Psychology of Entrepreneurship
Mindfulness Is A Useful Business Skill, New Research Suggests
Getting drunk on success can be just as dangerous, and just as heady, as the liquid kind, especially in business. When investors or traders surf success-highs trouble ensues. Those feelings, sometimes even extending to feelings of invincibility, distort subsequent decisions with a dangerous mindset: I’m a proven winner so don’t worry about risk, just stay in the game! Of interest is some new research suggesting mindfulness, of all things, just may help reduce the danger.
That’s right, it’s time to consider mindfulness, usually associated with practices like meditation and yoga, as a money-making business skill.
Mindfulness is already known to be a rich concept. In psychology it means being both aware of one’s thoughts and feelings and non-judgmentally accepting of them. While mindfulness can be a state resulting from those practices with which it is usually associated, it can also refer to an enduring feature of one’s personality, i.e., a trait.
The new research out of the University of Toronto suggests that higher levels of trait mindfulness provides some protection against potentially dangerous emotional highs by attenuating reactivity to positive feedback. For those high in mindfulness, it’s just not as thrilling when the world gives you a high-five.
The researchers, Rimma Teper and Michael Inzlicht, used EEG to record how participants’ brains responded to rewarding, aversive, and neutral feedback. They also measured mindfulness, levels of both awareness and acceptance. As they state in their article, their findings suggest “that individuals who report a high level of nonjudgmental acceptance of thoughts and emotions display less neuroaffective reactivity to immediate rewards.”
In other words, mindfully accepting one’s thoughts and feelings can protect against getting drunk with success.
Good managers and savvy investors already know this. They know they have to attenuate the high that can come from successful investing because the high hides risk. As much as a feeling of invincibility says otherwise, yesterday’s success does not lower tomorrow’s risk. The odds of success are what the odds are, whether you’r flipping coins, real estate, or companies.
But it’s not easy to keep this in mind. To illustrate is a fascinating pair of case studies by Byron Woollen, a friend and colleague who is the principal at Podia Consulting, a NYC-based consulting firm offering leadership and organizational expertise to CEOs and senior leaders. His article, “Investment risk and the mind of the financial leader” in Consulting Psychology Journal: Practice and Research (2011), documents how an organization can succeed or fail at integrating risk management and control functions with investment decisions so as to avoid the illusion that previous success protects against future risk.
The CEO of the successful company example did many things right, including articulating basic principles and then propagating them throughout the organization. The first of his three principles, as Woollen stated them, illustrates the problem mindfulness can help solve: “An investor who does not monitor his own potential for greed and for the ability of money to generate other psychological distortions is unlikely to appropriately attend to the inherent risks of his investment.”
As Woollen described to me over lunch one day, this hedge fund founder/CEO was serious about his principles. He would not even let any of his financial analysts finalize an investment decision until they understood that greed distorted even seemingly objective judgements. Smart call on his part.
Which brings us back to mindfulness as a business skill and the new study. Clearly, these findings need to be replicated, along with similar results achieved using different methods and procedures.
But still, the research is worth noting because mindfulness is already linked to so many different dimensions of psychological, and even physical, health. Like I often say to patients in my clinical practice, “all mindfulness is good mindfulness.” There are lots of reasons already established for developing ways of life that increase and support mindfulness. This is just one more. And while it is still preliminary, the idea that increasing mindfulness (especially “nonjudgmental acceptance of thoughts and emotions”) might protect against bad decisions is worth attention.
There are lots of practices I’ve seen increase both awareness and acceptance of thoughts and feelings. Mindfulness meditations and mindfulness-focussed psychotherapies all put mindfulness front and center. But there are other practices in which mindfulness grows as a matter of course. I’m thinking of psychodynamic psychotherapies, yoga and other body-based practices like Pilates and dance, and even nature-based activities like hiking and cycling.
Not only is all mindfulness good mindfulness, all roads to mindfulness are good roads. Find one (or two or more) that work for you.
And remember, being drunk with success is no way to drive a business. When decision-makers are flushed with success from the last choice, the next choice becomes more dangerous. Developing mindfulness may help. And if it doesn’t, even if this new research does not pan out, you’ve still improved your life and health, still accrued additional mental wealth.