Tuesday, February 18, 2020

Applying the Psychology of Wisdom to Make Better Decisions!

How wisdom contributes to decision-making has been attracting a lot of research interest lately. Professor of Human Development at Cornell University, Robert Sternberg defines wisdom as “the search for a moderate course between extremes, a dynamic between knowledge and doubt, a sufficient detachment from the problem at hand, and a well-balanced coordination of emotion, motivation, and thought".
For the past two decades the Berlin Wisdom paradigm has served to operationalize wisdom as a scientifically grounded psychological construct. Wisdom is defined as “good judgement and advice in difficult and uncertain matters of life”. The five criteria used for assessing individual wisdom-related performance are intended to reflect a balance between intellect and character:
1.     Rich factual knowledge about human nature and the life course,
2.     Rich procedural knowledge about ways of dealing with life problems,
3.     Lifespan contextualism – an awareness and understanding of the many contexts of life, how they relate to each other, and how they change over the lifespan,
4.     Value relativism and tolerance – an acknowledgement of individual, social, and cultural differences in values and life priorities, and
5.     Knowledge about handling uncertainty, including the limits of one’s own knowledge.
The elegant experimental design of the Berlin Wisdom paradigm has provided robust findings:
  • Wisdom is an ideal, rather than a state of being. Many adults are on the way toward wisdom, but very few people approach a high level of wisdom-related performance as measured.
  • The period of late adolescence and early adulthood is the primary age window for wisdom-related knowledge to emerge. Age may be necessary but it is not sufficient to guarantee wisdom.
  • Neither academic intelligence nor basic personality traits play a major role in the development of wisdom-related performance during adulthood.
  • The expression of wisdom-related performance can be enhanced by relatively simple social interventions. For example, having respondents discuss the problem with a trusted adviser, or asking respondents to engage in inner dialogue about the problem with a person of their choice, or even instructing respondents to “make a wise choice” increased performance levels by almost one standard deviation.
These findings suggest that many adults have the latent potential for wisdom-related performance when challenged on wisdom tasks. In this sense wisdom may represent a set of competencies, which can be aroused or triggered by circumstances, or indeed by asking the right questions.
The Center for Practical Wisdom at The University of Chicago has been promoting the scientific understanding of wisdom and its role in the decisions and choices that affect everyday life through the Defining Wisdom Project (2007-2011) and the Wisdom Research Project (2012-2015). Center Director, Professor Howard Nusbaum defines wisdom as “prudential judgement in the service of human flourishing”. The most important aspects of research at the Center have been to find the experiences and practices that enable people to increase their wisdom.
The Stein Institute for Research on Aging at The University of California San Diego has also been researching wisdom. Curiously, they discovered the ‘Ageing Paradox’, the finding that people in general report feeling happier as they age! They recently identified six components of wisdom from a comprehensive literature review:
1.     Social Advising - This involves having a good general knowledge of life and how to apply it in solving social problems, often hard-won through personal life experience. This element also involves an understanding of the developmental course of human life and how to apply relative judgement to different stages of the life cycle.
2.     Decisiveness - It is important to think about the pros and cons of everything before deciding. That needs to happen initially, but at some point, you do have to decide. You must be decisive and act upon it. This element is about recognizing ambiguity but making quick and effective decisions. Not sitting on the fence too long.
3.     Emotion Regulation - Regulating feelings and exercising self-control is essential to good judgement. Not “flying off the handle” or withdrawing. Control over your emotions is not absence of emotions but having control over the magnitude and the variation in them. At the same time, emotion regulation is primarily associated with more positive emotions. Not an extreme, ecstatic kind of positivity, but more contentedness.
4.     Insight - This is knowing yourself. It includes self-reflection and the ability to analyze and understand yourself and your actions. Striving to do that through self-reflecting and understanding one’s strengths as well as one’s weaknesses.
5.     Pro-Social Behaviours - These are things we do for others rather than for ourselves. This element represents an understanding of how others are feeling, a capacity to imagine what it must be like for them, and a preference for altruism, and a sense of fairness.
6.     Tolerance for Divergent Values - Acceptance of diversity of views means you may have strong feelings about something, but also understand why somebody else might have different feelings about it. It doesn’t mean that you give up on your values, but you can also understand why someone else may feel or think differently. It also means not being 100% certain that what you think is right, which means you’ll be more prepared to change your mind if new information presents itself.
The Wisdom and Culture Lab at The University of Ontario, Canada has been pivotal in establishing a practical framework for wise thinking that lends itself to better decision making. According to Professor Igor Grossmann and colleagues, “wise thinking is a skill. It is not simply an attribute of a person but rather a property of person-in-context. The potential for wise thinking emerges in the interaction of the person and their environment”.
Wise reasoning seems to mediate the effects of age on wellbeing. In other words, just thinking wisely improves life! Wisdom needs to be considered in the context of everyday life according to Professor Grossmann and colleagues. The central characteristics of wisdom have a dynamic component. Just because you are wise in one context does not mean you will be wise in another. Understanding the situational contingencies where wise thinking may lead to wise actions is vital to promoting wisdom. For example, one way to buffer thinking against bias in cases where self-interests are unavoidable is ‘ego-decentering’. In other words, viewing events from a “fly on the wall” vantage point.
In situation-specific experimental conditions, Professor Grossmann and colleagues have been able to demonstrate that wise reasoning varies across cultures (e.g., younger and middle-aged Japanese showed greater ability to reason wisely than their U.S. American counterparts), women are somewhat better at wise reasoning than men, and wise reasoning dips in middle-age (35-50) and then rises!
Not all decisions need wisdom, but wise decisions need the psychology of wisdom to be effective.

