Can You Meditate Your Way to Smarter Business Decisions?
Mindfulness meditation may prevent “throwing good money after bad.”
Posted November 17, 2014
Meditation is going mainstream in the halls (and gyms and break rooms) of big business. A glance at the headlines reveals that corporate luminaries from Rupert Murdoch to Bill Gates—as well as a plethora of senior executives at firms such as Google, Ford, Aetna, and Whole Foods—now swear by meditation as a tool for success. A number of Fortune 500 companies are offering meditation classes for their employees.
While there’s plenty of anecdotal evidence that meditation helps people enhance their ability to focus, have more energy, and generally feel better—and studies reveal meditation’s physical changes to the brain—there’s been little research actually linking it to business outcomes. But in my recent study, “Debiasing the Mind Through Meditation: Mindfulness and the Sunk-Cost Bias,” with co-authors Andrew Hafenbrack and Zoe Kinias of the Department of Organisational Behaviour at INSEAD, we discovered that even short periods of meditation can have a striking effect on business decisions.
As the title of the paper reflects, we tested the sunk-cost bias, recognized as one of the most damaging psychological phenomena affecting business dealings. Defined as the “tendency to continue an endeavor once an investment in money, effort, or time has been made” (Arkes & Blumer, 1985), it’s commonly known as “throwing good money after bad.” You can witness it played out on a grand scale in doomed but seemingly endless military campaigns (Staw, 1976), the banking crises (Staw, Barsade & Koput, 1997), and in expensive corporate projects that top brass can’t seem to give up on even after they’ve been scooped by a competitor. Perhaps you’ve succumbed to it yourself: remember that stock you just couldn’t sell even though it tanked? That concert you dragged yourself to—through a blizzard and with a head cold—just because you’d paid so much for the tickets?
Why do people fall prey to this kind of bias? As my colleague and lead author of the study, Andrew Hafenbrack, told Forbes in an interview, “In many cases negative emotions—fear, anxiety, regret, even guilt or worry over past decisions—subconsciously play a part in the decision-making process.” One of our results was that a reduction in negative affect was an important mechanism in the positive effects of mindfulness meditation on decision-making.
The type of meditation we used in the study was mindfulness meditation, which involves concentrating on present experience such as by focusing one’s attention on breathing (Hanh, 1999; Kabat-Zinn et al., 1992). We first assessed whether “trait mindfulness,” that is being more or less mindful by nature influenced the degree to which participants engaged in sunk cost behaviors through a variety of business scenarios. We found support that it did.
To gather additional evidence that it was indeed the mindfulness that led to this effect, we then took a different group of participants and had them either undergo a brief 15 mindfulness meditation exercise or one that induced the kind of mind-wandering state—flittering from present to past to future—that most of us typically experience during our waking hours. We then asked them to answer the same scenarios. One scenario involved a printing company that had spent $200,000 on a new custom-made printing press, only to find that its bankrupt competitor was offering to sell it a better one for only $10,000. A decision to buy it, using a pot of savings, indicated the participant had overcome the sunk-cost bias. Another scenario involved an aviation company president who had committed $10 million to developing a plane that couldn’t be detected by radar. After $9 million had been spent, there was news of a rival product with better performance and lower cost. A decision to keep funding the inferior plane indicated the participant had succumbed to the sunk-cost bias.
The results were pretty remarkable. A mere 15-minute mindfulness meditation—induced via a recorded, not even a face-to-face session—significantly increased people’s ability to resist the sunk-cost bias. In the aviation company scenario, for example, 53% of the meditators decided to scrap the project (the rational choice) as opposed to only 29% of the non-meditators.
We showed that the meditators’ behavior was due to a reduced focus on the future and past, which then decreased their negative affect—that is, they were less stressed or anxious. This correlates with past findings that people report greater happiness when they focus on the present moment rather than the past or future (Killingsworth & Gilbert, 2010).
The fact that just a few minutes of meditation may impact the bottom line should make managers sit up and take notice. It supports the growing body of evidence that work improves when people are permitted to take meaningful breaks. And it is additional evidence to the voluminous body of knowledge showing that rational decision-making—which many people think of as emotionless—can be improved by the presence of the correct emotion (Lyubomirsky, King & Diener, 2005) (in this case lowered negative affect).
My colleagues and I are currently taking this research further, looking at the influence of mindfulness meditation on negotiation outcomes. And in another study, Andrew Hafenbrack is investigating its effects on goal-setting. Interestingly, his early findings indicate that for this particular activity, mindfulness may actually be more hindrance than help.
Arkes, H., & Blumer, C. (1985). The psychology of sunk cost. Organizational Behavior and Human Decision Processes, 35, 124–140.
Hafenbrack, A. C., Kinias, Z. and Barsade, S. G. (2014). Debiasing the mind through meditation: mindfulness and the sunk-cost bias. Psychological Science, 25: 369.
Hanh, T. N. (1999). The miracle of mindfulness: An introduction to the practice of meditation. Boston, MA: Beacon Press.
Kabat-Zinn, J., Massion, M. D., Kristeller, J., Person, L. G., Fletcher, K. E., Pbert, L., Santorelli, S. F. (1992). Effectiveness of a meditation-based stress reduction program in the treatment of anxiety disorders. American Journal of Psychiatry, 149, 936–943.
Killingsworth, M. A., & Gilbert, D. T. (2010). A wandering mind is an unhappy mind. Science, 330, 932.
Lyubomirsky, S., King, L., & Diener, E. (2005). The benefits of frequent positive affect: does happiness lead to success?. Psychological Bulletin, 131(6), 803-855.
Staw, B. M. (1976). Knee-deep in the big muddy: A study of escalating commitment to a chosen course of action. Organizational Behavior and Human Performance, 16, 27–44.
Staw, Barry M., Barsade, Sigal G. & Koput, Kenneth W. (1997). “Escalation at the Credit Window: A Longitudinal Study of Bank Executives' Recognition and Write-off of Problem Loans.” Journal of Applied Psychology, 82, 130-142.
About Sigal Barsade:
An award-winning researcher and teacher, Sigal Barsade’s expertise is in emotional intelligence, organizational culture, leadership and top management teams, emotions in the workplace, and group dynamics. She is the Joseph Frank Bernstein Professor of Management at the Wharton School of the University of Pennsylvania. Prof. Barsade will teach in the Wharton Executive Education program, The Leadership Edge: Strategies for the New Leader, November 16-19.
Prior to joining Wharton, Prof. Barsade taught at Yale University for a decade. She has consulted for corporate, public and nonprofit clients, including Del Monte, GlaxoSmithKline, Merrill Lynch, State Farm Insurance, and Philadelphia Gas Works. Prof. Barsade serves on the editorial boards of Administrative Science Quarterly, Organizational Behavior & Human Decision Processes, and Organization Science.