Rupert Murdoch

Meditate For More Profitable Decisions

Meditate For More Profitable Decisions

Chris HowellsChris Howells, Contributor

It’s a practice rooted in Hinduism and adopted by beatniks seeking spiritual guidance. Now evidence shows meditation can improve business decisions and save your company from expensive investment mistakes.

By Zoe Kinias, INSEAD Assistant Professor of Organisational Behaviour and Andrew Hafenbrack, INSEAD PhD student in Organisational Behaviour with Jane Williams, Editor, Knowledge Arabia

Meditation has become an increasingly popular practice amongst the C-suite elite. And, with CEOs such as Rupert Murdoch (News Corp NWSA -3.04%); Bill Ford (Ford Motor F +0.47% Company); Rick Goings (Tupperware); and Marc Benioff (Salesforce.com CRM +1.62%) all touting its benefits, executive coaches are picking up on the trend introducing mindful techniques to programmes to calm the mind’s “chatter,” assist focus and manage stress. But new empirical evidence suggests it’s more than just a “feel good” exercise, and as little as 15 minutes of meditation can actually help people make better, more profitable decisions, by increasing resistance to the “sunk cost bias.”

The sunk cost bias–also known as the sunk cost fallacy, or the sunk cost effect–is recognized as one of the most destructive cognitive biases affecting organisations today. Put simply, it’s the tendency to continue an endeavor once an investment has been made in an attempt to recoup or justify “sunk” irrecoverable costs. The phenomenon is not new; psychological scientists have been studying the “escalation of commitment” since the mid-1970s, noting its ability to distort rational thought and skew effective decision-making. Often, it’s a subconscious action, which can result in millions of dollars being invested into a project, not because it’s a sound investment but because millions of dollars have already been spent.

Avoiding the trap

But it’s a mind trap you can avoid as suggested by the paper Debiasing the Mind Through Meditation: Mindfulness and the Sunk Cost Bias byAndrew Hafenbrack, INSEAD PhD student in Organisational Behaviour,Zoe Kinias, INSEAD Assistant Professor of Organisational Behaviour andSigal Barsade, the Joseph Frank Bernstein Professor of Management at The Wharton School. Their research shows just 15 minutes of mindfulness meditation– such as concentrating on breathing or doing a body scan–helps raise resistance to this problematic decision process, and open the way to more rational thinking.

“Prior research shows the more we invest in something (financially, emotionally, or otherwise), the harder it is to give up that investment and the more inclined we are to escalate a commitment,” Hafenbrack notes. “In many cases negative emotions; fear, anxiety, regret, even guilt or worry over past decisions, subconsciously play a part in the decision-making process.”

Most noted examples include the U.S. military campaigns in Vietnam in the 1960s, and more recently in the Middle East, when mounting casualties made it increasingly difficult for the U.S. government to withdraw. On the business front, companies regularly fall victim to the bias when faced with decisions on whether to pump money into a product after being scooped by a competitor, or to continue an investment as costs skyrocket beyond initial estimates. Sometimes, it’s a matter of a product just not selling as well as expected, as was the case with the Concorde supersonic jet when France and Britain continued their investment long after it was known the aircraft was going to be unprofitable.

The sunk cost bias can also be exacerbated by anticipated regret, the result of thinking too much about what may, or may not, occur in the future.

Building resistance

It is the result, says Kinias, of both emotional and temporal processes. MRI brain scans show the mind’s natural state constantly jumps around, flicking between ideas, switching from the past to the future to the present in seconds. Through a series of studies, Hafenbrack, Kinias and Barsade hypothesised, and found that mindfulness meditation, by focusing on the present, quiets this mind-wandering process, diminishing the negative feelings that distort thinking, thereby boosting resistance to the sunk cost bias.

They began the research with a correlational study demonstrating the link between trait mindfulness and an individual’s ability to resist sunk costs. As people vary in how mindful they are by disposition, volunteers were first assessed for this trait. They were then asked to make decisions based on ten scenarios. Some were business-related, others were simple choices, like whether to attend a music festival that had been paid for when illness and bad weather made enjoyment unlikely. As expected, the results indicated that higher trait mindfulness in volunteers translated into their having more resistance to include sunk costs in their decision-making process.

In subsequent studies, the team looked at the causal relationship between mindfulness meditation and the sunk cost bias in both laboratory and online settings. In each case, one group of volunteers was led through a breathing meditation (a form of mindfulness meditation), while another (the control group) underwent a mind-wandering induction, a simple procedure replicating the normal mental state.

All volunteers were then given a sunk-cost dilemma and asked to make a decision. In each study–whether it was online or in the laboratory–volunteers who had undergone mindfulness practice were significantly more likely to resist the sunk cost bias.

Letting go

What was surprising, says Kinias, was the magnitude of the affect that came after such a short period of meditation. “In one of our experiments more than half the participants in the control condition committed the sunk cost bias whereas only 22% committed it following the 15 minute mindfulness meditation–that’s a pretty dramatic effect.”

“There may be cases when processing of the past can be useful for making decisions,” she concedes, “but what our research suggests is that people make better choices  in the present moment when letting go of sunk costs is required to make the best decision.”

This article was originally published at INSEAD Knowledge.

The Daily Habit Of These Outrageously Successful People

The Daily Habit Of These Outrageously Successful People

The Huffington Post  |  By Posted: 07/05/2013 8:55 am EDT  |  Updated: 07/06/2013 6:32 pm EDT

“Meditation more than anything in my life was the biggest ingredient of whatever success I’ve had.” That’s what Ray Dalio, the billionaire founder of Bridgewater Associates — the world’s largest hedge fund firmexplained in 2012.

