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Dyson and the art of making quick decisions
October 16, 2019 | Financial Times | by John Gapper.

Article is arguing for enforcing a “shot clock” on lingering decisions and to put plans into action faster and regain competitive footing in your industry/business.

Entrepreneur, James Dyson, unceremoniously abandoned a Dyson initiative to build an electric car.  It demonstrated how unsentimental he was about unsuccessful experiments.....Better to acknowledge defeat as early as possible rather than after having thrown away hundreds of millions...For any business to thrive, difficult decisions need to be made, from new projects to corporate strategy. “The job of the CEO, everyone knows, is to make decisions,” wrote Ram Charan, a veteran strategy adviser. This is especially true when entire industries are facing disruption to their business models......Indecision is common in companies facing myriad possibilities, when executives are struggling to assess alternatives for future strategy. Many managers become frustrated by the glacial pace of corporate decision-making. McKinsey, the consultancy, surveyed executives who complained of “over-reliance on consensus and death by committee”, among other irritations....It is not always the chief executive’s fault. Some managers are comfortable with making simple decisions but struggle when they are promoted to a level where they are exposed to ambiguity and uncertainty. They need to employ their judgment, rather than consulting the data like an oracle. Their indecision can also infect the CEO. But your business is not a democracy....Some executives promote a “five second rule” to prompt executives who report to them to reach decisions (i.e. summarise the alternatives and options for any strategy, pause and pick one).....Being forced to use intuition after considering the evidence helps to avoid being paralysed by a question when there is no easy answer......Daniel Kahneman, the Nobel Prize-winning psychologist, observed that “managers think of themselves as captains of a ship on a stormy sea” who respond skilfully to the elements around them. It feels better to pick a destination and sail in that direction than to wallow around.....But Prof Kahneman won his economics Nobel for research on the cognitive biases that affect human choices. Making quick decisions, even informed by experience and expertise, is valuable but not foolproof. As he noted, “intuition feels just the same when it’s wrong and when it’s right, that’s the problem.”....Those who consider a challenge from all angles and act prudently and decisively may still be wrong. “Even highly experienced, superbly competent and well-intentioned managers are fallible,” Prof Kahneman wrote. Among the traps is the “halo effect” of believing that an executive who has succeeded before will make any project work. It follows that leaders should not be trapped by their decisions, or the confirmation bias of believing that the chosen path must be correct...... It is difficult when a leader place the entire company on another course, only to discover the pitfalls. It may take a successor to come along and reverse those choices. But decisions will at least prove right some of the time; indecision is always mistaken.
ambiguities  analysis_paralysis  CEOs  clock_speed  confirmation_bias  decision_making  Daniel_Kahneman  Dyson  halo_effects  hard_choices  HBR  humility  indecision  intuition  leaders  James_Dyson  judgment  mistakes  Ram_Charan  shot_clock  speed  tough-mindedness  uncertainty  unsentimental 
october 2019 by jerryking
“I placed too much faith in underpowered studies:” Nobel Prize winner admits mistakes – Retraction Watch
The argument is inescapable: Studies that are underpowered for the detection of plausible effects must occasionally return non-significant results even when the research hypothesis is true – the absence of these results is evidence that something is amiss in the published record.
daniel_kanehman  replication_crisis  daniel_kahneman  replication  psychology 
january 2019 by zethraeus
Dump the PowerPoints and do data properly — or lose money
APRIL 15, 2018 | FT| Alan Smith.

So what can data analysts in organisations do to get their messages heard?

Board members and senior managers certainly need to consider new ways of thinking that give primacy to data. But reasoning with data requires what psychologist Daniel Kahneman describes as “System 2 thinking” — the rational, reasoning self — and a move away from the “gut intuition” of System 1. That’s not an easy culture change to achieve overnight.

