Eliminating bias from decision making in the oil & gas sector...

Many decision makers aspire to strike a balance between their own authority and a consensus of opinion, usually from a small caucus of trusted advisers, the leadership team. Unfortunately, leadership teams are required to articulate opinion, which new research shows introduces “noise” [1] into the decision making process.?Noise is measurable, however, as is bias [2]; measuring just became a whole lot easier, partly because of lockdown...

The technique is refreshingly simple: take one empty glass jar, pour in a quantity of jelly beans, start a Zoom with a group of friends, mute them and ask them to guess the total number of beans in the jar through a blind ballot. Then ask your friends to guess the average bean size, the internal dimensions of the jar, the level of fill and the inter-granular porosity, also in a blind ballot, and?voila! By comparing guessed totals with calculated totals from their assessments of the physical dimensions, what you get is a gap between participants' reflexive guesses and what their perception of dimensions are actually telling them. It makes no difference if you invite 5 or 5000 friends to participate, the whole process takes a few minutes over that conference call.

You can apply exactly the same technique to opportunity identification in the oil & gas sector.?Start a video-conference, mute everyone, describe the opportunity to participants and collect a blind survey inviting them to report their gut-feeling for the opportunity, as well as the value metrics for opportunity identification that relate to your specific business.?Just as with the jelly bean jar, a gap opens up between participants' reflexive gut-feeling for the opportunity and what the data are actually telling them*. The difference is that, whereas there is arguably no incentive for guessing high or low bean counts, the gap for an incentivised opportunity reveals something about participants' experience with that opportunity or other opportunities like it; the gap contains an element of bias. What you get at the end of the call is a combination of noise and bias, which are measurable in the space of an hour.?It really is that easy.

...eliminating bias from decision making in the oil & gas sector just became a whole lot easier...        

Experimental simulation

A pre-cooked frontier oil & gas opportunity has been adapted to a data room simulation for use with video-conferencing from any location.?The opportunity is described in some detail including illustrations, presented by a facilitator who follows a script that has been fixed for nearly four years, presented to almost one thousand participants. No questions about the opportunity are permitted on the call to maintain independence for all participants, who are?invited to score their opinions based on selected value metrics. The survey takes 10-15 minutes to complete, with?the results appearing in a live graphic representation, as each participant completes their assessment anonymously. When all the votes are in, the facilitator describes what the graphic reveals about participants' attitudes to risk and whether as a group they display any particular bias towards this opportunity specifically.

What is needed

Each session is free of charge, because participating contributes to ongoing research**. Organisations wishing to take part require desktop video-conferencing capability (e.g. Zoom) with between 10 and 500 participants in a single sitting.??The identities of participants are not recorded unless the individual wishes to know their own score.

The simulations are part of an ongoing programme - please book a slot for your organisation by contacting [email protected]

Value added

The method illustrates how easy it is to engage knowledge within your organisation in support of decision making, potentially identifying organisational barriers that can be mitigated against.

Mark Twain also suggested that “Good decisions come from experience” whilst reminding us that “Experience comes from making bad decisions”.?It could be that your company is one of those rare enterprises that do engage all of the knowledge in your organisation. If not, then perhaps by having a vote, decision makers can benefit from broad experience without themselves having to make bad decisions.?

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*When participants are invited to share their opinion for an opportunity, they generally polarise their view because that is what they think is being asked of them. When you compare the polarised opinion with what the data are actually telling them about the opportunity, you find that most participants know they don't have enough information to polarise their view, but they still choose to override what the data are telling them.

**If an organisation wishes to trial an opportunity of their own and to review the value metrics to match their business priorities, this can be achieved for an administrative fee.

REFERENCES

[1] Kahneman, D., Sibony, O., Sunstein, CR., 2021 – Noise [HarperCollins Publishers?, ISBN 978-0008472566]

[2] Guy Loftus and Bond, M, 2019 - On the experiment to COLLAPSE COGNITIVE BIAS [www.k2vltd.com/article-21]