Random finds (2016, week 7) — On decision-making, certainty and business books
Every Friday, I run through my tweets to select a few of the observations and insights that have kept me thinking over the last week.
Two mindsets for decision-making
Indecisiveness is not something most executives want to be associated with. A rich body of research in social psychology and behavioral economics however, suggests that decisiveness is not an unequivocal good. Studies on mindset reveal that, when contemplating an important decision, prematurely focusing on execution can exacerbate decision-making biases and lead to overconfidence and excessive risk-taking.
In Crossing the mental Rubicon (Deloitte Review, Issue 18, 2016), Derek M. Pankratz & Michael A. Roberto distinguish two types of mindset: deliberative and implemental.
“During a pre-decision period, individuals adopt a deliberative mindset,” they write. “Here, people focus on adjudicating potential goals. They weigh information about the likelihood and value of different outcomes. Eventually, ‘the die is cast’ [As an example, they introduce Julius Caesar, crossing the river Rubicon in 49 BCE.] and in the post-decision stage, an implemental mindset takes over.” Unfortunately, many of us cross the mental Rubicon prematurely. And this is not without danger. Even if a decision seems correct at the time it was made, new facts may warrant reconsideration. However, the implemental mindsets we adopt to help us achieve our chosen goals can exacerbate a host of judgmental and decision-making biases. An execution-oriented frame of mind may encourage tunnel vision and lead to overconfidence and excessive risk taking. In the end, individuals may stick to decisions that no longer make sense, with potentially disastrous consequences.
Pankraz and Roberto argue that the mindsets we adopt before and after making decisions are built for very different tasks:
- Pre-decision: our thoughts are oriented toward evaluating options and choosing a path based on feasibility and desirability. We tend to weigh information relatively objectively and are open to new facts about the choices before us.
- Post-decision: deliberation is often set aside and we focus intently on the specifics of execution. New information is ignored or skewed, we may see our current course of action in a more favorable light, and we downplay the attendant risks.
We often overestimate our chances of success and the degree of our own influence. If we have crossed the mental Rubicon prematurely, these biases can create a path dependence that can leave outside observers scratching their heads. Luckily, research suggests that mindsets are an active phenomenon, in that we can consciously control them. Deliberative and implemental mindsets can be proactively triggered with relatively little effort.
The authors suggest executives should consider bringing unbiased outsiders into the conversation rather than simply assembling domain experts to discuss the decision. You should not simply discuss what you will do, and then analyze how to do it. Decision-making processes should not unfold in such a linear fashion from analysis to action. You should consider implementation obstacles and risks as you make decisions. Moreover, you should encourage the team to step back occasionally from the ‘how should we execute this plan’ discussion to consider whether the plan itself is the proper course of action. By implementing these techniques, executives can improve the likelihood that their decisions yield favorable results.
A healthy dose of doubt can be an asset
Certainty is another thing that blinds us to the truth. During a television debate, Bill Nye and the creationist Ken Ham were both asked what would change their minds about what is true. Ham said nothing, while Nye said evidence, accepting that we will always be wrong about something, and that the answer is to follow what looks most like truth and change our minds when we see evidence to the contrary.
Ham is certainly not the only one prone to confirmation bias. We all are — from politicians and management gurus to leaders in the companies we work for. Yes, even you and I…
Seth Godin recently wrote that certainty itself is ‘a form of hiding.’ It shelters us from fear, doubt and the pressure of making decisions. But more importantly, it also hides us from the risk of being wrong. Despite all the talk about embracing failure, in most organisations ‘being wrong’ still doesn’t earn you any brownie points. On the contrary. (If you want to read more about being wrong, pick up a copy of wrongologist Kathryn Schultz’ book Being Wrong. Adventures in the Margin of Error or watch her TED2011 talk On being wrong.)
But the real risk doesn’t come from hiding, it comes from never realising that you could be wrong in the first place. And just like decisiveness, certainty can make you ignore the evidence of misdirection in your company. The threat of disruption doesn’t come from the disruptors alone, it might just as well come from leaders who think others can’t be right.
A framework that fights consensus
From mindsets, doubt and cognitive biases to consensus, which I have always thought of as highly overrated. Reaching consensus takes far too much time — time that simply isn’t there — and the result almost always leads to mediocrity and ‘more of the same’. Furthermore, it kills creativity, innovation and, speaking from experience, ‘corporate careers’ and even entire organisations.
In Square Defangs Difficult Decisions with this System (First Round Review), Gokul Rajaram, who oversees Square’s rapidly growing restaurant delivery service Caviar, shares how he makes the most difficult decisions without striving for consensus. While at the same time assigning ownership, being inclusive and coordinating execution among all stakeholders. But the article begins with an anecdote.