Freelance consultant, author and data visualisation expert Andy Kirk believes there is a duty of care on both analysts and their audiences to develop skills, particularly in relation to how data is communicated through an organisation.......many senior managers “neither have the visual literacy nor the confidence to be exposed to [data presentations] they don't understand — and they just don't like change”. Mr Kirk describes it as a kind of “Stockholm syndrome” in data form — “I’ve always had my report designed like this, I don't want anything different”.......data analysts need to nurture their communication skills, taking a responsibility for encouraging change and critical thinking, not just being “the data people”. Acting as agents of change, they need to be effective marketers of their skills and sensitive educators that show a nuanced appreciation of the needs of the business. Organisations that bind data to the business model — and data literacy to the board — will inevitably stand a better chance of achieving long-term change.....The truth is that data in the boardroom enjoys a patchy reputation, typified by dull, overlong PowerPoint presentations. A cynic might suggest that even the most recent addition to boardroom structures — the chief data officer — is used by many boards simply as a device to prevent other members needing to worry about the numbers.

Here are 3 techniques that can be used to encourage progressive change in the boardroom.
(1) Use KPIs that are meaningful and appropriate for answering the central questions about the business and the market it operates in. Try to eliminate “inertia metrics” — i.e. “we report this because we always do”.

(2) Rework boardroom materials so that they encourage board members to read data, preferably in advance of meetings, rather than glance at it during one. This might mean transforming the dreaded PowerPoint deck into something a little more journalistic, a move that will help engage “System 2” thinking.

(3) Above all, be aware of unconscious bias in the boardroom and focus on debunking it. Most of us are poor intuitive statisticians with biases that lurk deep in our “System 1” view of the world. There is insight, value and memorability in the surprise that comes with highlighting our own ignorance — so use data to shine a light on surprising trends, not to simply reinforce that which is already known.
absenteeism  boards_&_directors_&_governance  change  change_agents  Communicating_&_Connecting  Daniel_Kahneman  data  data_driven  gut_feelings  infographics  insights  KPIs  PowerPoint  psychologists  storytelling  surprises  visualization 
april 2018 by jerryking
Piecing Together Narratives From the 0′s and 1′s: Storytelling in the Age of Big Data - CIO Journal. - WSJ
Feb 16, 2018 | WSJ | By Irving Wladawsky-Berger.

Probabilities are inherently hard to grasp, especially for an individual event like a war or an election, ......Why is it so hard for people to deal with probabilities in everyday life? “I think part of the answer lies with Kahneman’s insight: Human beings need a story,”....Mr. Kahneman explained their research in his 2011 bestseller Thinking, Fast and Slow. Its central thesis is that our mind is composed of two very different systems of thinking. System 1 is the intuitive, fast and emotional part of our mind. Thoughts come automatically and very quickly to System 1, without us doing anything to make them happen. System 2, on the other hand, is the slower, logical, more deliberate part of the mind. It’s where we evaluate and choose between multiple options, because only System 2 can think of multiple things at once and shift its attention between them.

System 1 typically works by developing a coherent story based on the observations and facts at its disposal. Research has shown that the intuitive System 1 is actually more influential in our decisions, choices and judgements than we generally realize. But, while enabling us to act quickly, System 1 is prone to mistakes. It tends to be overconfident, creating the impression that we live in a world that’s more coherent and simpler than the actual real world. It suppresses complexity and information that might contradict its coherent story.

Making sense of probabilities, numbers and graphs requires us to engage System 2, which, for most everyone, takes quite a bit of focus, time and energy. Thus, most people will try to evaluate the information using a System 1 simple story: who will win the election? who will win the football game?.....Storytelling has played a central role in human communications since times immemorial. Over the centuries, the nature of storytelling has significantly evolved with the advent of writing and the emergence of new technologies that enabled stories to be embodied in a variety of media, including books, films, and TV. Everything else being equal, stories are our preferred way of absorbing information.

“It’s not enough to say an event has a 10 percent probability,” wrote Mr. Leonhardt. “People need a story that forces them to visualize the unlikely event – so they don’t round 10 to zero.”.....
in_the_real_world  storytelling  massive_data_sets  probabilities  Irving_Wladawsky-Berger  Communicating_&_Connecting  Daniel_Kahneman  complexity  uncertainty  decision_making  metacognition  data_journalism  sense-making  thinking_deliberatively 
february 2018 by jerryking
3 Ways to Improve Your Decision Making
Walter Frick
JANUARY 22, 2018

Rule #1: Be less certain.
Nobel-prize-winning psychologist Daniel Kahneman has said that overconfidence is the bias he’d eliminate first if he had a magic wand. It’s ubiquitous, particularly among men, the wealthy, and even experts. Overconfidence is not a universal phenomenon — it depends on factors including culture and personality — but the chances are good that you’re more confident about each step of the decision-making process than you ought to be.