Wednesday, February 12, 2020

The Need for Wise Leadership!

It seems self-evident that decision-making has gotten more complex and tricky in the first quarter of the Twenty-first Century. Being smart is certainly necessary but it’s no longer sufficient for the wicked problems we must solve if life on our planet is to be sustainable. 
We are facing the early impacts of runaway climate change, political discourse is becoming increasingly authoritarian, social media algorithms are polarizing opinion and creating “artificial ignorance”, enraged religious and political criminals strike indiscriminately, walls are being built to keep out ‘the other’, new technologies leapfrog each other in breathless utopian anticipation, government and community institutions implode through loss of trust, and business institutions seem more riven by greed than at any time since the fall of the Roman Empire. We may well be on the way to the collapse of civilization, even though we all agree on what to do, and yet we seem incapable of taking action (Oreskes and Conway, 2014).
As Margaret Wheatley (2017) declares with uncharacteristic pessimism, “this world does not need more entrepreneurs. This world does not need more technology breakthroughs. This world needs leaders.” And moreover, leaders who are wise.
The ability to lead wisely has been all but forgotten. All the knowledge in the world did not prevent the collapse of the global financial system and the subsequent unearthing of unconscionable behaviour by our most trusted financial and insurance institutions (Ferguson, 2019). “What is curious”, write management researchers David Rooney and Bernard McKenna, “is that wisdom has been valued by humanity for thousands of years and in all cultures, but it is something that managers, business schools and management researchers rarely mention” (Rooney, McKenna, and Liesch, 2010).
We need to choose wise leaders. But wise leaders are not always charismatic and charismatic leaders are rarely – probably never – wise (Sternberg and Glück, 2019). There is nothing the world needs more right now than wisdom, and those coaches and mentors who can facilitate wise thinking in the leaders they work with.
Business now demands a different kind of leader”, say famed Japanese Management Professors, Ikujiro Nonaka and Hirotaka Takeuchi (2011) in their breakthrough Harvard Business Review article, “one who will make decisions knowing that the outcomes must be good for society as well as the company… they also need a third, often forgotten kind of knowledge, called phronesis, or practical wisdom.”
We need wisdom because intelligence and creativity are not enough for creating a better world. Sternberg (2019) distinguishes between deep wisdom, non-wisdom, and foolishness. People can be highly creative or highly intelligent, they can exhibit quasi-wisdom or pseudo-wisdom, but the six cognitive fallacies of foolishness can be seen in too many of our business, political, and community leaders on the world stage.
Ferguson, A. (2019). Banking Bad. Sydney, NSW: HarperCollins.Oreskes, N., and Conway, E.M. (2014). The Collapse of Western Civilization. New York, NY: Columbia University Press.
Nonaka, I., and Takeuchi, H. (2011). The wise leader: How CEOs can learn practical wisdom to help them do what’s right for their companies – and society. The Harvard Business Review, May.
Oreskes, N., and Conway, E.M. (2014). The Collapse of Western Civilization. New York, NY: Columbia University Press.
Rooney, D., McKenna, B., and Liesch, P. (2010). Wisdom and management in the knowledge economy. London: Routledge.
Sternberg, R.J. (2019). Race to Samara: The Critical Importance of Wisdom in the World Today. In: Sternberg, R.J., and Glück, J. (Eds.) The Cambridge Handbook of Wisdom. Cambridge, UK: Cambridge University Press.
Sternberg, R.J., and Glück, J. (2019). Why Is Wisdom Such an Obscure Field of Inquiry and What Can and Should Be Done About It? In: Sternberg, R.J., and Glück, J. (Eds.) The Cambridge Handbook of Wisdom. Cambridge, UK: Cambridge University Press.

