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Forget the MBA. Managers Need to Study the Brain

By Zack Anchors
It's often assumed that effective decision-making involves rising above the messy emotions flowing through the mind and relying purely on rational analysis. But that's not how our brains work, according to "Your Brain and Business: The Neuroscience of Great Leaders," a new book by psychiatrist and executive coach Srinivasa Pillay. He argues instead that we make our best decisions when we do take our emotions into account.

To illustrate the importance of emotions, Pillay cites the example of executives at mortgage companies who were fearless about lending people money during the run-up to the housing crisis: "Without fear, they lacked the information that was necessary to judiciously distribute money," he writes. "Fear is an emotion, and it needed to be part of the equation before money was lent."

Pillay spoke with BNET about the role of emotions in decision-making and other insights business leaders can gain from brain science.

BNET: What can business leaders learn from brain science?
Pillay: People think there's a huge divide between brain science and business, but businesses contain people and people have brains. So if we understand what is going on in their brains, we add another level of understanding concerning what's going on in the business. It pays to be aware of the unconscious factors that are affecting the outcomes of a business strategy.

BNET: How are the insights into business offered by neuroscience different than those offered by psychology?
Pillay: Organizational psychology focuses on external behaviour that you can observe directly. Brain science puts those behaviours in context by addressing the unconscious factors underlying them.

And brain science reframes existing ideas from organizational psychology, making them more concrete. Because of the concreteness, and because these ideas can be illustrated with images, employees are often able to remember the insights they learn and are then able to execute them more effectively.

BNET: What's an example of an existing idea that brain science reframes in an illuminating way?
Pillay: One of the reasons that business strategies are not executed effectively is that they are presented in a way that makes people anxious. This anxiety reduces productivity, undermining the strategy. An organizational psychologist might identify that productivity is affected by the level of your anxiety, but a brain scientist could say, "When you become anxious it activates the fear center in your brain, which can then disrupt the thinking part of the brain, to which it is connected."

Moreover, brain science tells us that even when fear is completely outside of conscious awareness, the fear center of the brain still activates. If you're unable to focus on a project, you may not be feeling anxiety consciously, but anxiety that is active in your brain may be lessening your productivity.

BNET: What is the role of emotions in effective business leadership?
Pillay: In business you're dealing with more than just logical, linear consequences; you're dealing with people. And people are as driven by emotions as they are by their thoughts.

For example, a lot of people are talking these days about the importance of empathy in the work environment. Neuroscience has now shown us that there are two types of empathy: cognitive empathy and emotional empathy. The latter is when you are in a conversation and you make a gesture to show that you relate to what the other person is saying -- say, an "ah." Cognitive empathy, on the other hand, is about demonstrating that you understand another person's point of view. Using this form of empathy, you might start a sentence with, "So from your perspective..." When you use that approach it stimulates a very different brain region. While both forms are valuable, studies show that cognitive empathy is actually superior in terms of determining effective outcomes in negotiation.

BNET: Is there one part of the brain that plays a particularly important role?
Pillay: In brain science we look more at neural systems than single regions. Having said that, the amygdala is one of the most critical brain regions that is relevant in business. The amygdala is an emotion processor. We are evolutionarily wired to process fear over and above other emotions, which is a way the brain helps protect us from threats. Understanding how the amygdala interacts with the thinking brain, and how it might affect decision-making biases, is one of the most valuable contributions neuroscience can make.

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