Weekend Reading: Mind Games — AI and the Hidden Architecture of Workplace Behavior
?By: Cameron Lawrence , Director of Research at Starling
This piece first appeared in Starling Insights' newsletter on March 9, 2025. If you are interested in receiving our newsletter, among many other benefits, please consider signing up as a Member of Starling Insights.
The disconnect between data-driven metrics and gut-driven insights has become increasingly problematic as regulators heighten their focus on Culture Risk Governance.?
In the UK, a recent "Dear CEO" letter issued by the Prudential Regulation Authority (PRA) explicitly identified risk culture as a potential "root cause of material weaknesses" in control environments. Similar concerns have been voiced by the Australian Prudential Regulation Authority (APRA), the Office of the Superintendent of Financial Institutions (OSFI) in Canada, and the European Central Bank (ECB).
Yet identifying and establishing reliable metrics by which to assess cultural dynamics remains elusive for both firms and their regulators. Against this backdrop, 美国哥伦比亚大学商学院 professor Sandra Matz 's new book, Mindmasters: The Data-Driven Science of Predicting and Changing Human Behavior, urges new understandings of psychology and how technology may give us more power over it, transforming how we might assess culture dynamics.
The transparent self
"[C]omputers can translate seemingly mundane, innocuous information about what we do into highly intimate insights about who we are and ultimately prescriptions of what we should do," Matz writes. This capability represents a fundamental shift in how we can achieve a forward-looking understanding of human behavior and behavioral proclivities.?
The core of Matz's argument rests on what she terms "psychological targeting" —?"the process of influencing people's thoughts, feelings, and behaviors based on their predicted psychological characteristics." As someone who has studied and practiced this approach for over a decade, Matz demonstrates how 'digital footprints' trace a more complete picture of our personalities than even our closest friends and family possess.
This is a feature that leaves many feeling uneasy. As Matz herself cautions, "By giving away your personal information, you're not just risking a potential future threat. You're sacrificing something valuable and tangible, right now ... your self-determination."?
"Giving up your privacy means giving up the freedom to make your own choices and live life on your own terms," she continues. "When others have access to your personal data and can use it to gain intimate insights into who you are, they hold power over you and your decisions."
In the modern workplace, the application of such tools to improve governance brings this tension between insight and autonomy to the fore. As organizations seek to better understand and shape their cultures, it is imperative that they navigate legitimate concerns about surveillance and manipulation in order to maintain trust with their workforce.
"The impact of psychological targeting ultimately depends on us and the choices we make," Matz concludes. "At its worst, psychological targeting manipulates, exploits, and discriminates. At its best, it engages, educates, and empowers."?
With the rapid advancement of generative AI, these capabilities are expanding exponentially. "As advanced AI technology — including generative AI — makes the creation and targeting of hyperpersonalized content easier than ever before, we need a clear vision for how to amplify the opportunities afforded by psychological targeting while mitigating its risks," Matz explains.
When managed properly, these technologies also present opportunities to change for the better — and not only individual behavior, but also the way our society functions as a whole. This is where Matz's work becomes particularly relevant to financial institutions grappling with Culture Risk Governance challenges, and industry overseers seeking to deploy more successful culture risk supervision.?
"For all its risks of trapping us in our own echo chambers, psychological targeting could be a real game-changer in how we learn about the world," Matz argues. "For the first time in history, we could step out of our shoes and start exploring the world from the viewpoint of someone who is entirely different. Not just any viewpoints, but viewpoints that we define and might never otherwise get to experience."
Is it contagious…?
The tools Matz describes promise to illuminate and to make moldable currently intractable elements of human life.?
Readers familiar with the work we do at Starling will know that we have proven an ability to do much the same with organizational life. This parallel development — understanding individual psychology through digital footprints and organizational dynamics through network analysis — offers a set of complementary insights that transform Culture Risk Governance capabilities.?
While Matz sets forth a means to understand the psychological dynamics within an individual, Starling provides organizational leaders with a means by which to understand how individuals interact to produce broader organizational performance outcomes.
The network perspective is particularly valuable because it captures the social transmission mechanisms through which individual behaviors aggregate to form organizational culture. "Networks are prisms that color and shape what people see and what they believe," University of Pennsylvania Professor Damon Centola, a Starling advisor, wrote in our 2021 Compendium.?
"My research shows that, as people consider whether to adopt a new belief or behavior, they are guided — much more than anyone realizes — by their social networks," Centola added. "This much-deeper process of social spreading is called complex contagion, and it has given rise to a new science for understanding how change happens — and how we can help make it happen."
This insight has profound implications for any organization seeking to shape its culture proactively. Traditional approaches to culture change often focus on formal policies, training programs, or leadership communications. However, these frequently fail because they don't account for the complex dynamics through which behaviors actually spread within organizations.
In an article contributed to our 2022 Compendium, Michael Arena, Co-Founder of the Connected Commons and former Vice President of Talent & Development at Amazon Web Services, and Rob Cross, Professor of Global Leadership at Babson College, explained the power of network science to create lasting culture change.
"Culture and networks reinforce each other in organizations," Arena and Cross wrote. "Culture shapes the beliefs and values in networks and network interactions create and reinforce culture." When combined with the psychological targeting capabilities that Matz describes, this approach creates a powerful methodology for apprehending and shaping organizational culture.?
Culture Risk Governance?
As financial sector regulators worldwide increasingly focus on culture as a driver of operational risk, both firms and supervisors face the challenge of developing reliable metrics for assessing cultural dynamics. This convergence of psychology, behavioral science, network science, and technology promises to revolutionize Culture Risk Governance.
For financial institutions seeking to improve their risk culture, this combined methodology offers several advantages over traditional approaches:
To many, the deployment of such capabilities might be taken as an effort to introduce yet more intrusive surveillance, as many employers are indeed seeking to do. But such concerns ignore the fundamental mindset change regarding employee conduct that these tools offer.
Traditional organizational surveillance tools are designed to detect individual actions taken by employees after they have made some kind of decision. By contrast, Culture Risk Governance achieved in the manner discussed here would allow us to ask "Where are the organizational conditions ripe for employees to make poor decisions and potentially compromise the firm's risk management systems and processes?" This shifts the lens away from a focus on individual culpability and instead targets individual susceptibility, allowing individuals to take self-corrective and self-protective measures.?Done rightly, Culture Risk Governance serves individual agency.?
Good behavior by design
In our upcoming 2025 Compendium, to be released this summer, Sandra Matz will discuss how these new tools can help bring about greater human flourishing. Alongside her, MIT Professor Alex 'Sandy' Pentland , author of Social Physics: How Good Ideas Spread — The Lessons from a New Science, will discuss how such capabilities can revolutionize the management of all sorts of organizations to improve performance and mitigate risk.
By bringing together insights from individual psychology and network dynamics, organizations can develop more sophisticated approaches to Culture Risk Governance — approaches that recognize both the psychological drivers of individual behavior and the social structures through which those behaviors aggregate to form organizational culture.?
As technologies deploying "social physics" continue to evolve, they promise to transform what has long been considered an intractable challenge in financial regulation: how to effectively assess and supervise the non-financial risks that stem from organizational culture.
For firms and regulators alike, these capabilities could provide the tools needed to move beyond simplistic discussions of "tone from the top" toward a more nuanced understanding of how culture actually functions in complex organizations.
The opportunity before us is not merely to predict behavior more accurately but to create environments that foster desired behavior by design — leveraging our understanding of human psychology and social networks to build organizations where doing the right thing becomes the path of least resistance rather than an act of courage.