How to make decisions for the future

We don’t spend much time considering how we make decisions. Particularly about our own future (or that of your company). It appears that 95% of our decisions are made for us by our subconscious and our programming from our youth.

Move away from instinct

Particular hard choices demand that we train the mind to override the snap judgments of System 1 thinking, that we keep our mind open to new possibilities, starting with the possibility that our instinctive response to a situation is quite likely the wrong one.

Forward-thinking

For all the biases and intuitive leaps of System 1, one of the hallmarks of human intelligence is the long-term decision-making of System 2: our ability to make short-term sacrifices in the service of more distant goals, the planning and forward-thinking of Homo prospectus. To make the right decision, you have to figure out how to structure the decision properly, which is itself an important skill. However; “One thing a person cannot do, no matter how rigorous his analysis or heroic his imagination,” the Nobel laureate Thomas Schelling once observed, “is to draw up a list of things that would never occur to him.” 

Don’t trust experts

Why would our brains devote so many resources to something as innocuous and seemingly unproductive as daydreaming? They were three times more likely to be thinking about future events than about past events. We are not very good at it. Particularly experts. Most were no better than the figurative dart-throwing chimp. Interesting finding; the more media exposure you had, the less valuable your predictions were likely to be. 

Thinking style

The critical factor is thinking style. Curiosity is crucial, People attuned to a wide range of potential sources, willing to admit uncertainty, not devoted to an overarching theory—turned out to be significantly better at predicting future events than the more single-minded experts. For the long view, you need to draw on multiple sources for clues; dabblers and hobbyists outperform unified thinkers. Successful forecasters as a group were much more likely to be open to experience. 

It is difficult

Most organisations seem to be using the same decision process as a hormone-crazed teenager. We now understand that farsighted decisions are challenging for many different reasons. 

• They involve multiple interacting variables
• They demand thinking that covers a full spectrum of different experiences and scales
• They force us to predict the future with varying levels of certainty. 
• They often feature conflicting objectives or potentially useful options that are not visible at first glance. 
• And they are vulnerable to the distortions introduced by individual “System 1” thinking, and by the failings of groupthink. 

Phases

Decisions are made up of two distinct phases, sometimes called divergence and consensus phases. In a divergence phase, the key objective is to get as many perspectives and variables on the table as possible through exploratory exercises designed to reveal new possibilities. In the consensus phase, the open-ended exploration of new possibilities reverses course, and the group begins to narrow down its options, seeking agreement on the correct path. 

Factors

There are a number of primary factors that contribute to the challenge of farsighted decision-making:

• Complex decisions require full-spectrum analysis.
• Complex decisions force us to predict the future. Most decisions, big or small, are fundamentally predictions about the future. 
• Complex decisions involve varying levels of uncertainty. 
• Complex decisions often involve conflicting objectives. 
• Complex decisions harbour undiscovered options. 
• Complex decisions are prone to System 1 failings. 
• Complex decisions are vulnerable to failures of collective intelligence. 

3 steps

Deliberative decisions involve three steps, designed specifically to overcome the unique challenges of a hard choice:

1. we build an accurate, full-spectrum map of all the variables and the potential paths available to us; 
2. we make predictions about where all those different paths might lead us, given the variables at play; 
3. we reach a decision on a path by weighing the various outcomes against our overarching objectives. 

Examples

The author uses a number of examples to illustrate how difficult difficult decisions are, the defence of Long Island by George Washington, weather forecasting and capturing Bin Laden. Here are the lessons:

Mapping

• Mapping is not the same as deciding. Mapping is the point in the decision process where divergence and diversity are key. The challenge of mapping is getting outside our intuitive sense of the situation in front of us. Part of the art of mapping a complex decision is creating a full-spectrum portrait of all the variables that might influence your choice. But part of that mapping process is also coming up with new choices. 
• There is wisdom in building an accurate mental map of the system you are trying to navigate, but there is also a crucial kind of wisdom in identifying the blank spots on the map, the places where you don’t have clarity, either because you don’t have the right set of stakeholders,

Narrowband

• Our minds naturally gravitate to narrowband interpretations, compressing the full spectrum down into one dominant slice. Cognitive scientists sometimes call this anchoring. 

Groups

• Well-functioning groups need to take advantage of cognitively peripheral people. The most important element is the diversity of perspectives you assemble. The very act of diversifying the group clearly improves its decision-making abilities. 
• The connection between diversity and improvements in the collective IQ of a group has been demonstrated by hundreds of experiments over the past few decades. 
• Diverse groups make smarter decisions.

Experts

• Introducing expert roles turns out to be a particularly effective technique in addressing the challenges of full-spectrum thinking because in many cases, the different bands or layers of the full-spectrum perspective correspond to different fields of expertise. 
• You can enhance the diversity of an existing group—without bringing in outsiders—simply by designating “expert roles” to each of the participants based on the knowledge they happen to bring to the discussion. 

Overconfidence

• Sometimes the easiest way to be wrong is to be certain you are right. There is the fatal disease of overconfidence that plagues so many complex decisions. 

