Decision Making: Risk vs Uncertainty

The trouble with decision making (DM) as a topic is its complex character which is doesn’t lend itself well to unpack it in a linear mode. So I won’t, and even won’t follow the (seemingly linear) steps laid down as a baseline in one of the first blogs but coming back to them later. For as soon as we want to dive further into our process, we have to determine first which domain we are finding ourselves in. An ordered domain or a complex one?

To begin with, most people seem to conflate #risk with #uncertainty. Risk is mapped to the ordered/complicated domain and can be calculated. Whether that is the probability of winning or losing at the casino, or the risks of flying an airplane under normal conditions. With uncertainty, all bets are off. The outcome cannot be known or calculated. Both conditions require very different approaches to decision making. The best decision under risk is not the best decision under uncertainty.

Interesting added dimension: DM researcher @Gerd Gigerenzer states that with high uncertainty, meaning: unstable conditions, only a few data available but many variables, experienced experts do better relying on their (trained!) #intuition or simple #heuristics rather than trusting complicated algorithms and calculation models as DM support. Novices should instead train their intuition first before relying on it. And for anything that can be calculated (risk), algorithms can help. Most DM researchers argue for a good mix of the use of intuition and formal decision making support.

Both domains, risk and uncertainty harbour more layers of difficulties for decision making. Gigerenzer states that most people don’t have a natural understanding of probabilities expressed in percentages. His research shows for example, that a shockingly high number of medical doctors don’t understand their own statistical data in test results or risks. As a most infamous example he mentions a UK press conference about pharmaceutical drug safety where an announcement scared tens of thousands of women into ceasing to take the new generation anti baby pill: They stated a thrombosis risk of 100% (!) against the first generation pills. But 100% of what? The real (relative) data that wasn’t released at first stated that of every 7000 women, the first-generation pill showed 1 case of thrombosis, the 3rd generation showed 2 women out of 7000 with thrombosis. From 1 to 2 an increase of 100%; correct and misleading.

Another trap is lurking for intuitive decision makers. Usually they can’t explain their intuitions and hunches, as tacit knowledge can’t really be explained. In some areas where mistakes tend to be punished (hospitals) rather than being used to learn (aviation), most often this leads to defensive decision making. Experts tend to go against their better judgement (intuition) and choose or recommend inferior solutions that won’t get them either fired or sued. According to Gigerenzer, far over 90% of medical doctors in the USA prescribe medicines for protective reasons not for clinical reasons. Protection against the patient. With detrimental consequences for the whole industry and the people in it (#fagilistas). 

Sources:
Gerd Gigerenzer (2014):“Risk Savvy: How to Make Good Decisions”. Penguin Books ; Gerd Gigerenzer (2008):“Gut Feelings: the Intelligence of the Unconscious”, Penguin Books

Photo by Carl Raw on Unsplash

#Decison Making: #Framing

In the last blog I ended with establishing a baseline around decision making, drawing on the Lectical Decision Making Assessment (LDMA) and Russo & Schoemaker (“Winning Decisions”):

1. Framing: the general goal of the decision maker including the way they think about the knowledge upon which they base their decision
2. A realistic approach to gathering intelligence
3. Coming to Conclusions: organising and analysing the information and a way to coordinate different perspectives (weighing)
4. An approach to communicating and implementing the decision made
5. Learning from Experience, including a way to measure the decision’s effectiveness so adjustments can be made

It seems that already the first step, Framing, is much undervalued, or even overlooked. The way we frame a problem exerts enormous control over the options we recognize, the data we collect and the solutions we choose.

Poor framing can lead people to sensible-sounding but fundamentally limited views of the world to structure their decision making process. According to Russo & Schoemaker (“Winning Decisions”), we experience frames when we meet people who just seem to immediately understand us. Or in the frustration of trying to talk with others who just don’t seem to get it, no matter how much we try to explain. Cognitive scientist call these different ways of looking at the workd “frames”. They are mental structures that simplify and guide our understanding of a complex reality. Everyone must inevitable adopt some kind of simplifying perspective.

