Farsighted – How We Make the Decisions that Matter the Most – Steven Johnson

https://www.amazon.com/gp/product/1594488215/ref=ppx_yo_dt_b_asin_title_o01__o00_s00?ie=UTF8&psc=1

What a good book on “thinking about thinking”.  Below is a summary of the book above (which is 218 pages)

  • Intro – Moral Algebra
    • A growing scientific field called “decision theory” – roots in economics, behavioral psychology, neuroscience – codifying a number of frameworks for making long-term decisions
    • Create a list of pros and cons
      • Two column technique dating to letter from Benjamin Franklin
        • Divide half a sheet of paper into two columns and write over one Pro and the other Con
        • Put down list of hints of different motives in each column addressing the decision
        • Estimate each motive’s weight
        • When find two motives of equal weight in each column, strike them out
        • When finding a Pro motive equaling two Con motives, cross the three out
        • When finding two Con motives equal to three Pro motives, cross the five out
        • Continue doing this and come to a determination based on what is left
      • This was called Franklin’s “Moral Algebra” using this primitive technique of weighting
        • The balancing stage is just as important as the initial stage of writing down entries into each column
      • The pros vs cons list remains one of the only techniques of adjudicating a complex decision regularly taught
    • Have a technique for deciding
      • Don’t just simply evolve decision as a series of informal conversations and background mulling
    • The craft of making farsighted choices is an underappreciated skill
    • Almost never see a course devoted to the art and science of decision making
    • The notion of the brain being divided between two distinct systems both used in decision making
      • System 1: the intuitive, fast-acting, emotionally charged
      • System 2: what is called on when having to consciously think through a situation
    • The decisions that matter the most do not rely heavily on instincts and intuition
      • Require slow thinking
      • Involve complex problems with multiple variables
      • These decisions are called “deliberative”
    • Systems engineered to promote deliberative decision-making are specifically designed to keep us from naively falling into preconceived assumptions (System 1 thinking
    • Almost never hear a political debate, shareholder meeting when a candidate or executive is asked to describe how they go about deciding
      • Courage, charisma, intelligence pale in comparison to the fundamental question: will the decision-maker make a good choice when confronted with a complex situation
    • What a “decider” needs is a “routine” or “practice” for confronting a problem and exploring its unique properties and weighing the options
    • We tend to emphasize the results of good decisions and not the process leading to the decision itself.
    • An institution learning from its mistakes by deliberately improving the process that led to past mistakes
    • Hard choices contain interior decisions needing to be adjudicated separately and in preordained sequence
      • To make the right choice, need to figure out how to structure the decision properly
    • Two distinct phases in decision making
      • Divergence – get as many perspectives and variables on the table as possible and to reveal new possibilities
      • Consensus – open ended exploration of new possibilities to reverse course and narrow down options
      • Most don’t separate the two phases – just look at options…have a few informal meetings…make decision
    • Last two centuries decision making revolved around “rational choice” from classical economics
      • Evaluate options available
      • Consider relative benefits and costs of each outcome (“marginal utility”)
      • Pick winner
    • In 1958, Herbert Simon, economist suggested problems with “rational choice”
      • For “rational choice” to work it requires 4 leaps of faith
        • Calls for knowledge of all the alternatives open to choose
        • Calls for complete knowledge of the consequences that will follow on each alternative
        • Calls for certainty in decision-maker’s present and future evaluation of consequences
        • Calls for ability to compare consequences, no matter how diverse and heterogeneous in terms of some consistent measure of utility
      • Supplementing “rational choice” with what Simon called “bounded rationality”
        • Decision-makers cannot simply wish away uncertainty and open-endedness of the choices.
