Strategy. Innovation. Brand.
The Last of Thumb Thinking
Sure it’s dangerous. But we’re in control. No problem!
Heuristics are simply rules of thumb. They help us make decisions quickly and, in most cases, accurately. They help guide us through the day. Most often, we’re not even aware that we’re making decisions. Unfortunately, some of those decisions can go haywire — precisely because we’re operating on automatic pilot. In fact, psychologists suggest that we commonly make 17 errors via heuristics. I’ve surveyed 11 of them in previous posts (click here, here, and here). Let’s look at the last six today.
Optimistic bias — can get us into a lot of trouble. It leads us to conclude that we have much more control over dangerous situations than we actually do. We underestimate our risks. This can help us when we’re starting a new company; if we knew the real odds, we might never try. It can hurt us, however, when we’re trying to estimate the danger of cliff diving.
Hindsight bias — can also get us into trouble. Everything we did that was successful is by dint of our own hard work, talent, and skill. Everything we did that was unsuccessful was because of bad luck or someone else’s failures. Overconfidence, anyone?
Elimination by aspect — you’re considering multiple options and drop one of them because of a single issue. Often called, the “one-strike-and-you’re-out” heuristic. I think of it as the opposite of satsificing. With satsificing, you jump on the first solution that comes along. With elimination by aspect, you drop an option at the first sign of a problem. Either way, you’re making decisions too quickly.
Anchoring with adjustment — I call this the “first-impressions-never-die” heuristic and I worry about it when I’m grading papers. Let’s say I give Harry a C on his first paper. That becomes an anchor point. When his second paper arrives, I run the risk of simply adjusting upward or downward from the anchor point. If the second paper is outstanding, I might just conclude that it’s a fluke. But it’s equally logical to assume that the first paper was a fluke while the second paper is more typical of Harry’s work. Time to weigh anchor.
Stereotyping — we all know this one: to judge an entire group based on a single instance. I got in an accident and a student from the University of Denver went out of her way to help me out. Therefore, all University of Denver students must be altruistic and helpful. Or the flip side: I had a bad experience with Delta Airlines, therefore, I’ll never fly Delta again. It seems to me that we make more negative stereotyping mistakes than positive ones.
All or Nothing — the risk of something happening is fairly low. In fact, it’s so low that we don’t have to account for it in our planning. It’s probably not going to happen. We don’t need to prepare for that eventuality. When I cross the street, there’s a very low probability that I’ll get hit by a car. So why bother to look both ways?
As with my other posts on heuristics and systematics biases, I relied heavily on Peter Facione’s book, Think Critically, to prepare this post. You can find it here.
The Anatomy of Debacles
I was satisficing. If only I had known.
What’s a debacle? According to Paul Nutt, it’s “…merely a botched decision that attracts attention and gets a public airing.” Nutt goes on to write that his “…research shows that half of the decisions made in business and related organizations fail.” Actually, it may be higher because, “failed decisions that avoid a public airing are apt to be covered up.”
Remember that I wrote not long ago (click here) that perhaps 70% of change management efforts fail? Now we learn that half — or more — of all business decisions fail. We’re not doing so well. Nutt has studied over 400 debacles — botched decisions that became public disasters — and has created an anatomy of why and how they happen. Nutt’s book, Why Decisions Fail, is a sobering look at how we manage our organizations and, more specifically, our decisions.
Critical thinking should help us avoid botched decisions and public debacles. I’ll be writing about critical thinking over the next several months and, from time to time, will pull ideas from Nutt’s book. Today, let’s set the stage by looking at the basics. Nutt writes that blunders happen because of three broad reasons:
- Failure-prone practices — Nutt claims that two-thirds of business decisions are arrived at via common practices that are known to fail. One of our problems is that we typically don’t analyze the decision-making process itself. We tend to ask, “how can we correct the problem?” rather than “how did our decision-making process lead us astray?” As an example, Nutt notes that “Nearly everyone knows that participation prompts acceptance, but participation is rarely used.”