A decade ago, Rajaram, then a product management director for Google AdSense, was presenting to Google’s CEO Eric Schmidt. A gnarly challenge related to Google’s display ads business surfaced, and the discussion got heated. Schmidt’s voice boomed, “Stop. Who’s responsible for this decision?” Three people, including Rajaram, simultaneously raised their hands. “I’m ending this meeting,” Schmidt said. “I don’t want you to return to this room until you figure out who the owner is. Three owners means no owner.” With that, the meeting was adjourned and the team dismissed.
This experience fundamentally changed the way Rajaram makes decisions. Since then, he has noticed how even the most forward-thinking companies gravitate to consensus as the way to make difficult decisions. To avoid this, he has developed a framework that helps synchronize and speed up collaboration. And while the system outlines a step-by-step process (you can read all about these steps in the actual article), Rajaram emphasized five key takeaways during First Round’s last CEO Summit:
- Don’t use consensus. Agreement does not equate ownership.
- Clarify the ‘why’. It’s essential to understand the purpose and context for making the decision to optimize for it.
- Ensure that the decision maker is both responsible and accountable for the final choice. Don’t be that company where decisions are handed off to be implemented without previous involvement.
- Consult maximally. More people want to be involved than you think do.
- Get feedback privately, but document and get support publicly.
“I bet you if you survey people at your company today about decision-making and their level of happiness, most will say that they don’t understand how decisions are made. This framework allows you to articulate each stage of the process broadly to a company,” Rajaram says. “I firmly believe that making high quality decisions can fundamentally transform the way we work. I personally can’t wait to live in a world where people and companies make difficult decisions systematically and in a high quality way.”
More on consensus: When Consensus Hurts the Company in the Spring 2015 edition of MIT Sloan Magazine. The article by Felipe A. Csaszar and Alfredo Enrione describes when trying to gain consensus about important decisions is the right course and when it isn’t — and how leaders can determine the best form of decision making for a given situation.
On business books and aspiring management gurus
“We’ve all been there,” says Freek Vermeulen (Associate Professor of Strategic and International Management at London Business School) in Fallen for a management guru? You can do beter. “It’s so easy to succumb to the charms of a sexy theory. The best ones take all your insecurities, uncertainties and doubts and explode them in the first chapter of a book you bought in the business section of an airport bookshop.” And indeed, when talking to leaders there’s always at least one who refers to a book he or she recently bought while killing time in transit.
“Quite often these books are written with panache. And the authors — aspiring management thinkers and gurus (never scientists) — have an excellent sense of the pulse of the business public. They are neither crooks nor charlatans; they write what they believe. But that doesn’t make their beliefs right,” Vermeulen continuous.
One formula that best-selling business books follow, is to start with a list of eye-catching companies that have been outperforming their peers for years. The next step is to show what these companies have in common, and subsequently how we can all become the next Apple or Uber. If only…
“One piece of advice to come out of such tomes, for instance, has been to create a strong, coherent organizational culture, like most of high-performing firms studied. However, we now know from academic research that a strong culture is often the result of a period of high performance, rather than its cause.”
Another successful formula introduces new and fashionable management practices such as Six Sigma or Lean Startup. [We hardly ever hear from companies that use lean practices and fail miserably, because it’s not only a way of doing but (especially) also a way of becoming. Hopefully resulting in a state of being.] The book then introduces us to the success stories of early adopters. But again, academic research clearly shows that in the long run these practices usually do not create any value and can even stifle long-term innovation. Most of these practices go out of fashion after a while. Not that it really matters, because there is always ‘the next big thing in management’, and the next…
“And that is perhaps no wonder, because it is only human to be susceptible to the beguiling songs of Sirens that bear the promise of prosperous times. But sometimes it makes sense to do what Odysseus instructed his men to do, when the Sirens were in sight: plug your ears with beeswax and just sail past.”
Better still, why not read Homer’s The Odyssey. It is full with timeless advise, even for today’s leaders.
In addition to Vermeulen’s critique, it is not only authors who have a sense of the pulse of the business public. It is also consultants who build their entire practice on best-selling business books, management practices and models — providing their clients with answers and solutions that are simply inadequate. To say the least…
Moving on to more leadership literature in Getting beyond the BS of leadership literature (McKinsey Quarterly) by Jeffrey Pfeffer (Thomas D. Dee II Professor of Organizational Behavior at Stanford University Graduate School of Business and author of the recently published Leadership BS: Fixing Workplaces and Careers One Truth at a Time).
Pfeffer writes: “Despite the many shortcomings of leadership instruction, some books and articles do provide fruitful guidance on how to be a better, more effective leader. And there’s scattered information about what skills and behavior are needed to get things done and how to develop them. Sadly, and for a number of reasons, there’s a scarcity of useful material.”
