A Brain for Business – A Brain for Life

How insights from behavioural and brain science can change business and business practice for the better

Shane O'Mara

• Publisher: Palgrave Macmillan
• Year: 2017
• ISBN:
  9783319491547
• Topic: Negocios y empresa
• Subtopic: Gestión de recursos humanos

Behaviour change is hard, but O'Mara shows that by adopting strategies that are well-founded in the science of brain and behaviour individuals and organisations can adapt to the demands of the modern world.

The brain matters in business. The problem is that our brains have many biases, heuristics and predilections that can distort behaviour and decision making. The good news is that we know more about how these work than ever before.

O'Mara's starting point is that, as our behaviour arises from the structure and function of our brains, careful examination of a series of brain–based ('neurocognitive') analyses of common aspects of human behaviour relevant to business and management practice reveals lessons that can be used at work.

He begins by looking at neuroplasticity and how it is enables a shift from a restrictive 'fixed mindset' to an enabling 'growth mindset'. He shows how this changing mindset approach – where the focus is on task and improvements based on effort – is scalable within organisations.

Next, as the brain is a living organ like the heart and lungs, O'Mara shows how to keep it physically in the best possible shape before examining how we exercise control over our behaviour, build resilience and create positive brain states. He also considers the implications for business of our brains wiring for status and illustrates how research shows that it is possible to de-bias assumptions about gender and race – and the impact that this has on performance.

© The Author(s) 2018

Shane O'MaraA Brain for Business – A Brain for LifeThe Neuroscience of Businesshttps://doi.org/10.1007/978-3-319-49154-7_1

Begin Abstract

1. A Background Scenario from Organisational Life

Shane O’Mara¹

(1)

Trinity College Dublin, Dublin, Ireland

End Abstract

The Meeting and the Final Negotiations

Mind your own business (English proverb)

There are many industries that one could choose for the purposes of presenting the story to follow, but here I choose an industry that I have long observed, namely the pharmaceutical industry. Novel and selective drugs are essential to my research work on the ageing brain and occasionally have proved very useful for the relief of minor headaches or other minor ailments! The pharmaceutical industry has many problems: competition for highly-qualified scientific staff, the high cost of bringing new drugs to the market, the risks of unexpected ‘adverse events’ caused by those drugs when administered to patients in a litigious society, a product pipeline that lacks new blockbuster drugs, a product development life cycle that can extend over decades, competition between companies for market shares and, increasingly, very severe competition from vendors of generic drugs when blockbuster pharmaceuticals come off patent. A wave of consolidation between many of the large pharmaceutical companies has taken place over the past two decades or so; this is a trend that is likely to continue. Opportunities for consolidation have revolved around finding partners that make logical sense in terms of the eventual goal of bringing novel drugs to the market. Do the potential partners match in terms of product pipeline, production facilities, novel bioassays, product distribution, logistics, cost-control and innovation? Is there hidden value in the large library of compounds, molecules and other agents that most of the pharmaceutical industry possesses? Will the eventual company have an internal and external logic that makes sense to investors, regulators, prescribers and patients? These issues are very complex and are difficult for one person to grasp in their entirety; in an important sense, mergers of these multi-billion dollar or euro entities with their tens of thousands of employees involve a complex act of faith, vision and facts.

The Background—A Fictional Case Study

Several months of meetings, offers and counteroffers have taken place, all of the relevant issues have seemingly been worked through and today is the day the final joint memorandum of understanding and intent signed by the negotiating teams, draft contracts agreed and the final actions listed in order for the three businesses to be merged. The stock analysts will then be briefed and the regulators informed.

CEO Profiles

Tom Spengler, late 50s, overweight, face flushed, has been CEO of Alphapharm for 15 years and believes there is nothing he doesn’t know about his company or the pharma industry; the merger today is to be his legacy for the future. After all, combining the businesses will allow them to combine product lines, pool revenues, enhance research and development activities, and allow a single marketing and advertising line. Only good can come from this, Tom believes, and he has worked the numbers to prove it—or rather, his handpicked financial analysts ran the numbers for him. This was his chance to make good the loss of face and the loss of money on his previous merger attempt with another pharma company—one that betrayed him in the end.

