Stop the Noise III — Hurdles to Great Critical, Futures & Strategic Thinking
Relevant Outtakes from Kahneman’s book on “Noise” Part III (Takeaways #19–25)
Author: Sean Moffitt, Grey Swan Guild Founder and CEO, Cygnus Ventures
“Whether you make a decision only once or a hundred times, your goal should be to make it in a way that reduces both bias and noise. And practices that reduce error should be just as effective in your one-of-a-kind decisions as in your repeated ones.”
― Daniel Kahneman, Noise: A Flaw in Human Judgment
In our continuing series, we are listening intently for noise and generating our own 25 selfish takeaways from Daniel Kahneman’s 2021 book (with Olivier Sibony and Cass Sunstein), Noise: A Flaw in Human Judgment. Here are my concluding last seven thought kernels and actions from our series.
Noise Takeaway #19 — Exercise the Limits of Eccentricity
- the uniqueness of people’s personalities is what makes them capable of innovation and creativity; when it comes to many forms of judgment however, this is less of an asset
- by suppressing noise, organizations and societies can foster a more reliable and consistent environment where performance is not solely dependent on rare instances of brilliance but is rather the product of collective work, collaboration, and reliable processes
- the less noisy approach allows for more sustainable and consistent outcomes, ultimately leading to better overall results
Takeaway #19: We like the think creativity has no limits but when the stakes are high and there is a premium on accuracy, fair judgment and correct thinking, conducting a noise audit (as outlined in the book’s epilogue) and refraining from the hope of virtuoso right-brained creative thinking is in order.
Noise Takeaway #20 — Importance of Having a System (like our 15 frameworks)
- mechanical adherence to even simple rules can perform better than human judgement and could improve judgements to difficult problems
- for example, aggregating diverse views is known as the Delphi method; this method involves multiple rounds during which the participants submit estimates to a moderator and remain anonymous to one another; the process encourages estimates to converge and harnesses both from aggregation and social learning.
- This involves implementing processes and systems that promote consistency, standardization, and fairness, Kahmeman calls it good decision hygiene
Takeaway #20: I read a recent survey on LinkedIn (above) that when faced with a critical decision in their life, people prefer to go with their gut — unfortunately, your gut lies and is noisy; have some rules with weights and ratings that you can follow objectively when confronted with big forks in the road — I’ve done it for finding a house, purchasing software and looking for talent — have a system of finding what you want before you’ll find any interesting thing will do.
Noise Takeaway #21 — Be on Guard for System Credibility
- system noise is inconsistency, and inconsistency damages the credibility of the system
- people usually expect that judgments will be based on the values of the system not the person making them
- when the gap is sufficiently wide, people question the system; we see this currently in criminal justice, global governance, entertainment industry and executive compensation to name a few
Takeaway #21: every decision that is more than two standard deviations from the mean deserves some scrutiny, these decisions shouldn’t be eliminated, but in organizations, major decisions that zigged when others zagged should be subject to board or oversight review.
Noise Takeaway #22 — Self-Imposed Guidelines
- upfront requirements on how to approach a problem can limit unwanted variability; in their absence, personal biases, subjective interpretations, or random factors grow rampant
- we have a structured process for hiring decisions, engineering solutions and patient diagnosis, why not for strategic, investment and foresight thinking and decisions?
- noise thrives when there is no clear rule to guide judgment; established standards or definitive guidelines should be adopted in most settings
Takeaway #22: throwing thinking against the wall gives you splat; even the most exploratory efforts should have some guardrails on what can and cannot be approached and adopted.
Noise Takeaway #23 — Sequencing and Delayed Judgment
- minimize confirmation bias by sequencing information to limit the formation of premature intuition
- instead of the whole, judge individual components of a system or decision; push off holistic judgment, do not exclude intuition, just delay it
- mini-Delphi, can be deployed within a single meeting (also called estimate-talk-estimate), it requires participants first to produce separate, silent estimates, then to explain and justify them, and finally to make a new estimate in response to the estimates and explanations of others; the consensus judgment is the average of the individual estimates obtained in that second round
Takeaway #23: in group discussions or asychronous input, make sure participants are not able to see other’s already submitted inputs and request their perspectives in phases or chunks of the overall subject matter challenge.
Noise Takeaway #24 — Group Amplification Mania
- deliberating groups and polarized groups when not independent can amplify noise, particularly without clear evidence to refute
- independence is the prerequisite for wisdom of crowds; focusing on only one or a first perspective might produce erroneous evaluations and have harmful incentive effects
- group deliberation often adds more error in bias than it removes in noise; to truly harness the power of diversity, organizations must welcome the disagreements that will arise when team members reach their judgments independently
Takeaway #24: In many key decision forums, have people or groups make their decisions, requests or predictions in separate pods and find value in the basis for their different decisions, ensuring reviewers are not prejudicial or have a selfish vested interest in one type of answer is integral to the success of the effort — find the very best judgment referees.