Photo by Alex Ivashenko on Unsplash

But frames themselves don’t just limit our view, they are hard to see and change. If we are too close to your frame, we tend not to see it. Many inexperienced decision makers tend to think that their perspective is all there is.

Through what frame do you view your business? Do you have a relational frame, a transactional one? Is an organisation a legal entity? A set of relationships? A network? A family? Against what frame do you measure your wins and performance? What other metaphors do you use to decribe your business?

The fun thing: we can see that each frame or metaphor has its limits and boundaries, that includes certain aspects and leaves others out. We can start playing around, and reframe.

Photo by meriç tuna on Unsplash

What changes if you change your frame? We are looking at the moment to replace our car. We are playing now to get rid of the frame of ownership which is a hard one to go. With renting, there are whole range of new solutions out there for our decision making process, including options with new technologies, low consumption that were previously out of our reach from the ownership frame.

Russo & Schoemakers advice us to become aware of the frames we use and compare ours to other peoples’ frames. The recommend running a “frame audit” to become aware of our implicit assumptions about our industry, our business, our profession. To define the boundaries and explore the highlights and shadows. To listen to norms, rituals, metophors we and others use and start playing around with them to see what perspectives can shift with different frames.

Some of these reframings are so powerful, that they can actually resolve the problem in the first place. That is some kind of mastery…..

Reference: Russo, J. E. & Schoemaker, P.J.H. (2002): Winning Decisions: Getting it right the first time.

Black Box: How do we make decisions?

With the amount of decisions that we make every day, it is astonishing that the process of making decisions is not well understood. So how do we make the best choice?

The very act of deciding seems a bit like the proverbial piece of soap in the bathtub: the more you want to get a grip on it the more it slips away. Much is written today about VUCA conditions, and decision making in complex adaptive spaces with highly uncertain outcomes, volatile ingredients and complex relationships are a different animal all together to deal with. We run an Adaptive Leadership training some time ago with top level leaders from the wider UNO network. We wanted to test if their complexity of thinking was matching the complexity of their jobs and run a Decision Making Assessment (LDMA; from Lectica). These leaders were presented with an ill-structured dilemma (no right or wrong solution) to which they had to come up with ways of responding and deciding and their reasoning. When asked about to portrait decision making process in a way that it could be followed or repeated by others, much to our surprise most came up with a list of action rather than some decision making process. That made us even more curious. We ventured more into this terrain.

The weird thing is that even in ‘normal’ conditions people are not aware of how they make choices. Some people pose their questions attentively, gather relevant information superbly and then “wing” it with the actual act of deciding. And then come up with a perfect explanation in hindsight.

So, starting to establish a baseline around decision making, let’s consider basic steps, drawing on the Lectical Decision Making Assessment and Russo & Schoemaker (Winning Decisions):

1. Framing: the general goal of the decision maker including the way they think about the knowledge upon which they base their decision
2. A realistic approach to gathering intelligence
3. Coming to Conclusions: organising and analysing the information and a way to coordinate different perspectives (weighing)
4. An approach to communicating and implementing the decision made
5. Learning from Experience, including a way to measure the decision’s effectiveness so adjustments can be made

In the next blog snippet, I will elaborate a bit more on the single steps, each provides rich ground for further exploration.

Outlook: In some next blogs I intend to bring in more and more layers of decision making, exploring input from different topics, authors, influenzers  and frameworks: Dave Snowden, Gary Klein, Bonnitta Roy, Gerd Gigerenzer, Andy Clarke; Lectica.org; concepts/models/ methods: Framing, Cognitive Biases; Intuition; Sensemaking; Cynefin Framework, OODA Loop, Risk vs. Uncertainty, Heuristics, Constraints, Learning, Failure, Innovation, Theory of Change