        • Must develop strategies to specifically address those challenges
    • Eight primary factors contribute to farsighted decision-maki8ng
      • Complex decisions involve multiple variables
      • Complex decisions require full-spectrum analysis
        • Ordinary/daily decisions are typically narrowband in nature
        • Decisions that really matter can’t be understood on a single scale
        • Variables related to decision draw on completely difference frames of reference – multidisciplinary
      • Complex decisions force us to predict the future
      • Complex decisions involve varied levels of uncertainty
      • Complex decisions involve conflicting objectives
      • Complex decisions harbor undiscovered options
        • Choices available are not fully defined
      • Complex decisions are prone to System 1 failings
        • Loss aversion, confirmation bias, availability heuristic
      • Complex decisions are vulnerable to failures of collective intelligence
        • Diverse groups can be vital to divergent stage decisions – introduce new possibilities and expose unseen risks
        • Groups vulnerable collective bias, distortions
    • Deliberative decisions involve three steps
      • Build and accurate, full-spectrum map of all variables and available paths
      • Make a prediction about where the paths may lead
      • Reach decision on path by weighing various outcomes against the overarching objectives
    • Behavioral economists remind us
      • We are prone to all sorts of reductions as a species
      • Compress complex reality down to abbreviated heuristics that often work in everyday life for high frequency, low significance decisions
      • We need help to overcome reductive instincts when it really matters
  • Mapping
    • The inverted wisdom of failed decisions
      • Mistakes we can learn from – point to some feature of human mind undermining ourselves or some failing of environment sending choices down the wrong path
    • Well-known psychological trait known as “loss aversion”
      • Humans are wired to resist losses more than to seek gains
      • Even if in long-term best interest to seek the gain
    • Recurring theme in complex decisions
      • Trying to understand a problem with many interacting variables
      • Often impossible to perceive all relevant elements
      • Decisions are built out of proxies and translators – reporting their assessment of situation
      • Part of making right decision is learning how to make sense of the different inputs
      • But more importantly to recognize the holes that exist in the network
    • No one makes a hard decisions without a mental map
      • These maps must be full spectrum
      • Mapping is not the same as deciding
      • Map should reveal a set of potential paths
    • Mapping is the point in decision process where divergence and diversity are key
      • Not looking for consensus
      • Looking to expand range of possible factors and decision paths
      • Challenge of mapping is getting outside our intuitive sense of the situation
      • Cognitive scientists call this “anchoring”…narrowband decision making
        • A decision involving multiple, independent variables … people have tendency to pick one anchor” variable and make their decision based on that
      • Compressing the spectrum is a perfectively adaptive strategy where abundance of microchoices exist
    • Decision theorists have tool for sketching full-spectrum choices: influence diagrams
      • Help to visualize chain of effects – implicit pathways
      • Impact pathways rarely run in straight lines
    • Each farsighted decision has its own map
      • Art of making choices with wisdom lies not in forcing a map to match some existing template
      • Develop vision to see each situation as it tryly is
      • Best way to develop that vision is to get different pairs of eyes on the problem
    • Mapping a complex decision requires a network of diverse perspectives
      • Common term for this deliberation is “charrette” – French word for wagon
      • Open and deliberative process where different stakeholders invited to critique existing plan and suggest new ideas
      • A charrette makes it harder for a complex decision to be evaluated from a narrowband perspective
      • Charrettes differ from traditional meeting forums in they usually take the form of a series of small-group meetings … not one large meeting
      • To derive most useful information from multiple sources of evidence you should always try to make these sources independent of each other
      • Standard practice of open discussion gives too much weight to opinions of those who speak early and assertively
      • Practical applications of “group” decision-making can be usefully broken down into a series of individual consultations
      • Well-functioning groups need to take advantage of cognitively peripheral people
        • In most groups, cognitively central people have a disproportionate influence
      • Face-to-face meetings elicit unconscious responses that are commonly known to other members of group
        • Technical term for this is called hidden profiles
      • In the divergent stage of a a decision, the best approach may well be to have interviews with individuals and not a team meeting
