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Decision Making: In making sense of complexity, have we become gutless?

The world has become more complex and what we thought were low probability/high impact events are happening more often, or are they?  Are we creating illusions for ourselves, creating hope that we are making sense of our complex world?  Are we getting better at decision making or are we still listening to our gut?

Twenty-five years ago, serving in the Royal Air Force (don’t ask – another life) I booked my first holiday as an adult.  I went to the local travel agent, looked through the brochures and read their ‘independent’ reviews of resorts and hotels.  I didn’t trust just one travel agent, oh no. I took the train to Swansea, about an hour and a half away, and went to every travel agent in the city.  I then compared reviews and made a decision as to what hotel was best for me.  To cut a long story short, the hotel was not what I expected and the girls in bikinis that were pictured around the pool turned out to be retirees who glared at any youths looking to enjoy ten days in the sun.  Fast forward to today.  The information available to me is vast.  I no longer trust travel agents.  No, now I gather information from my fellow travellers from all over the world.  Trip Advisor is my first port of call and I now have hours of tortuous ‘pleasure’, as myself and my wife weigh up our options and make a decision.  I think about cultural/age bias in the reviews, the experience of the reviewer, even reliability, based on other reviews of hotels that we have experience of and how our reviews compare against the ‘norm’.  The world is far more accessible, I have more data/information than ever from which to make sense of reality, but, ultimately I am relying on my gut instinct.

Does this experience differ that much in our professional lives and what are the implications?  My argument would be that it doesn’t. My other argument would be that we are creating illusions to reinforce our belief that we are controlling a complex and random world.

Cards on the table, I believe in Dave Sowden’s Probe-Sense-Respond approach to complex environments.  With this as a starting point, we surely have to recognise that the complexity of your world is increasing as we become more aware of it.  As we probe the environment we develop an awareness of connectedness, which itself distorts our decision-making process.  I have heard Dave speak on a number of occasions about low probability/high impact events occurring more frequently.  My question is, are they really?  Is the occurrence rate increasing or is our awareness of the environment improving?  There is a difference here and, either way, what it does tell us is that these are no longer low probability.  The nub of my argument is that as we, amplified by our social ties, probe the environment the density of hubs become more apparent.  Basically, more links surface around existing hubs and, as we follow the pathways of these emergent links, we become more aware of ‘new’ hubs.  These hubs have always been there, but we are strengthening the coupling between them and the more ‘mature’ hubs (in our thinking) through our probing of the environment.  This sounds great in a linear world, but the reality is that before we know it we find ourselves down a dark alley in a strange city, worrying about what we do next.

Much of this is being precipitated by the drive for resilience.  we are driven to search out patterns, changing thinking from a Gaussian to a Pareto based approach to strategy and risk.  The problem I have is that we seem to be missing something, in that as we become more aware of our environment the more likely low probability/high impact events become.  The other issue I have is that we seem to be creating patterns, illusions, in randomness.  My position is that we have become more aware of the preconditions in our environment that contribute to states of punctuation, or jumps in history.  However, where I have the problem is that we are no closer to understanding the proximate causality of these jumps, which I would argue is more random than complex.  Also, as we try to understand and control the preconditions we will naturally create alternate random events as a cause of our actions.  Your view, and consequently your decision making, also depends on the lens through which we decide to interpret the information.

The classic example is Gilovich’s study into the German V1 bombings of London. There was a belief that the V1 bombings were an attempt to target certain areas of London.  If you choose to observe the data in the way illustrated in the top picture, the hypothesis seems plausible.

However, view the same data through an alternate lens, the bottom picture, and the hypothesis is less plausible.  Then there’s another problem.  We can surface the data/information, but it doesn’t mean that it will elicit what we would consider to be an appropriate response.  Take 9-11.  Ask yourself whether you can see conditions where the event would not have occurred.  I would guess that you could; for example, a change in US foreign policy or better intelligence from which to consider the threat assessment.  Now consider that in 1994, “A Fed Ex employee tries to crash a DC-10 into a company building in Memphis but is overpowered by the crew. A lone pilot crashes a small plane onto the White House grounds.  An Air France flight is hijacked by terrorists linked to al Qaeda, with the goal to crash it into the Eiffel Tower, but French Special Forces storm plane before it takes off”.  The information was there to be considered and, according to some reports, was surfaced within the US government via the ‘Terror 2000’ report.  Many have considered that a simple reinforcement of the cockpit doors would have prevented the attack, which came into effect post 9-11.  I posit that this intervention, while changing the parameters of the preconditions, would not have negated an event of similar nature because it would not have dealt with the proximate cause.  We like the belief that comes from hindsight and the reassurance that we could have controlled our environment, if only we had been more aware.

The repercussions are profound.  I argue that often we seek patterns where there are none and punctuated change comes from randomness – we cannot control it. We cannot remove human agency from the system or the decision making process and therefore we want to believe that we control our environment, but we don’t.  We probe the environment more often and to a greater depth.  We gain a greater awareness of preconditions and with that awareness comes a belief in outcomes based on availability.  Availability increases the sense of risk.  Risk in the complex domain, which often lacks recognisable patterns, which can cause uncertainty, influences emotion in people.  People take whats available and make a decision that they believe to be rationale, while failing to realise that their emotions have brought about a shift, in qualitative terms, known as the possibility effect, that has transitioned their decision making process to a space where ‘gut’ instinct or zero validity expertise takes over.  There aren’t any patterns for us to recognise and so we make ourselves believe that they exist, we create illusions.

In this space, are we relying on our gut.

Taking myself back to the first holiday I ever booked, I find myself asking, has anything really changed?

2 comments on “Decision Making: In making sense of complexity, have we become gutless?

  1. David, I’m so glad you posted this. I often find myself pondering the very same questions. I find myself labouring within the confines of self imposed boundaries that keep locked into a pattern of thoughts of actions that I’ve validated. This, you have reminded me, is an illusion and the comforts of this protected, patterned zone are, in fact, trappings that provide a barrier to innovation in my own learning and work.

    Too often, we think we have a high level of control over situations and refuse to recognize it as illusion. I suppose this is a means by which we build our comfort zones and it is not until we read a post like this that we realize the constructs on that zone are flimsy and easily blown over. They are strong in our own mind’s eye, but act as a barrier. The other side of that barrier is where we need to be.

    Thank you for reminding me to dabble in the zones of less comfort, give up my illusions, and truly forge ahead in my learning and work. Let’s revel in the comfortless and pattern free zones. This, in my opinion, is the realm where true innovation is found. It is the realm where “punctuated change comes from randomness.”

  2. Pingback: Black swans, fat tails and risk – So what? | Theknowledgecore's Blog

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This entry was posted on July 16, 2012 by in Complexity, Decision making and tagged , , , , , .
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