In the early 1960s Robert Rosenthal discovered something remarkable by studying rats in his psychology lab at Harvard University. On the face of it, the research was pretty standard stuff, unlikely to produce startling results. 

He divided his rats into two groups. On the cage of the one group he labelled the rats as super-smart and highly trained, and he labelled the rats in the other cage as not terribly bright. The twist was that the labels on the cages were bogus, there was in fact no difference between the two groups of lab rats. Rosenthal had randomly assigned his rats into the two groups, and he kept this piece of information to himself. Later, he asked his research assistants to record how well the two groups of rats performed in various tasks, such as navigating a maze. Surprisingly, the “smart” rats outperformed the “dumb” rats. 

His subsequent explanation was that, over time, his assistants gave better treatment to the rats that they believed were smart. The rats for which there were higher expectations were treated more gently and warmly, and this led to an improvement in their cognitive functioning. There was absolutely no difference between the rats at the outset, only a difference in expectations on the part of their human handlers.

Afterwards Rosenthal was given the opportunity to conduct similar research on humans in a schoolroom setting. In a replay of his rat research, he ran IQ tests on all the young children in one class at the beginning of the school-year. He then binned the test results without telling the teachers or the students. Instead, he randomly assigned the kids into two groups, one of which he described as having scored high on the test and who were about to bloom academically. He returned 8 months later and reran the IQ tests on both groups. The IQ scores of the “smart” kids showed significant increases in comparison to the control group.

Similar to the way Rosenthal’s research assistants had treated the lab rats, the teachers of this class of children believed the one group to be more gifted than the other group. The teachers gave the “smart” kids more attention, more encouragement, and more praise. All of this  changed the way in which the children saw themselves. Their cognitive performance was radically improved by a change in the way that the teachers saw them and what the teachers expected of them. The original fiction that they were smarter became a self-fulfilling reality. 


These findings are echoed in diverse fields such as quantum physics and anthropology. In these different fields it is now accepted that the mere act of observing gives rise to changes in what is being observed. Just looking changes things. And more profoundly, the way that you look not only affects your subjective experience but it also affects the objective reality. 

How you look at the world is a function of the mental frameworks, or schemas, that you use to quickly and easily organise information for specific themes. Schemas affect three cognitive processes:

  • Attention. You will tend to notice information that’s consistent with your existing schemas, while anything that’s inconsistent with those schemas you’ll tend to ignore.
  • Encoding. You will tend to store information that fits with your schemas, and you’ll tend to discard whatever doesn’t fit.
  • Retrieval. You will retrieve from memory and report information that is consistent with your existing schemas.

This ongoing process of selective information management forms a positive feedback loop. Once your schemas take shape, they tend to become strengthened over time. 

When you experience high cognitive load your schemas allow you to cope without requiring you to expend too much mental effort. This means that the higher the noise levels, the greater your reliance on schemas. Under conditions of elevated noise, it becomes extraordinarily difficult to notice and process information that is dissonant with your schema for that situation. Those times when noise levels are elevated are often precisely the ones when you most need high quality cognitive processing, and they are also the times when it’s most difficult to achieve. 

If you happen to think that people, or certain kinds of people, are inherently lazy or dishonest or greedy or whatever, you will notice and store data that confirms this view. When your interaction with that group (or an individual that you consign to that group) hits a rocky patch, your schemas for that group or person will play a significantly more pronounced role in the interaction. 

The same applies once you’ve started to think about certain others in a positive light, perhaps as smart or energetic or generous. Data that doesn’t fit your existing schema for that person or group of people will either be rejected or it will be distorted so that it fits. This schema will influence your behaviour, and your behaviour will confirm your schema. Even if they’re not deliberate or conscious, these beliefs and assumptions about others shape your reality. And, as we’ve seen from Rosenthal’s research, your beliefs and assumptions about others will also shape their reality.

It makes intuitive sense. Your unconscious (or conscious) assumptions about other people affect your approach towards them, they affect the temperature, distance, tone, language – pretty much everything that makes up a relationship. Put another way, how you see affects what you see, which affects what you do. This affects what others do, which affects what you all get.

I’ve seen this play out in a positive way repeatedly in my work with investment professionals. The simple act of engaging my clients with unconditional positive regard is itself a sort of catalyst that sets in motion for them an alchemical process towards higher functioning and even self actualisation. The way in which you hold another person in mind creates the conditions in which magic can and does happen.

Your Team

The way in which you see the other members of your investment team is not privately contained in your internal world. That view leaks out in all sorts of subtle ways and they pick up on these leakages and turn them into real, lived experiences. How you see them determines how you interact, which determines how they feel and what they bring, and this determines what your team achieves. How you see your colleagues matters.

If you consciously choose to have high positive expectations of your colleagues, you do run the real risk that you will be disappointed some of the time. Nobody likes that. And so there’s a certain sort of logic to want to hedge against the pain, which is usually done by setting low or negative expectations. That way it might not hurt as acutely when you’re disappointed. But it’s also likely to be negatively self-fulfilling. Not a great hedge.

You will have accumulated some evidence that some of your colleagues do not deserve to be treated with unconditional positive regard. They haven’t earned the right, you might say. Yes, that may be. But you already know that my response would contain the word schema. Are you sure that you haven’t unconsciously been selectively noticing, encoding, and retrieving data that supports your pre-existing view of these colleagues?

It takes courage to have a positive view of your colleagues, with all the evidence you’ve collected and with the knowledge that there are no guarantees. Rather than putting in place a hedge that has a self-fulfilling downside, it might be massively more constructive to buy some upside optionality. There is every possibility that just shifting your internal view of the members of your team will alter the trajectory of your relationships and what you can collectively achieve.

Changing a schema is hard. This we know. But it’s not impossible. It starts with being courageous enough to consciously set your intention for just one relationship, and keep resetting your intention even when the data seems to point the other way. Frankly, it sounds irrational. But we are, after all, talking about making magic.

  • Who is one person for whom you’re prepared to risk raising your expectations?
  • What new expectations will you have of this person? 
  • How will you reset your high expectations if you’re disappointed?


  • Rutger Bregman: Human Kind (2020)
  • Justin Newdigate: Noise (2019)
  • Robert Baron: Social Psychology (2006)
  • Robert Rosenthal: Pygmalion In The Classroom (1968)