Fusion in the Heart of Finance

There is an expression derived from Donald Hebb’s ‘Hebbian’ theory that states that ‘the neurons that fire together, wire together’. Put (overly) simply, it’s the process through which our brains create pathways of learning, and the infrastructure that informs who and how we are. Cells in our brains respond to stimulus, create reactions in other cells, and increase overall efficiency through the creation of cell ‘assemblies’. It is, in some ways, the neurological equivalent of fusion. Let me expand on Hebbian theory through the lens of impact investing – with a little poetic licence!

As children, we learn as a result of the environment we are placed in and the stimulus and inputs around us. It is largely these ‘nurturing’ environments that inform our belief systems that in turn form our values; the sort of moral map of who we are. These belief systems can be positive, and they can be negative, depending on the stimuli. The same way overall neurological efficiency is informed by the inputs the brain receives (not withstanding pre-existing conditions and genetically inherited predispositions), our behavioural game plan is informed by how and what we think – our beliefs. The more diverse the stimuli in both instances, the more expansive the universe of learning and behaviours that then result. The more positive the stimuli, the greater the capacity for learning is, as well as increased reduction in self-harming behaviours.

So, what has all this got to do with finance and impact investing? Well, Milton Friedman’s seminal paradigm that the purpose of business is to make money, has been interpreted largely over the years as ‘profit at all costs’. At a time where the imperative to rebuild and increase economic activity post the Second World War was paramount, Friedman spoke the language of growth. In the years and decades that have since followed, the finance system, through its relentless pursuit of growth, has reduced society and the planet down to resources to be used and exploited, with no associated cost. GDP has become King. In the creation of a system that rewards profit above all else, it has wired together a culture that, like a magnet, attracts those who are stimulated by the same inputs. If we think of the finance system as a brain, the neurons that fired together decades ago, created the tapestry for a rather monochromatic landscape, where any colour was removed. It is a very black and white landscape, except even then, it’s predominantly white. Diversity in thinking and behaviour did not exist because the inputs and resulting stimuli were one dimensional. Any neurons that didn’t respond to these stimuli were rendered redundant and the system, as we know it, emerged.

Imagine if, for a moment, Donald Hebb and Milton Friedman had sat down and talked. That fusion of theories and ideologies could have created a very different landscape. The ability to translate neuroscience into a systems thinking based approach to growth would, I am sure, have led to the inevitable conclusion that, like in Nature, diversity matters. With diversity comes the ability to pivot from one way of thinking to another, and to harness one form of input after another. Diversity builds agility and resilience. If the purpose of life (and business) is to survive and thrive, resilience and wellbeing are the master keys.

This is the world of impact investing; an approach to finance designed to create sustainable and positive change to correct the negative externalities that the current finance system has either created or exacerbated. It is, in some ways, cognitive behavioural therapy (CBT) for the finance system; activity designed to repair the neural pathways that have led to self-harming behaviour by encouraging new, healthier relationships with positive inputs that lead to better outcomes and increase resilience and wellbeing.

So how does impact investing do this? Through fusion, rather than replacement. The old finance neurons are identified, in some cases hacked, and in all cases, reinforced through the adoption of new non finance cells – let’s call them impact neurons. Impact neurons come pre-loaded with diversity, lived in experience, and real time knowledge. They understand the damage the self-harming learning pathways have created, and behave like vaccines, permanently fixing them or rendering them obsolete. Unlike parasitic relationships, the impact neurons require the finance neurons to navigate and understand the complex pathways that have been developed over time so that they can, together, re-programme the entire brain and increase resilience. It’s a fast and targeted upgrade of the pathways and symbiotic in nature. It’s taking a one-dimensional linear series of pathways and creating a multi-dimensional system. In a world where we are surrounded by the non-linear, invisible, and microscopic outcomes of our behaviours, impact investing provides the inputs required to respond practically, expeditiously, and positively.

The current Covid-19 pandemic, the biodiversity and climate crises and the global call for true equality and inclusivity demonstrate the inadequacies of GDP as a measure and growth as a paradigm. Resistance to the change championed for so long by impact investing pioneers such as Sir Ronald Cohen and Charly and Lisa Kleissner is evaporating in the face of the increased risk of structural failure. This opens up, at scale, the space for the new inputs and the rewiring impact investing brings.

My own business is a living embodiment applying Hebbian theory into mainstream finance; a certified B Corps and dedicated impact wealth manager, we found our home 4 years ago. We connected with other impact neurons, thus strengthening our own pathway and that of our friends, but we also connected with the existing finance neurons most capable of adapting to the change required. Most importantly, and as we looked to the future, we collided within ourselves the skillsets and lived in experiences needed to deliver our mission. Financiers and impact specialists sit side by side, working together to help deliver the change required. As we embrace the reality of our new world, one thing is clear – if we can identify our erroneous beliefs then we can mitigate the excessive reactions and seed the conditions for regeneration. We believe impact investing provides the pathway to our success.