Jim Johnson, early 40s, trim, fit and CEO of Germane Biotech, originally founded on spinoffs from his research work at a leading university hospital, is ambitious, driven and knows that he doesn’t know enough about the pharma industry. He is also cautious and knows how to read a balance sheet. His years in biotech have led to him to be cautious about supposed new opportunities. He is especially adept at focusing on downside risks, having been involved in several failed large-scale clinical trials.

Mary Kearney, mid 40s, accountant by training, CEO by vocation, was a recent surprise appointment to head Levenson-Herbert Pharmaceuticals after many years spent in the music industry, another industry with a rapidly changing business model and collapsing revenues. She knows how to read balance sheets, and her training in a major accountancy practice during a period when it merged with difficulty with another major practice. She particularly understands that the future is not a continuation of the past—that businesses need to be especially careful that they are not overtaken by technological changes that come seemingly from nowhere.

The Companies

All three pharma companies are mid-ranked by market capitalisation. Tom expects, on the basis of his numbers, that the merged entity will be worth more than the three companies would be if kept apart. Tom has chosen his numbers carefully in order to make the strongest possible case for the proposed three-way merger.

The Opening

Tom, Jim and Mary enter the boardroom ahead of their teams, with Jim and Mary speaking quietly to each other. Tom strides ahead of them; this is his day, a day to create a legacy. His mouth is a little dry, and his heart is beating a little faster than usual. Some twinges in his chest he attributes to stress. He feels, as he likes to put it, good stress—stress to keep him on top of things, to keep his edge. Jim and Mary are smiling a little, and their hearts are beating quickly, and their breathing is faster than normal. Curiously, neither of them has really looked Tom in the eye when they were shaking hands, but he hasn’t really noticed. He hasn’t noticed that their conversation is largely directed to each other, rather than him. But then, he has other things on his mind…

Tom has worked very hard for this day: spotting the initial opportunity, negotiating with his board, selling them the idea, working the numbers, eyeballing all the legal documents. He has directed his team from the start, driving them hard, and making sure they were informed on a need to know basis—which wasn’t much, because, after all, he, Tom, was the visionary. He was right to keep driving ahead and push his team in this direction—he was paying them enough! And for the ones who questioned his numbers and judgement—well, they were disloyal and jealous, just wanting to stop him grabbing his moment in the sun. Just as well he got rid of them! A good team is a unified and obedient team, directed by a strong leader who knows his own mind. A good team player knows they have a job to do, and they should, indeed must do it, and it alone. That is what they trained for; they shouldn’t fool themselves that they can learn to do other jobs. He mulled again on the logic of the merger. All the companies are of a similar size, and there seems to be a good strategic fit and an excellent business case to bring them together. They all have the same core market, but bring different strengths. Germane Biotechnology has a very strong research and development unit, which is generally regarded by observers as industry-leading. Alphapharm has a very strong logistics and distribution network and is well diversified around the world. Levenson-Herbert has a well-branded market presence and is exceptionally adept at sourcing new and competitive suppliers for their production line, allowing them to keep costs under control and their margins on production industry-leading. All in all, as far as Tom is concerned, merging the three companies promises a combined future in sales and growth potential that far exceeds the organic capacities of any of the individual companies alone.

The Meeting

The teams sit around the table; Tom at the head and Jim and Mary beside each other, with their teams positioned to their sides. Jim and Mary both reach for the water on the table in front of them; their mouths feel very dry now. They are both perspiring more than usual and are glad the air-conditioning is turned to a lower temperature than normal. Jim chews on his pen; Mary is twirling her hair repeatedly between her fingers. Both are tapping their feet underneath the table. They glance occasionally at each other, holding the look with blank, emotionless faces. Tom doesn’t notice anything out of the ordinary about his partners’ behaviour; he is hardly paying them any attention at all. He quietly chews on a caffeine pill and is glad that he has a nicotine patch in place—he doesn’t like to smell of cigarettes at these meetings. The caffeine helps with the fatigue—Tom has been sleeping very poorly for some time and hardly at all last night. Hard to keep your head clear when you’re sleep deprived, but maybe his team will jump in when he needs them to…

Tom calls the meeting to order. His attention is focused on the page containing the short meeting agenda; although he prepared it 24 hours ago, he can barely remember the contents of it now. His heart rate has risen, and he can feel his heart beating in his chest. The stakes are very high: multiple millions are at stake between the merged businesses, and Tom wants to position himself at the head of the merged entity. He is not so concerned about positioning Jim and Mary in the newly merged company. In fact, Tom has never really discussed this with his partners; he assumes they will be happy with the positions that he has chosen for them. After all, nobody would be here but for him. He picks up his pen, fumbles it, and almost immediately drops it again. Nerves, he thinks.

