Decision making in a time of uncertainty
We live in a time of dramatic and unfamiliar change. This is nothing new, but it sure feels like it. Part of the reason for this is that most of us have grown up in a period of relative stability. To us that is normal. But it really isn't.
The world has been formed by iterative cycles of dramatic change followed by periods of consolidation and stability. Biologists call this "Punctuated Equilibrium" and it underpins modern thinking about evolution. Economists call these change cycles "Kondratiev Waves" and they reflect scientific or technological changes that catalyse social and political changes as a result. Business gurus call them “Industrial Revolutions”.
Whatever they are called, these periods of change appear to be coming more frequently and the changes that they catalyse feel more pronounced. This latter quality may be the result of globalisation and the 24/7 virtually connected world creating butterfly effect ripples faster and further than was possible before. Memes spread around the world in minutes. Viruses in days. Social revolutions in months. Exponential growth is the new normal.
The net impact for humans experiencing these changes is destabilisation as arrhythmic beats make dancing more difficult for those accustomed to the status quo. If it is hard for humans to dance imagine how hard it is for elephants.
To reduce the complexity of change and its profound anxieties and challenges to an aphorism is trite, but then again that’s what aphorisms are for. Simply put what got us here isn’t gong to get us there. In times of change we need to adapt, innovate and change or the result isn’t going to be pretty.
I am planning to write about various aspects of change over the coming weeks from various points of view and in bite-sized format. My first thought morsel on the subject concerns pattern recognition.
Pattern Recognition Problems
Humans function by heuristics, little mental short cuts that allow us to conserve energy and act on instinct and memory. Some very clever people won the Nobel prize for pointing this out and delineating the thinking systems that underpin fast and slow thinking.
Fast thinking rules our actions most of the time and it's useful in stable circumstances when what we saw yesterday is representative of what we are seeing today. Slow thinking by comparison takes a lot of effort and it helps us create new paradigms.
In times of change yesterdays patterns don’t fit todays and we lack the time for some seriously slow thinking. Caught between a rock and a hard place is an uncomfortable place to be and it can be dangerous as you get squashed.
It turns out then that humans are poorly suited for continuous rapid change (we are not alone most species struggle with this) and so we panic. We dissemble, procrastinate, revert to poorly fitted heuristics or delude ourselves that life is mean reverting so “carry on” and stay cool. Non of these pattern fitting approaches are helpful.
A common response to cognitive dissonance is to invent patterns that align with our bias. This is comforting and however outrageous to others is allows us to function secure in the internally consistent world we created for ourselves that has coherence.
This is of course not much use when reality bites. As reality is not interested in illusions, No matter how comforting they may be to us.
Survivors in times of dramatic change are those that quickly recognise and accept change and adapt. This applies to humans, companies (groups of humans united by economic interest) and societies (groups of humans united by social and cultural interest).
Our next phase of industrial, social and biological revolution is going to be very challenging for us because it is so different to what came before. The biggest changes are that we are moving from linear to exponential rates of change and from a search for causation to an acceptance of correlation.
I look forward to exploring these issues further in my next post and in particular how we can make better decisions when we recognise these issues are real.
Tech Enthusiast| Managing Partner MaMo TechnoLabs|Growth Hacker | Sarcasm Overloaded
2 年Chris, thanks for sharing!
Founder of CLOSER. Founder of SPRING STUDIOS
4 年‘There is nothing permanent except change’ The strongest quality of any individual is its ability to adapt to change without losing its basic integrity. Simply, whatever change occurs, there is an enduring and essential quality of the individual that always remains. What we do changes. Where we are changes. Who we are, however, does not change. Therefore, our own clarity and sense of who we are becomes the bedrock on which we can build ourselves up in any circumstance. What most of us lack, is a process to not only survive change, but thrive because of-that change. Change is permanent, be a change master and thrive in any situation.
Don’t compete.Create.?? Stand with ????????
4 年Not until 2005, the S&P 500 index transitioned to a public float-adjusted capitalization-weighting. How’s the math before (1837..)?
Li-ion Cell: Process Operations & Technology. Physicist.
4 年We may be considering the noise(fast) and not the carrier signal(slow). Is it a significant change if the decay is just as fast as the growth? Clumsy point perhaps but if we analyse high frequencies we see rapid change.