how happy you think gifting money to a charity in the
name of your partner will make you and him or her respectively.
Then visit the Website www.kiva.org, the e-bay of microfinance, where you
can buy your partner a gift certificate that can change the life of a poor
entrepreneur in a developing country for as little as $25. The website
works in conjunction with microfinance institutions around the world that
recommend the borrowers and administer the loans. The process is
amazingly simple – to spend the gift, your partner, browses the profiles of
potential borrowers, finds one they like and pays via PayPal. You can do
interesting things like buy a poor family in Azerbaijan a goat or help fund a
baker set up shop in Cambodia. It can lead to some great and engaged
discussions between between both of you as you toss around the options
and work out what engages you the most. Once the loans are made, your
partner will receive regular repayments, usually monthly, until the loan is
paid off and regular updates on how the recipient is faring. The repayment
rate on these loans is a staggering 98%. When the loan has been repaid,
your partner can do what she wishes with the money, but don‟t be
surprised if she loans it to another entrepreneur and starts the cycle again.
The beauty of Kiva is that it is a peer to peer transaction which means that
all your money reaches the recipient.
Now ask your partner to rate how happy this gift has made them, and also
rate it yourself. Compare it to the rating that each of you gave your
material gift.
Most people who have tried this experiment do not, before they engage
with the Kiva site, expect it to do much for their happiness or that of their
partner. However, as they go through the exercise their perception
changes. A month after the gift is given, both parties invariably report
higher wellbeing from the choice of this gift than a material item.
Not only has Kiva been successful in motivating adults to give more, it‟s a
great site to introduce kids to the power of giving. When they first received
their $25 Kiva vouchers, my kids were bemused. But as they navigated their
way around the website, they became intrigued by the projects and the
quirkiness of them: “Gosh, I didn‟t realise that a goat could be a long term
source of food, fuel and clothing for a family.”
It would be an exaggeration to say that my boys today enjoy giving away
money to Kiva more than they enjoy receiving gifts. Nevertheless, the
8. quirkiness of the site, their sense of control over who gets the money,
automatically being able to track the repayments and the life of the recipients
has meant that they have readily agreed to receiving 25% of their birthday
and Christmas gifts in the form of Kiva gift certificates.
The Smith Family (TSF), is one of Australia‟s largest and oldest social
enterprises and its focus is the education of disadvantaged kids. It uses
research on the mind in a variety of ways.
At one level, in an applied research project undertaken with AXA, it is
analysing behavioural research to help understand how the money
behaviours of disadvantaged children can be improved.
At another level, it uses emotional engagement as a means of enhancing its
connection with donors. Volunteers are able to participate in activities ranging
from packing and delivering Christmas presents to mentoring disadvantaged
kids as well as receiving a personal letter from a child being sponsored. The
organisation‟s website comprises a number of personal, moving stories of kids
whose lives have benefited from education. In combination, this is a powerful
package to encourage philanthropic behaviour.
Inspiring us to be more generous of spirit may be one of the most powerful
rewards of the research into the mind and its potential and indeed, this
conference.