Why you should challenge your conclusions as a Leader?

Albert, a CXO level C Suite leader was questioned on the performance of a company, which is not directly in competition with his organization, given the 4 decades of experience that Albert had in running some of the vast operations across the globe. The interviewer was expecting some segmentation of his overview about the particular company.

But to the utter surprise of the Interviewer, Albert quickly responded to the question without wasting a further second as if he knew the question before it was being asked.

“Ah, that company is simply awesome. I know them, they must be doing well, as there are a lot of new emerging economies that will find their product fit for their own consumption.”

The Interviewer just smiled and moved on to the next question.

But let’s just take a pause here, and try to understand, what had really happened there? How come Albert, who is a seasoned manager reverted to a comprehensive question with such brevity and despite knowing fully well that he had a very limited set of information to process a suitable answer to the readers of the magazine, for whom the interview was held?

Well, what Albert never realized was that his fast response was due to the fact that he liked that company’s products and often buys it from the nearby supermarket, his wife liked them and so did his children .He formed his opinion about the Company’s overall assessment and future from that deep seated liking in his subconscious towards the products of that company. Believe it or not, this is how it works mostly.

Many a times as a Business leader, we all draw conclusions to some of the most important things at work in some way or the other, when we know very well that there is a limited set of information and facts at our disposal to substantiate our conclusions. We are programmed to jump to conclusions.

We have two systems in the Mind - System 1 and System 2, originally proposed by the psychologists Keith Stannovich and Richard West and later on researched upon extensively by Noble Laureate Daniel Kahneman as he remarked in his legendary book, “Thinking Fast and Slow”. (1)

“System 1- Operates automatically and quickly, with little or no effect and no sense of voluntary control.”(1)

The way you drive your car to the office while thinking about the presentation your boss showed you yesterday for the new marketing campaign, and once you reach the office, you have no memory of the route and what all you had seen on the way. That’s System 1 working for you.

“System 2- Allocates attention to the effortful mental activities that demand it, including complex computations. The operations of system 2 are often associated with the subjective experience of agency, choice and concentration.”(2)

When you are looking for your partner at a crowded Frankfurt station in the recently arrived ICE from Paris, you deploy System 2 which needs recognition, memory recall, focus and deliberation. That’s System 2 for you.

What happened in Albert’s case above is the quick response of System 1 without knowing that it draws it input from a series of hardwired memories about the products that he had been using, and because of this he concluded that the company would do well in the future.

Let’s take one more example of why we need to challenge and sometimes rebuke our conclusions:

More popular

More Profound

More Distinguished

If I ask you any question by using the set of words above, for instance, Who is a more popular CEO among the top 3 CEO’s of your country or Who is more profound between Celebrity Author A or Celebrity Author B or Who is more distinguished in terms of Art collection between No 1 Gallery of or No 2 Gallery in your city, What would be your response?

You will in most likelihood choose the one in all the 3 questions above with whom you have an associated set of memories and your System 1 will be quick to respond. The associated set of memories has nothing to do with the facts and actual information that is reliable, you could choose the CEO whose company’s products you like or who have just introduced a remarkable marketing campaign that you immensely liked, you could choose the celebrity Author B as you have been reading him quite for some time or you could choose the Gallery no 1 as you recently read about the collection of it in the most popular magazine around you.

Whatever you choose in above questions as your answers, one fundamental thing has been skipped quite easily by your System 1 and that is that there could be some other CEO than the Top 3 or there could be some other author who is more profound, whose work, unfortunately, you have not read or heard or there could be some other gallery in your country that hosts some of the rare historic collections but seldom you have had a chance to know about it. There could be a third answer but your mind jumps the gun and concludes with the help of limited information and forms an opinion that lacks basic foundations of facts.

In all above 3 questions, your mind has been flabbergasted with the limitations or illusions created by the word “More”. It has ceased the scope of available information and your System 1 is right there to trigger the responses from the associated sets of memories. How many times in our life it happens when:

·        We see a fabulous presentation with loads of graphics and charts by an agency and we decide to hire them quickly without bothering to work out with an available set of information, your business’ specific needs, alternate options from other agencies, their track records in a similar set of objectives or the talent available in their team who can understand the USP’s, challenges and limitations of your organization.

·        We hire a top executive merely on the basis of his last 3 companies that were in similar domain as your organization without having the tacit knowledge or factual comparison of the challenges those last 3 companies were facing vis-v-vis your current organization. Are the trend lines speak of any mean level match?

·        We decide to build a new tech product that may fit the organization’s need that are both existing now and in next six months’ time, but do we carefully analyze the ROCE (Return on Capital Employed) with proper segmentation considering the number of customer acquisition or increase in market share or further accumulation of data science to make the experience more fruitful to the end consumer in next 2 years’ time?

We need to consistently challenge our own conclusions as leaders, We need to see what is beyond visible, We need to look at alternate sources of information and other tacit knowledge, We need to have strong correlation both in the external and internal factors that could affect your business in the long run, We need to see what is not there, what is not being heard till now or what is not being visible to you or your team.

Daniel Kahneman has coined an interesting term called “WYSIATI” (3) ‘What you see is all there is’ in his book “Thinking Fast and Slow”.

Business leaders also need to control their over confidence, purely formed on the basis of their prior experience, but that is where the flaw is and many things go wrong drastically due to this. We need to understand that in this fast changing world where everything is changing right from consumer’s expectation to employees’ efficiency or morale, we can’t rely on our experiences of 2-5 years of 8-10 years ago, moreover, there are dangers of falling prey to your associative set of opinions that are trying to address today’s situation from the impressions made in your subconscious some years back.

Business leaders have a very difficult task of interpreting different sources or sets of information that are communicating the same message and people who are running large and complex organizations need to be vary of the fact. Let’s look at these Statements:

“The box of potato chips of 100 gms, made from finest of potatoes from New Zealand is 95% fat free”

Or

“The box of potato chips of 100 gms, made from the finest of potatoes from New Zealand is having 5% fat”

Which one is more attractive and reassuring? Obviously, it is the first one. Well that is the Framing effect for you, deliberated by the top psychologists for years in management and psychological studies and the advertisers use it more often to lure us in to their web.

 That is only one example but there could be thousands when we, as business leaders, need to dive deep into the varied source of information and pick those which suit our needs best. It is imperative that we challenge our conclusions and keep a cool off period to further dissect our decisions with a different prism of knowledge, opinions, facts and available alternate information.

Referenes (1-4)- The work of Daniel Kahneman in “Thinking Fast and Slow”

(Above are Author’s personal opinion in his personal capacity)