Uncertainty

• Recognizing and separating these different forms of uncertainty is an essential step in building an accurate map of a hard choice. Because some element of the situation is fundamentally unknowable. Such as:
• measurement error
• systematic error
• natural variation
• inherent randomness
• model uncertainty
• subjective judgment
• linguistic uncertainty
• numerical vagueness
• nonnumerical vagueness,
• context-dependence
• ambiguity
• indeterminacy in theoretical terms
• underspecificity

Challenge 

• Search for contradictory evidence—evidence that might undermine the interpretation around which the group was slowly coalescing—turned out, in the end, to generate evidence that made that interpretation even stronger. Either way, the exercise forces you to see the situation with more clarity, to detect the whorls of the fingerprint with greater accuracy. 
• Challenging assumptions, seeking out contradictory evidence, ranking certainty levels—all these strategies serve the divergent stage of the decision process well, helping to expand the map, propose new explanations, and introduce new variables. 
• Amazon’s Jeff Bezos famously adheres to a “70% rule” in making decisions that involve uncertainty: instead of waiting for total confidence in a choice—a confidence that may never arrive, given the nature of bounded rationality—Bezos pulls the trigger on decisions once he has reduced his uncertainty level to 30%. 
• The military has a long history of deploying what conventionally are called red teams: a kind of systematic version of devil’s advocacy where a group inside the organisation is assigned the role of emulating an enemy’s behaviour are. You can think of a red team as a kind of hybrid of war games and scenario plans.
• The difference with strategies like premortems and red teams lies in the formal nature of the process: giving people a specific task and identity to role-play. It’s not enough to ask someone, “Can you think of any way this plan might fail?” Premortems and red teams force you to take on a new perspective or consider an alternate narrative, that might not easily come to mind in a few minutes of casual devil’s advocacy. 

Reduce options

• If you do find yourself stuck with a single path decision, Chip and Dan Heath suggest an intriguing—and somewhat counterintuitive—thought experiment to get outside that limited perspective: deliberately reduce your options. If your organisation seems to have settled into the comfortable assumption that Path A is the only route available to them, then imagine a world where Path A is roadblocked. 

Simulate

• Simulations make us better decision-makers because simulations make us better at predicting future events, even when the system we are trying to model contains thousands or millions of variables. 
• There does seem to be genuine merit in using games to trigger new ideas and explore the possibility space of a particularly challenging decision. 

Numbers

• You can apply moral algebra. Linear value modelling is employed widely in making astute planning decisions 

Storytelling

• Interestingly, one of the key tools we have had in training our minds to make this momentous choice has been storytelling—science fiction, to be precise, which turns out to play a role in some of our mass decisions equivalent to the role scenario planning plays in our group decisions. For at least a century, science fiction has served to anticipate the future.
• But almost every decision can be productively rehearsed with another, even more, ancient form of escapism: storytelling. Scenario planning is a narrative art, first and foremost. The three-part structure turns out to be a common refrain in scenario planning: you build one model where things get better, one where they get worse, and one where they get weird. Scenario planning is genuinely not intended to be consulted for an accurate forecast of future events. Instead, it primes you to resist the “fallacy of extrapolation.” It is, at heart, a kind of informed storytelling, and of course, storytelling is something we instinctively do anytime we are contemplating a big decision. 
• It is not an accident that so many of these tools and strategies that help us wrestle with complex decisions revolve around storytelling. Our appetite for fictional narrative is not just the result of cultural invention, but instead has deep roots in the evolutionary history of the human brain. 
• Stories exercise and rehearse that faculty for juggling different frames of truth, in part because they themselves occupy a complicated position on the map of truth and falsehood, and in part because stories often involve us observing other (fictional) beings going through their own juggling act. 
• Stories serve a function, not unlike the ensemble forecasts of modern meteorology. 
• By telling one another stories, we free ourselves from the bottleneck of an individual life. Stories mean we “are no longer limited by the slow and unreliable flow of actual experience. Instead, we can immerse ourselves in the comparatively rapid flow of vicarious, orchestrated, imagined, or fictional experience. 

Reading

• Psychologists and cognitive scientists refer to this ability to imagine the subjective life of other people as having a “theory of mind.” That empathy, that knack for peering into another person’s mind and imagining how some theoretical event might feel, is almost by definition one of the most important virtues in making complex decisions. This is the reason why reading novels turns out to enhance our decision-making skills. Many studies have confirmed that a lifelong habit of reading literary fiction correlates strongly with an enhanced theory of mind skills. But no form rivals the novel’s ability to project us into the interior landscape of other minds. 

The future of decision making

Perhaps it is time that we took some of the lessons we have learned from small-group decision-making and applied them to the realm of mass decisions. That is not as unlikely as it sounds. After all, the rise of the Internet has enabled us to reinvent the way we communicate multiple times in my lifetime alone: from email to blogs to Facebook status updates. Why shouldn’t we take this opportunity to reinvent our decision-making tools as well? 

Decision-making classes

How do you move more from system I thinking to system II thinking, or at least improve the quality of system II thinking? Decision making as a profession, maybe even something that should be taught at schools. The course itself would be a case study in the power of diverse perspectives. But beyond the multidisciplinary sweep, students would learn a series of techniques that they could then apply to their own lives and careers: how to build a full-spectrum map of a complex decision; how to design a scenario plan and a premortem; how to build a values model and Bad Events Table. They’d learn to seek out undiscovered options and to avoid the tendency to fall back into narrowband assessments.

The other case for bringing decision-making into the classroom is that it provides a valuable bridge between the sciences and the humanities. We have a few challenges ahead.