The Neuroscience of Business: Innovations in Leadership and Strategic Decisions

When we are confronted with a choice, the cerebral cortex first decodes the perceptual properties of the options available. By comparing current options with our memories, as well as our current internal state, our brains assign value to the options, which are represented in the ventromedial prefrontal cortex and ventral striatum. The options with the highest value are then typically selected for choice by the prefrontal cortex. To aid these processes, the parietal cortex uses prior experience to focus attention on the most relevant and valuable options. All of this takes place across distributed networks connecting sensory input to motor output. Consequently, disorders involving different parts of the brain can produce distinct kinds of impairments in decision making, from impulsivity to problem gambling and other forms of addiction.

There isn’t one reward center of the brain. Instead, there is a network of reward areas. One of these, the ventral tegmental area, is a part of the midbrain that produces dopamine, an important neurotransmitter needed to predict rewards and learn how to acquire them. Dopamine is transmitted to many different areas of the brain — in particular, the prefrontal cortex and striatum — to motivate behavior, guide learning, and make decisions. Remarkably, most parts of the brain are sensitive to reward, so processes from perception, attention, and memory to emotion can be focused on making decisions that acquire rewards and avoid punishments.

The mesolimbic pathway, originating in the ventral tegmental area of the brain, is key to motivation. This pathway uses the neurotransmitter dopamine to motivate goal-directed behavior. Motivation is different from pleasure and also different from reward. Motivation is the internal drive to achieve a goal or obtain a reward. Dopamine increases during anticipation and provides the drive to obtain a desired goal. There is another part of the frontal lobe, the anterior cingulate cortex, that drives the extreme motivation necessary to do the difficult or impossible — like climb a mountain or run a marathon.

Neuroscience has a lot of relevance for leading and managing companies and teams. Neuroscience can help inform how we work best with others, build effective teams, and overcome bias, just to name a few leadership traits. The social brain network is specialized for managing our connections with others, and activation in this network underlies attention to others, empathy, and cooperation.

Neuroscience also provides an alternative way of looking at traditional leadership hierarchy within business settings. In fact, high status within a social hierarchy is associated with less activity in the social brain network, impairing the development of good working relationships. Using these kinds of observations, neuroscience can help inform the mechanisms that lead to better business decision making and optimized business practices that improve productivity, reduce stress, and lower employee turnover.

All human behaviors — from what consumers choose to buy, to how they invest, to how they respond to advertising, to how they relate to team members or clients — arise from how their brains work. And we now know that people are not very good at reporting their brain states. Today business leaders can measure those brain states directly. Neuroscience gives business leaders the objective, scientific tools they need to understand both consumers and employees and use that information to make better business decisions.

Today's dynamic, hyper-connected, global business world makes every decision count more than ever. Neuroscience provides a science-based toolkit that can help business leaders make better decisions. Today we are at an inflection point where neuroscience and neurotechnology provide a scalable, objective way to improve all aspects of business decisions, from marketing, to human resources, to innovation, to finance, to entrepreneurship.

Marketing is the most mature area of business being disrupted by neuroscience and the clear leader in this space is Nielsen. All the major tech companies, like Facebook and Google, are now using neuroscience to understand people with ever greater precision. Wealth management companies like Vanguard are beginning to apply neuroscience to develop better models of investors. And there are multiple companies, like CTRL-labs, Halo, Muse, and Neuralink, that stand poised to bring brain-computer interface technology into everyday use.

We are at the dawn of a revolution in which many if not most industries will be disrupted by neuroscience. As our understanding of the relationships between brain states and decision making and human performance become more precise, this will change the way employees are selected, on-boarded, and trained; shift work is scheduled and monitored; and investment decisions are personalized for individuals. We believe human resources will be the next big area of disruption for neuroscience.

Brain physiology limits the number of items we can usefully consider, so decision making seems likely to depend on individual biology. People also differ in how sensitive they are to negative outcomes, uncertainty, risk, and volatility, and these individual sensitivities strongly shape the way they make decisions. In large measure, these limitations are both strongly rooted in each person's individual biology and can be measured using neuroscience techniques. These facts mean business leaders can use neuroscience to help them make more precise business decisions.