THAT’S THE WAY WE (USED TO) DO THINGS AROUND HERE

When corporate leaders talk about change, they usually have a desired result in mind: gains in performance, a better approach to customers, the solution to a formidable challenge. They know that if they are to achieve this result, people throughout the company need to change their behavior and practices, and that can’t happen by simple decree. How, then, does it happen? In the last few years, insights from neuroscience have begun to answer that question. New behaviors can be put in place, but only by reframing attitudes that are so entrenched that they are almost literally embedded in the physical pathways of employees’ neurons. These beliefs have been reinforced over the years through everyday routines and hundreds of workplace conversations. They all have the same underlying theme: “That’s the way we do things around here.”

This phrase (and others like it) typically refers to the complex, subtle practices that become ingrained in an organization’s culture, to the point where they become part of its identity. Habitual thoughts and behaviors are not bad in themselves; indeed, they are often the basis for what a company does well. But when circumstances shift or the company becomes dysfunctional, those habits may need substantive change.

We teamed up to write this article, despite our disparate backgrounds — in neuroscience (Schwartz), learning and development in a major international corporation (Gaito), and ethics and leadership in the financial-services industry (Lennick) — because during the past six years, we each came to recognize the power of conceptual focus in organizational change. Altering habits is difficult enough for individuals. Studies suggest that the number of people who voluntarily shift away from addictive or obsessive-compulsive behavior, even when they know their lives are at stake, is staggeringly low, perhaps one in 10. At corporations, the complexity of collective behavior makes the challenge even greater. Furthermore, as with repairing a ship while it is at sea, these changes must be made at the same time that the company continues to operate.

But there is a particular type of highly charged conversational process that leads to changes in the neural patterns of people throughout an organization — a process that works with, not against, the predisposition and capability of the human brain.

Cargill’s Strategy Transformation

Consider, for example, the way that Cargill, a major agricultural and food products company, applied knowledge of the human brain to raise its game in collaboration and innovation across business units. Cargill had already undergone one major shift, starting in 1999, toward becoming a more agile, solutions-based organization. The company’s executives had defined the “heart of leadership” for their company as integrity, conviction, and courage. They had also set out to create a “culture of freedom,” empowering and encouraging employees at every level to act with decisiveness and accountability on behalf of customers.

But some elements of the company’s culture and practice still did not fully support the customer-focused culture that they were developing. One customer, a large packaged-foods manufacturer, told a Cargill executive, “You send 15 different people to our offices each week from different businesses, and they all ask us some of the same questions, but they never try to understand exactly what we do with all of your ingredients. If you brought all those people together, you could potentially offer much more to us.”

The situation clearly called for new behaviors. Better collaboration among Cargill employees, for example, would not just solve the problem of redundant sales calls. It could lead to new logistics, risk management, and quality assurance practices. But that type of collaboration, especially across Cargill’s 70-plus businesses operating in 66 countries, would be a stretch — particularly since in Cargill’s culture, it would require bottom-up commitment.

In 2006, the company renewed its commitment to move to the next level in fulfilling its strategic objectives in serving customers more effectively. Corporate leaders described some major behavioral, structural, and cultural changes that were needed — in effect, a major shift in “the way we do things around here.” This initiative sparked a new interest in understanding and working with the realities of the human brain.

Ameriprise: Cultivating the Counterintuitive

Around the same time, the leaders of Ameriprise Financial — a US$7 billion company that is the leading source of financial advice in the United States — began taking a fresh, dispassionate look at their own behavior. In 2007, an annual investor performance study from the research firm Dalbar showed that most investors consistently did less well as individuals than the market as a whole. Their instincts led them to miss some of the gains inherent in a volatile market. For example, when stocks fall sharply, a fully rational investor should step back and wait for a signal of what is going to happen next. But many investors rush to sell, fearing a further downturn, and move their money into cash or related interest-bearing products. This exacerbates their losses, because stocks often rise again soon afterward.