‘Welcome all’, he says to the assembled group, noticing that his tongue sticks to the roof of his mouth and feels as if it is too large for his mouth. His heart is beating more rapidly. He tries to focus on the agenda and fidgets with some of his assembled documents; he looks around and says, ‘We have a short agenda today—we must agree the final shape of the deal, assemble the relevant numbers, and…and…’ Why won’t the words he thought he had practiced come? He pauses, his breathing coming in shorter and shorter bursts; he is convinced that everyone must be able to hear his heart; it is beating so loudly. He stumbles and mumbles on ‘…agree, agree the draft of ah, ah, eh, final…joint memo of recommend, eh recommendation to our boards and our share-holders…’

That was not so good, he thinks. Still, the assembled teams are nodding in agreement. He starts to speak again and the words flow a little more: ‘We have the chance to achieve something great here today, bringing together our businesses’; he relaxes a little, thinking that his tongue seems not to be so large and his mouth not quite so dry. His heart rate has slowly a little too, although the twinges in his chest are still present.

Just as he about to continue, Jim and Mary raise a hand. Mary speaks. ‘Tom, many thanks for bringing us together today. We have all worked hard to get here, and we all greatly appreciate your effort and your hard work.’

Tom nods appreciatively. This is after all just the truth of the situation. Without him, they would have nothing!

The Left-Field Move

‘Tom, before you go further, there is something we need to put on the table.’

Tom looks around, surprised and curious.

Mary continues calmly: ‘We’ve looked very carefully at your numbers, and can’t make them stack up. Not really. They conceal a lot of wishful thinking, and the imputed values for goodwill and reputation are, very frankly, nonsensical. You’ve made far too many assumptions about future cash flow, and you’ve ignored the negative effects that diluting shareholding is likely to have on how the market will perceive this deal. Your assumption that we can do a down-the-line debt-for-equity swap to refinance the deal is completely untested. Moreover, in governance terms, far too much power and control is vested in a single individual—namely, you. We, therefore have deep concerns, and believe if a merger is to happen, it must happen on different terms to those you propose.’

Tom started to speak, paused, and lost his train of thought, burbling ‘but, but, but…’.

Mary continued: ‘So, Jim and I have made alternative arrangements. A merger is a reasonable idea, but it has happen according to a differing structure to the one you that you propose. We have agreed with your major shareholders—the pension funds that have been so very disappointed in your profits for these past years—that we will take over Alphapharm, dissolve it where possible, sell on assets that are free-standing to generate cash, keep the remainder and subordinate it within a merged Germane-Levenson-Herbert or GLH Pharma as it will be known. I will be CEO, and Jim will be Chair. You, I regret to say, will be out, but on very generous terms. Here are the documents laying all this out. You can sign at the various points indicated.’

The Aftermath

The ambulance arrived quickly. Tom lay there thinking that if you had to have a heart attack, a drug company headquarters was as good a place as anywhere. They had stolen his company from under him too, he thought. Why hadn’t he given them greater consideration and tried to see things from their perspective? Too late now. Will I make it alive to the hospital, he wondered, as the medical team stabilised him in the ambulance.

Exercise

1. 1.
   List the thoughts, words, and phrases that occur to you regarding:

   1. i.
      Tom’s leadership style
   2. ii.
      The effectiveness of Tom’s leadership style
   3. iii.
      Tom’s stress levels
   4. iv.
      Tom’s methods for coping with his stress levels
   5. v.
      Tom’s insights into the motivations of other people
   6. vi.
      Tom’s health behaviours and self-care
2. 2.
   What lessons have you learned?
3. 3.
   What would you have done differently from Tom?
4. 4.
   What do you think of Mary and Jim’...