Irrational behaviour and Dan Ariely

Understanding behavioral economics is a key element in helping us to make good decisions – so this is a short blog to let people know about the free course that is about to begin:

A beginners guide to irrational behavior by Dan Ariely.

I have read a few of his books and seen a number of his lectures. Not only does he know a lot about behavior economics and why we act and decide the way we do – he also conveys it in an entertaining and amusing fashion. I am really looking forward to the course.

The course is hosted by Coursera, an organisation offering free courses who have linked up with 33 other institutions – pretty impressive ones at that …. the likes of Stanford, Princeton, IE and Michigan.

I cannot vouch for he quality of all the courses, but have done one course on systems modelling (Michigan) and can only say it is excellent. You do not need to pay a cent or even buy the professors book. Content is delivered in videos between 5 and 15 minutes long – so it is easy to fit the occasional study period between tasks. It also only takes about 8 hours a week that even the busiest people should be able to manage, given you can listen to the videos whenever you feel like it.

The course starts on the 25th March, so sign up now! Click on the link to find out more and sign up at:

Dan Ariely: a beginners guide to irrational behaviour

I am a great believer in Covey’s “sharpening the saw” occasionally and can only encourage you to sign up to this course (or any of the other ones that grabs your interest) and sharpen your saw.

For interest – Coveys “sharpen the saw” video. Its wider than just education, but still worth watching.

Enjoy the course!

 

Shut up and listen!

Here is a useful article from a great blog called Rethinking Complexity, out of Saybrook University. It challenges you to put aside preconceptions and really listen – even when what you are hearing goes against your fundamental beliefs. It does this via a simple exercise (simple to understand, not so simple to do!).

It discusses Edmund Husserl’s concept of “bracketing” which means setting aside your preconceptions. Which will allow you to really listen and hear what the other party is saying. If you are trying to understand each other; or perhaps attempting to reach an agreement over something, this becomes really important. If you are simply trying to win an argument rather than gain mutual understanding – then this is not for you. I suspect we often find ourselves in this latter area (wishing to win an argument) when we really should be looking to gain a mutual understanding. It is obviously best if both parties are putting their pre-conceived notions aside.

The technique requires a high level of emotional maturity as well as an ability to meta-think (to think about what we are thinking about).

Are you up to trying the exercise? It really could benefit your decision making if you can allow yourself to hear contradictory perspectives and evaluate them objectively – not in the frame of your own pre-conception.

Find the article here at:

“Bring in ‘da noise, bring in ‘da funk”

At the end of the month, I am giving part of a series of lectures to a group of female managers in a major steel company. I am planning to use this technique to see if it will help bring some clarity to the myths, mis-perceptions and facts around women in business. I will keep you posted.

 

 

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Information Overload and Decision Making

John Payne, a Professor at Duke Institute for Brain Science and gave an excellent TEDPhoto of John W. Payne talk around information overload and decision making. At the bottom of the page is a link to the 10 minute video (where there is a transcript as well).

As a quick summary, the Professor states that the problem we tend to face in decision making is not scarcity of information (in fact to the contrary we often have information overload). He claims the main challenge is scarcity of attention.
(My view is that the word “attention” may be a little narrow and covers a number of items (some or all of which may be present) such as time availability, ability to understand or process the information provided and capacity to make trade-offs.)

He uses a good example of information overload in decision making in talking about the 4 medical plans offered to him at the University – each of which had 33 different features such as additional costs for care and ambulance services. A second more common example is simply trying to select a mobile phone provider and plan – the options are dizzying and often hard to compare.

The most common results of this excess information are:

  • Decision avoidance or procrastination
  • Selection of the default (for instance staying with what you have always done before or maintaining the status quo)
  • Reverting to simple heuristics and using less information or using it in a less complex way (for instance: is it acceptable or not).

Human beings have survived on heuristic-based decisions for millennia and often they result in very good decisions – but not always. Sometimes they can lead us to focus on some pieces of information and ignore others. What will make us focus on a specific piece of information may be based on our values, but may also be based on the context in which we are making the choice – which includes the way in which the information (or decision selection)  is presented.

John provides a number of ways of dealing with this. Firstly, the providers of the information should aim for “cognitive fluency” – basically how well the information is presented visually; as well as “emotional fluency” which is how well you are able to interpret the information. Lack of cognitive fluency may lead to the data being ignored and lack of emotional fluency may lead to incorrect processing of that information.

A second (and to me more important) piece of advice is that one should try and get in touch with your values and objectives in taking the decision before one even starts examining the information provided. This aids in making “value-based decisions”. And in a world crowded with info, this becomes increasingly more important.

He gives a simple example in the video using 3 cards (gold, silver and bronze) and writing prioritised objectives on each of them. He also demonstrates good use of visual information in the video by referring to a display notice detailing how environmentally friendly is a certain car.

One area John briefly touches on, but is worth considering in more detail, is “choice architecture” that is how the decision is put across, including what is the default. There are many examples of where a very simple change in choice architecture may have a dramatic effect on the results. One example of is this architecture is in how people are asked if they wish to donate organs. A simple default opt-in to the programme (requiring a conscious opt-out action) has been shown to have significantly better results than the opposite (default opt-out). Thalers book “Nudge” also gives many examples of this. Obviously ethics and values can become important considerations here – but that is the topic of another publication.

