Monday, March 9, 2020

A Model of Coaching for Wisdom

Associate Professor of Psychology, Igor Grossmann at 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 coaching and mentoring. According to 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”.
Grossmann and colleagues have established that wise reasoning mediates 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 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, 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.
Grossmann has formulated a model of wise reasoning and a constructivist perspective on teaching wisdom. His framework of wise thinking in everyday life includes (a) intellectual humility or recognition of the limits of one’s own knowledge, (b) appreciation of perspectives broader than the issue at hand, (c) sensitivity to the possibility of change in social relations, and (d) compromise or integration of different opinions.
From the model of wise thinking, Grossmann and colleagues designed the Situated WIse reasoning Scale (SWIS) to assess responses to experimental situations. For example, under Weigh up uncertainty and change: “I looked for different solutions as the situation evolved”; under Intellectual humility: “I looked for any extraordinary circumstances before forming my opinion”; under Search for integration and compromise: “I tried my best to find ways to accommodate both of us; under Engage others’ perspectives: “I tried to see the conflict from the point of view of an uninvolved person”.
I modified some of these questions to make it easier for use in coaching and mentoring and came up with a WISE template of my own in 2018. Subsequently I have incorporated the Heath Brothers more pragmatic approach to making better choices – the WRAP process: Widen your options: uncover new possibilities and consider them simultaneously through multitracking; Reality-test your assumptions: ask disconfirming questions, zoom in and out; Attain distance before deciding: shift perspective and clarify core priorities; Prepare to be wrong: prepare for bad outcomes as well as good ones.
Modifying these descriptors leads to a revised WISE template 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 more likely to benefit the common good:
W- 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 land". We just have to step back, take some time, and widen the scope of our search for different approaches to the issue.

Useful coaching questions include:
·      "Instead of either/or, whether/or not, what other options are there?"
·      "What is most important to you right now"
·      "In what ways could your opinion be incorrect?"
·      "Who has solved this problem before (Google it)?"
I – 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. Simple, complicated, complex, and chaotic contexts each call for different responses.
Useful coaching questions include:
·      ”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 you prepared to give up for this option to become a reality?”
·      ”In what ways could this response fail?”
S - 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. Senior Lecturer in Work and Organizational Studies at MIT, and founder of the Presencing Institute, Otto Scharmer 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. 

Useful coaching questions include:
·      "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 your 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?"
E - 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 process of “discovery-driven learning”.


Useful coaching questions include:
·      "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?"
The purpose of the WISE template and related coaching questions is to provoke wise thinking in relation to the particular issue or decision confronting the leader who is being coached or mentored. Used in this way, it might be expected to improve the likelihood that the leader will make wiser decisions across a broader range of problems.

Tuesday, March 3, 2020

The 6 Factors of System 3 Thinking for Making Wise Decisions!

