Thanks to Antony Mayfield for sharing these book notes which Ron Kohavi made about Annie Duke’s book (and also her Maven course) ‘Thinking in Bets: Making Smarter Decisions When you don’t Have All the Facts’. The notes led me down all kinds of rabbit holes so I’m going to unpick one or two of them here.
Annie Duke was a world famous professional poker player who since retiring from the game went on to study cognitive psychology and write a number of books about decision-making. One of the big messages of the book (disclosure – I haven’t read it myself, yet) seems to be that, as Antony says, ‘a blindspot for most of us is that we rate decisions by their outcomes, which is misleading in a complex world‘. This struck me as such an interesting way to think about decision-making.
Drawing from Ron’s notes, she talks about how a round of Poker is a game of clear outcomes (win or lose) with near instant feedback on those outcomes. But it’s also a game involving decision-making in uncertain conditions and with incomplete information. So it’s a good analogy for business decision-making (and in some ways, life).
One of the book’s main points is this idea that we typically define the quality of decisions by their results. A good result means you’ve made a good decision. A bad result the opposite. We equate the quality of decision with the quality of the outcome (Ron makes the point that Reinforcement learning models in machine learning do exactly this – propagating results back to decisions). Ask people about the best and worst decisions they’ve made and they will invariably refer to the best and worst results.
And yet winning and losing are ‘loose signals’ of decision quality. You can still make a really good decision and end up with a poor outcome (perhaps due to circumstance or things beyond your control). A much better way of defining the quality of a decision is by looking at the process of decision-making. A poor process will likely lead to a poor decision.
There are, of-course, a myriad of cognitive biases that can lead to poor interpretation of a situation or information. We often subconsciously seek out information that aligns with our values or beliefs (confirmation bias – ‘…instead of altering our beliefs to fit new information, we do the opposite, altering our interpretation of that information to fit our beliefs’). We may well have stubborn misconceptions that our brains refuse to let go of. On this last point I loved Ron’s example of this illusion, Roger Shepard’s tables. These two tables in the picture are exactly the same size and shape (yes, they really are) and yet we can’t stop seeing them as different because of the way that our brains interpret the information:
So as Ron says, ‘a great decision is not one that has a great outcome, but the result of a good process, which attempts to accurately represent our own state of knowledge’ or what knowable knowledge exists (as he points out, research can of course help us to increase the level of information from which we make a decision).
And that’s why it’s so important that we acknowledge the limitations of our own knowledge. Leaders cannot know all the answers but being comfortable with not knowing (and saying so) means that they will be a better decision-maker: ‘“I don’t know” is not a failure but a necessary step towards enlightenment’.
‘The fact that the person is expressing their confidence as less than 100% signals that they are trying to get at the truth, that they have considered the quantity and quality of their information with thoughtfulness and self-awareness‘.
The best leaders I’ve worked with were not afraid to say when they didn’t know or didn’t understand something. They were keen to seek out the truth, even if it ran counter to their current beliefs. Ron mentions Richard Feyman’s view that we should lean over backwards to consider where we could be wrong: ‘The first principle is that you must not fool yourself, and you are the easiest person to fool’.
There’s a lot more in Ron’s notes that is worth diving into so do go and take a look – I’ll probably be writing at least one more post on the the wisdom they contain.
Photo by Jens Lelie on Unsplash
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