Decision-making is a black box

It’s amazing how many people don’t know how to make decisions, which is curious if we think of how many decisions, we are making every day in our private and our business life. Decision making is for most people a process of “guessing” or “betting” on an outcome, starting from what to eat in a restaurant to choosing a job or a life partner. A coherent decision-making process is mostly lacking and is often replaced by a story that provides sense in hindsight, meaning: people make up a story afterwards that seems to come up with a process, explaining to others – and themselves- how they decided afterwards. They think they have decided in a coherent way. This phenomenon is called “retrospective coherence”. Fun fact: that story depends a lot on the outcome of the decision: if a decision leads to success (the right ‘bet’) it tends to draw a completely different retrospective story than an outcome considered a failure. I will continue this exploration into decision making; drawing on different authors and frameworks for the, looking forward to shedding some light into the DMP-black box.

Don’t believe everything you think

Deconstructing Transformative Processes for Individuals

Once in a while people want to change something personal, learn more, grow or reinvent themselves on a different level. Here, I want to take a closer look at those change processes where simple, technical solutions don’t work keep producing limited outcome. If the solution is not ready at hand or fails repeatedly the challenge requires most often an adaptive solution. Resistances and pushbacks that are arising make it difficult to get to the root causes of unwanted behaviour or undesired personal realities. This is where it gets interesting.

At the bottom of these phenomena are patterns with a combination of properties that are

• difficult to detect (fast, automatic, hidden, with defraction),
• difficult to understand (non-logic, pre- or non-conceptual origin, based on incorrect ‘meaning-coupling’), and
• actively protected with what can be described as an immune reaction against the intended change (“immunity to change”): the wrong meaning-coupling or ‘mapping error’ is considered or perceived of existential importance for some sort of survival– hence resistances and pushback are getting more intense the closer the individual gets to the source of the unwanted behaviour (see graphic)

However, with the right understanding of the nature of these processes, a willingness to explore and stay in the process despite of discomfort and resistances, and with the adequate tools and guidance, transformative change is not only possible, but can take days instead of lifetimes, hours instead of years. We are talking legitimate shortcuts. 

In case you are dealing with personal challenges that are automatic, lightening fast, go unobserved, are hidden from your own logic and seem somehow protected, have a closer look at the course we are offering through EZC.Partners in July in Germany.

For more information click on EZC.Partners website.

Driving development vs scaling change

Group transformation processes, much like individual transformative processes, follow different phase with distinctly recognizable stages. According to these patterns, a skilled coach/facilitator can keep the individual or the group in the process. The main task is to counteract the conscious or unconscious attempts to escape or to sabotage the process because of phenomena that are considered uncomfortable, irritating or even painful (e.g. Scott M. Peck’s “Groan Zone/Authentic Chaos”/ R. Kegan’s “Immunity to Change”).   

Individual processes can take the form of individual coaching, intensive retreats in self-leadership with awareness based technologies. They are geared towards reintegrating disassociated parts of the self-system or the dis-identification with mapping errors in the meaning making system of the individual.Group processes can have different intentions that go from more coherence in teams, integrating pathologies, towards more authentic participation, innovation and other emergent properties. Most of the time they are not automatic and require facilitated and committed process work with the respective team or group. In an ideal case, group facilitation requires only those minimum elegant structures that keep the group in process while resisting the temptation to go with any of the easy solutions that inevitably pop up along the way, while constantly scanning the quality of presence that is arising in the group and mirror that back. This would ideally also require a kind of ‘process literacy’ of the participants; the ability to distinguish between the self and the (power) moves of identity. The phases and stages of these processes along with the phenomena normally showing up are pictured above. For further reading on the dynamics of group processes see Bonnitta Roy’s article in Kosmos Magazine or this chapter published on group processes. The process traps and the tools and method to counteract escape mechanisms are pictured in Slides below. Please note that the representation with the U-Figure is oversimplified, these processes are non-linear and can’t be followed as a recipe (e.g. “step 5: find deeper meaning and purpose”.) Each phase is emergent from the prior one and can’t be planned, forced, constructed, or jumped. The figure U makes only sense as a coherent view in hindsight and thus differs from the majority of Theory U applications.