Wheatley, M.J. (2017). Who Do We Choose to Be? Oakland, CA: Berrett-Koehler.

Monday, April 29, 2019

The WISE Template for Effective Decision Making!

More than 50% of business decisions end in tears, some more spectacularly than others! In today's VUCA world (volatile uncertain,  complex, and ambiguous) business leaders are under pressure to act quickly and make the "right" call. So how do they get it so wrong so often, and how can you beat the odds?

In the early 1970s, Ford Motor Company's charismatic CEO, Lee Iococca wanted a "2,000 pound car for $2,000". The result was the Ford Pinto, a popular compact car designed to beat the Japanese automakers at their own game. But there was a problem. The position of the gas tank meant a rear-end collision could easily rupture the tank and cause a fire. Engineers came up with a fix but it was going to cost about $11 per vehicle, which would amount to $137 million over projected sales of 12.5 million vehicles.
Instead, Ford conducted a cost-benefit analysis on the litigation costs due to likely deaths and severe burns of drivers and passengers and arrived at an estimate of $49.5 million. They decided not to fix the cars. Ford's "profit drives principle" philosophy at the time blocked production staff from voicing the risk.

In the 1990s, Shell wanted to decommission the floating oil storage tank, Brent spar, used in the North Sea Brent oil field. They sought and received government approval to sink the rig in deep water. But just before disposal was to begin, Greenpeace activists began a high-profile publicity campaign. The activists flew to the spar by helicopter and boarded it, prompting a media feeding frenzy. Shell officials successfully argued the economic and legal case for deep water disposal as the best option, but they lost public support and incurred significant reputational damage. In the end they were forced to decommission the rig onshore.

Wells Fargo is the world's fourth largest bank by market capitalization and the third largest bank in the US by total assets. “Eight is great” was a saying that was the foundation of an aggressive cross-selling target scheme advocated by CEO John Stumpf in the Wells Fargo retail-banking division. Employees had to reach “eight is great” targets in order to earn commissions and avoid termination. In 2015, the Los Angeles City Attorney filed a lawsuit against Wells Fargo based on the Bank’s alleged fraudulent and abusive sales practices. They were finally compelled to pay $185 million in penalties. It transpired that 5,300 Wells Fargo employees had been terminated between 2011 and 2016 for sales practice violations that included opening over two million unauthorized deposit and credit card accounts and charging some of their customers fees for these unauthorized accounts.  John Stumpf was forced to resign in 2016. His successor, Tim Sloan was also forced to step down in March 2019 after a further 1.4 million false accounts were discovered.

After 20 years collecting and studying strategic decisions made by senior leaders in corporate, government and non-profit organisations, professor of management at Ohio State University, Paul Nutt concludes that the process by which the decision is made matters more than the eventual outcome. Decision processes driven by a single idea were more than four times likely to fail as those governed by the more time-consuming process of discovery and evaluation of the best ideas to suit a shared outcome. 

As Ikujiro Nonaka and Hirotaka Takeuchi point out, the difference between a good decision and a wise decision is the difference between asking, "what's in it for me?" rather than the question "what's good, right and just for everyone?" This takes time and requires considerable thought. Daniel Kahneman says we don't easily adopt this mode of thinking because it's effortful. Far quicker to rely on experience and "gut feeling", what he calls System 1 thinking. But even when we need to slow down and analyze the data and make reasoned decisions (what Kahneman calls System 2 thinking) we still don't necessarily know how to judge goodness, or grasp the essence and context of the issue before us, particularly when there are no defined right or wrong answers. For this we need a 3rd System of thinking.

The WISE template is a process for applying the 3rd System of thinking to help make effective decisions in complex circumstances. It helps to circumvent logical fallacies and cognitive biases, enables us to consider likely consequences in the short- and long-term, and it challenges our thinking to find outcomes which are good for society as well as the organizations we work for.

Widen your view

Time pressure pushes us into grasping the first viable option. Often, there seems to be a stark choice - choose A or B. It requires much less effort to narrow the field down to a simple duality of options and then choose the least disruptive one. However, the truth is that there are many alternative scenarios that exist in "possibility space". We just have to step back, take some time, and widen the scope of our search for different approaches to the issue.

Useful questions to ask yourself include: 

  • "Instead of either/or, whether/or not, what other options are there?"
  • "What is most important to me right now"
  • "In what ways could my opinion be incorrect?"
  • "Who has solved this problem before (Google it)?"
Interrogate reality

We make assumptions and jump to conclusions too readily. Is the reality I'm seeing the same as the reality you're seeing? Acknowledging the context and the "territory" within which the issue sits is an important prerequisite to knowing how best to evaluate the various options and which tools to use.

