THE BLOG
04/18/2011 02:01 pm ET Updated Jun 18, 2011

Capitalism Revisited: Why Society Matters

What does it mean to be a successful capitalist? Until recently, capitalism simply referred to "for-profit" businesses that were privately owned. Conscious capitalism, a recent extension of this idea, is a movement that recognizes that this profit can create value for stakeholders and customers alike, and in the process, also creates long-term value for investors. (1) These value propositions are based on the notion that businesses can invest in a higher purpose and in so doing create economic, psychological and spiritual wealth for customers.

When business owners are faced with how to inject their approaches with these societal considerations, the immediate response is usually one of inertia because the "Pollyanna" approach of catering to society seems to be a luxury, in a world where tightening economies threaten the survival of any business. But recent studies have shown that there may in fact be a business case for catering to societal needs such that both the buyer and the seller emerge as winners.

"Doing good" is not simply a matter of philanthropy, but also a way of building customer loyalty and building a reputation. (2) From a brain perspective, there are several reasons why this may be the case. Even when customers do not overtly register a service that takes their needs into account, the brain may register this intention outside of consciousness. This purpose that may trickle down from the business owner to the sales person is potentially detectable by customers at an unconscious level. Studies imply that "mirror neurons" in customers may in fact be able to read the intentions of sales people automatically through a brain mechanism involving the frontal and parietal lobes. (3, 4) It may be that based on the way we ourselves act, our brains can read the intentions of others. (5)

At an unconscious level, trust may also encourage approach-related behaviors. Our brains are wired to approach people in whom we trust since trust deactivates the fear center of the brain -- the amygdala -- thereby encouraging a potential customer to engage more. (6) Any marketer would know that the more you can capture the attention of customers, the greater your chance of selling the goods you offer. If you, for example, provide some but not all information pertinent to a food product that you are selling, studies imply that the brain may detect this uncertainty, and without explicit knowledge, may activate the fear center in response to hidden ambiguities. (7) Being more explicit so that the customer has a better idea of risk may have less of an aversive effect.

If one person reacts to this ambiguity by avoiding this product or business, other people may "pick up" this attitude and potential "herd behavior" could drive people away from a product or business. A recent study showed that "herd behavior" in stock-picking for example, occurs because part of the brain's reward center (the ventral striatum) participates in what we call social decision-making. (8) Other people's decisions can influence our own.

Given these brain-based findings, what can businesses do to optimize customer loyalty and adherence to potentially increase sales? Firstly, building businesses that customers can trust will disengage the brain's fear center. Thus, when businesses are composing heir mission statements, asking how the purpose of the business will truly serve people is critical. Secondly, since mirror neurons may be able to pick up intentions, CEOs should ensure that the sales force is aligned with the higher purpose of the business. Thirdly, businesses should avoid "double messages" and seek to represent the purpose in a way in which it dos not engage the fear brain. And last but not least, businesses should seek to correct early oversights that could eventually drive people away in herds due to the way the brain's reward system is wired.

While further brain-imaging studies would lend more weight to these preliminary findings, the issue of conscious capitalism has a growing case in favor of it. In fact, I am honored to be part of a thoughtful and distinguished group of people who will contemplate this very question from multiple standpoints. At the Third Annual International Conference on Conscious Capitalism in Waltham, MA, researchers from a variety of fields will ask whether we can not only make a brain-based case, but a business-based case for such conscious capitalism. My prediction is that aligning our brains with business will help to achieve this goal. And understanding this more deeply will likely lead to more ideas to improve business outcomes.

References
1. Frazee S. Integral Leadership Review. Catalyzing Conscious Capitalism Conference. Vol 9. 3 ed: Russ Volckmann, LeadCoach; 2011:1-5.
2. Agarwal PK, Tyagi AK, Kumar P, Swati G. Cause Related Marketing in India: A Conceptual Paradigm. Advances in Management. 2011;3(12):24-31.
3. Rizzolatti G, Sinigaglia C. The functional role of the parieto-frontal mirror circuit: interpretations and misinterpretations. Nat Rev Neurosci. Apr 2010;11(4):264-274.
4. Bonini L, Rozzi S, Serventi FU, Simone L, Ferrari PF, Fogassi L. Ventral premotor and inferior parietal cortices make distinct contribution to action organization and intention understanding. Cereb Cortex. Jun 2009;20(6):1372-1385.
5. Kaplan JT, Iacoboni M. Getting a grip on other minds: mirror neurons, intention understanding, and cognitive empathy. Soc Neurosci. 2006;1(3-4):175-183.
6. Todorov A, Baron SG, Oosterhof NN. Evaluating face trustworthiness: a model based approach. Soc Cogn Affect Neurosci. Jun 2008;3(2):119-127.
7. Schultz W, Preuschoff K, Camerer C, et al. Explicit neural signals reflecting reward uncertainty. Philos Trans R Soc Lond B Biol Sci. Dec 12 2008;363(1511):3801-3811.
8. Burke CJ, Tobler PN, Schultz W, Baddeley M. Striatal BOLD Response Reflects the Impact of Herd Information on Financial Decisions. Front Hum Neurosci. 2010;4:48.