- Premature commitments — Nutt writes that “Decision makers often jump at the first idea that comes along and then spend years trying to make it work.” In the vocabulary of critical thinking, this is known as satisficing or temporizing — two heuristics that can lead us astray. Nutt concludes that, “A rush to judgment is seductive and deadly and can be headed off.” I’ll write more on how to head it off in future articles.
- Wrong-headed investments — the basic problem here is that we spends lots of time, energy, and money to demonstrate that our decision is correct and the ideas behind it are sound. We call it an evaluation but really, it’s a justification. It’s better to invest our energy in clarifying objectives, discovering issues (and opportunities), and identifying measures of risk and benefit.
Nutt also criticizes contingency theory — the idea that your situation dictates your tactics. For instance, if you’re faced with a community boycott, you should do X; if you’re faced with cost overruns, you should do Y. Nutt concludes that, “Best practices can be followed regardless of the decision to be made or the circumstances surrounding it.” The bulk of his book outlines what those best practices are.
Of course, there’s a lot more to it. I’ll outline the highlights in future posts and put Nutt’s findings in the general context of critical thinking. I hope you’ll follow along. In the meantime, don’t make any premature commitments.
Sunday Shorts – 4
Is that Trazodone I taste?
Interesting things I’ve seen this week (even if they weren’t published this week)
What can pickpockets teach us about how our minds work? It’s simple: you’re not nearly as focused as you think. It’s easy to divert your attention and rob you blind. Click here for The New Yorker article.
What’s a phablet? You can find out by going to the Consumer Electronics Show or by clicking here. (Hint: it’s what happens when you cross a phone with a tablet).
And how about the Netherlands glow-in-the-dark highways? It’s another example of mashup thinking. Just mashup asphalt and phosphorescent powder. It absorbs solar energy during the day and glows at night. Now why didn’t we think of that? Really… why didn’t we? Click here.
What is City 2.0? We’re spending about $100 billion worldwide each year trying to find out. Maybe it’s not just smart gadgets. Click here.
Why wouldn’t you try to poison your husband by putting Trazodone pills in his tuna salad? Because the bitter taste would tip him off right away. One needs to be practical in these endeavors. Click here.
Should you stand or sit at work? Why isn’t lying down an option? Click here.
Would you rather be right or would you rather be president? Phillip Stephens writes that left-wingers used to be the ones who were too pure to make the compromises needed to govern. Now it’s the right wing — on both sides of the Atlantic. Click here.
The Big Hits of 2012
Is he speaking Swedish?
I created this website in 2011 to write about issues related to innovation, creativity, branding, strategy, organizational development, change management, persuasive communication, critical thinking, rhetoric and anything else about human affairs that seems interesting. I got serious about the site last May when I started my weekly newsletter. My goal is to write something interesting, useful, or just funny every business day. Each Wednesday, I send out a newsletter summarizing the week. I’ve been at it for 36 weeks now.
The new year seems like an opportune time to summarize my most popular posts from 2012. I’m still learning what’s popular and what’s not. I write 300 to 500 words per day and I love it when hundreds of people read what I’ve written. Here are the most popular posts in 2012. If you have suggestions for 2013, I’m all ears.
Developing a Habit of Innovation — five specific habits and modes of thinking that can help you be more innovative.
Branding: Why Buy Eyeballs That Won’t Buy? — many CEOs want their companies to become household names, even though most households will never buy their product. What’s the point of spending money to build mindshare if those minds are not going to buy?
90 Days of Anger — why do politics make us so angry? Because politicians want us to be angry. Anger motivates action better than any other emotion. If you’re angry, you’ll donate money, recruit friends, run telethons and so on. If you’re not angry, you’ll just sit on the couch. Politicians use attributed belittlement to make sure that you stay angry.
Culture Eats Strategy for Breakfast — let’s say that you need to change your company’s strategy. If you change it in ways that conflict with the corporate culture, the strategy is doomed to fail. When it’s culture versus strategy, culture always wins. Always.