      • Most important element in building a map is the diversity of perspectives and improves decision making abilities
      • The presence of differences can make a difference
      • “Diversity trumps abilitiy
      • Conventional assumption was newcomers to previously homogeneous group improved overall intelligence
        • Studies have shown the additional of “outsiders” to homogeneous groups help the “insiders” come up with more nuanced and original insights
      • Homogeneous groups tend to come to decisions too quickly (Stage 1 thinking)
      • Enhance diversity of a group without bring in outsiders simply by designating “expert roles” based on knowledge they have
      • Introducing expert roles turns out to be effective in addressing challenges of full-spectrum thinking
        • Different bands of full-spectrum perspective correspond to different fields of expertise
    • Diverse groups are better detectives (problem solvers)
      • But far less confident in decisions they made
      • Strong correlation between astute decision-making and willingness to recognize uncertainty
    • Situations involving intense time pressure shaped by gut instincts and experience play important role
    • “Known unknowns”
      • Wisdom in building accurate mental map
      • But also, crucial wisdom to understand to blank spots in the map
    • Uncertainty
      • 13 types
        • Measurement error
        • Systematic error
        • Natural variation
        • Inherent randomness
        • Model uncertainty
        • Subjective judgement
        • Linguistic uncertainly
        • Numerical vagueness
        • Nonnumerical vagueness
        • Context dependence
        • Ambiguity
        • Indeterminacy in theoretical terms
        • Under specificity
      • But in general, these boil down to 3 types
        • Knowable unknowns
        • Inaccessible unknowns
        • Unknowable unknowns
      • Arise from failure to map situation and can be remedied by building better maps
      • Uncertainties involving information that exists but is inaccessible
      • Uncertainties resulting from inherent unpredictability of the system under analysis
    • Tendency to overvalue importance of variables in a system we understand
      • Undervalue elements that are opaque to us
    • For knowable unknowns, the best strategy is to widen and diversity the team
    • Crucial to keep track of blind spots
    • Embracing uncertainties echoes the fundamental techniques of the scientific method
      • Rate of development of science is not the rate at which you make observations but much more the rate at which you create new things to test
    • Analysts should rate their level of confidence in their assessments
      • Turns out to be productive strategy on multiple levels
      • The act of thinking about how certain you are about something makes you think about what you may be missing
    • Challenge assumptions, seek out contradictory evidence, rank certainty levels
      • Help to expand map and propose new explanations as well as introduce new variables
    • Spending too much time probing uncertainty risks leaving you in a Hamlet-like limbo of indecisiveness
      • Amazon’s Bezos adheres to a 70% rule…once uncertainty is 30% or less, pull the trigger
    • In early 80’s, professor at Ohio State determined only 15% of case studies involved a stage where decision makers actively sought out a new option beyond the initial choice
      • Only 29% of organizational decisions contemplated more than one alternative
    • Strong correlation between number of alternatives deliberated and ultimate success of the decision
      • Participants in study indicating only one alternative considered ultimately judged their decision a failure more than 50% of time
    • Important to carve out a phase of decision process where entirely new alternatives are explored
    • When finding yourself stuck with a single path decision
      • Intriguing ideas to get outside that limited perspective is to purposely reduce your options
        • If you assume path “A” is only way forward, then imagine that path “A” is blocked
    • Doubt/uncertainty need to be confronted when making a hard choice
      • Most essential form of doubt involved questioning options that appear on the table
    • Extremism is the source of new ideas and decision paths not visible to the mainstream
      • Where extreme positions are not granted a meaningful voice is where a “society” is incapable of fundamental change
    • Outsiders are not the only ones who can reveal unimagined options
      • Sometimes, new pathways get discovered by those at the top of the chain
    • Consequences of choices
      • Each path suggests a series of possible futures with downstream effects
      • In decisions unfolding over days, weeks, years, choosing right path depends not just on ability to understand current state but ability to predict what comes next
  • Predicting
    • Nancy Andreasen, Univ of Iowa researcher
      • When the brain thinks in a free and unencumbered fashion, “it uses its most human and complex parts”
      • Brain is more active at rest than when supposedly being active
        • Scientists called this the “default network
