Posts Tagged ‘decision making’

“No Coke…Pepsi!”

The iconic phrase made popular on Saturday Night Live in 1978 by John Belushi as Pete Dionasopolis, owner of the Olympia Café illustrates the length of the ongoing rivalry between the two flagship soft drinks.

You may have seen the television add where PepsiCo claims that people prefer the taste of Pepsi over Coke in blind taste tests.  Yet Coca-Cola’s commercials claim that people prefer the taste of Coke.  So who’s right?  As it turns out, both are correct but it depends on how the test is conducted. PepsiCo used a blind test taste while Coca-Cola let people see the name of the product they were drinking.

“To better understand the Coke vs. Pepsi rivalry, a group of neuroscientists conducted their own taste tests — only this time, the participants were tested in a magnetic resonance imaging machine so their brain activity could be monitored throughout the test. Duke Professor Dan Ariely notes in his book PredictablyIrrational, when the participants received a drink, they were presented with visual information indicating either that Coke, Pepsi, or an unknown drink was coming. This way the researchers could record and compare observations under all of the different scenarios.

So what were the results? It turns out that the brain activity of participants did indeed vary depending on whether or not the drink’s brand was revealed. When participants weren’t informed of the brand, only the center part of their brain was activated, which is associated with strong feelings of emotional connection. When the participants were informed of the brand, however, something additional happened. This time, the frontal area of the brain controlling memory, associations, and higher-order cognition was also activated — not coincidentally, the frontal lobe is also closely linked to the brain’s pleasure center. And the response was strongest when they were drinking Coke, indicating that most people do in fact prefer Coke over Pepsi, but only if they know which is which ahead of time.” (Excerpted from Profiting from the Irrationality of Others,  John Maxfield, The Motley Fool, Dec. 7, 2011)

So what is the significance of this discovery in leadership and organizations? For one, the discovery illustrates the importance of “memory, associations, and higher-order cognition” in decision making. While decisions are commonly perceived as rational, memory from past experiences provide a powerful influence. Termed as irrational by some, I believe it is actually non-rational thought, which is not obviously rational versus being against rational.

One of my favorite examples is when I hear executives make statements such as “people are too risk averse…it’s okay to fail…we need to learn from our mistakes…employees need to take more risks.”  To understand risk aversion, all you need to do is reflect on your own past experiences.  As a child, a student, an athlete, an employee – how many times were your mistakes or failures associated with positive emotions and feelings versus negative ones?  It is the power of these memories, whether conscious or not, that truly impact the decisions we make.

Incite: What other examples of decisions or behaviors can you think of that are affected by past memories and their associated emotions?  Giving feedback, speaking up in meetings, confronting bad behavior?

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