On Humility and Making Better Decisions
Dr. Daniel Kahneman features on the latest Farnam Street podcast and it’s a surprising episode. Kahneman wrote Thinking Fast and Slow. I admire Kahneman a great deal. Not for his Nobel or for his work, which are both impressive, but for his humility.
Some of the key tenets of Kahneman’s work in his famous book were disproved. And he owned up to it, both in print and on the podcast. That’s the hallmark of someone with great integrity, and it’s a sign to trust someone more.
So I listened to his podcast with great interest. Kahneman discussed the ways to make better decisions. He recommends delaying your intuition and breaking down a decision process into smaller pieces.
Suppose you are interviewing executives for a VP role. Ahead of time, the hiring team creates a rubric detailing a few key dimensions, maybe five or six. Cultural fit, intelligence, domain expertise, ability to recruit and management style, hypothetically. The hiring committee interviews the candidate and then reassembles to debrief.
Most of the time, we run unstructured meetings. Kahneman recommends structuring the agenda by dimension. Everyone discusses the first parameter and scores her on cultural fit. Once that’s done, the group moves onto intelligence. Everyone scores the candidate, and onto the next one. At the end, the group reviews the score matrix and decides.
In this way, everyone delays their intuition and thinks more deeply about the decision. This is a structured interview, which is three times better at predicting outcomes than an unstructured interview.
Another way of breaking down decision is the Fermi Process, named for Enrico Fermi, another Nobel laureate, father of the atomic bomb. Fermi was a terrific estimator. He famously estimated the power of the atomic bomb to within an order of magnitude by dropping leaves of paper during the detonation of a test bomb.
The Fermi Process or Fermization, as Tetlock called it in a great book called Superforecasters, is about breaking down a problem into smaller parts. Then estimate each of the subcomponents and then calculate the answer. How many piano tuners exist in Chicago? Can you estimate it? The answer is at the bottom of this post.
This idea of breaking down predictions and forecasts into smaller bits has merit and has been proven across several different fields. It’s worth considering as a tool the next time you need to decide on a complex topic. As Kahneman says, the best decisions are made by algorithms and the closer we can get to structured decisions, the more we can supress bias.
The podcast has several other interesting jaunts on different topics in work psychology. But the thing that I admire most about the author is his integrity. It’s rare to see a man of such prominence admit fallibility. It’s a trait to admire and emulate.
*Chicago has about 290 piano tuners. See this explanation
Technologist | Investor | Entrepreneur
5 年Thanks for sharing Tomasz and as I value the perspective you bring to many topics after reading your posts over the years. What struck me as counter-culture is the comment you made about trust. The fact a prominent person like David humbled himself publicly when presented with new information endeared you to trust him more. If only we all were mature enough to emulate his behavior in all areas of our lives. ????
Director of IT at Dave Carter & Associates
5 年I’m going to listen to the referenced podcast later after I have finished digesting the Jocko Willink TED I found in one of your linked articles. That was a great talk. Thanks for introducing these to me.
Co-founder, Author, Practitioner- Business Agility, Digital Marketing & Digital Transformation, AI adventurer, Strategist, M&A PE advisor
5 年You can apply the same to marketing and sales. Thanks for sharing btw. It always amazes me that so few people in marketing try forecasting. We did some research last year and found that 50% of marketers don't forecast, they spend the budget they are allocated. Think about that for a second... I spend what you give me...says a lot about understanding growth potential. Most marketers should ask for more budget, yes more, but you can only do that through forecasting, by channel (smaller problems), by upside, really knowing your numbers and gunning for them.