Still working hard through Kahneman’s Thinking, Fast and Slow. I’m enjoying all the revelations about the way we think as humans. Most of all I’m excited about solving a puzzle that I challenged myself to a few years ago: Why do people resist change? But more on that another time.
I think he’s making the book dense so you have to work at it, to give it attention. No lists of 3 bullet points anywhere to be seen. But I can slowly see his many theses coming together nicely.
I won’t spoil all the fun but I just wanted to consider something he talks about under the halo effect, outcome bias and plain ol’ luck.
In short we cant help but like good stuff. We love justifying what worked, adding some logic even if it’s not there. And sometimes stuff just worked or not regardless of what we did or didn’t do.
We love jumping to conclusions based on limited information. We create the easiest story that fits our view of the world.
There are a few examples quoted in business books. In particular he picks out “Built to Last” and builds the argument that the comparison of pairs of firms that have been more or less successful is a comparison of firms who have been more or less lucky. And as such the quality of leadership cannot be reliably inferred from observations of success.
That’s a pretty challenging thought.
But he quotes that on average, the profitability and stock price gaps between the pairs of firms compared in the book, fell to zero after the study. And a study of Fortune’s Most Admired companies showed that the firms with the worst ratings went on to give the best 20 year returns. What is down must come up: regression to the mean.
I’m not sure Alex Ferguson would agree with all this. After all he has bucked every trend going to stay on top for donkeys’ years. Has he just been lucky for decade after decade? Is he sliding down a bell curve back to the middle as we speak?
Fans of the film Moneyball will recognise much of this stuff. Halo effect: we like the good lucking strong folk and pick them. Outcome bias: we think that because a team won, its got the right players. Plain ol’ luck – well you need plenty. But you can create results by following the data and avoiding the biases. Picking people who just get slightly better odds than the flip of a coin consistently. Building self belief in teams.
Hard stuff to absorb as it challenges the way we think. But maybe it is the way we think in managing contact centres and handle feedback. Lots of objective data. No biases in our interpretation. Or is it?