As applied behavioural finance specialists, the team at Panthera Solutions in Monaco look at the current “crisis as opportunity” revival during the ongoing Covid-19 pandemic through their lense.
Never let a crisis go to waste – a truism which has become popular again in recent weeks.
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Officials, experts, coaches and the like are telling us what to do in addition to social distancing: stay calm and use the crisis as an opportunity. This is easier said than done. “The only way a person can change is if they change the story they tell themselves about themselves.” This classic quote from the founding father of archetypical psychology points to the following: for us to change our behaviour lastingly, certain conditions need to be met.
Our recent research has produced insights on the glorification of change. There is an industry waiting for you to tell you how to eat, sleep, think and decide, in short, how to live your life. “Be gloriously agile, embrace change and ongoingly self-optimise” they say. No matter how good-willing their advice is, they tend to run short on meeting the required conditions for us to change.
They underestimate what’s called our “mental immune system”, which protects us from too fast, unintended behavioural change. This system is responsible for making behavioural change an exception. Biologically, we can change our cognitive routines until old age thanks to what´s called the neuroplasticity of our brain. The saying that “you cannot teach an old dog new tricks” is wrong. That´s not the bottle neck.
But what are those conditions and how to meet them to achieve behavioural change? In this article, we invert the question and clarify which learning environments will NOT make you achieve that change. No doubt, the question of how to change our behaviour to step up to the current challenge is of relevance. Individual inabilities and organisational insufficiencies become unavoidably visible during times of crises. Knowing ‘how not to do’ it is as important as ‘knowing how to’ do it. Let´s take a look.

Passive and active forms of learning

The learning environment for directed behavioural change can be separated between passive and active forms of learning. The illustration below summarises the relevant realm of literature.

Main takeaway: the more tailored an active learning environment for an individual, the better directed change can be facilitated. Passive forms of learning generate little to no impact. In other words, listening to a podcast, watching a video, and answering questions during an online seminar are nice to have moments of passive learning. They raise awareness, but they don´t change our behaviour. The literature knows about a wide knowing-doing gap between the awareness of a matter and related action.
Examples of nice-to-have moments of passive learning:

• Listening to podcasts, keynotes, webinars, video lectures or panel discussions
• Participating in seminars, roundtables or online courses
• Using pattern recognition software or virtual, augmented and mixed reality technologies for learning

Passive learning naivety

It would mark a naïve understanding of life, the complexity of cognitive processes and the ambiguity of the civilisation we built to think that seminars, podcasts, online courses and alike achieve directed behavioural change.
Against academic evidence, those providers glorify behavioural change as scalable exercise that is necessary to undertake and easy to achieve. Those offerings resonate well in board rooms with a check-list mentality, while trading short-term compliance in exchange for innovative specialisation. When measuring the empowerment effects of those approaches, an assessment on their claims concludes: they are starting out a tiger but ending up a bedside rug.
For more information on the above, read our white papers on Ambiguity Tolerance Beats Artificial Intelligence and The Knowing-Doing Gap in Behavioral Finance. In our next article we will outline how to make directed behavioural change likely to happen. Stay tuned.
 
The views and opinions expressed in this article are those of Markus Schuller and his team at Panthera Solutions and do not necessarily reflect the views and opinions of Monaco Life. 
 
 
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