Why is it such a great time to be a cognitive scientist right now?

More than ever, people are talking about how the brain works, and everyone wants to understand how to change behaviour. As a result, the inner workings of the brain are no longer the purview of those trained in neuroscience. Terms that were once considered esoteric, like amygdala and prefrontal cortex have become as commonplace as inflation and sustainability. Put simply, cognitive science has become accessible.

This is a beautiful moment in time where the bridge between academia and the private sector is stronger than ever — where we can translate a theoretical understanding of the nuances of human behaviour into implementable solutions that influence how our society operates. As a scientist, it doesn’t get any better than that.

PwC has its own behavioural science practice. Why is the firm investing in this, and what is your role?

As a firm, PwC fosters a culture of collaborative ideation and celebrates collective diversity of thought. It is with this mindset that the firm was able to see and nurture the natural alignment between cognitive neuroscience, psychology and social influence with the traditional consulting toolkit. We are now systematically incorporating behavioural science into the way we both understand and solve our clients most important problems.

I joined the firm with a mandate to build and lead the practice, and almost three years later, I am happy to report that the PwC behavioural insights team has trusted clients across the banking, insurance, utilities, retail, government and non-profit sectors. I work with an incredible team — most notably James Morrison, Mohsin Bin Latheef, Sarah Khan and Matthew Satterthwaite. They are all brilliant, curious and inspired, and they make my job easy.

In your experience, which industries/sectors can benefit the most from behavioural insights?

In my opinion, the behavioural toolkit has its greatest application in sectors where there is a significant gap between peoples intentions and their actual behaviour. We call this the intention/action gap, and it often has a significant impact on the financial, social, mental and physical wellbeing of stakeholders — whether it be employees, customers or citizens.

Our brains like to fill in the gaps with best-case scenarios.

This means that our behavioural team spends a considerable amount of time helping stakeholders make the right decisions for them — from saving more for the future and making informed decisions with their investments, to putting their paper in the recycling bin and riding public transit, to avoiding chronic diseases and sticking to treatment regimens. These problems naturally align to financial services and healthcare markets broadly, but they are also ripe for organizations that operate within the public and social-good markets. The majority of the human brain is built around social connections.

What are the implications for behaviour?

One of my favourite theories of neuropsychology is that the human brain has evolved over time due to the pressures of social contract and connectivity. I love this theory because it acts as a consistent reminder that as a species, we are truly better when we act together.

However, this natural knack for social connectivity means that whether we mean it to or not, our behaviour influences other people and others behaviour influences us — sometimes in significant ways. When we start thinking about this nuance within the context of leadership and organizational behaviour, it becomes clear that sentiment and attitude can spread like a contagion throughout the workforce — and that is not always a good thing. The onus is on leadership — and its reinforcement of and care for team culture — to harness and balance collective energy for the betterment of the whole.

Many of your clients are in financial services. As we all know, the process of building financial well-being over time is riddled with biases. Describe a few of the key culprits.

It is important to note that biases are not distinct operations within the brain. Rather, they tend to ebb and flow depending on the context. When it comes to any future-based decision, we are generally at a disadvantage because of our brain’s data-processing capabilities. Present data — the data that we are crunching in the here and now to make a decision in the moment — are very concrete and available. But when it comes to thinking about the future, the data we use to build our mental model is ambiguous. Combined with the fact that we tend to overestimate our capabilities and underestimate the likelihood of negative events, our brains like to fill in the gaps with best-case scenarios: I will spend less in the future; I will get a promotion; or I will stick to my new years resolution of packing a lunch.

This decision-making process makes it very easy to justify spending money today.

Did you know?

Gallup research shows that companies applying behavioural economics principles outperformed their peers by 85 per cent in sales growth and more than 25 per cent in gross margin during a one-year period.

Which key principles of choice architecture do financial advisors need to understand?

Financial advisors have a really tough job. They have to somehow distill the incredibly complex and esoteric world of finance into simple explanations that enable their clients to understand risk and reward. In particular, advisers need to be aware of a few things: That their customers can be paralyzed by too many options; anchored by the order of information; disproportionately dissuaded by salient information like fees; overly attached to investment strategies they have held for a long time; asymmetrically influenced by news and information that confirms their beliefs of the world; and can be influenced by waves of influence or trends. It is so important for financial advisors to keep the action/intention gap at the forefront of their conversations with clients.

Looking ahead, what is next for behavioural insights in organizations?

We really are just getting started. Even seeing the evolution over the past three years has been incredible. I am inspired daily by the growing number of clients who are thoughtful about integrating behavioural insights into the way they design and deliver their products and services, the way they interact with and motivate employees, and the way they make decisions.

Looking ahead, I see a bright future where our public and private organizations weave behavioural insights into the core of their processes and procedures — in particular, at the competitive edge, where shared value can be created between citizens and government, and between customers and companies.

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This article originally appeared in the Spring 2019 issue of Rotman Management magazine.