Limitations of neuroscience in business

neuromarketing. nerve management. Neurofinance. Efforts to bring brain science into the business world are nothing short of comprehensive.

Proponents of neuroscience in commercial settings argue that it can provide important insights that help explain consumer and employee behavior. This is an insight that can ultimately be used to develop more engaging products and services. While that may be true to some extent, administrators considering such applications are not responding to widespread claims that ignore important caveats regarding the practical application of brain science.

This article is intended to help administrators critically evaluate neuroscience-based vendor products. In particular, he has three very important issues that a business leader must understand if he wants to make an informed decision regarding investment in such a product.

Question 1: proxy

One famous example of neuromarketing involves researchers using brain data from individuals watching movie trailers to predict ticket sales. This has led to claims that brain imaging can be used to improve marketing techniques and boost box office returns.

To understand why such claims are questionable, let’s examine the proxy issue.

A proxy is an indirect measurement used to predict the outcome of something that is otherwise difficult or impossible to measure directly. For example, baseball scouts often use his minor league on-base percentage as a proxy to predict how often a player will get on base in the majors. This indirect means allows your team to make educated guesses without spending millions of dollars trying to attract qualified leads.

For a proxy to be considered meaningful within a particular field, it must meet three specific criteria:

• reliability: Good proxies are derived from very large data pools, as correlations inferred from small data sets often turn out to be inaccurate or false.
• valid: In theory, a single experiment could produce very different results (as when the European physics laboratory CERN falsely detected particles traveling faster than the speed of light), so a suitable Proxies are cloned separately.
• utility: Given the finiteness of resources and capital, a good proxy offers a relatively favorable cost-benefit ratio.

In baseball, minor league on-base percentages are reliable because they come from thousands of players over decades. Valid because it has been replicated using player data from dozens of independent international leagues. It’s also useful because it costs little to measure and correlates well (0.53) with his league’s on-base percentage in the majors.