Have you ever wondered about your decision making process?
Our decision making process is not as objective as we think it is.
The year is 2007. The first-ever T20 world cup final is on between India and Pakistan. We see a keenly fought match go into the last over with Pakistan needing 13 runs and India needing one wicket to win. Dhoni, the young “Captain Cool,” tosses the ball to Joginder Sharma instead of the experienced Harbajan Singh. Misbah strikes a massive six off the second ball to swing the game Pakistan’s way. And then he does something uncharacteristic – he tries to scoop the next ball behind him for four but is caught by Sreesanth. India has won, and Dhoni is a hero. And we have a moment that every Indian fan will remember for a long, long time.
And yet every time, I see the video – one question nags at me. Dhoni displayed audacious captaincy for sure. But how would we have treated Dhoni if Misbah had connected that shot and Pakistan had gone on to win the game?
Now, close your eyes for a moment. Think about the very best decision you have taken in your life. Relive that moment. Now open your eyes and consider – your best decision was one which resulted in success, right?
We tend to equate the quality of a decision with the quality of its outcome. Poker players have a word for this: “resulting.”Duke, Annie. Thinking in Bets. Penguin Publishing Group. Kindle Edition
We always tie decision making process quality to the outcome.
Indeed, this is one of the reasons why Fake news works.
Fake news isn’t meant to change minds. As we know, beliefs are hard to change. The potency of fake news is that it entrenches beliefs its intended audience already has, and then amplifies them.Duke, Annie. Thinking in Bets. Penguin Publishing Group. Kindle Edition
How about luck?
Results occur not just because of skill but also because of luck. However, humans have a “Self-serving” bias.
We take credit for the good stuff and blame the bad stuff on luck so that it won’t be our fault. The result is that we don’t learn from experience well. “Self-serving bias” is the term for this pattern of fielding outcomes.Duke, Annie. Thinking in Bets. Penguin Publishing Group. Kindle Edition
Being successful requires us to make better decisions. And making good decisions means minimizing resulting and self-serving bias. How do we do this?
Annie Duke presents some beautiful insights and techniques to help us become better decision-makers. But before we get there, we should realize that life is not like Chess; it’s more like Poker. In Chess, the rules are clear, and the moves are transparent on the board. Skill plays a massive part in who wins. In Poker, on the other hand, people may bluff, you may get the wrong cards, you may win due to luck too. As in life, there are way too many complexities involved.
So as a leader who has to make good decisions consistently, we need to minimize and focus on the quality of our choices instead. How do we do this?
Here are her prescriptions:
Become better at differentiating skill from luck.
How do we do this? The challenge is that our decisions are very personal to us – so before we know it, the “self-serving-boas” hits us. Her masterstroke is to reimagine the decision as a “bet.” Bets are less personal, and we can look at them more objectively. Moving to “Bets” is not easy but can be life-transforming.
Rate the skill quotient in the decision
Asked which of our decisions are the best, chances are we will revert to “resulting” – calling out the ones which provided us the most outstanding outcomes. But we realize that significant decisions don’t have to result in the best outcomes; there’s luck involved too. So Annie’s suggestion is to put a number against each decision showing our reading of the quality. Note that this is subjective, but over time, we can iterate, helping us make better decisions.
Have a decision making process “checklist”
Have a checklist handy that will help us see the world from alternate views. Let’s say my opponent wins. I am likely to attribute that to luck. If I win, I’ll attribute that to my skills. We use the checklists to invert points of view. So when I win, I ask myself, “how would I feel about this if the other guy had won.” This question will build both humility and an ability to differentiate luck and skill over time.
Factor in an Accountability group to keep your decision making process honest
Having an accountability group that does not allow us to play our victim cards (oh, how bad my luck was!) – but focus on the quality of decisions and how we are improving them. And the more diverse this team is, the better.
Keenly watch out for “hindsight” bias. Past events will always look less random than they were (it is called the hindsight bias).Fooled by Randomness, Penguin Books Ltd. Kindle Edition.
Annie Duke refers to this as a significant challenge in our decision-making. her solution is for us to “mentally time travel.” When we look at a decision, we move backward in time and forward in time (the data that will be available will be different in each case), which helps us bring better context to the decision itself.
How we form beliefs – it’s not how you think!
This is how we think we form abstract beliefs:
We hear something;
We think about it and vet it, determining whether it is true or false;
only after that We form our belief.
It turns out, though, that we actually form abstract beliefs this way:
We hear something;
We believe it to be true;
Only sometimes, later, if we have the time or the inclination, we think about it and vet it, determining whether it is, in fact, true or false.Duke, Annie. Thinking in Bets. Penguin Publishing Group. Kindle Edition.
So taking the time to look at our assumptions and beliefs (Even those we take for granted as valid) is one key ingredient for better decision making.
Here’s a comprehensive checklist she provides that can help:
How do I know this?
Where did I get this information?
Who did I get it from?
What is the quality of my sources?
How much do I trust them?
How up to date is my information?
How much information do I have that is relevant to the belief?
What other things like this have I been confident about that turned out not to be true?
What are the other plausible alternatives?
What do I know about the person challenging my belief?
What is their view of how credible my opinion is?
What do they know that I don’t know?
What is their level of expertise?
What am I missing?Duke, Annie. Thinking in Bets. Penguin Publishing Group. Kindle Edition
Smart need not mean immune to belief bias!
Surprisingly, being smart can make bias worse.
It turns out the better you are with numbers, the better you are at spinning those numbers to conform to and support your beliefs.Duke, Annie. Thinking in Bets. Penguin Publishing Group. Kindle Edition
Annie points to some studies where the more brilliant a person is, the more likely they are to have these beliefs and biases that cloud their decision-making. So rather than just IQ, deliberate practice is required for better decision-making.
Ultimately, Annie’s book helps us become better decision-makers:
The life skill comes from learning to be a better belief calibrator, using experience and information to more objectively update our beliefs to more accurately represent the world.Duke, Annie. Thinking in Bets. Penguin Publishing Group. Kindle Edition