About this author
Zack Lynch is author of The Neuro Revolution: How Brain Science Is Changing Our World (St. Martin's Press, July 2009).
He is the founder and executive director of the Neurotechnology Industry Organization (NIO) and co-founder of NeuroInsights. He serves on the advisory boards of the McGovern Institute for Brain Research at MIT, the Center for Neuroeconomic Studies, Science Progress, and SocialText, a social software company. Please send newsworthy items or feedback - to Zack Lynch.
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October 27, 2003

Emotional Transaction Costs

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Posted by Zack Lynch

BusinessPundit, recently highlighted in Business and the Tragic View of Human Nature that:

"The field of management has a long way to go...a better understanding of human nature (via neuroscience) will allow us to better target management tactics for specific situations, industries, and most importantly, individuals...Good managers are masters of situationalism (if that's a word). They can tailor their tone, attitude, strategies, tactics, etc. to the needs of the individual situation. I think in the future, management will move from being more of an art to being more of a science. In my opinion, management is still in its infancy."

I agree with Rob's assessment, and would add that the tools management will use to help them achieve their objectives will come via neurotechnology. Indeed, improving competitive performance via neuroceuticals will accelerate many aspects team performance by improving individual emotional stability and cognitive clarity. But the effects will go far beyond this: to the nature and shape of the firm.

By radically reducing the spatial transaction cost of finding and sharing knowledge, information technology has played an important role in flattening organizations down from their hierarchical, industrial predecessors.

Neurotechnology will also impact the "typical organization" of the firm in its own unique ways. As we learn more about the neurobiology of trust, how people make decisions, and the many other components of human social interaction that go into everything from contract development to dispute resolution, the emotional transaction cost of doing business will drop precipitously. In my research, I have come to believe that we will see a further flattening of organizational structures and the emergence of real heterarchies.

What do you think?

(Thanks to the Carnival of the Capitalists for bringing this to my attention.)

Comments (2) | Category: Neuroeconomics


1. Christopher on October 28, 2003 2:37 AM writes...

So, is the solution dissolution? I wonder what the impact of this will be... Won't we be needing new metrics to measure this phenomena and shape/accelerate results? Where are these discoveries being championed? Is there a payoff if it can not be measured?

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2. Matthew Mahoney on October 28, 2003 3:29 AM writes...

People will indeed work to reduce transaction costs. Our external tools will drop spatial search costs. Pharma applications will give people greater opportunity to make moves to grow their relationships, *but* to truly reduce the perceptual distance between people will require Conversations (not biological correlate proxies). Management may become a science, but eventually and ultimately it is an art.

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