      • Default network involved retrieval of information from long-term memory and manipulation of this information for problem-solving and planning
      • Adaptive value of this mental activity by storing/retrieving/manipulating internal information
        • We organize what could not be organized during stimulus presentation … solve problems requiring computation over long periods of time and create effective plans governing behavior in the future
        • Makes no small contribution to human survival and technology invention
      • What feels like the mind drifting into reverie is, on the level of neural activity, a full workout
        • The brain regions involved are those which are uniquely human
      • Recent study by social psychologist pinged 500 people at random points during day and asked what they were thinking at that exact moment
        • Surprisingly they most likely were thinking about the future
        • Imagining events and emotions that hadn’t yet happened
      • Humans spend remarkable amount of time thinking about events that are by definition not real … figments of imagination
      • When we let our mind wander, it naturally starts to run imagined scenarios about what lies ahead
        • May be the defining attribute of human intelligence
    • A wide range of potential sources, willing to admit uncertainty and not devoted to an overarching theory
      • Are significantly better at predicting future events than more single-minded experts
    • Unified perspective of a single field of expertise or worldview appears to make to you less able to project future changes
      • For the long view, need to draw on multiple sources … the dabblers, and hobbyists outperform unified thinkers
    • Psychologists refer to the “big five” traits
      • Conscientiousness
      • Extraversion
      • Agreeableness
      • Neuroticism
      • Openness to experience
    • Successful forecasts as a group were much more likely to be open to experience
    • The “fallacy of extrapolation”
      • How predictions fail when attempting to forecast behaviors of complex systems
      • Assumption that an identified trend will always continue in the same manner, indefinitely into the future
    • When different fields are raising their game at a regular pace, category-changing break-throughs can arise
      • The kind of step change that is difficult to predict in advance
    • A conceptual tool: randomized controlled trials (RCT)    
      • Inventions that shape how we manipulate data, new methods that let us see patterns in that data
      • Subjects divided into 2 groups
        • One given antibiotic (proposed cure)
        • One given placebo
      • Tool for separating genuine inventions from quackery
        • Make predictions about future events
      • Can map out chains of cause and effect with rigor
        • Even when didn’t understand all the underlying forces that made those causal chains a reality
      • Can’t run RCT on a single subject
      • RCT gave way to make complex decision making … can predict future with acuity
    • The term “forecast” is strictly applicable to such an opinion as is the result of scientific combination and calculation
      • Store a historical record of past configurations
      • When new configuration emerges, consult earlier charts resembling current pattern and use as guide
        • More of educated guess than proper forecast
    • New models much more accurate than predecessors because they rely on what is conventionally called ensemble forecasting
      • Ensemble forecasts create hundreds/thousands of different forecasts in separate simulations
        • Vary initial conditions slightly to product a high probability forecast
    • Hard choices implicitly make predictions about the course of future events
      • With meaningful margin of error
      • In a hard choice, single-minded focus is over-rated
    • Ensemble simulations don’t necessarily need to have a complete understanding of how the system works to make useful predictions
    • Simulations make us better decision-makers, because simulations make us better at predicting future events
    • Simulations a crucial part of decision process
      • Looking for some unanticipated consequence
    • One thing a person cannot do, no matter how rigorous the analysis “is to draw up a list of things that would never occur to them”
    • Economist and foreign policy analyst, Thomas Schelling, working with RAND corp in 50’s and 60’s
      • Advocated for a less rigorous way of thinking around blind spots by “playing games”
    • “War games” functioned in same way was randomized controlled trials or ensemble forecasts
      • Created a platform where decisions could be rehearsed multiple times with different stragies with each round
      • Collaborative nature of game play meant new possibilities and configurations could become visible
      • Unexpected moves your opponent put on table could be factored in
      • Began with a map … an actual topographic map of the field
        • Forced you to explore that map
        • Simulate the different ways opposing teams might do battle in that space
      • You can’t draw up a list of things that will never occur to you
        • But you can play your way into that kind of list
