A Magnetic Resonance of Managers' Brains
In a study bridging research in strategic management and neuroscience, Maurizio Zollo (Department of Management and CRIOS Bocconi), Daniella Laureiro-Martinez, Stefano Brusoni (both ETH Zurich), and Nicola Canessa (Università Vita e Salute San Raffaele) scanned brain activity of experienced managers while they performed a decision making task. They found that individuals who decide to exploit knowledge in current activities show patterns of brain activity associated with reward seeking, while those who decide to switch to exploring new activities show patterns associated with attention control. Moreover, they find that individuals with stronger activation of the attention control areas of the brain achieve a better decision making performance.
The authors took fMRI scans of the brains of 63 participants with at least four years of managerial experience while they were performing a simple task. In this task, they repeatedly had to choose to play any one of four slot machines, so they could either decide to stay with their current familiar machine, or to switch to a new and unfamiliar one. The results of this study are reported in the article Understanding the Exploration-Exploitation Dilemma: An fMRI Study of Attention Control and Decision Making Performance (in early online view in Strategic Management Journal, doi: 10.1002/smj.2221).
The authors highlight some findings and explain them theoretically. On the one hand, exploitation relates to optimizing for current needs. Therefore, individuals that do so are likely to implement behaviors that help to evaluate how well they are currently doing and to refine their behavior based on this evaluation. Indeed, the authors found that individuals who decided to exploit showed high activity in current reward evaluation areas of the brain. On the other hand, exploration is doing new and therefore more risky activities. Individuals are likely to do so because they are unsatisfied with current performance and therefore attention shifts to alternative activities. In line with this, the authors find that when individuals decide to explore, attention control areas of the brain are activated.
Lastly, the authors also evaluate overall performance. Current literature suggests that managers explore less than what is optimal due to several cognitive biases, thus managers that are more likely to explore should do better. Confirming this, results show that individuals with higher activation of the attention control brain areas performed better.
As a main contribution, the authors find that the processes of exploration and exploitation are indeed cognitively different. But the study also has implications for managers. Neurological processes deteriorate with age, stress and sleep deprivation. Yet in organizations decision makers often are older, and decisions are often made under stressful conditions by individuals that had only little sleep. Managers should take into account that under these situations, they are more likely to make shortsighted decisions and might consider delaying decision making under some circumstances. Also, recent advances in training healthy individuals to improve the cognitive processes associated with attention control could be interesting for decision makers.
The results of the ongoing research programme about neurosciences and management by CRIOS, ETH and San Raffaele researchers will be presented on 20 June at Università Bocconi in the conference A Neuro-Science Perspective on Innovation and Sustainability.