Thinking in Bets, Acting in Spades
How...cutting bias from your decision-making and reflection processes can supercharge your strategy and execution
Hi, I’m Crystal Yan. 👋 I’m a product and design leader and leadership coach. Here, I write about building products and teams. Every few weeks, I write about customer development, behavioral science, and management, and share resources to help you become a better leader.
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Thinking in Bets, Acting in Spades
When people asked me what I studied, some are surprised to find that my academic training is in behavioral economics. If you’re not familiar with behavioral economics, in a nutshell, it’s this: conventional economic theory assumes people are rational; meanwhile, behavioral economics assumes people behave irrationally when making decisions.
Though it took me years to find the connection, the curiosity that drew me to behavioral science is what drives a lot of my approaches to decision-making as a leader, whether those decisions are about solving problems for users or with the humans on the teams I lead.
I’m always trying to learn how to make better decisions, and recently, I read Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts by Annie Duke Strategies for Learning from Failure by Dr. Amy C. Edmondson, and “Your Ideas Are Not Your Identity”: Adam Grant on How to Get Better at Changing Your Mind (article) from BehavioralScientist.org.
Here are some useful lessons I took away, and how you can apply these learnings to how you make decisions and the actions you take:
1. Alternate Futures
"In most of our decisions, we’re not betting against another person. Rather, we’re betting against all the future versions of ourselves that we are not choosing.” - Annie Duke
Lesson: Most decisions are bets against ourselves.
Apply this: To make better decisions today, get comfortable with acknowledging the uncertainty and risk inherent in the decisions you make. List out unknowns, and communicate those during the decision-making process.
"Take a moment to imagine your best decision in the last year. Now take a moment to imagine your worst decision. I’m willing to bet that your best decision preceded a good result and the worst decision preceded a bad result” - Annie Duke
Lesson: Often, we equate good results with good decisions and bad results with bad decisions, but these are not always correlated. You could make a great decision given the information you knew at the time, but still get a bad result due to bad luck. This is also known as confirmation bias in the behavioral science world.
Apply this: To make better decisions in the future, practice separating the quality of your decision-making from the quality of your results. Take a moment to reflect and write down your best decision and worst decision last year, and interrogate why you selected those.
3. Not All Failures Are Created Equal
"Although an infinite number of things can go wrong in organizations, mistakes fall into three broad categories: preventable, complexity-related, and intelligent…Only leaders can create and reinforce a culture that counteracts the blame game and makes people feel both comfortable with and responsible for surfacing and learning from failures…The human tendency to hope for the best and try to avoid failure at all costs gets in the way, and organizational hierarchies exacerbate it…We throw good money after bad, praying that we’ll pull a rabbit out of a hat. Intuition may tell engineers or scientists that a project has fatal flaws, but the formal decision to call it a failure may be delayed for months. Again, the remedy—which does not necessarily involve much time and expense—is to reduce the stigma of failure." - Dr. Amy C. Edmondson
Lesson: When leaders fail to understand the types of mistakes that led to failure and jump to blame individuals, it creates a culture in which in the future, people never feel comfortable surfacing risks, which leads to more failure.
Apply this: To learn from failures more effectively, use a framework for categorizing reasons for failures. For example, list out three recent mistakes you’ve made and plot out where they fall on this spectrum of reasons for failure. Then, take a moment to brainstorm how to take action. Your action should be tailored to the type of reason. After doing this, create space for your team to reflect on failures and learnings from mistakes, and facilitate this exercise with your team.
4. Learn to Enjoy Being Wrong
"What I learned from that is if somebody sees an idea, or an opportunity, or forms an opinion that is different from mine, I shouldn’t default to the assumption that I’m right and they’re wrong. I should say, This is an interesting opportunity to learn something from someone who sees things differently from me, and I wonder if they know something I don’t…[Daniel Kahneman] said something to the effect of, No one enjoys being wrong, but I do enjoy having been wrong, because it means I am now less wrong than I was before.” - Adam Grant
Lesson: Being wrong means you’re learning.
Apply this: To learn from mistaken assumptions more effectively, practice reframing how you react to being wrong. Learn to untangle your ideas from your identity. To embed this thinking into an organization, practice red team analysis.
- Read Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts (book) by Annie Duke
- Read Strategies for Learning from Failure (article) by Dr. Amy C. Edmondson
- Read “Your Ideas Are Not Your Identity”: Adam Grant on How to Get Better at Changing Your Mind (article) from BehavioralScientist.org
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