15 decision-making tips from Nobel Prize winner Daniel Kahneman
Daniel Kahneman is an expert in human judgment and decision-making. He won the 2002 Nobel Prize for challenging the assumption of human rationality prevailing in modern economic theory.
I had the privilege of attending the World Business Forum by the World of Business Ideas in New York on Nov. 14, 2018 and would like to share 15 lessons that I have learned from Daniel on improving our decision choices as marketers and entrepreneurs. These are especially apt this planning season.
- Confidence is a very poor cue to accuracy.
- Intuition comes with much confidence.
- Trust intuition only in well-understood and very specific situations where one has practiced regularly with feedback if previous intuitions have been right or wrong.
- Delay intuition, as intuition becomes more accurate if information are organized.
- Algorithms are noise-free and have disciplined uniformity, so people should think like an algorithm.
- Evaluating options can improve decision-making.
- People take risks because they do not know the odds against them.
- Premortem can improve quality of decision-making by giving incentives for people to be pessimistic.
- Vote before a major discussion to ensure people come prepared for meetings.
- Happiness tends to yield a biased decision in favor of what is being proposed.
- Even the most optimistic plan fails. Paradoxically, extreme success is impossible without optimism.
- Pessimists should be treasured, not suppressed in organizations.
- Optimism is genetic, largely like intelligence.
- Good result can be because of luck, not good decision.
- Evaluate process, not result or outcome.
When people use judgment where financial risk is high, variance can be too wide. Both underestimation and exaggeration can be costly to the company. When planning, it is best to seek the perspective of another party where it can offer cases similar to your planned case to determine if there is reason to believe. —CONTRIBUTED
Josiah Go is chair and chief innovation strategist of Mansmith and Fielders Inc. The next World Business Forum in New York will be on Nov. 20-21, 2019.
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