Professor Emeritus of Psychology and Public Affairs at Princeton University's Woodrow Wilson School, Daniel Kahneman, won the 2002 Nobel Memorial Prize in Economics for his work on system 1 and system 2 thinking in “Thinking, Fast and Slow”The idea that much of our thinking and decision-making is subconscious, and automatic (system 1), as opposed to rational and deliberate (system 2). But he missed the observation by Japanese theorists, Professor Emeritus Ikujiro Nonaka at the Graduate School of International Corporate Strategy, Hitotsubashi University, and Professor Hirotaka Takeuchi, of the Management Practice in the Strategy Unit of Harvard Business School that there is a third system.
We typically rely on system 1 thinking because it’s automatic, fast, and experience-based. We use our innate or gut feel to quickly arrive at a decision that “feels right”. System 2 thinking is logical, rational, and fact-based. We use system 2 when we need to slow down and analyse the information to deduce a solution.
The third system on the other hand is a more ‘considerative’ way of assessing information and arriving at a decision. We use system 3 when we need to think about how to balance the various interests in the short and long term, and when dealing with complex and poorly defined problems that have multiple, unknown solutions. For example, deciding on a particular career path, accepting the death of a loved one, or solving long-lasting conflicts among family members.
Distinguished Professor of Psychiatry and Neurosciences at the University of California San Diego, School of Medicine, Dr Dilip Jeste and his co-researchers allude to the operation of a third system through various neuro-correlates. Wisdom is a multidimensional and adaptive human attribute based in distinct regions in the brain. Within the prefrontal cortex, there are three regions that are important – dorsolateral, ventromedial and there’s something that connects them – the anterior cingulate. The dorsolateral prefrontal cortex is like a proverbial father. This is the part of the cortex that tells us not to do things that are socially unacceptable or undesirable. The ventromedial prefrontal cortex, on the other hand, is like the proverbial mother – kind, compassionate. Usually the dorsolateral and ventromedial parts function efficiently and don’t always need a mediator, but when necessary, the anterior cingulate can be the conflict detector and sometimes, resolver.
Wisdom is balance. It is balance between the proverbial father-like thinking and the proverbial mother-like thinking, and also between cognition and emotion, between the oldest and the newest parts of the brain.
In my own research I have identified 6 psychometrically valid factors of System 3 thinking which are activated when we  make wise decisions. I describe the 6 factors of system 3 thinking as competencies, which implies they can be developed and enhanced through coaching and mentoring:
Focus
In their 2018 book, "The Mind of the Leader", authors Hougaard and Carter highlight the debilitating effects of distraction on decision making effectiveness. System 3 decision-making requires sustained, focused attention to meaningful tasks and activities, balancing mental activity with mental control. Cultivating the ability to focus in the midst of noise has been found to enhance productivity and minimize stress. Coaches and mentors can introduce mindfulness practice to improve this competency.
Life Experience
Life experience is a necessary but not a sufficient condition for system 3 thinking. However, wise persons are more likely to reflect on their own life lessons and the lives of others to make sense of what it means to live a good life, and to offer practical and non-judgmental advice to others according to Professor of Sociology at the University of Florida, Dr Monika Ardelt. Coaches and mentors, drawing from the field of positive psychology, may demonstrate ways in which we can curate our memories and appreciate the course of our own life as a useful guide to what it means to live a flourishing life.
Decisiveness
Paradoxically, an important capability of system 3 thinking is acknowledging uncertainty and ambiguity yet making quick and effective decisions; not suffering "paralysis by analysis". Under complex conditions decision-making is a series of experiments in which we learn something new. We should not be fearful of making mistakes but rather accept the entrepreneurial "fail forward" principle. Coaches and mentors can help build this competency in clients through fostering the techniques of a growth mindset to speed up decisiveness according to Dr Carol DweckLewis and Virginia Eaton Professor of Psychology at Stanford University. While at the same time balancing decision speed with a recognition of the mind traps which leaders often fall into as outlined by Jennifer Garvey Berger.  
Compassion
Compassion is the feeling that arises when we are confronted with another's suffering and feel motivated to relieve that suffering. Without compassion we cannot hope to face the collective problems of humanity and strive to do whatever is within our power to make positive change. Otherwise our decisions are confined to “me-first” and blind to the long-term consequences. Coaches and mentors can encourage self-compassion or suggest immersive experiences in which subjects are exposed to the suffering of others as a means of provoking compassion.
Emotion Regulation
One of the most critical capabilities of system 3 thinking is to recognize your feelings, yet not be overwhelmed by them. Control over emotions is not the same as the absence of emotions but rather having control over the intensity and variation in them, which yields a kind of contentedness. Harvard Medical School Psychologist, Dr Susan David distinguishes between emotional rigidity, “getting hooked by thoughts, feelings and behaviours that don’t serve us” and emotional flexibility, “being flexible with your thoughts and feelings so that you can respond optimally to everyday situations”.
Tolerance for Divergent Values
Dr Christopher Petersen, the Arthur F. Thurnau professor of psychology at the University of Michigan, and Dr Martin Seligman, Zellerbach Family Professor of Psychology at the University of Pennsylvania founded the Values in Action Institute after identifying 24 character strengths and virtues we all possess to a greater or lesser degree. Acceptance of diversity allows for our own unique signature strengths, but also opens us up to understand why someone else might rely on different strengths. The key to system 3 thinking appears to be in having strong values "weakly held", which means we are more prepared to change our mind if new information presents itself.
As Professor of Human Development at Cornell University, Robert Sternberg pointed out in his balance theory of wisdom, “information processing in and of itself is not wise or unwise. Its degree of wisdom depends on the fit of a wise solution to its context”. Likewise, coaching for wisdom is not solely concerned with enhancing system 1 and system 2 thinking to make better decisions. Wise reasoning has been found to be malleable across people and contexts in everyday life. Everyone possesses wisdom resources to a greater or lesser degree. The coach or mentor can deliberately stimulate these resources to help the leader use system 3 thinking to make wise decisions. In time, this may give rise to the characteristics of wisdom in leadership.

