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strategy and business
 / Autumn 2013 / Issue 72(originally published by Booz & Company)


The Thought Leader Interview: Loran Nordgren

S+B: Where does motivation fit in? If people care more about the decision, do they do better with unconscious thought?
Yes. Unconscious thought tends to do better when the stakes are high. One aspect that relates to the issue of motivation is that most unconscious processes are driven by goals. These are consciously formed goals.

For example, when we give people information on the apartments, we can provide different types of distraction. When we give them the counting-back tasks, which overwhelm the conscious mind, they perform at a higher level than if they weren’t distracted. But when we distract them by giving them a goal—telling them that they’ll have to make a choice within 10 minutes—we see a higher level still.

The Relevance for Business

S+B: Isn’t the act of “using” your unconscious thought itself a conscious act? How do you set that up without polluting the process with conscious thought?
We addressed this problem in one experiment where we asked people to act as real estate agents. “Your job,” we told them, “is to select the best apartment for your client.” We gave them rules in terms of pricing or features—the bedroom had to be on the first floor, for example. There were only two apartments with the best attributes that didn’t violate the rules, and we wanted to see who selected those.

Consistent with what we’ve seen elsewhere, those who favored unconscious thought were generally much better at choosing the apartments with better attributes. But those who relied on conscious thought were better at avoiding the rule-breaking apartments. In other words, the rule violation aspect undercut the advantage of unconscious thought.

But the people who first thought consciously and then were given the goal with distraction still outperformed the others by far.

S+B: Why is it important for businesspeople to know about this theory?NORDGREN: The decisions that executives make are invariably complex decisions where they have to weigh many different factors, integrating large amounts of information. These decisions are precisely the ones where unconscious thought proves particularly useful.

But unconscious thought also has limits. For example, it does not know how to handle ephemerals. Math equations aren’t going to be solved this way.

Conscious thought is also superior for the kind of information gathering that leads to an effective decision. And it is good at detecting rule violation—the sort of “if-then” logic problems that come up when we’re trying to evaluate a set of alternatives. “If the rent is that high, we can’t afford it. If we shut down that project, it’s going to have these negative consequences.”

The focus of our most recent research has been on getting the best of both modes of thought. How do you leverage their strengths?

S+B: How would you use these insights to design, say, a strategic planning process—which is (after budgeting) probably the second most hated exercise in large companies?
Maybe the first principle is to only engage in that kind of effortful process when a decision needs to be made, as opposed to when the calendar has turned over and a new strategic planning review is on the schedule.

Another big implication for decision making is to have a two-step process, separating the information acquisition phase, when conscious thought is emphasized, from the decision phase.

First, you have a structured, facilitated discussion where you gather information—ideally, canvassing people ahead of time. I’m a huge advocate of the private collection of information. If you want to tap into the unique expertise in the room, you should try to get information from the relevant people in advance, before some sense of a majority viewpoint is created.

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