The Moral Molecule

Neuroscience and economic behavior

Management As a Series of Experiments

The neuroscience of management

Economics teaches that people optimize outcomes subject to the constraints they face. The problem with this view is that the desired optimum changes when the setting one find oneself in changes. Settings and environments constantly change, so seeking some global "best option" is a losing proposition.

Designing and sustaining an organizational culture is particularly difficult because the people embedded in the culture are diverse. I have written extensively about how to build a culture of trust and how this substantially improves both business outcomes and colleague joy at work

So, how can a leader implement policies to create a culture of trust?

I recommend a modest approach: consider management as a series of controlled experiments that have the goal of improving outcomes rather than immediately hitting some global optimum. This humble approach seeks to nudge an organization's culture toward colleague empowerment to make decisions and be accountable for them, and recognizes that some interventions will fail. Call it "evidence-based management" or my preferred term since it is based on neuroscience "neuromanagement."

Here are the steps one should follow to run management experiments

1. Obtain baseline values for the policy you want to change and key outcome variables you believe are impacted by this policy.

2. Communicate to colleagues the reason for the change, the date the change will occur, and the period of the change. Listen to their advice about how to make the change and ask for their commitment to it.

3. At the end of the test period, confirm that the policy you sought to change actually did change, and measure outcome variables.

4. If the change produced a positive effect on outcomes, continue it. If not, consider returning to the status quo.

5. Lather, rinse, and repeat.

To use this approach effectively requires a theory of change so that interventions are not made willy-nilly. My previous posts have identified the neuroscience of voluntary cooperation that provides the foundation for understanding how people are likely to respond to culture changes.

The companies I have worked with that have used this modest approach have seen immodest improvements in performance. The most important step is obtaining buy-in from colleagues. To do this, the rationale for the change must be clear, especially why it will improve their work lives. Saying it will increase productivity is not enough, there has to be an emotional investment in making the new policy work by each individual. This can be best communicated by describing at human scale, not organization-wide, what will happen.

Management as an experiment also takes the perfection pressure off leaders as every change will not produce the desired effect. It is just an experiment after all. But, the ones the work can make a profound difference in people and performance.

 

Paul J. Zak is a neuroeconomist at Claremont Graduate University in Claremont, CA.  His book The Moral Molecule will be published in 2012.

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