This work is of particular importance to us at the moment as we are currently undertaking work in the UK where we are assisting local government in implementing “choice” policies for vulnerable adults who receive support from the State. The idea that too much choice may not be good, seems to have been ignored by the Department of Health – especially considering that many of these people have less mental and/or emotional capacity than the general population. The second area where it may be important in this work will be in helping these Local Authorities in constructing decision architecture around the choices.

If you still have time, enjoy the video – you will find it at the link below.

John Payne on TED

The science around decision making, managing information overload, and complexity and choice architecture is important in many aspects of our personal and business lives. At Genesis we do not claim to have all the answers, but we are able to help you think through the issues and consider how to find optimal solutions to the challenge.

 

A Boardroom Fable – Making Better Decisions

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A Boardroom Fable
How Gail saves the company and Brad saves his reputation

Taking strategic decisions in complex environments is one of the toughest, and most important jobs, of any Executive in both the public and private sectors. Taking good decisions can result in massive value creation, but getting it wrong can equally destroy value – or even destroy a company.

View this entertaining slide show that tells the story of the company: Marcon, and its CEO, Strategy directorBrad and simultaneously offers excellent advice on taking strategic decisions.

Making Better Decisions – A Boardroom Fable

 If you prefer, you can view the slideshow on this page (scroll down); or alternatively, you may download the presentation by completing the form at the bottom of the page.

Please feel free to share this with colleagues and friends and help us help the world in:

“improving lives through better decisions!”

If you are interested in buying our manual on The Genesis Decision Making Process with best practices in decision making – please click here:

Genesis Decision Making Process

Download it after sharing a few details with us:

For all enquiries, please contact Simon Gifford at sgifford@genesis-esp.com

Decisions and leadership meet technology and crowds

Leadership and decision-making meet technology, collaboration and crowds.

When I publish an article (or in this case a broadcast), I normally try and summarise it soIBM Think that my too-busy readers are able to get the gist of what is being said without reading the original article; or at least are able to make a judgement on whether or not they want to read the original article.

In this case, I am not going to do that as this video has too much excellent content to allow me to summarise it. I will only say two things:

  • It includes excellent input on decision making, the use of technology, the new leadership paradigm, group intelligence and the fact that you must have women in a team to increase the level of this intelligence (that should provoke a few of you to watch it at least).
  • I personally believe that the discussion here holds the kernels of the future of  leadership and management; and so strongly recommend anyone who has an interest in better understanding this topic and wanting to get more out of their organisation – be it public sector or private sector – takes the necessary 40 minutes to watch this IBM Think Forum video.

Decisions and leadership meet technology and crowds

Thanks to my colleagues at THOUGHTstream who brought it to our attention. Jamie at Ts bravely did attempt to make a summary – please visit “Jeopardy, women and chocolate” to view their take on the video. Thanks also to IBM for putting this, and other great work , into the public realm.

 

If you would like to know more about embedding science within your leadership and decision making processes, contact me at sgifford@genesis-esp.com for a no-obligation discussion.

 

How do you measure success and your life?

Priorities, metrics and values.
In decisions and in life! 

The World Economic Forum is over and it appropriately included a degree of soul-searching and even an admittance that mistakes had been made. This has been a good lead-in to my deliberations as I compose the 4th habit in the series (the 7 habits of highly effective decision makers) which discusses making ethical considerations a priority in decision making.  (This may be THE most important of the 7 habits).

In my research on the topic, I have “discovered” a really special man Professor Clayton Christensen from Harvard Business School who poses some fantastic questions. I would like to share two elements of his work with you.

First a video of a talk he gave when receiving the McKinsey Award for the best HBR article. He talks about some of the flaws we make in measurement of profitability. Among other problems created, he demonstrates how they force us into a short-term bias and into one that reduces our likelihood of creating jobs. I think more and more that companies goals must start encompassing wider targets than profitability – and alongside CSR. For instance, is it not time that we started reporting on job creation and increased number of employees (as a positive)?

Have a look at the video (it is less than 5 minutes), and then come back for the article …

HBR awards

The second element of his work I would like to share is his article (that won the HBR award). It may challenge your thinking – or at the very least have you re-assess the priorities in your life. The questions he asks his Harvard class are:

  •  First, how can I be sure that I’ll be happy in my career?
  • Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness?
  • Third, how can I be sure I’ll stay out of jail?

He then discusses the concept of a strategy for your life and resource allocation within that frame. Personally, I found the article refreshing and inspiring – and perhaps what many of us need as we move through some of the character-forming challenges that the world is providing us at the moment.
(Note you may have to register for HBR too read this – registration is free and Genesis gain no benefit from this in any way).

How will you measure your life

We normally end our articles with an offer of assistance with the issues that the topic raises when they are within our capabilities at Genesis. We certainly cannot claim to be experts in assisting people to re-align their values and measurement systems. However, we would be able to coach an individual or group through the process, probably using some of the tools we have available.

Because we believe it is important to give back to the world, we would be happy to offer such a facilitation for FREE to anyone (or any group) who would seriously like to undertake this. We could do this remotely or face to face and would only charge for any out of pocket costs we incurred in the process. Write to me confidentially at sgifford@genesis-esp.com to start an initial discussion.

(Note: we obviously have a constraint on time and so the offer is only available to the first 5 people/companies who contact us).