      • Gameplay as a complex decision-making tool has much broader potential
      • Genuine merit in using games to trigger new ideas to explore possibility space of particularly challenging decision
    • Scenario planning
      • Is a narrative art
      • Homes in on the uncertainties that haunt complex decisions
      • Forces participants to imaging multiple versions of how that uncertain future may play out
      • Scenarios require full-spectrum mapping
      • Three-part structure is a common theme in scenario planning
        • Build one model where things get better
        • Build one model where things get worse
        • Build one model where things get weird
      • Scenario method allows for inclusion of realism and imagination, comprehensiveness and uncertainty
        • A genuine plurality of options
      • Scenario planning is differentiated by its unwillingness to fixate on a single forecast
      • Most scenarios end up failing to predict future outcomes
        • But act of trying to imagine alternatives to conventional view helps to perceive options
      • Scenario planning not intended to be consulted for” accurate” forecasts of future events
        • Primes you to resist the “fallacy of extrapolation”
      • No single “right” projection can be deduced from past behavior
        • Accept uncertainty and try to understand it
        • Make it part of the reasoning
        • Uncertainty is a basic structure feature of the business environment
      • Scenario based exploration takes elements most uncertain and imagines different outcomes from each
        • It is a kind of informed storytelling
        • Storytelling is something we instinctively do when contemplating a big decision
        • Difference with storytelling and scenario planning
          • Rarely take the time to do a full-spectrum analysis
          • Rarely bother to construct multiple stories
      • Uncertainty can’t be analyzed out of existence
        • On some fundamental level is an irreducible property of complex systems
        • Scenario planning and simulations offer a way of rehearsing for uncertainty
      • Scenario practice can make leaders comfortable with the ambiguity of open futures
        • Can counter hubris
        • Expose assumptions that otherwise remain implicit
        • Contribute to shared and systemic sense-making
        • Foster quick adaptation in times of crisis
    • Premortems/Red teams
      • Storytellers suffer from confirmation bias and overconfidence list all of us
      • To avoid need to trick your mind into entertaining alternative narratives
        • Plot lines that might undermine assumptions
      • A compelling variation on scenario planning is called “premortem”
      • In a premortem…ask planners to imagine it is months into the future and that their plan has been implemented…and it has failed
        • Ask the team why it failed
        • Approach draws on psychological research found that people come up with richer and subtler explanations when they are given a potential future event and asked to explain
        • Forcing yourself to imagine scenarios where decision turned out to be disastrous, you can thing around blind spots and the false sense of confidence
      • Predictions of scenario planning work best when drawing on diverse forms of expertise and values
        • There are limits on the kind of outsider viewpoints you can incorporate into deliberative sessions
        • Outside perspectives can be simulated
      • Red teams
        • A systematic version of devil’s advocacy
        • A group inside an organization is tasked to perform role of emulating an enemy’s behavior
        • People naturally attempt to anticipate objections or possible failure points when they contemplate challenging decisions
      • Strategies like premortems and red teams lie in the formal nature of the process
        • Give people a specific task and identity to role-play
        • Similar to strategy of assigning expert roles in the mapping stage of the decision
      • Think through emotional and material consequences from someone else’s perspective
        • Research suggests this kind of psychological project is part of what the brain’s default network does in daydreaming
        • Ability to shift our imagination between different perspectives may be one of the core attributes of a farsighted mind
        • Being a smart decision-maker is being open-minded enough to realize other people might have a different way of thinking about the decision
  • Deciding
    • Mapping, predicting, simulating doesn’t add up to deciding
    • Joseph Priestly, who received Ben Franklin’s letter on moral algebra said, “It must necessarily be understood that all people live in society for their mutual advantage; so that the good and happiness of the members, that is the majority of the members of any state, is the great standard by which every thing relating to that state must finally be determined”
    • Jeremy Bentham, used Priestly’s statement as a cornerstone of the utilitarian ideology
      • That moral decisions – both public and private – should be based on actions that produced the “greatest happiness for the greatest number”
      • Bentham divided experience of the world into two broad categories: “two sovereign masters are pain and pleasure”