Noise Takeaway #25 —The Universality of Noise
- after reading Noise, it’s clear to me is that the concept of noise is relevant for every domain where decisions and judgements are made, in some areas there is more allowance for noise, but in all areas unwanted noise can be reduced
- we can be blind to the obvious, and we are also blind to our blindness, the statement distills a truth about humans as inherently flawed creative beings, our checkered ability to recognize and acknowledge the obvious (and recognize the fact we have done so) often eludes us
- in many cases, the smartest and most confident among us can particularly be the most engrossed in our perceptions and biases that we overlook the simple truths that lie before us; embrace the fact that our understanding of reality is far from infallible
Takeaway #25: Recognizing the limitations of our perception and the importance of humility is paramount; eschewing overconfidence when we see it, having a respected independent jury of peers willing to feedback, stepping back and away from key decisions, and having some type of semi-objective system (perhaps aided by AI) are all good coping strategies.
Read our Part #1 — Stop The Noise Takeaways #1–9, and our Part #2— Stop the Noise Takeaways #10–18
Grey Swans — A Month of Specialty Posts:
This is a special edition of a set of posts on different methods and frameworks for chasing Grey Swans. but we have so much other commentary on this valuable but often overlooked chase for the non-obvious:
I — Grey Swan Week and defining Grey Swans
II — Our 2023 Report Card of Grey Swans (last year’s review and performance)
III — Fifteen Ways to Hunt for Grey Swans (methods and frameworks) —
- #1 CIPHER
- #2 SCAMPER
- #3 SUPERCAFFEINATED U
- #4 FUTURES WHEEL
- #5 CONE OF POSSIBILITIES
- #6 WEAK SIGNALS
- #7 SWAN SOURCING
- #8 SCENARIO ARCHETYPES
- #9 OUTSIDE-IN COLLISIONS #10 POSSIBILITY PREMORTEMS #11 RED TEAMING #12 WHAT IF … EXPLORATION #13 ADOR EDGES #14 CRITICAL UNCERTAINTIES #15 MULTI-VIEW SCENARIOS
IV — Stop The Noise I — 25 Outtakes from Kahneman’s book
- Stop The Noise Part 1 — Outtakes #1–9 from Kahneman’s book
- Stop The Noise Part 2 — — Outtakes #10–18 from Kahneman’s book
- Stop The Noise Part 3- — Outtakes #19–25 from Kahneman’s book
V — Fifty Grey Swan Wild Card Influences in 2024 (ranking the categories)
VI — Twelve Grey Swans Revealed (<25%) — Cloudy Swans
VII — Twelve Grey Swans Revealed (<5%) — Stormy Swans
VIII — Twelve Grey Swans Revealed (<1%) — Shadow Swans
Stay tuned with us here, as well as on our website for all the rundowns.
Participate in our Hunt for Grey Swans
Don’t worry it’s a humane hunt. We have already invited some of our regular contributors to provide us the seeds of what will be our authoritative list of one hundred 2024 Grey Swans.
These are the improbable, disruptive and remote developments that decision makers better keep at least one eye peeled open for so they don’t blindside them. Perhaps you have some you’ve considered yourself.
Be among the most talented and wide-eyed observers. Let us know your Grey Swan additions and we will add them to our annual collection with our 2024 Grey Swan Guild Subnmission Form. Other benefits and collabroations may follow.
Grey Swan Submission Form: https://bit.ly/2024greyswan
Grey Swan Guild — Making Sense of the World and Next Grey Swans
We are the Guild whose mission it is to make sense of the world and next Grey Swans (wild cards, scenarios, early signals).
How we do this is guided by our four values of: aspiration, collaboration, curiosity and purpose.
We bring this to life through six facets of our world-leading Guild experience:
- Intelligence and Foresight
- Content and Publications
- Events and Experiences
- Training and Learning
- Global Community and Network
- Experiments and Ventures
Here’s what you can do in the Guild:
Learn about the Guild: https://www.greyswanguild.org/
Read our Content: https://greyswanguild.medium.com/
Attend our Events: https://www.greyswanguild.org/calendar
Become an Official Guild Member: https://bit.ly/gsgsmemberform
The Guild Hub: https://www.greyswanguild.org/
Cygnus Ventures (powered by Grey Swan Guild ) — Explain Today, Imagine Tomorrow
Now coming up to our 4th year of our Guild, we have built twelve ventures designed to create value and tap our enormous reservoir of talent found inside the Guild.
To get directly involved in any one of our Cygnus Ventures , including two venture efforts focused on research and intelligence efforts called Weathervanes (current focused) and The Radar Collection (future-focused).
Go Deeper as a Global Sensemaker: https://bit.ly/lofsenseform
Learn more about our ventures: https://www.greyswanguild.org/cygnusventures
To get directly involved in any one of our twelve (12) Cygnus Ventures including click here. To hire our ventures group for any of your own wicked challenges or Grey Swans, let’s have a discussion.
Join some of our ventures: https://bit.ly/gsgventures
