A new study suggests that practicing mindfulness meditation can help entrepreneurs beat a pernicious cognitive bias and make better financial decisions.
Some people meditate for peace of mind, others are aiming for the health benefits of less stress. The religious might even be looking for a path to nirvana. But new research has added a surprising and far more down-to-earth rationale for entrepreneurs to add meditation to their day -- it can raise profits.
Huh? How can mindfulness meditation, which requires no particular religious belief and involves only sitting quietly and paying attention to your mind and body, possibly impact your bottom line?
The research comes out of business school INSEAD and focuses on meditation’s effect on common hitch in the human cognitive machinery called the sunk cost fallacy. Colloquially known as throwing good money after bad, the sunk cost fallacy boils down to persisting with a bad decision because our aversion to losing the time and money we’ve already invested is so high. You might keep pursuing a new product, for instance, even after it’s clearly not a hit just because the thought of losing all the effort you invested in getting it to market makes you feel a bit sick.
These sort of emotionally biased decisions waste resources, distract business owners and hurt the bottom line, and it turns out, meditation can help you let go of bad choices and more on to fresh ones. INSEAD Knowledge explains the study findings:
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 [INSEAD and Wharton academics] 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.
The team came to this finding through a series of experiments that led some participants through a breathing meditation and compared their responses to sunk-cost dilemmas (some were business related while others were more day-to-day quandaries like whether you should go to the outdoor concert you already purchased tickets for even though it’s raining) to those of a control group. The results were conclusive: "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."
JESSICA STILLMAN is a freelance writer based in London with interests in unconventional career paths, generational differences, and the future of work. She has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist. @EntryLevelRebel