Ted Truscott, CEO of U.S. asset management at Ameriprise, stated it this way: “Remember, when you have the price, you don’t have the proof, and when you have the proof, you don’t have the price.” In other words, by the time investors felt comfortable with a stock (the “proof”), it was probably already priced too high to be a good investment. By seeking reassurance, investors were undermining their own portfolios.

The Ameriprise leaders prided themselves on building a better future for their customers, and the study results suggested an opportunity to enhance their own practices. Their advisory teams (either on staff or franchise holders) were not consistently giving clients the advice that would have helped them avoid this trap. “Being a great financial planner and advisor requires not only technical expertise,” concluded Kris Petersen, then the Ameriprise senior vice president of financial planning, “but an understanding of how people make decisions. Our clients are misbehaving with their money, and we have to do a better job of helping them.”

Jeff Marshall, a franchise leader in the Pacific Northwest, moved rapidly to put in place a new training program to change the company’s approach. But response was very limited at first. Of the 12,000 Ameriprise advisors, only several hundred signed up for that first round of training in 2007. Even many who were initially enthusiastic expressed doubt when they discovered that the training would take several months. Interest grew broader in late 2008, of course, after the financial crisis began. By then, Ameriprise leaders had recognized that they needed to confront deeply ingrained habits of thought, which required a thorough understanding of the limits and capabilities of the human brain.

The Principles of Change

A viable approach is emerging today that applies neuroscience to organizational change at dozens of companies like Cargill and Ameriprise. Specific practices vary from one workplace to the next, but they are always based on principles grounded in brain research:

• Habits are hard to change because of the way the brain manages them. Many conventional patterns of thinking are held in circuits associated with deep, primal parts of the brain that evolved relatively early. These include the basal ganglia, or the brain’s “habit center,” which normally manages such semiautomatic activities as driving and walking; the amygdala, a small, deep source of strong emotions such as fear and anger; and the hypothalamus, which manages instinctive drives such as hunger, thirst, and sexual desire. Information that is processed in these parts of the brain is often not brought to conscious attention.

The basal ganglia’s processing, in particular, is so rapid compared to other brain activity that it can feel physically rewarding; people tend to revert to this type of processing whenever possible. Moreover, every time the neuronal patterns in the basal ganglia are invoked, they become further entrenched; they forge connections with one another and with other functionally related brain areas, and these neural links (sometimes called “action repertoires”) become stronger and more compelling. This helps explain why when people in a workplace talk about the way to do things, they often reinforce the link between their own neural patterns and the culture of the company. If an organizational practice triggers their basal ganglia, it can become collectively ingrained and extremely difficult to dislodge.

Similarly, if you want to create permanent new patterns of behavior in people (including yourself), you must embed them in the basal ganglia. Taking on new patterns (also known as learning) often feels unfamiliar and painful, because it means consciously overriding deeply comfortable neuronal circuitry. It also draws on parts of the brain that require more effort and energy, such as the prefrontal cortex, which is associated with deliberate executive functions such as planning and thinking ahead.

In financial services, for example, when the market goes down, selling equities feels reassuring, because the news about the market has triggered habitual attitudes about risk (stored in the basal ganglia) and fears (generated by the amygdala). Holding on to the stock may be more prudent, but that decision requires activity in the prefrontal cortex, which requires extra effort and energy. Similarly, if people at a company such as Cargill find it difficult to innovate in teams across business units, they may be collectively protecting their basal ganglia– and amygdala-driven instincts (the attractions of habit and the fear of change) at the expense of the new goals of the organization.

At work, being forced to try something new can trigger fear and anger (sometimes called the “amygdala hijack”), the urge to flee, or exhaustion disproportionate to the actual provocation. In the grip of such emotions, people resist change. Their capacity for rational and creative thinking is also diminished; they revert to their rote behaviors, such as arguing, passive-aggressive compliance, or covert resistance. To overcome this reversion, people need to prepare for organizational change in advance — they must train to recognize the source of a strong emotion even as it is triggered, and to find more effective ways of responding.

