The Art & Science of Decision Making
The Easy Mind & the Lazy Mind:
To make sense of the world around us, we rely heavily on our intuitions. Intuitions are marvelous. In the blink of an eye, in the absence of much information or data points, they help us to assess, judge and decide for our own good.
Malcolm Gladwell’s bestselling book, “Blink” celebrated the marvels of the intuitive mind and left an impression with many people that perhaps intuitive decision making was in some way magically superior to careful, deliberate decision making.
But with the marvels of intuition, also comes its flaws. The world in our head is not a replica of the reality.?The world in our head is colored by our own systemic biases, emotions, wishes, and intuitive preferences. This distorted view quite often leads us to make a bad decision, while making us believe, we are making a good one!
Even Gladwell’s ‘Blink’, which argues the marvels of intuitive thinking, changes track in the latter part and suggests caution to rely only on it.
“We can be blind to the obvious, and we are also blind to our blindness”.
-Daniel Kahneman.
Daniel Kahneman is a Nobel Laureate, and is a beacon in the field of psychology of judgement and decision making. For making it easier for us to understand, he relied on calling the “intuitive mind” as “System 1” (Ref. book: Thinking Fast and Slow) and the “rational/logical mind”, as “System 2”.
Characteristics of these two Systems:
System 1: Effortless, intuitive, quick to make free-wheeling associations, and relies heavily on experience and memory.
System 2: Effortful, deliberate, can concentrate and make choices, and has strong statistical consideration.
One cannot deny that the quality of one’s life depends on the quality of decisions taken by the person, over the years. The decisions could be either made for us (intuitive System 1) or we can make a deliberate and informed decision (System 2). Kahneman warns us with the risk of making wrong choices if we solely rely on our System 1. For important and critical decisions, he strongly recommends using the deliberate System 2.
The problem is that System 2 is a lazy system, it is slow and requires huge effort. Many of us do not want to go there. It is always easy to go by what the intuitive mind says as it saves going through lot of information, data, and deliberations.
This laziness costs a lot in the long run. We are at risk of making wrong decisions due to the inconspicuous flaws of our intuitive mind. We would be far better placed if we shift the ratio more towards the System 2, especially for important and critical decisions.
The Intuitive Decision Making (System 1):
Gladwell in his book recounts many stories of intuitive decisions, which made huge favorable impact and were often the reason between winning and losing. One example that comes to my mind is not from the book but the 2011 Indian Cricketing Team. During the World Cup final, captain MS Dhoni’s decision to promote himself higher-up the order, is among the most celebrated decision in the history of Indian cricket. It sure contributed to clinch the final and hence the cup.
How can one make a case against such compelling power of intuition?
To understand this, we need to differentiate the “gut-feel intuition” from another type of intuition which is called “expert intuition”. What Dhoni and many of the Gladwell’s heroes successfully leveraged, is the expert intuition.
Expert Intuition:
Consider a seasoned chess master. Due to his long hours of practicing various chess moves and configurations over many years, when he just gives a passing look at people playing chess with a new unique situation on the chess board, he intuitively can suggest a great move.
This is because he derives from his deep experiences to make that quick decision. He can sense pattern and cues, comparing it to a similar situation stored in his memory. And all this happens quickly, intuitively, still making it as a remarkable decision. ?
To make an expert intuitive decision, the pre-requisite is years of hard work and practice on a chosen field of expertise.
Also, there is a reason to pick up the chess example here. The expert intuition is not equally reliable in every field. For example, stock analysts and political pundits are more likely to be wrong on their expert intuition than the chess masters, surgeons, or pilots. Why?
Daniel Kahneman collaborated with Gary Cline to come up with two basic conditions for trustworthy expert intuition:
In summary, while intuitive decisions seem magical, relying on them, puts us at a grave risk of making wrong choices. If the experts need ideal conditions to rely on their intuitions, what are our chances of making a good decision, just based on our intuitions?
Role of Emotions in Decision Making:
For centuries, social scientists worked with a basic premise that people are generally rationale, and they depart from rationality only when swayed by strong emotions like fear, anger, hatred etc.
Better understanding of the unconscious biases has proved that dropping of rationality could also be due to the design of the cognition machinery (thought, experience & senses), and not just by cognition being colored by emotions. In simpler terms, the sole reliance on System 1, could throw you off logic and rationality, without you even recognizing that.
Having said that, this does not undermine the role of short-term emotions on making wrong choices. The recommendation is not to make critical decisions during any of the high emotional states. Cool down, give some time, before taking a critical decision. "Go-to-the-balcony" as William Uri in his book 'Getting-to-Yes' suggests.
Kahneman, also points out an interesting phenomenon - a good mood, in absence of any perceived fear, allows a free rein to System 1. Which means it suppresses the ability to engage in deep, effortful work (System 2).
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Researchers at the University of Waterloo in Canada showed that there are people for whom bad mood hones their thinking skills. These were high-reactive individuals – people who have rapid, intense, and enduring emotional responses. They performed better on executive functions of the brain (System 2), when experiencing a bad mood.
In a similar study, Dr. Robert Sinclair and Carrie Lavis of University of Alberta found evidence that sad people appeared to be devoting more energy to the task to distract themselves from their sad feelings.
In summary, our emotions do hijack our decisions; this is when logic and intuition collide, and we become vulnerable to making wrong choices.