He then gives several reasons for this lack of material, including that thinking on leadership has become a sort of morality tale. Pfeffer tells us that there are writers who advocate authenticity, attention to employees’ well-being, telling the truth, building trust, being agreeable, and so forth. While on the other hand, a smaller number of empirical researchers, contrarily, report evidence on the positive effects of traits and behavior such as narcissism, self-promotion, rule breaking, lying, and shrewd maneuvering on salaries, getting jobs, accelerating career advancement, and projecting an aura of power.
Part of this discrepancy between the prescriptions of the vast leadership industry and the data on what actually produces career success stems from the oft-unacknowledged tendency to confuse what people believe ought to be true with what actually is. And underlying that is an associated confirmation bias: the tendency to see, and remember, what you’re motivated to believe.
Pfeffer also gives us a list of what he thinks are the best books on leadership. This list includes Robert Cialdini’s Influence: Science and Practice that provides us with a common set of theoretically sound, empirically based principles of interpersonal influence. According to Cialdini people are both cognitively biased and cognitively lazy. Our mental shortcuts and unconscious patterns of thought make us susceptible to the tactics of interpersonal influence — tactics that depend on the norm of reciprocity, accepting and obeying authority (or its symbols), the power of liking, the value created by scarcity, and the tendency to escalate levels of commitment, even in the face of negative outcomes. Cialdini reminds us that everyone is susceptible to these well-known influence strategies, even if we know about them. As a consequence, they represent a set of tools potentially available to anyone who takes the time to learn them and master their use.
A bit more…
On Edge a fascinating talk by Ed Boyden, a professor of biological engineering and brain and cognitive sciences at the MIT Media Lab and the MIT McGovern Institute. He leeds MIT’s Synthetic Neurobiology Group in search for answers to the question “how we can truly understand how the brain is computing the mind?”
Over the last 100 years, neuroscience has made a lot of progress. We have learned that there are neurons in the brain, we have learned a lot about psychology, but connecting those two worlds, understanding how these computational circuits in the brain in coordinated fashion are generating decisions and thoughts and feelings and sensations, that link remains very elusive. And so, over the last decade, Boyden’s group at MIT has been working on technology, ways of seeing the brain, ways of controlling brain circuits, ways of trying to map the molecules of the brain.
Boyden also briefly talks about the cooperation between academia and companies, and hope he hopes to create hybrid institutions: “You want to have academia for that serendipitous ability to connect dots and collaborate, and you want companies when it’s time to push hard and just get the thing done and scale up and get it out the door. What I would hope to engineer in the coming maybe decade or so are hybrid institutions where we can have people go back and forth because you might need to have an idea that would go back and forth a bit until it matures.”
Read (or watch) the entire talk here: http://edge.org/conversation/ed_boyden-how-the-brain-is-computing-the-mind.
In Aeon an essay by Robert Epstein (@DrREpstein), The New Mind Control, on how the internet has spawned subtle forms of influence that can flip elections and manipulate everything we say, think and do.
Certainly, if Google set about to fix an election, it could first dip into its massive database of personal information to identify just those voters who are undecided. Then it could, day after day, send customised rankings favouring one candidate to just those people. One advantage of this approach is that it would make Google’s manipulation extremely difficult for investigators to detect.”
On International Darwin Day 2016, The Atlantic took us back to 1860 with the original review by a Asa Gray of Charles Darwin’s The Origin of Species:
“Novelties are enticing to most people: to us they are simply annoying. We cling to a long-accepted theory, just as we cling to an old suit of clothes. A new theory, like a new pair of breeches, (The Atlantic still affects the older type of nether garment,) is sure to have hardfitting places; or even when no particular fault can be found with the article, it oppresses with a sense of general discomfort. New notions and new styles worry us, till we get well used to them, which is only by slow degrees.”
Gray finishes by saying:
“As we said at the beginning, this upshot discomposes us. Several features of the theory have an uncanny look. They may prove to be innocent: but their first aspect is suspicious, and high authorities pronounce the whole thing to be positively mischievous.”
Read the entire 1860 review here: http://www.theatlantic.com/magazine/archive/1860/07/darwin-on-the-origin-of-species/304152/?utm_source=SFTwitter.
I always love to watch Lisa Bodell (CEO and founder of futurethink and author of Kill the Company). Here she is talking on How Simplification is the Key to Change. My favorite quote: “Thinking is a daring act.”
You can watch the TEDx Normal talk here: https://www.youtube.com/watch?sns=em&v=Qm172DbaSbc&app=desktop.
And finally, a beautiful documentary on West Coast modernist architecture, Coast Modern. It showcases the pioneers of West Coast modernism, and the homes that have become their legacies. The film takes us back to the basics of true living. A sense of place, light and a deep connection to the earth.
Coast Modern is available in iTunes: https://itunes.apple.com/movie/coast-modern/id655413445.
“Alea iacta est.” — Julius Caesar