• Despite the seeming inflexibility of the brain, neural connections are highly plastic; even the most entrenched thought patterns can be changed. The kind of mindfulness that accomplishes this combines metacognition (thinking about what you are thinking) and meta-awareness (moment-by-moment awareness of where your attention is focused). Adam Smith, the 18th-century economic philosopher, understood this. He described self-directed reflection as an “impartial spectator” and commented on its importance.

A growing body of neuroscience research confirms the power of the impartial spectator. For example, a person with obsessive-compulsive disorder (OCD) might ruminate on a single belief, such as “I have to wash my hands to make sure they’re clean.” Day after day, this thought reinforces neural connections in parts of the brain such as the basal ganglia, gaining influence over the individual’s behavior. But MRIs show that asking people to observe their own thinking process as they ruminate can cause activity to move to more deliberate, conscious brain regions such as the prefrontal cortex. Research at the University of Toronto shows that moment-by-moment self-observation activates executive planning areas in the prefrontal cortex and deactivates areas involved in attention-distracting rumination.

Working in any corporation may lead people to adopt repetitive patterns of behavior. But the neural connections remain plastic. Once people know how to bring the impartial spectator into play, they can recognize when their old habituated neural patterns no longer serve them (or their company) well, and reshape those patterns in new directions.

• Paying attention to new ways of thinking, however uncomfortable at first, can rewire people’s thinking habits. The name given by neuroscience to this phenomenon is “attention density.” When a person repeatedly pays conscious attention to desired thoughts and related goals, the processing of these thoughts and goals stabilizes and moves to the part of the basal ganglia called the caudate nucleus, which lies deep beneath the prefrontal cortex and processes a massive number of neural signals from it. MIT neuroscientist Ann Graybiel has referred to the basal ganglia–caudate nucleus complex as the habit center of the brain. It shifts circuits into place so that ways of thinking and acting that at first seemed unfamiliar soon become habitual. The power of focused attention is enhanced further by the “quantum Zeno effect”: just as quantum particles become more stable when observed, neuronal patterns solidify more rapidly when repetitive attention is paid to them.

• In focusing attention, don’t tell people what they’re doing wrong. Instead, accentuate what they’re doing right. Most brain activities don’t systematically distinguish between an activity and the avoidance of that activity. When someone repeatedly thinks, “I should not break this rule,” they are activating and strengthening neural patterns related to breaking the rule.

Therefore, to engender change among people in an organization, it’s important to keep attention focused on the desired end state, not on avoiding problems. This goal-directed positive reinforcement must take place over and over. The most effective way to achieve this is to set up practices and processes that make it easy for people to do the right thing until it becomes not only second nature, but an ethic taken to heart (and to the brain) by the entire company.

• Cultivate cognitive “veto power.” Veto power is the ability (among both individuals and groups) to rapidly consider outside provocations and choose to stop dysfunctional impulses before they lead to action. In one of the most discussed experiments in the history of neuroscience, preeminent researcher Benjamin Libet used electroencephalographic equipment to measure the brain functions underlying simple finger movements. He discovered that three-tenths of a second before people are aware of the will to move their finger, there is a brain signal related to a desire for finger movement. A person may have the desire to move, but then choose not to move; these two thoughts — the desire and the choice — are separate.

Many people believe that their control over their impulses is limited, particularly in the face of such strong emotions as anger, frustration, enthusiasm, or grief. To an extent, that is true, but Libet’s work shows that people can always constrain (or choose not to follow) a particular impulse. People may have only limited free will, but they have powerful “free won’t.” In organizations, when a strong impulse reflects “the way we do things around here,” there is always the option to veto the action, especially if people have practiced this ability. Even as simple a response as counting to 10 when stressed opens up possibilities for responding in more functional ways.

• The capability for focusing attention needs to be built over time. Few companies have established a strong capability for focused attention. For that reason, we suggest a path for getting there. The six steps that follow are a synthesis of work the authors conducted separately: Schwartz in helping OCD patients and then organizations, Gaito in leadership development work at Cargill, and Lennick at Ameriprise and other companies. These steps, which we have seen applied in practice, allow you to build a company’s capacity to refocus its attention on its most desired goals. They also create a virtuous cycle. (See the exhibit below.)