Claude's Book Review - May 2024

Decisions over Decimals

Striking the Balance between Intuition and Information

by Christopher Frank, Paul Magone, and Oded Netzer

John Wiley & Sons., 2023. 202 pages

Successful decision-making is critical craftsmanship that any manager needs to master. With the rise of technology and big data, striking a sound balance between intuition and information has become a central challenge. It is that challenge Christopher Frank, Paul Magone, and Oded Netzer take up in their book Decisions over Decimals, published in 2023 by John Wiley & Sons.

According to the authors, Decisions over Decimals describes the holistic approach that bridges data analysis with human insights for balanced decisions. It addresses the often observed fact that the challenge faced in decision-making is not the availability of data but the judgement how to use it. The authors combine data, experience, and intuition to avoid typical decision biases. They call their approach “Quantitative Intuition” or QI. It combines precision questions, contextual analysis, and synthesis to support human decision-making. The book is structured along the stages of their quantitative intuition-driven decision- making method. Although many of the arguments the authors make are supported by short case studies, the book takes a prescriptive approach. Its style is based on a combination of management consulting type of thinking with the rigor of academic research. This makes the book compelling to read for most people but may turn away readers who prefer a more storytelling approach.

While not new, the QI method starts by asking powerful questions. Being a robust questioner is at the core of understanding the decisions and the context they fall into. The goal of questioning is not about getting specific answers. It is about accumulating and expanding knowledge. The smartest person in the room is not the one with the answers. It is the person asking the questions. QI follows Einstein’s saying, “If I had one hour to solve a problem, I would spend 55 minutes thinking about the problem and five minutes thinking about solutions.” Key to questioning is their IWIKTM concept, asking the question, “What do I wish I knew to make the best decision?” Following questioning comes the activity of framing the problem by applying the four steps: asking, brainstorming, capturing, and deliberating. What some readers may see as counter-intuitive forms the next step: Thinking about the decision and working backward to scope the needed data and analysis. Decision-making is not about expecting big data to offer big solutions. It is about what I like to call identifying smart data. Data is only as good as the questions you ask of it. As such, the authors’ approach speaks from my heart. Chapter four addresses some of the common biases faced when interrogating data. The narrative is a condensed form of Kahneman’s thinking (see, for example, A Flaw in Human Judgement by Daniel Kahneman, Olivier Siboy, and Cass R. Sunstein or Thinking Fast and Slow by Daniel Kahneman).

Decisions cannot be made without data. But data does not make decisions. Managers need to develop an intuition for numbers. Rough and relevant estimates are always more important than precise irrelevant data. The Fermi approach is presented as a tool to obtain rough estimates. Managers should not worry about details, especially those that do not change their opinion and decisions.

Next, the analysis performed should be turned into a synthesis. This is a significant activity that junior managers are typically poor at. Synthesis, the third pillar of the QI framework, serves to connect the dots. Synthesis is not about summarizing. It is about extracting and presenting knowledge. Finally comes the moment of truth, the decision-making. It can be deconstructed into four forces: time, risk, trust, and momentum. An exciting aspect of decision-making is identifying whether a decision is reversible and whether it can be made to be reversible.

If you think that making a decision is the end, you are wrong. Decisions must be delivered in a way to trigger action. The power of storytelling, which I find the authors have room for improvement, can hardly be understated. Again, the concept of storytelling introduced is hardly new. But it is highly relevant.

The remaining chapters address additional challenges decision-makers are facing, that is, chasing decision-making, creating a quantitative intuition culture, and understanding the future of data-driven decision-making.

I found this book a great read if you are interested in getting an introduction to decision- making in business, combining intuition and data. If you have been following decision- making theory in the past, you will not find many new insights. It is more of a condensed repetition of existing knowledge. In addition, the writing style is, to me, too prescriptive and leaves little room for alternative approaches. Using a term from the strategy language: this book is stuck in the middle, too advanced if you are a novice decision-maker and too poor on novelty if you have been in contact with the topic before. My recommendation about whether or not to read this book is it depends!

As always, this is my subjective assessment of the book Decisions over Decimals with which you may or may not agree. Any well-argued opinions, whether in the agreement or not, are welcome!

? 2024 innovate.d llc

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