    • Like the rational choice of classical economics – necessarily grows cloudy when confronted with actual decisions in the world
    • Cost-benefit analysis – calculate the potential costs and benefits in part by predicting the downstream consequences of implementing “it”
    • The Value Model
      • Not all effects can be quantified purely in monetary terms
      • Descendants of Bentham’s equation do not rely exclusively on monetary assessments
        • One heavily mathematical approach is called “linear value modeling” (LVM)
      • Once having mapped the decision, explored alternative options, built predictive model outcomes then write down a list of the values most important
        • Values model requires you give each item a weight
        • With the values properly weighted then turn to the scenarios developed for each of the options and grade each option in terms of how it addresses the core values
        • B Franklin called his approach moral algebra, but values modeling is closer to a moral algorithm
      • Situations where the choice involves more than two options, users of LVM find it a good tool to eliminate weaker scenarios
        • The weaker scenarios are called “dominated” alternatives
        • The values calculation helps to prune these
      • Value modeling is particularly useful for dealing with a decision where the stakeholders have competing values because different calculations with different weights corresponding to the different stakeholders perspectives can be done
    • Risk Magnitude
      • Each bad event is scored with two key attributes
        • Risk magnitude
        • Risk probability
      • A “risk penalty” for each action is calculated by multiplying the risk magnitude by the risk probability
      • Risk magnitude scores are effectively a “moral compass”
      • A Bad Events Table has important lessons for humans making deliberative decisions about events that might unfold over months or years
        • Deliberately includes probability assessments
        • Forces consideration of not just our objectives and values but the highly unlikely catastrophe
          • Some outcomes are so disastrous they should be avoided at any cost
        • Bad Events Table for complex decisions keeps from focusing exclusively on the upside
      • Way to mitigate uncertainty in the act of deciding
      • Avoid tendency to focus exclusively on the most likely outcome
      • Part of the art of deciding lies in making peace with the less likely outcome as a failsafe measure
      • Another way to mitigate uncertainty is to favor paths that allow modifications after you’ve embarked on them
        • This is a version of the “minimally viable product”
      • A variable to add to the linear values model:
        • Downstream flexibility
      • We tend to value the decisive leader
        • Sometimes the most farsighted decisions are the ones leaving room for later tinkering
    • Mulling
      • Most of us end up making complex decisions without doing math
      • Most important work lies in way we frame the decision
        • The strategies used to overcome challenges of bounded rationality
        • Exploring multiple perspectives, building scenario plans, identifying new options
      • Mapping and predicting stages of a complex choice are about giving the default network more material to process
      • Investing the time and contemplation into the decision process takes you to a place where the choice becomes clear
      • Choices with a small number of decision-makers, the best approach is often an old-fashioned one
        • Give your mind the free time to mull it over
      • Start with the possibility that our instance response to a situation is quite likely the wrong one
  • Global Choice
    • Fluff
  • Personal Choice
    • Fluff
  • Epilogue
    • Are there more important skills than ability to make hard choices?
      • Few rivals
        • Creativity
        • Empathy
        • Resilience
    • At the very heart of what we mean when we use words like “wisdom”
    • Decision science or decision theory is the field is a sort of intellectual chameleon
      • Plays well in highbrow context
      • And in pragmatic one
    • What fields would such a syllabus incorporate?
      • History
      • Moral philosophy
      • Behavioral economics
      • Probability
      • Neurology
      • Computer science
      • Literature
    • A case study in the power of diverse perspectives
      • Learn a series of techniques
      • Full-spectrum map
      • Scenario planning
      • Premortem
      • Values model
      • Bad Events Table
    • Importance of sharing hidden profiles among diverse groups
    • Value in measuring uncertainty
    • Seek out undiscovered options
    • Avoid tendency to fall back to narrowband assessments
    • Importance of being other-minded
    • Reading great literature to enhance faculty
    • Provides a valuable bridge between the sciences and humanities
      • Read literature as an exercise in improving ability to make farsighted decisions
        • Novels mirror the scientific insights arising from randomized controlled studies and ensemble forecasts
      • Science gives insights novels cannot provide

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