Dalio is in good company. More and more leaders in the corporate world have been taking note of the benefits of meditation, which include lower stress levels, improved cognitive functioning, creative thinking and productivity, and even improved physical health. A number of Fortune 500 companies, including Google, AOL, Apple and Aetna, offer meditation and mindfulness classes for employees — and the top executives of many major corporations say that meditation has made them better leaders.

Ford Motor Company chairman Bill Ford and former Google.org director Larry Brilliant are also among the executives advocating the mindfulness practice. Here are 10 influential business leaders who say meditation has helped them achieve (and sustain) a high level of success.

1. Rupert Murdoch, Chairman and CEO, News Corp

rupert murdoch

News Corp CEO Rupert Murdoch recently tweeted that he was trying out Transcendental Meditation, a popular technique developed in the 1960s and followed today by famous practitioners like Oprah, David Lynch and Candy Crowley.

2. Padmasree Warrior, CTO, Cisco Systems

padmasree

Warrior, the chief technology and strategy officer of Cisco Systems, meditates every night and spends her Saturdays doing a “digital detox.” In her previous role as Cisco’s head of engineering, Warrior oversaw 22,000 employees, and she told the New York Times in 2012 that taking time to meditate and unplug helped her to manage it all.

“It’s almost like a reboot for your brain and your soul,” she said. “It makes me so much calmer when I’m responding to e-mails later.”

3. Tony Schwartz, Founder & CEO, The Energy Project

tony schwartz renewal

The Energy Project CEO Tony Schwartz has been meditating for over 20 years. He originally started the practice to quiet his busy mind, according to his book What Really Matters: Searching for Wisdom in America. Schwartz says that meditating has freed him from migraines and helped him develop patience, and he also advocates mindfulness as a way to improve work performance.

“Maintaining a steady reservoir of energy — physically, mentally, emotionally and even spiritually — requires refueling it intermittently,” Schwartz wrote in a Harvard Business Review blog.

4. Bill Ford, Executive Chairman, Ford Motor Company

bill ford

The Ford Motor Company chairman is a big proponent of meditation in the business world, according to Inc. Magazine. At this year’s Wisdom 2.0 conference, Ford was interviewed by leading American Buddhist teacher Jack Kornfield. Ford told Kornfield that during difficult times at the company, he set an intention every morning to go through his day with compassion. And to lead with compassion, Ford said he first learned to develop compassion for himself through a loving-kindness (metta) meditation practice.

5. Oprah Winfrey, Chairwoman & CEO, Harpo Productions, Inc.

oprah weight body image ego

An outspoken advocate of Transcendental Meditation, Oprah — recently named the most powerful celebrity of 2013 by Forbes — has said she sits in stillness for 20 minutes, twice a day. She’s also brought in TM teachers for employees at Harpo Productions, Inc. who want to learn how to meditate.

After a meditation in Iowa last year, Oprah said, “I walked away feeling fuller than when I’d come in. Full of hope, a sense of contentment, and deep joy. Knowing for sure that even in the daily craziness that bombards us from every direction, there is — still — the constancy of stillness. Only from that space can you create your best work and your best life.”

6. Larry Brilliant, CEO, Skoll Global Threats Fund

larry brilliant

Larry Brilliant, CEO of the Skoll Global Threats Fund and former director of Google.org, spent two years during his 20s living in a Himalayan ashram and meditating, until his guru instructed him to join a World Health Organization team working to fight smallpox in New Delhi.

In his 2013 commencement address at the Harvard School of Public Health, Brilliant emphasized the importance of peace of mind, wishing the graduates lives full of equanimity — a state of mental calm and composure.

7. Ray Dalio, Founder & Co-CIO, Bridgewater Associates USA

ray dalio

In a 2012 conversation at the John Main Centre for Meditation and Inter-Religious Dialogue at Georgetown University, Dalio said that meditation has opened his mind and boosted his mental clarity.

“Meditation has given me centeredness and creativity,” said Dalio. “It’s also given me peace and health.”

8. Russell Simmons, Co-Founder, Def Jam Records; Founder of GlobalGrind.com

russell simmons

Hip-hop mogul Russell Simmons has long practiced Transcendental Meditation, speaking out about the benefits of the practice and sitting on the board of the advisors for the David Lynch Foundation for Consciousness-Based Education and World Peace.

“You don’t have to believe in meditation for it to work,” Simmons wrote in a Huffington Post blog. “You just have to take the time to do it. The old truth is still true today, ‘God helps those who help themselves.’ My advice? Meditate.”

9. Robert Stiller, CEO, Green Mountain Coffee Roasters Inc.

russell simmons

There is a dedicated meditation room at the Vermont headquarters of Green Mountain Coffee Roasters Inc., and CEO Robert Stiller himself is a devoted practitioner.

“If you have a meditation practice, you can be much more effective in a meeting,” he told Bloomberg in 2008. “Meditation helps develop your abilities to focus better and to accomplish your tasks.”

10. Arianna Huffington, President & Editor-in-Chief, Huffington Post Media Group

arianna huffington

And last but not least, Arianna Huffington described early-morning yoga and meditation as two of her “joy triggers” in a 2011 Vogue feature. Now, Huffington has brought meditation into her company, offering weekly classes for AOL and Huffington Post employees.

Huffington has spoken out on the benefits of mindfulness not just for individual health, but also for corporate bottom lines. “Stress-reduction and mindfulness don’t just make us happier and healthier, they’re a proven competitive advantage for any business that wants one,” she wrote in a recent blog.

The Daily Habit Of These Outrageously Successful People.