Amy Clarke
Co-Founder & Chief Impact Officer
Tribe Impact Capital
http://www.tribeimpactcapital.com/
Twitter: @TribeCapital

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Fusion in the Heart of Finance

There is an expression derived from Donald Hebb’s ‘Hebbian’ theory that states that ‘the neurons that fire together, wire together’. Put (overly) simply, it’s the process through which our brains create pathways of learning, and the infrastructure that informs who and how we are. Cells in our brains respond to stimulus, create reactions in other cells, and increase overall efficiency through the creation of cell ‘assemblies’. It is, in some ways, the neurological equivalent of fusion. Let me expand on Hebbian theory through the lens of impact investing – with a little poetic licence!

As children, we learn as a result of the environment we are placed in and the stimulus and inputs around us. It is largely these ‘nurturing’ environments that inform our belief systems that in turn form our values; the sort of moral map of who we are. These belief systems can be positive, and they can be negative, depending on the stimuli. The same way overall neurological efficiency is informed by the inputs the brain receives (not withstanding pre-existing conditions and genetically inherited predispositions), our behavioural game plan is informed by how and what we think – our beliefs. The more diverse the stimuli in both instances, the more expansive the universe of learning and behaviours that then result. The more positive the stimuli, the greater the capacity for learning is, as well as increased reduction in self-harming behaviours.

So, what has all this got to do with finance and impact investing? Well, Milton Friedman’s seminal paradigm that the purpose of business is to make money, has been interpreted largely over the years as ‘profit at all costs’. At a time where the imperative to rebuild and increase economic activity post the Second World War was paramount, Friedman spoke the language of growth. In the years and decades that have since followed, the finance system, through its relentless pursuit of growth, has reduced society and the planet down to resources to be used and exploited, with no associated cost. GDP has become King. In the creation of a system that rewards profit above all else, it has wired together a culture that, like a magnet, attracts those who are stimulated by the same inputs. If we think of the finance system as a brain, the neurons that fired together decades ago, created the tapestry for a rather monochromatic landscape, where any colour was removed. It is a very black and white landscape, except even then, it’s predominantly white. Diversity in thinking and behaviour did not exist because the inputs and resulting stimuli were one dimensional. Any neurons that didn’t respond to these stimuli were rendered redundant and the system, as we know it, emerged.

Imagine if, for a moment, Donald Hebb and Milton Friedman had sat down and talked. That fusion of theories and ideologies could have created a very different landscape. The ability to translate neuroscience into a systems thinking based approach to growth would, I am sure, have led to the inevitable conclusion that, like in Nature, diversity matters. With diversity comes the ability to pivot from one way of thinking to another, and to harness one form of input after another. Diversity builds agility and resilience. If the purpose of life (and business) is to survive and thrive, resilience and wellbeing are the master keys.

This is the world of impact investing; an approach to finance designed to create sustainable and positive change to correct the negative externalities that the current finance system has either created or exacerbated. It is, in some ways, cognitive behavioural therapy (CBT) for the finance system; activity designed to repair the neural pathways that have led to self-harming behaviour by encouraging new, healthier relationships with positive inputs that lead to better outcomes and increase resilience and wellbeing.

So how does impact investing do this? Through fusion, rather than replacement. The old finance neurons are identified, in some cases hacked, and in all cases, reinforced through the adoption of new non finance cells – let’s call them impact neurons. Impact neurons come pre-loaded with diversity, lived in experience, and real time knowledge. They understand the damage the self-harming learning pathways have created, and behave like vaccines, permanently fixing them or rendering them obsolete. Unlike parasitic relationships, the impact neurons require the finance neurons to navigate and understand the complex pathways that have been developed over time so that they can, together, re-programme the entire brain and increase resilience. It’s a fast and targeted upgrade of the pathways and symbiotic in nature. It’s taking a one-dimensional linear series of pathways and creating a multi-dimensional system. In a world where we are surrounded by the non-linear, invisible, and microscopic outcomes of our behaviours, impact investing provides the inputs required to respond practically, expeditiously, and positively.

The current Covid-19 pandemic, the biodiversity and climate crises and the global call for true equality and inclusivity demonstrate the inadequacies of GDP as a measure and growth as a paradigm. Resistance to the change championed for so long by impact investing pioneers such as Sir Ronald Cohen and Charly and Lisa Kleissner is evaporating in the face of the increased risk of structural failure. This opens up, at scale, the space for the new inputs and the rewiring impact investing brings.

My own business is a living embodiment applying Hebbian theory into mainstream finance; a certified B Corps and dedicated impact wealth manager, we found our home 4 years ago. We connected with other impact neurons, thus strengthening our own pathway and that of our friends, but we also connected with the existing finance neurons most capable of adapting to the change required. Most importantly, and as we looked to the future, we collided within ourselves the skillsets and lived in experiences needed to deliver our mission. Financiers and impact specialists sit side by side, working together to help deliver the change required. As we embrace the reality of our new world, one thing is clear – if we can identify our erroneous beliefs then we can mitigate the excessive reactions and seed the conditions for regeneration. We believe impact investing provides the pathway to our success.

Amy Clarke
Co-Founder & Chief Impact Officer
Tribe Impact Capital
http://www.tribeimpactcapital.com/
Twitter: @TribeCapital

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