Harvard Business Review/Furr, Nel & Ramsøy: Neuroscience Is Going to Change How Businesses Understand Their Customers

Harvard Business Review

Innovation
Neuroscience Is Going to Change How Businesses Understand Their Customers

    Nathan Furr Kyle Nel Thomas Zoëga Ramsøy

February 08, 2019 UPDATED February 07, 2019

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ANDRZEJ WOJCICKI/SCIENCE PHOTO LIBRARY/Getty Images

A Fortune 100 automotive company is exploring a new technology on the periphery of their core business. The executives in charge believe they have struck on a possible breakthrough, but as they push the project into uncertain terrain, their traditional signposts for decision-making are no longer relevant in this new context. They need a new method for coming to strategic decisions within this unfamiliar and turbulent environment, but how?

Neuroscience, it turns out, can help change how companies think about new opportunities, and specifically, within the emerging field of applied neuroscience.

Applied neuroscience is best described as the use of neuroscience tools and insights to measure and understand human behavior. Using applied neuroscience, leaders are able to generate data about critical moments of decision making, and then use this data to make confident choices that help to navigate the future of an initiative.

Studies using applied neuroscience are often conducted outside of a lab context, and therefore rarely use large, stationary MRI (magnetic resonance imaging) scanners. Instead, these studies focus on using more mobile solutions such as EEG (electroencephalograph) headsets, combined with eye-tracking technology to capture precise data on how the brain reacts when presented with certain scenarios. Because of this, applied neuroscience is used primarily during one of two points in a new project — either at the onset while defining the business problem, or later in the cycle while seeking new solutions for users.

What is key in applied neuroscience is capturing real data on decision making as it relates to a given situation. This kind of data allows you to understand precisely how and when individuals are making decisions (whether internal stakeholders or customers), and then use this to create a predictive map about which way to advance.

Let’s look at IKEA as an example.

A group of executives at IKEA began considering large-scale global challenges, such as how population growth is putting increased demand on the production of food, energy, and natural resources. With this in mind, they started asking what new sources of energy, textiles, metals, woods, and plastics will be used to build future products for this growing population.

This inquiry into the future inspired IKEA to turn these questions inward and begin asking some radical, disruptive questions about IKEA’s business. For example, what if instead of just selling home furnishings, IKEA sold solutions that helped resolve these resource tensions? What if instead of only selling ovens, IKEA also sold customers renewable power? Even more, what if IKEA created virtual power grids that leveraged blockchain to allow customer communities to trade power with each other?

These questions were both radical and inspiring in relation to IKEA’s historical business model and identity.

If you were working as IKEA’s consultant, what would you advise them to do?

Perhaps you might recommend IKEA remain closer to its familiar business model and core capabilities. But how would you know you were right? The world is dramatically changing, and what if one of these new initiatives proved incredibly valuable?

The big question here is how leaders driving forward new opportunities can uncover greater insights into their initiatives and then use these insights to move forward confidently.

In the case of IKEA, Thomas Zoëga Ramsøy’s team at Neurons employed applied neuroscience to better understand this potential opportunity for the organization and gaze into the unspoken, subconscious reactions of these potential opportunities.

Using high-resolution EEG headsets and eye trackers, Thomas’ team tested IKEA customers in Poland and the Netherlands to understand their reactions to new business models based on this idea. For example, the reaction to a new home solar offering that would enable customers to generate their own renewable energy.
Further Reading

    Leading Transformation: How to Take Charge of Your Company’s Future
    Innovation BOOK
        Nathan Furr, Kyle Nel, and Thomas Zoega Ramsoy
    32.00 Add to Cart
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His team then correlated their reactions and comprehension levels with a behavioral database to pinpoint which business models the customers were likely to accept, never accept, or accept in a few years. Creating this type of behavioral map gave Håkan Nordkvist, head of sustainability innovation at IKEA Group, a more concrete way to understand the emotions and reactions that could drive one business model over another.

Nordkvist has used these tools and other experimental design methods in combination with the company’s strategic narrative to create successful new business models at IKEA.

Today, IKEA’s use of applied neuroscience to evaluate potential opportunities has led to new business models and undertakings including a home solar offering that enables customers to generate their own renewable energy, a shift to renewable plastics, and innovations that provide customers at the IKEA restaurant chain choices of healthier and more-sustainable food.

At first glance, any of these new opportunities may appear incredibly risky for such a large and established organization. It is risky to stray from what is core to a business, but in today’s business climate where industries and technologies are rapidly converging, this is at times exactly what an organization needs in order to “skate to where the puck is going.”

The example of IKEA demonstrates the difference between an organization talking about experimenting, and an organization truly experimenting in ways that can dramatically impact the future through bringing an understanding to how customers and employees think about transformative opportunities.

Nathan Furr is an assistant professor of strategy at INSEAD and a coauthor of Leading Transformation: How to Take Charge of Your Company’s Future (Harvard Business Review Press, 2018).

Kyle Nel is the CEO and cofounder of Uncommon Partners, a behavioral transformation consultancy, the former executive director of Lowe’s Innovation Labs, and a coauthor of Leading Transformation: How to Take Charge of Your Company’s Future (Harvard Business Review Press, 2018).

Thomas Zoëga Ramsøy is the founder and CEO of Neurons Inc. He is a coauthor of Leading Transformation: How to Take Charge of Your Company’s Future (HBR Press, 2018).
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