Daniel Kahneman is something of a sage. He is a psychologist, yet he has won the Nobel Prize for Economics.
Why? Because he’s demonstrated through experiment and argument that humans are not entirely rational creatures. In fact, we’re often quite irrational, making decisions that aren’t in our best interest, acting on impulse and blinded by unseen bias, and taking actions that aren’t well evaluated.
When Legg Mason Chief Investment Strategist Michael J. Mauboussin asked Kahneman what was the one best way for him to improve his decision making. The psychologist’s reply was to buy a notebook.
This decision notebook, Mauboussin explained to the investment website Motley Fool has this purpose:
"Whenever you’re making a consequential decision...just take a moment to think, write down what you expect to happen, why you expect it to happen and then write down how you feel about the situation, both physically and even emotionally."
What do you get from such a pen and paper practice? This mapping out of your decisions, Mauboussin explains, is a way of alleviating the hampering effects of hindsight bias, the nearly universal tendency to view past events with a favorable tilt toward our noble selves.
Inspired by Kahneman and based on my own experience, in my new book Everything Connects, we outline three major themes on decision making. They attempt to connect the dots between our emotional self and systemic thinking.
We might have the right insight into a problem, but the wrong product acting as a solution.
Innovators and entrepreneurs solve problems, but to solve a problem, we need to be able to spot it; before we can supply a useful answer, we need to supply the right question. The dustbin of history is filled with organizations that were answering the wrong questions. So much of the work in any project involves asking the right question, which is a subtle sort of knowledge.
This is why we want to continually amass understanding: finding the questions the world needs answered is an emergent process, and so we need to be always exposing ourselves to the opportunity to recognize our gaps in knowledge. The right insight can be powerful.
The better we attend to the way we make decisions, the better we can understand what we misunderstood.
Whenever making a major decision, we need to sketch out the assets we need in order to execute. At a personal level, we’d do well to note our emotional state, too, since anger primes people to make aggressive decisions and fear prompts timid ones. Still, there is the question of what we don’t know and how to deal with that ignorance.
There are many possible practices to aid our ignorance. One of them is meditation, since it makes us more familiar with the movement of our minds; another is the bond of partnership, since close friends and colleagues can see things about us and the world that we would never see alone.
Another is to allow ourselves to have a continuous dialogue with our present and future selves. Yet another is to diagram a decision—which we call blueprinting. By noting our assets and our assumptions, we may grow more intimate, more nuanced, and more rigorous in our approach to making decisions.
When we make a decision, we tend to leave our understanding unexamined, whether as individuals or as organizations. Mapping them out lets us have a more granular understanding of how we work.
Ideas are the beginning of strategy. What are you to do once you’ve had an insight that could launch a company? We need to test that strategy, to bring that idea a little closer to reality. We can do that by examining the interdependent causes that will need to be brought together for an idea to find its home in the world.
By mapping our decision-making process, we can see what our assumptions are and where they might go wrong, and when they go wrong, we can find the incongruence between our perception of reality and the way it actually is. That mapping of the decision process is where we explore the art and craft of blueprinting.
This mapping of decisions is not entirely new in the business world. In literature and white papers you might find mentions of technology architecture, process architecture, and other decision-making taxonomies; though they are useful to a point, these things function as schematics of systems. It’s like knowing all about your digestive or endocrine systems, which is useful only if you have a problem or solution particular to those systems.
However, if you’re acting with your whole body—as organizations tend to do with big-time decisions—you need a map that takes into account not just one or two of your groups but all of them and the way they interrelate. This is the premise of the enterprise blueprint: to draw lines around and between the different factors that contribute (or don’t contribute) to the success of an idea as it moves into the world.
This is a diagram of an action and all of the moving parts.
When we’re mapping out our decisions, we need to think of the what involved that will get us to the value we’re trying to create.
Implicit within any decision is the question, What do we need to get this done? In other words, what core competencies do we need in order to execute?
Blueprinting is a sort of diagnostic of assumptions. We’re trying to measure the inputs we need to get the outcomes we want. And the more granular we can be with that description, the more easily we can see our inaccuracies and learn to spot them.
Adapted from Everything Connects: How To Transform And Lead In The Age Of Creativity, Innovation And Sustainability (McGraw Hill, 2014). Copyright (c) 2014 by Faisal Hoque. All rights reserved.
[Image: Flickr user kate hiscock]