Ask yourself these counter-intuitive questions:
  • "What would have to be true for each of these options to be the best possible choice?"
  • "What's the biggest obstacle to this being the right decision?"
  • "What am I prepared to give up for this option to become a reality?"
  • "In what ways could this response fail?"
Sense what is emerging

Contrary to intuition or System 1 thinking, we need a way to move past the fluttering of emotion and allow a deeper understanding of the nature of the issue. Professor Otto Scharmer from MIT calls this "presencing" - observing the problem and sitting with it to see what insights emerge. The more complex the issue, the more we need to pay attention to emergent properties. Our familiar tools and resources for "fixing it" won't work. 

Take the time to ask yourself these questions:
  • "Imagine it is 6 months from now and this decision is a failure, why did it fail?"
  • "What is the essence of this issue (what is my deep knowing)?"
  • "What is the best possible future that I am bringing about?"
  • "What might other people think or feel who are watching me make this decision?"
Enact a way forward

However, it's possible to be too contemplative about the problem and not do anything about it. We need to take action. The best way is through a series of experiments, pilots, or prototypes to explore what will most likely be the best action to take. This is exactly what entrepreneurs do, they "fail forward and fail fast". Only through taking some kind of action will we learn what works and what doesn't - the essence of innovation.

Here are some questions to ask to shape your action steps:
  • "What can I start doing, now?"
  • "What is an appropriate threshold for me to take action?"
  • "In what ways can I experiment or prototype these options?"
  • "What can I learn from this?"
If the decision you are facing is a big one with significant impacts and multiple ways in which it could go terribly wrong, then the WISE template may offer a way to filter out the noise and deeply consider the consequences. Even if the outcome doesn't always match your expectations, you are more likely to make a wise decision using this process!

Monday, April 8, 2019

How to Lead Millenials!

Herding cats is easy compared to keeping a bunch of smart millennials motivated for long enough to make a meaningful contribution. Yet, fast-growing, agile, entrepreneurial organisations need this kind of sustainable energy to do good things for clients and communities. What's the secret? 

It turns out this is exactly the same problem faced by professional service firms - the McKinseys, Deloittes, and BCGs of the business world. They have to entice a group of disparate professionals to give up autonomy in return for a group share of the profits, while at the same time maintaining the bonds of a matrix-structured organization which threatens to fly apart at any moment under the centrifugal force of massive ego! Have they cracked the code? 

Laura Empson, Professor in Management at the Cass Business School, London, and Ann Langley, Professor of Management at HEC Montreal think they have. Their model of the professional service firm (2015) is an elegant guide in how to use multiple manifestations of influence where direct authority is limited or questionable (think millennials). So how does it work?

It's a 9-box matrix which spells out what you can do to keep millennials corralled yet happily productive. 

Firstly, at the individual and group level you can apply your Professional Expertise through:
  • Coaching and mentoring millennials, which goes beyond a simple transfer of technical skills to encompass more personalized coaching in interpersonal skills. This is a key theme in how to lead professionals, so if you don't have the requisite skills perhaps now would be a good time to get yourself trained!
  • Balancing the competing economic and organizational interests of the company with the expressed need of professional millennials. This requires subtlety and persuasion based on your experience of what and who works best for all concerned.
  • Championing projects undertaken by professional millennials to help get them more embedded into the organization and better recognized by clients and stakeholders.

Secondly, you can utilize Political Interaction at the organizational level through:
  • Nurturing your millennials by making them feel valued, supported and cared for and removing obstacles to getting their work done. The idea is to build trust, loyalty and cohesion through connecting them with key influencers in the company.
  • Enabling their initiatives - without drawing attention to yourself - through removing roadblocks and promoting their entrepreneurialism.
  • Consensus-Building with your peers to help resolve the inherent tensions between the needs of your millennial professionals and the needs of the collective.

And thirdly, you can employ Personal Embodiment at the strategic level by:

  •  Role-modeling what is expected of professionals in the company; demonstrating passion and belief; treating everyone with dignity and respect; demonstrating the highest integrity; giving credit to others and taking responsibility for failure.
  • Meaning Making through framing and defining the reality of the environment and providing personal support and opportunities for millennials to make sense of their surroundings.
  • Visioning - articulating and enacting your vision for the company; building on your own credibility and reputation; and providing a beacon of common values which will entice professional millennials to want to be associated with you.
Don't expect millennials to follow you unless you are willing to devote your personal resources and your energy to supporting and encouraging them. It takes considerable effort, but the rewards to you and your company will be immeasurable!

