Taming The Animal Instinct

Dec. 21, 2004
Consulting firm taps animal behavior, psychology, biology to help companies make better business decisions.

At first blush Oxford Risk Research and Analysis (ORRA) Ltd. seems ill equipped to offer business advice to corporations. Its founders are zoologists, and psychology, evolutionary biology and animal behavior are among the areas of expertise it brings to the table. However, it is that very mix of expertise, the start-up firm says, that allows it to provide important insights to decision-makers on matters related to risk. That's because, says ORRA, people do not simply make rational, reasoned business decisions based on sound economic and statistical measures -- a primary principle of classic economics. Instead their choices are influenced by emotion, evolution and psychology, all of which may lead them unwittingly to make poor choices. "Even when people are given the right information, their psychological filters can lead them to the wrong choice," says founding member John Krebs, a zoology professor at the University of Oxford in the UK and chairman of the UK Food Standards Agency. Evolution plays a role, notes ORRA founding member Alex Kacelnik, professor of behavioral ecology at Oxford, by molding behaviors that may have helped human existence to continue but that don't work well in making optimal business decisions. For example, he says, people have evolved to be less fearful of situations with which they are familiar. In turn they "have a tendency to consider 'less risky' things they are familiar with." Applied in a business setting, when faced with several opportunities, decision-makers may choose what they see as the more familiar, less risky choice, even when presented with statistical, analytical evidence that an alternate option offers greater probability for success and greater rewards. "History is littered with examples of companies that were too risk averse or saw risk as a threat rather than an opportunity," notes Krebs. Research on animal and plant behavior also has helped yield insights into risk management, ORRA says. "Human beings and other animals respond to risk in similar ways," notes Krebs. "The tools we have developed for animal behavior also work for humans. It turns out that we can get real insights into how businesses respond to risk when they make decisions." ORRA's assistance to business lies in helping make those in the decision-making role more aware of how they reach decisions and by offering advice on how to improve their judgment. "We do not intend to make decisions for clients," Kacelnik says. "We tackle the decision-making process rather than the decision itself." ORRA was spun off from Oxford through the university's technology transfer company.

About the Author

Jill Jusko

Bio: Jill Jusko is executive editor for IndustryWeek. She has been writing about manufacturing operations leadership for more than 20 years. Her coverage spotlights companies that are in pursuit of world-class results in quality, productivity, cost and other benchmarks by implementing the latest continuous improvement and lean/Six-Sigma strategies. Jill also coordinates IndustryWeek’s Best Plants Awards Program, which annually salutes the leading manufacturing facilities in North America.

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