Did Mitt Romney Read My Blog? — when should you not attack your opponent? When you know that your audience likes or admires or respects your opponent. If you launch an attack on a popular person (or product), you’ll look like the bad guy, not them. It’s the difference between a debate and a battle — you can read more about it here.
The Persuasive Future — one of my earliest posts (check out the sweater) and still one of the most visited. You’ll never win an argument in the past tense. Learn how to be more persuasive by shifting to the future tense.
Moderating the Extremes — your friend is absolutely convinced that she’s right and everybody else is wrong. How do you get her to listen to another point of view?
Multitasking Is A Myth — stop beating yourself up. You can’t really multitask. But you can do fast, sequential tasking. Sometimes you get stuck, however, which is why you should never mention sex in a speech.
Leadership and Motivation — who said, “When I realized that men were willing to die for bits of colored ribbon, I knew I could rule the world.”? And how does that make you a good leader?
Bring Your Husband to Heel — can you train your husband the same way you train a dog? Sure you can!
Innovation and Dogs — what can dogs teach us about innovation? Hold the leash lightly. (Bonus: a precious picture of our dog, Bella).
Christmas – Deadliest Day of the Year — why is Christmas the deadliest day of the year in the United States? Maybe it’s not because of what we do but rather how we think.
Are Older People Wiser? — it seems that they are. Why would that be? Because they forget stuff.
I should have said … — have you ever thought of a perfect comeback…hours after you needed it? Watch this.
Seduction — do you want to be more seductive? Of course you do. Here are six ways.
Strategy: What If Health Care Costs Go Down?
The telegraph will generate millions of jobs.
In the early 1990s, call centers were popping up around the United States like mushrooms on a dewy morning. Companies invested millions of dollars to improve customer service via well-trained, professional operators in automated centers. Several prognosticators suggested that the segment was growing so quickly that every man, woman, and child in the United States would be working in a call center by, oh say, 2010.
Of course, it didn’t happen. The Internet arrived and millions of customers chose to serve themselves. Telecommunication costs plummeted and many companies moved their call centers offshore. Call centers are still important but not nearly as pervasive in the United States as they were projected to be.
Now we’re faced with similar projections for health care costs. If current trends continue, prognosticators say, health care will consume an ever increasing portion of the American budget until everything simply falls apart. Given our experience with other “obvious trends”, I think it behooves us to ask the opposite question, what if health care costs go down?
Why would health care costs go down? Simply put — we may just cure a few diseases.
Why am I optimistic about potential cures? Because we’re making progress on many different fronts. For instance, what if obesity isn’t a social/cultural issue but a bacteriological issue? That’s the upshot of a recent article published in The ISME Journal. To quote: “Gram-negative opportunistic pathogens in the gut may be pivotal in obesity…” (For the original article, click here. For a summary in layman’s terms, click here). In other words, having the wrong bacteria in your gut could make you fat. Neutralizing those bacteria could slim down the whole country and reduce our health care costs dramatically.
And what about cancer? Apparently, we’re learning how to “persuade” cancer cells to kill themselves. I’ve spotted several articles on this — click here, here, here, here, and here for samples. Researchers hope that training cancer cells to commit suicide could cure many cancers in one fell swoop rather than trying to knock them off one at a time.
Of course, I’m not a medical doctor and it’s exceedingly hard to predict whether or when these findings might be transformed into real solutions. But I am old enough to know that “obvious predictions” often turn out to be dead wrong. In the late 1980s, experts predicted that our crime rate would spike to new highs in the 1990s. Instead, it did exactly the opposite. Similarly, we expected Japan to dominate the world economy. That didn’t happen either. We expected call centers to dominate the labor market. Instead, demand shifted to the Internet.
In the case of health care, it’s hard to make specific predictions. But a good strategist will always ask the “opposite” question. If the whole world is predicting that X will grow in significance, the strategist will always ask, “what if the reverse is true?” You may not be able to predict the future but you can certainly prepare for it.
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