WaPo – Nobel Prize-winning psychologist to CEOs – Don’t be so quick to go with your gut

https://www.washingtonpost.com/business/2019/03/04/nobel-prize-winning-psychologist-ceos-dont-be-so-quick-go-with-your-gut/?utm_term=.de7528b97165

https://sloanreview.mit.edu/article/a-structured-approach-to-strategic-decisions/?utm_medium=referral&utm_source=washpo&utm_campaign=Kahn0319 (free version of this no longer available … that I can find)

https://www.nytimes.com/2011/11/27/books/review/thinking-fast-and-slow-by-daniel-kahneman-book-review.html

https://www.chronicle.com/article/The-Anatomy-of-Influence/129688

  • Daniel Kahneman and Amos Tversky (Nobel Prize 2002 psychologists) upended the notion that human beings are rational decision-makers
    • This work influenced how medical decisions made, political scientists think about foreign policy, investors evaluate investment risks
  • Kahneman  with two others wrote new paper could help influence the way senior executives approach decision-making (see link above to Sloan Review)
    • outline a process for making big strategic decisions
  • labeled with the name “Mediating Assessments Protocol,” or MAP
    • simple goal: To put off gut-based decision-making until a choice can be informed by a number of separate factors
  • One of the essential purposes of MAP is basically to delay intuition
    • The structured process calls for analyzing a decision based on six to seven previously chosen attributes … discussing each separately, assigning relative percentile score and using the scores to make holistic judgement
  • it may be common for teams of executives to make briefing books – divided into topics for big decisions
    • it’s not as common to have a decision divided into subcomponents and each one evaluated independently
  • “When you’re making an important decision, any option is like a candidate. You should think of what are the essential dimensions that would make a difference between a good option and an option that should be rejected, and you should look at those dimensions one at a time.”
  • may also help limit dreaded groupthink.
    • “By breaking up the process and making it fact-based, we’re doing as much as we can to inhibit groupthink. Groupthink is as about the conclusion, [and with MAP] you’re trying not to get to the conclusion too early.”
  • many companies have detailed processes in place for making lower-level decisions, ones made at the higher level can be subject to more gut-based instincts.
    • it’s fair to say that the amount and detail of the process is inversely important to the importance of the decision
  • other reason strategic decisions tend to have fewer disciplined processes is because of who makes them.
    • They are made at the top of the organization and if you are at the top you tend to trust the other people who are at the top
  • Because of the more occasional nature of strategic decisions and the challenge of comparing outcomes it’s very hard to get quantifiable evidence of its effectiveness
  • Taking such a disciplined approach to decision-making won’t be easy for many executives. Our brains don’t work that way
    • tend to form a global impression unless you make a special effort not to form a global impression
  • Two tricks that help
    • divide the team evaluating the factors
    • assign a relative percentile score to ensure things stay more concrete
  • uncomfortable to think this way because our brains are geared toward “excessive coherence,” or the tendency to suppress contradicting evidence.

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