It seems like everyday we’re treated to a business news story that just a couple of years ago would’ve seemed fantastic, but now is just taken in stride. Many of the pillars of American industry have either gone bankrupt or been acquired at fire sale prices, more than one quarter of all residential mortgages are under water, unemployment is at ten percent and could stay that high for years, and even Harvard has been forced to cut back because of the thirty percent drop in the value of its endowment.
All of these are just examples of what economists tell us is structural, not cyclical change. The business world is now a fundamentally different place, and things are not about to return to the way they were. In my day job, I see lots of pain out there, which drives an intense focus on cost reduction and a strong aversion to risk trying anything new. While it’s understandable that in such times people would just hunker down, I fear this is exactly the opposite of what needs to be done.
When a crisis hits, our fight or flight reaction kicks in, narrowing our vision to what it takes to survive. But the unexpected and painful event can also stop the automatic processing of the brain and change the way we look at things. We become more willing to change, and with a fresh perspective, we become more innovative and recognize new opportunities. How we respond is a conscious decision.
At the same time our economy is being transformed, so too is our understanding of how our minds work and how we make such decisions. We’re learning about how our perceptions shape the world we live in, how much our actions are driven by emotion and not logic, and how big ideas change the way the mind works. These and other findings of brain science challenge the conventional wisdom on how to conduct business.
The changes roiling the economy and the latest brain research combine to create an imperative for every company to fundamentally rethink their business. Customer needs have changed, but now we have better ways of understanding what they are. Costs must be controlled, but there are new management practices and organizational designs that ensure greater efficiency. Fundamental change is now a fact of life, but we have the tools to help people prosper from it.
Perhaps the most fundamental lesson of brain science is that the world is only what we think it is, but our thoughts will determine our actions. My bet is that those that see the present as an opportunity are going to take the bold action needed to flourish. Those that don’t will be yesterday’s news.