The Deliberate Decision Making (System 2):
Objective, Criteria & Candidates:
Defining a clear objective is the pre-requisite to any reliable, deliberate decision-making process. An objective specifies what a decision maker is trying to accomplish, and by doing so provides measures that can used to choose between alternatives.
Many years ago, engineers at Intel were working with an objective of ‘improving the quality of video-conferencing’, the project was not going anywhere as the team was struggling and could only come up with marginal improvements. Not until their CEO John Chambers re-stated the objective as ‘how can we make the virtual meetings across continents almost live, like face-to-face? How can we provide a viable alternative to air travel which so many managers have to undertake to attend these meetings?’ This suddenly changed the entire scope of the project. Suddenly the possibility of saving all that money meant, it was worth to invest substantially on the project. This is how the “Telepresence” was born.
Getting the right objective and defining it clearly is the critical step in the decision-making process. Once that is achieved, the next step is finding the measures.?
The measures are a set of criteria that guides a decision maker, to choose the best from the available alternatives (candidates).
As you walk into a car dealership, 20 criteria can come up for your attention e.g., Price, Financing, Fuel economy, Engine power, Maintenance cost, Safety record, Theft potential.
Cost of insurance, Style/Appearance, Basic Features, Cost of options, Resale value, Ease of driving, Seating capacity, Ease of parking, Garage space needed, Four-wheel drive, Status-symbol, Reliability and many more!
?How do we know if we are choosing the right criteria for our decision making? How do we know the right hierarchy of these criteria that would be best for us? Do we need to assign weights? Based on what? Our gutfeel? Intuition? We already learnt that it is not the best way to decide, so what do we do?
Now turning from the criteria to the candidates (options to choose from), same complexity arises - your decision is only as good as your best candidate. Have you taken into account all good options? Have you searched and looked beyond the obvious? Have you weaned out options that you do not have resources to implement?
The Pitfalls for the Deliberate Decision-Making Process:
Both Kahneman and Gladwell, while in two opposing camps, agree on few critical things. One of that is ‘need to simplify the System 2 led decision making process’. While Gladwell calls for frugality (removing a whole lot of distracting details and focus on few key aspects), Kahneman, on other hand, supports reducing the complex data crunching and analysis down to a manageable formula (simple statistical rule).
Interestingly, both come out with very similar examples. Kahneman mentions Apgar Score from obstetrics, while Gladwell picks up Goldman Score from cardiology.
The Apgar Score:
Prior to 1952, whether any intervention was needed for a new-born to improve health and survival rates was dependent on attending doctor’s reading of the signs during the physical assessed and evaluation. This meant a huge variation in the outcomes on survival rates.
In 1952, Virginia Apgar, an obstetrical anesthesiologist, created a simple statistical rule, which became to be known as Apgar score.
The Apgar score comprises five components: 1) color, 2) heart rate, 3) reflexes, 4) muscle tone, and 5) respiration. Each of them is given a score from 1 to 10, at 1st and 5th minute, after the birth, determining how well the baby tolerated the birthing process and how well the baby is doing outside the mother's womb.
Even today, despite the advent of foetal monitors, Apgar score is used worldwide for evaluating the physical condition of new-borns at birth. It is because it is simple, predictable, and reliable. It is a distilled formula derived from years of observing and treating new-borns.
The Goldman Score:
A multi-factorial index of cardiac risk in the non-cardiac surgical setting. It was developed for cardiovascular risk identification of patients to prioritize treatment. The data were derived retrospectively in 1977 from 1001 patients undergoing non-cardiac surgery.
The point of both these examples is that having a lot of data points, does not necessarily help and is often overwhelming for most people. Someone needs to take all the available data, understand trends, and then come out with some simple formula, some statistical rule, some software – which helps everyone to consistently take good calls, and is so reliable that it even helps to defend your decisions. This simplicity beyond the complexity, is what makes people increasingly engage the otherwise lazy System 2 and avoid the risk of being swayed by their flawed intuitions.
There are lot of widely used existing techniques that attempt to ‘narrow down” the complexity, to make it simpler and practical. But the problem is, they still are not very helpful in reducing the effort required and the cognitive load they put upon us. They are far from, the simplicity and effectiveness of Apgar or Goldman Scores. Let us check upon few of them.
Popular ranking techniques and their pitfalls:
How can we make better defensible decisions?
As mentioned earlier, we make many decisions based on our gut, and there is ample evidence that ‘intuitive decision making’ can often lead us to take a wrong decision, while making us believe we are on the right.
The ‘deliberate decision-making process’, on the other hand, seems very complex, cumbersome, and overwhelming. Our System 2 is already lazy and if we attempt to engage it in such an overwhelming process, it is very likely, it will pass the buck back to System 1.?
So, what do we do?
Fortunately, there are solutions. AHP (Analytical Hierarchical Process) is one such robust decision-making system which has the ease and effectiveness of Apgar and Goldman scores. When faced with single criteria and multiple choices, it helps you to assess the options in pairs for cognitive ease and provides clear scores so that you can pick up the best option. One may like to refer to the work of Dr. Errol Wirasinghe (author of Better Defensible Decisions ) and a simple software developed by him to help quickly and easily complete this process in minutes!
Similarly, for multiple criteria decisions, it provides scores to help segregating the criteria, assigning weightages and finally in ranking the options – making it very easy to see your best option coming up clear. There is a simple, easy-to-use software which takes away all the cognitive burden and provides you with a better defensible decision.
Comprehensive piece Sanjay Lohani. Dr. Errol Wirasinghe Ph.D. is a pioneer in decision making system.