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While both individual and group/team processes require time, place, effort, training, personal commitment, nurture, practice and guidance, they have a place in adult – , leadership – and team development as well as innovation training, but not for scaling and shifting larger collectives or organisations. Pictures 4 and 5 show  how working with large scale differs in its approach. Complexity thinking and cognitive science deliver the design principles for sensemaking approaches (see Prof. D. Snowden’s work/Cognitive Edge). Here, we work with triggering people into paying attention (cognitive activation) while they volunteer to deliver real, self-signified, and real time data about what is actually happening as opposed to what should be happening. The shift of the whole collective (change) is an effect of the sum total of all micro-shifts of everyday behaviours and attitudes in a more generative direction, toward an ‘adjacent possible’.

Team training, group processes and leadership development as well as internal capacity building might still be desirable in specific instances to complement this process. However, the beauty of this approach to change is at least twofold:

a) with this approach no one has to go a developmental growth process and are allowed to be who they are and have the values they have, while at the same time shifts and change are possible, and they can chose how. 
Thus, sensemaking is complementing adult development while counteracting the developmental bias seen in many (integral) change initiatives, where larger scale change is seen almost exclusively through the lens of growth to higher levels of consciousness as the only way to solve complex problems. This attitude has a built-in arrogance that, sure enough, creates pushback and resistance to change.

b) it scales, with immediate impact, in real time. This is exactly what we need.

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This blog was previously published here.

Company Values

 

Companies have become aware of the fact that core values – integrity, trust, fairness – can function as attractors that drive beneficial behaviours in the workplace. What they are not getting is that core values just can´t be prescribed, top down or in any other direction.

While many companies large and small have come to the laudable conclusion to focus their organizational development efforts on values rather than behaviours, most go about this strategy in a wrong way.  When values are defined upfront without letting them emerge through a process and paying attention to which values are currently operative, people tend to game the system and display what HR and HQ want to hear. Dave Snowden puts it this way: “As soon as you write your values down, you´ve lost them”.

Even if you work with more sophisticated approaches that try and distinguish between actual and desired values in the organisation, the methods used to survey those values most often distort the results. Questionnaires and 360s are gamed easily and you know where to put your x-es in your sleep. Experts are biased with unconscious hypothesis while surveying and indexing the data.

Leading change: First in the subtle, then in the world.

If you want to lead change – personal, organizational or societal – you have to intimately know how change works. This includes experiential clarity in knowing how to overcome – and help overcome – resistance towards change. It also includes knowing the ever so subtle, almost unnoticeable shifts in your own inner experience when facing a challenge to change a personal reality in the face of a conscious or unconscious resistance. This is especially true if the change you want to induce is not just incremental change, i.e. getting better at something, but a real transformational shift, or even a paradigm shift, personal or otherwise.

This is what Bill O’Brien or Otto Scharmer talk about, when they tell us how much the `inner place of an intervener´ matters to the success of an intervention.

Leading self comes before leading others. Let us illuminate that ‘blind spot of leadership’ and take a closer look at what happens in our own spaces first. How do you deal with your own personal change? How do you overcome your own resistances when they are well hidden from your own insight and logic? How much do you know your own inner quiet place where you examine your own assumptions, what you are unconsciously knowing (e.g. “I am not good enough”) and can you unlearn what you know? What you are ignoring (“I can’t bear feeling that”)?  Are you aware of what it is you are secretly protecting?  What encountered knowns and unknowns do you leave unexamined? With which consequences?

The answer to these questions lead to the areas, where leaders of change need to develop a kind of mastery that is similar to that of martial arts: In dealing with the inconspicuous, lightning fast impulses, and in handling most uncomfortable pushback, shadow impulses and resistance.

We tend to think that facing change and leading change are about the bold moves, that paradigm shifts are spectacular, that holding unknowns or paradoxes is something very noticeable and in your face. This is not the case –  the trick lies in the subtle, in the almost undetectable vibrational shifts and minute impulses that are going on in the background of your own mind, without you noticing them consciously.