Theknowledgecore's Blog

Complexity and Knowledge Management Navigators…

How to predict success

Often we are asked to guide an organisation towards the ‘right’ decision, or, putting it simply, to predict success.

So what is the secret to this prediction?  All too often, it is just down to common sense…

For the organisation, faced with an informed evidence-based choice, it comes down to having to make a critical decision in an unfamiliar environment.  In this type of domain invalid intuition can take over and this is where it gets dangerous; intuition can have limited validity, if any at all, in domains where the decision-makers rely on ‘gut instinct’, which can happen in complex environments or when they lack familiarity with the decision domain; those familiar with ‘pink and fluffy’ concepts, such as Knowledge Management, might find this all too familiar.

Kahneman, in his book ‘Thinking, fast and slow’, explains this phenomenon by differentiating between skilled intuition and the ‘illusion of validity’; cutting to the chase, skilled intuition, which is valuable to the decision-making process, can only be trusted when two criteria are fulfilled; if these criteria are not met then the decision maker is merely creating the illusion of skilled judgement:

“1.  [The decision] exists in an environment that is sufficiently regular to be predictable; 2. [The decision maker(s) has/have had] an opportunity to learn these regularities through prolonged practice” (p. 311 – electronic version)

Kahneman then sums up the problem faced by critical decision makers:

“Intuition cannot be trusted in the absence of stable regularities in the environment”

This illusion of validity tends to emerge when decision makers are put in positions where the environment lacks familiar cues, leaving them without experiences, or previous patterns, to draw upon.  Lacking familiarity they fail to trust the evidence, falling back onto something familiar, something deep inside, something in their gut, something that tells them that a decision is the right one.  This is where the decision maker can tend to create the illusion of familiarity; believing that their expert judgement, their ability to understand and control a strange and complex environment, will lead them to the make the ‘right’ decision.  If the decision works out, it was based on expert judgement, if not, then it was down to something outside their control (see explanatory attribution theory).

The problem is that decision-makers, ignoring data, overconfident in their ability to understand complex domains, in which they have little or no experience, having no pattern recognition programme to draw upon, are taking chances; trusting an internal bias for which they have no understanding, rolling the dice and taking a decision based on intuition with zero validity – an outcome based on luck.

So, what can be done? Would you buy into the concept of common-sense? Would you believe that one of the most valuable predictors of success can exist in a simple equally weighted formula?  For example, based on the work of Robyn Dawes ‘The robust beauty of improper linear models in decision making’, will a proposed new community of practice work?  The answer can be predicted by a simple equally weighted formula or, common sense:

The number of people willing to engage in the community – The number of people not willing to engage in the community = success or failure (a minus number predicts failure, a positive number, success)

Can it really be this simple?

Simply, yes; the Dawes approach has been proven to outperform expert judgement and match or outperform complicated decision making algorithms.

The question is whether decision-makers can forgo their inherent bias, forget their gut, and trust the formula…can they overcome the temptation to skew the results to satisfy a particular judgement bias?  Can they learn to trust good old fashioned common sense?

So, what do you think?

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: