Decision Making In The Real World

Phil Rosenzweig is a contrarian. You can tell he enjoys disagreeing with people. The Halo Effect was a great read that targeted strategy researchers. His new book , Left Brain, Right Stuff, is an attack on decision research. It has many good points and is worth a read. That said in a spirit I’d imagine Rosenzweig wold appreciate I feel compelled to critique a little. Therefore I’m going to break my comments into two. Today is my day for positivity. Next week, I’ll be negative.

Rosenzweig considers both academic research and how managers actually decide. This allows him to make a number of pertinent critiques of academic research. Decision making, as studied in the lab, deliberately tries to isolate specific effects. Thus academics search for single shot decisions that the person doing the experiment cannot influence, for example the roll of a die. When we see evidence that people think they can influence the die we know they are wrong. We conclude people think they can control things  when they aren’t. The participants can only be right which leads to no paper, or wrong which an lead to a published paper. Academics like finding the later.

In the real world however managers often influence outcomes and can learn from feedback. Perhaps a small investment will allow you to learn so why not dip your toe in the water? Furthermore massive strategic decisions are often very different to lab decisions. Such decisions are often hard to asses even well after the decision. This which makes it hard for anyone, ressearcher or decision maker, to know if they choose well.

Rosenzweig concludes by giving a number of questions we can ask ourselves. I don’t think all are helpful but some make a lot of sense. For example, “Are we making a decision about something we can control..?” (Rosenzweig, 2014, page 248). If conditions not typically found in lab experiments don’t apply be careful about too simplistically applying the results to the real world.

Read: Phil Rosenzweig (2014), Left Brain, Right Stuff: How Leaders Make Winning Decisions, Public Affairs.