Are organisations led by the limbic system?

(We're reporting from this month's Division of Occupational Psychology conference at the Digest. This post is by Dr Jon Sutton, Managing Editor of The Psychologist, and will also feature in that magazine's March issue. @jonmsutton / @psychmag)

According to keynote speaker Gerard Hodgkinson (Professor of Strategic Management and Behavioural Science at Warwick Business School), ‘Descartes’s error is alive and well in the workplace’. In a bold and wide-ranging address, Hodgkinson made the case for why and how occupational psychology needs to connect with the social neurosciences.


Hodgkinson is bringing psychology into the field of strategic management, trying to help decision makers become more rational. Take how organisations tend to respond to a major threat or opportunity (HMV and Blockbuster come to mind as I write this). Usually there are small, incremental changes, and when it becomes apparent this isn’t sufficient, what does the organisation do? Nothing. There is a period of ‘strategic drift’. Then there is a period of ‘flux’, which on Hodgkinson’s graphic representation looks rather like a tailspin. This is followed by ‘phase 4’, ‘transformational change’ or ‘complete demise’.

But to what extent can psychology shed light on this process? Hodgkinson’s 2002 book ‘The Competent Organization’ argued the case for the centrality of the psychological contribution to organisational learning and strategic adaptation, yet 11 years on, he said, there was still only a passing consideration of affective and non-conscious cognitive processes. Why do we continue to sidestep it?

Using examples from his practice, Hodgkinson demonstrated how strategising is both an inherently cognitive and affective process. Eliciting a cognitive taxonomy from senior figures in a UK grocery firm, he found that although the market conditions had changed dramatically, mental models – individually and collectively – had not. Decision makers were slaves to their basic psychological processes, for example still focusing on the ‘magic number’ of ‘7 plus or minus 2’ competitors.

Hodgkinson showed how he confronts strategic inertia in top management teams, stimulating individual cognitive processes by scenario analysis. Some organisations excel at this: Hodgkinson claims that Shell closed all their facilities within 45 minutes of 9/11. While others were still struggling to comprehend what was happening, their scenario planning had allowed them to take quick and decisive action.

Hodgkinson’s latest research draws on social cognitive neuroscience and neuroeconomics to develop a series of counterintuitive insights. His hope is that these can teach people to be more skilled in their control of their emotional, limbic system. True rationality, he concluded, is the product of the analytical and experiential mind.

Further reading:

Hodgkinson, G., & Healey, M. (2008). Cognition in Organizations Annual Review of Psychology, 59 (1), 387-417 DOI: 10.1146/annurev.psych.59.103006.093612 Pdf freely available here.