Currently Rereading Think Twice By Michael J. Mauboussin

Think Twice: Harnessing the Power of Counterintuition by Michael J. Mauboussin is a short book consisting of only 143 pages but with a tremendous note section as well as a very comprehensive bibliography. Some of my takeaways I wanted to share with our readers:

416ZsptOLEL.jpg (333×500)

From page 3 about making decisions using the inside view:

“An inside view considers a problem by focusing on the specific task and by using information that is close at hand, and makes predictions based on that narrow and unique set of inputs.”

From page 4 about making decisions using the outside view:

“The outside view asks if there are similar situations that can provide a statistical basis for making a decision. Rather than seeing a problem as unique, the outside view wants to know if others have faced comparable problems and, if so, what happened. the outside view is a unnatural way to think, precisely because it forces people to set aside all the cherished information they have gathered.”

Also on page 4:

“Why do people tend to embrace the inside view?”

There are three illusions that people take to support the use of the inside view:

(1) The illusion of superiority

From page 5:

“Remarkably, the least capable people often have the largest gaps between what they think they can do and what they actually achieve.”

From page 6

(2) The illusion of optimism

“Most people see their future as brighter than that of others.”

And finally:

(3) There is the illusion of control.

“People who believe that they have some control have the perception that their odds of success are better that they actually are.”

I really believe there are some lessons to be learned here about the inside view and outside view in our decision-making process. Please consider these and most of all use them.

More On Tunnel Vision Part 5

From Think Twice by Michael J. Mauboussin

(4) Avoid making decisions while at emotional extremes.

Decision making is difficult enough when you are under ideal conditions but very difficult when your are having emotional issues such as stress, anger, fear, anxiety, greed and euphoria. Antonio Damasio, a neuroscientist, suggests that “our reason can operate most efficiently” when we have some emotional poise. We need some emotion in order to make good decisions. If you are not feeling at your emotional peak, consider postponing important decisions.

(5) Understand incentives.

Incentives are easily seen if they are financial but others such as reputation or fairness are more difficult to spot. The evidence shows that incentives distort our decisions through our subconscious.

We, as humans, do not consider enough alternatives when making decisions. When the stakes are extremely high, ask yourself if you are susceptible to tunnel vision.

More On Tunnel Vision Part 4

From Think Twice by Michael J. Mauboussin

(3) Keep track of previous decisions

Hindsight bias is something all individuals need to be aware of because we have the belief that we know more about an outcome beforehand than we really did. As Soren Kerkegaard, the Danish Philosopher said, “Life must be understood backwards… But it must be lived –forwards.”

According to Mauboussin, we fail to consider enough alternatives looking forward and think we knew what was going on looking backward.

How do we solve this? Write down the rationale behind decisions and revist past decisions. Keep a decision-making journal to help give you a better view of your possibilities.

When we have votes on the county commission hindsight bias plays a large part in hindering decision-making because I tend to think what worked in the past will work in the future and I struggle with all the future outcomes.

More On Tunnel Vision Part 3

Abraham Lincoln

Abraham Lincoln (Photo credit: casually_cruel)

From Think Twice by Michael J. Mauboussin

(2) Seek Dissent

How is the best way to handle this? According to Mauboussin, the idea is to prove your views wrong.  First, learn to ask questions that would give you an counterpoint of view that would challenge your own views. My father-in-law taught me to watch political programming that is contradictory to my views so that I could understand the opposite point of view. Make sure you listen carefully and do the same when you are looking at data. This allows you to be more consistent in your views.

One of the most difficult things to do is to surround yourself with people with a totally different viewpoint. This allows you to explore alternatives and helps avoid group think. Mauboussin uses the example of Abraham Lincoln as a great example of using this when he became president.

As a county commissioner, seeking dissent is a very difficult thing. Our county has twenty five commissioners and every one has their own opinion. To wade through this is somewhat time consuming but is necessary in understanding each one’s point of view.