So, the first rule of decision making is to just be less certain — about everything. Think choice A will lead to outcome B? It’s probably a bit less likely than you believe. Think outcome B is preferable to outcome C? You’re probably too confident about that as well.

Once you accept that you’re overconfident, you can revisit the logic of your decision. What else would you think about if you were less sure that A would cause B, or that B is preferable to C? Have you prepared for a dramatically different outcome than your expected one?

Rule #2: Ask “How often does that typically happen?”
....think about how long similar projects typically take....In general, research suggests, the best starting point for predictions ­— a key input into decision making — is to ask “How often does that typically happen?”
This rule, known as the base rate, comes up a lot in the research on prediction, but it might be helpful for the judgment side of decision making, too. If you think outcome B is preferable to outcome C, you might ask: How often has that historically been the case? ...The idea with both prediction and judgment is to get away from the “inside view,” where the specifics of the decision overwhelm your analysis. Instead, you want to take the “outside view,” where you start with similar cases before considering the specifics of your individual case.

Rule #3: Think probabilistically — and learn some basic probability.
The first two rules can be implemented right away; this one takes a bit of time. But it’s worth it. Research has shown that even relatively basic training in probability makes people better forecasters and helps them avoid certain cognitive biases....Improving your ability to think probabilistically will help you with the first two rules. You’ll be able to better express your uncertainty and to numerically think about “How often does this usually happen?” The three rules together are more powerful than any of them alone.

Even though these rules are all things you can start using relatively quickly, mastering them takes practice. In fact, after you use them for a little while, you may become overconfident about your ability to make decisions. Great decision makers don’t follow these rules only when facing a particularly difficult choice; they return to them all the time. They recognize that even seemingly easy decisions can be hard — and that they probably know less than they think
decision_making  pretense_of_knowledge  base_rates  probabilities  Daniel_Kahneman  overconfidence  biases  certainty 
january 2018 by jerryking
What You See Is Not All There Is
Be wary of constructing a story based only on what you see--you may not realize what you don't know.
bias  psychology  judgement  decision_making  storytelling  daniel_kahneman  talk  discussion 
april 2017 by vloux
From Michael Lewis, a Portrait of the Men Who Shaped ‘Moneyball’ - The New York Times
By ALEXANDRA ALTERDEC. 3, 2016
Lewis decided to explore how it started.

The inquiry led him to the work of two Israeli psychologists, Amos Tversky and Daniel Kahneman, whose discoveries challenged long-held beliefs about human nature and the way the mind works.

Mr. Lewis chronicles their unusual partnership in his new book, “The Undoing Project,” a story about two unconventional thinkers who saw the world differently from everyone around them. Their peculiar area of research — how humans make decisions, often irrationally — has had profound implications for an array of fields, like professional sports, the military, medicine, politics, finance and public health.....Tversky and Kahneman's research demonstrating how people behave in fundamentally irrational ways when making decisions, relying on their gut rather than available data, gave rise to the field of behavioral economics. That discipline attracted Paul DePodesta, a Harvard student, who later went into sports management and helped upend professional baseball when he went to work for Mr. Beane.....Unlike many nonfiction writers, Mr. Lewis declines to take advances, which he calls “corrupting,” even though he could easily earn seven figures. Instead, he splits the profits from the books, as well as the advertising and production costs, with Norton. The setup spurs him to work harder and to make more money if the books are successful, he says.

“You should have the risk and you should enjoy the reward,” he said. “It’s not healthy for an author not to have the risk.”
Amos_Tversky  Michael_Lewis  Moneyball  books  book_reviews  unconventional_thinking  biases  cognitive_skills  unknowns  information_gaps  humility  pretense_of_knowledge  overconfidence  conventional_wisdom  overestimation  metacognition  behavioural_economics  irrationality  decision_making  nonfiction  writers  self-awareness  self-analysis  self-reflective  proclivities  Daniel_Kahneman  psychologists  delusions  self-delusions  skin_in_the_game  gut_feelings  risk-taking  partnerships 
december 2016 by jerryking

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