When Bias Takes the Wheel, Watch Out

Bottom Line Up Front? Olivier Sibony is officially invited to join the Maestro team. That is how much value I found in his book. I don’t think I really have the authority to carte blanche invite someone to join the team, but I’ll deal with that later.

You’re About to Make a Terrible Mistake is, like many other books on the topic of bias, fascinating. What makes it special is that Sibony goes several steps beyond the explanation of biases to explain not only how organizations can make better decisions, but what specific strategies can be used.

If there are three things we love at Maestro, it’s process, immediately-usable strategies, and pillars. This book has all three. There is so much to this book, so instead of giving a detailed overview, I’ll give you a summary that will put the CliffsNotes writers to shame and then share some of my favorite nuggets of wisdom.

THE BARE BONES OF TERRIBLE MISTAKES

1. Biases do lead us astray, but it doesn’t happen randomly. It can be predicted.
2. As humans, we cannot overcome bias, and we probably don’t want to. Cognitive biases are side effects of the heuristics our brains have developed over millions of years of evolution. These heuristics have served us well. Plus, many of these biases are nearly impossible to escape as individuals. But not as organizations. Organizations that use collaboration and process can overcome bias traps.
3. Overcoming these biases as an organization isn’t just going to happen by chance. Processes need to be put in place that create and foster countermeasures to these bias traps.
4. There are a lot of bias traps—nine to be exact. Each one is created by a number of cognitive biases working together.
5. When decisions are made, there are “what” factors and “how” factors. “What” factors have to do with the analysis of the facts (think financial models and parameter analyses). “How” factors have to do with the process (think composition of decision-making team and discussion topics). “How” factors have been found to be much more consequential, but most companies focus on the “what.”
6. In order to make better decisions, decision architecture must be put in place. There are three main pillars to decision architecture—dialogue (talk about it openly), divergence (welcome or even force challenging opinions), and dynamics (foster an organizational culture that supports the other pillars).

This concludes what could probably serve as a book report if I were in the fifth grade. I said bare bones and I meant it. There is so much meat on the bones in the book for you to sink your teeth into if you choose to read it. I’m going to stop with the meat and bones analogy now because it’s starting to get gross.

NUGGETS OF WISDOM

Now for the mind-blowing takeaways! These were the ideas and facts that resonated with me. Surely others will have different takeaways, but I think these do a good job of illustrating the kind of “aha” moments this book can provide.

This Storytelling Thing Has Gotten Out of Hand
The first “trap” that Sibony writes about is the storytelling trap. To illustrate it he uses a story (meta, I know). A sales rep tells you he has recently lost two clients to your biggest competitor. He says it’s because the competitor sells their product at a lower price. Now you’re worried about this and considering changing your prices.

But let’s look at the facts. Your sales rep lost two clients. That’s it. Those are your only facts. It could have been due to price, or it could have been because your sales rep is lacking in skill, or it could have been due to luck. You don’t actually know, but the story has been told around price, which has now anchored you.

Then Sibony writes, “Even when we believe that we’re making a decision on the basis of facts alone, we are already telling ourselves a story. We cannot consider objective facts without finding, consciously or not, a story that makes sense of them.” (The emphasis here is my own.)

Think about that. Our brains aren’t computers. They don’t store data in a bubble (that’s how computers work, right?). Any fact you learn is immediately woven into the stories that you know. You can’t help it from happening. Your friend got bitten by a dog? It was probably her own dog. Chihuahuas are crazy. It was probably mad that she carries it around in that stupid little purse…See? Your brain can’t not tell a story. It is impossible.

A Lot to Learn from Crash and Burn
What do companies do when making strategic decisions? They look at what other companies did. What was Apple’s strategy? What about DoorDash? Sibony writes, “We shouldn’t draw conclusions from a sample that is composed only of survivors. Yet we do, because they are the only ones we see.”

We talk a lot at Maestro about learning from our own failures. We should also learn from the failure of others. Look at what to do and what not to do. Probably more important, which of a company’s strategies worked because it was a good strategy vs. worked because of luck?

These Four Questions
I mentioned earlier that many companies focus more on the “what” instead of the “how.” Interestingly, many companies do focus on the “how” for small things, but not the larger, more consequential ones. As Sibony writes, “Almost all companies have a procedure for buying office supplies, but very few have a formalized process for buying a company and merging with it!”

He goes on to say that, when measuring investment success across companies, answers to these four questions separate the best decisions from the worst ones. He quickly moves on to decision architecture, but I think these four questions are worth sharing because they allow you to go back and quickly assess some of the large decisions you’ve already made with a more critical eye. Here they are:

1. Did you have an explicit discussion about the risks and uncertainties?
2. Were points of view that contradicted those of senior leaders aired?
3. Did you deliberately seek out information that would contradict your investment thesis?
4. Were criteria for approval predefined and transparent to all?

The more you can honestly answer “yes” to these questions, the more likely you were able to protect yourself from bias traps.

Run a Premortem
This is one of my favorites of all of Sibony’s strategies he shares in the book. I like it not only for its brilliance but for the fact that anybody can do it regardless of budget and it takes advantage of biases in order to fight them.

It can be hard to voice an opposing opinion. Or you might argue that “we all agreed so how were we supposed to contradict each other?” The premortem solves these issues. The basic idea is that you pretend it’s five years after you made the decision (to buy the company, invest in new technology, etc.) and the project has failed miserably. Write down the reasons it was unsuccessful and make everyone participate.

Part of the genius of this strategy is that there is something called the hindsight bias that makes it easy to judge past decisions. Plus, we already know we’re great at storytelling. Conducting a premortem uses these biases to our benefit, forcing everyone to look at possible risks that they may not have considered previously.

Olivier Sibony’s book is a quick read, and it’s full of strategies you can apply right now to how your organization makes decisions. You probably don’t need to deploy a red team before purchasing your office supplies, but for consequential business decisions, this book can help save you from your disappointingly human self.

Contact us at mastery@maestrogroup.co to schedule workshops for your team or ask about our leadership development program.