Graphic from Pixabay.
Do You Ever Think About How You Think?
I tend to believe strongly in the use of facts, analysis, and what behavioral economist, Daniel Kahneman, calls “thinking slow.” But I also can’t discount gut. My business partner, Timothy Gendreau, has terrific gut instincts. These, I believe, are the result of a combination of raw talent and years of experience. Fortunately, he also knows facts and analysis must bear out the validity of what his instincts are telling him, and that’s usually where I come in.
Before I go further, I would like to pose five questions to any reader of this article:
1. Do you make decisions based primarily on what your gut or instincts tell you?
2. Or do you make decisions based primarily on facts, data, and careful analysis?
3. Or have you developed an approach that respects the roles of both gut and analysis in decision making?
4. If both, is your decision making skewed more to one that the other approach?
5. What’s the system of values that guides your thinking and your emotional responses?
Most of us are familiar with Michael Lewis’s books (or at least the movies that are based on them). Moneyball extolled the virtues of using facts, data, and statistical analysis rather than just gut and instinct to build a winning baseball team.
And then there was The Big Short, which told the story of a physician cum hedge fund manager, who, as this WSJ review put it, got very rich by not giving into the prevailing herd mentality that housing prices would continue to rise and subprime mortgages would pay off in the end.
This week I started reading Michael Lewis’s newest book, The Undoing Project. I’m finding it a compelling exploration of the lives and work of Daniel Kahneman and Amos Tversky. As this New York Times review points out, “The research of Kahneman and Tversky has become some of the most influential social science of the past century.”
Unlike in, Moneyball, The Undoing Project doesn’t set out to praise the use of facts and analytics. Beginning in the very first chapter of the book, it raises very interesting questions about the appropriate selection and use of data, especially when trying to understand human behavior and reliably predict who will be successful and who will not.
After Moneyball, and certainly after the successes of Nate Silver (at least prior to our recent election), my perceptions of the value of using data and analysis got a huge boost. But The Undoing Project suggests we also have to be very cautious about our assumptions and about what we think we can learn from even very large masses of data.
People want certainty, and proper use of data and analytics can indeed help us reduce uncertainty. But the truth is, most of decisions we make inevitably involve some degree of uncertainty. And this is especially true for those of us responsible for mission crucial decisions.
So how do we humans deal with uncertainty? As Kahneman posits in his book, Thinking, Fast and Slow, we have evolved two modes of thinking: one is designed to enable us to respond quickly to our environment and those around us (for better or for worse, as it turns out), and one enables us to think critically and systematically about the world we live in. The problem: we don’t always use the two modes of thinking to our best advantage or benefit.
This raises some pretty thorny questions – especially for those who must make mission critical decisions – about how and when to use, leverage, and rely on facts and analysis, and when to trust instinct and gut over what we may be seeing in our analysis.
Certainly, there are times when we must act quickly for whatever reason and without benefit of sufficient facts. But more often, and especially in business, we need to be skeptical and employ deep, critical thinking by asking questions like,
“What could we be missing here? Do we have the right information? Are we looking at the facts correctly? Are we looking at the big picture? Are we adequately considering the long term, not just our short-term interests?”
The good news, I believe, is that many of us are trying to effectively make more use of facts and analysis to be able to think critically and understand the world more thoroughly.
The bad news: there are far too many of us who rely too heavily on impressions and gut without tempering what we feel or believe with sufficient critical thinking, and without questioning if or why our gut could be wrong.
Bottom line, every single one of us needs to think about how we think, what we value, and what drives our opinions and belief systems. And we need to mindfully and dispassionately do this when we interact with others. This is the only way we can make smarter decisions, find common ground with others, and hope to make our lives better and our businesses more successful.
Write and tell us what you think!
By Susan Wayo
The Gendreau Group