Tuesday, March 19, 2019

Wisdom and the Rise of AI (Artificial Ignorance)!

Artificial Intelligence is already here, we just don't notice it yet. All around us, the invisible algorithms of social media and countless online platforms are shaping our buying habits, our values, and our beliefs. Should we be concerned?

The Power of The Algorithms

The algorithms exploit our cognitive baises and effectively hijack our minds without us even realizing it:

  • Our devices have the same conditioning effect as poker machines, keeping us hooked on content through Intermittent variable rewards.
  • FOMO (Fear of Missing Out) becomes an addiction to living moment to moment online.
  • Our social approval is primed by how many tags and likes we get. 
  • Our need to reciprocate social gestures is exploited to keep us on the platform for longer (looking at you LinkedIn).
  • Automatic feeds and autoplay are like consuming a bottomless bowl of soup - we will always consume more than we need.
  • Message interruptions are an effective way of capturing our attention since we're primed to notice something different or novel.
  • The algorithms want to convert our reasons for using the app into their reason, which is to maximize the time we spend consuming things.
  • It's always easier to subscribe than it is to unsubscribe, so most of us don't.
We tacitly buy into this because the benefits seem to outweigh the costs. The content streamed to us seems to happily coincide with our interests (cat videos, anyone). But the algorithms have a dark side. They steer us toward edgier content, a loop that results in more time spent on the app, and more advertising revenue for the company. Platform incentives polarize opinions, viewpoints, beliefs and ideologies. They nudge us toward a more strident version of our existing beliefs. 

It's unfair to blame the internet for this, but the algorithms behind the platforms inadvertently create and reinforce extremist beliefs. They become a place where people with hateful and violent beliefs can feed off one another. This is an emergent AI, but not some technological dream of a Utopian future. What we are breeding is Artificial Ignorance

AI (Artificial Ignorance)

As Margaret Wheatley observes in her 2017 book, Who Do We Choose To Be?"This is the age of retreat: from one another, from values that held us together, from ideas and practices that encouraged inclusion, from faith in leaders, from belief in basic human goodness".

Artificial Ignorance is everywhere: the lack of political courage, the building of walls against collaboration across national boundaries, self-interest and greed which supersedes compassion. We have seemingly lost the ability to solve the global problems of our time. 

But there is an antidote to ignorance, and the antidote is wisdom. So much is possible if we can step away from the addictive torrent of information and consciously and wisely choose who to be in this moment, and the next.

What we need is a WISE template for making more considerate decisions for ourselves, our communities, our businesses, our government and political institutions, and for the planet. Our survival may very well depend on it.

A Template for Making WISE Decisions

Use this template to guard against bias, assumptions, and fallacies in making critical decisions in times of uncertainty and complexity:

Widen your framework: 

  • Avoid "either/or" and "whether/or not" decisions. Think AND not OR.
  • Ask yourself, "what different outcomes or solutions could there be?" Generate a list of options.
  • Ask yourself, "could my opinion on the situation be incorrect?"
  • Find someone who has solved this problem before, or Google keywords related to the issue.
Interrogate reality:
  • If you think your best option is correct, consider, "in what ways might this be the wrong decision?"
  • Ask yourself disconfirming questions such as, "What's the biggest obstacle to this being the right decision?" "In what ways could I fail?"
  • Ask yourself, "what would have to be true for each of these options to be the best possible choice?"
  • Ask yourself, "can I accept that there may be information to which I do not have access?"
Sense what is emerging:
  • Ask yourself, "what do I notice when I put myself in the other person's shoes?" "What might be that person's perspective?"
  • Ask yourself, "What might other people think or feel if they were watching the situation?"
  • Retreat from the issue and allow time for stillness and reflection; let your awareness redirect itself; allow the inner knowing to emerge.
  • Ask yourself, "what is waiting to emerge into being through this decision?" 
Enact a way forward: 
  • Take the first step in the direction of the decision. Don't procrastinate or wait for more data or analysis, it may be too late.
  • Experiment and prototype, learn through action: "fail forward and fail fast".
  • With each action, ask yourself these four questions: "What just happened? Why do I think it happened?What can I learn from this? How will I apply these learnings?"
  • Take action from the predicted future state, as if you are already there.

We are immersed in a matrix of Artificial Ignorance and it's unlikely to get better. The best we can do is cultivate our own "islands of sanity" in Margaret Wheatley's words. A template for practicing wisdom and making wise decisions may be our best resource!