Tuesday, February 25, 2020

How to Measure Wise Decision Making

Wisdom is inherently hard to pin down and even harder to justify as a practical consideration for complex decision making. But three things have emerged in recent years to put wisdom centre stage. Firstly, we are facing unprecedented threats to our very survival as a species and the standard political, economic and social decision-making frameworks are proving to be ineffective. Secondly, two decades of research into wisdom has revealed credible ways to understand, measure, and enhance wise reasoning in decision making. And thirdly, the rise of evidence-based coaching and mentoring over the last 20 years has legitimized the role of coaching and mentoring as the primary intervention for developing wise reasoning. Now, more than ever we need to deliberately coach for the development of wisdom in our leaders, before it is perhaps too late.
The problems with measuring wisdom through self-report scales arise from the inherent limits to introspection and the processes of impression management. As Professor Ute Kunzman from the Life-Span Developmental Psychology Unit of Leipzig University points out, “a wise person likely underestimates his or her wisdom-related traits and competencies and someone who reports the belief that her or she is wise is likely to be not wise”.
The assessment of wisdom-related knowledge via the Berlin Wisdom Paradigm has been the empirical standard amongst researchers in wisdom for over two decades. Experienced rater evaluations of subjects articulating their responses to a dilemma against the five criteria of the paradigm exhibits satisfactory inter-rater reliability, consistent external validity, and meaningful associations with personality characteristics.
While the multi-method approach to the assessment of wisdom may be the preferred method of investigating wisdom more comprehensively and via sources other than the individuals being assessed, it can be cumbersome and costly. Professor of Psychology at Langara College in Vancouver, Canada, Jeffrey Dean Webster argues for the utility of self-report measures on the basis that they are:
1.     Focused, standardised, and quantitative.
2.     Relatively inexpensive and easy to administer, code, and analyse.
3.     Can be used in virtually unlimited sample sizes, which contributes to external validity.
Self-report measures capture an array of properties of personal wisdom drawn from multiple of sources. However, validity questions need to be addressed, such as: whether a component of a questionnaire is an integral feature of wisdom or a correlate; if the measures capture a unique feature of the construct of wisdom or are actually measuring some other personal attribute; that the scale measures more than just the Big Five personality traits.
The Stein Institute for Research on Ageing at the University of California San Diego have recently developed a psychometrically robust self-assessment of six components, the San Diego Wisdom Scale (SD-WISE). Taken together, they represent the best approximation of system 3 decision-making. In other words, an individual scoring highly across all components might be expected to do well in wisdom-related performance tasks such as those used in the Berlin Wisdom Paradigm.
Coincidentally, Professor of Developmental Psychology at Alpen-Adria University Klagenfurt, Austria, Judith Glück and colleagues from the original Berlin Wisdom group have come up with their own self-assessment of wisdom, the Brief Wisdom Screening Scale (BWSS). This is a validation of four scales from the literature, plus the Berlin Wisdom Paradigm. While there is some overlap with the more recent SD-WISE scale, these additional wisdom elements add greater depth to system 3 decision-making:
1.     Self-Transcendence - The innate desire to discover meaning in human life. It is associated with experiencing a decreased reliance on social definitions of self, a greater sense of connectedness with past and future generations and considering oneself an integral part of the universe.
2.     Mindfulness - The skill of bringing your attention to whatever is happening in the present moment. It is sustained, focused attention on meaningful tasks and activities. This element is necessary to balance mental activity with mental control. Paradoxically, finding mental stillness can enhance productivity and creativity.
3.     Compassion - Going out of your way to help the physical, mental, or emotional pain of another and of yourself.  It is recognizing others’ distress and having a desire to alleviate it, although it is also associated with fairness, justice, and interdependence. Cultivating compassion through training contributes to greater altruistic behaviour and the development of neural systems implicated in understanding the suffering of others. And compassion can be measured.
My proposed self-assessment scale of system 3 decision making, the Third System of Thinking Profile (T3 Profile), includes some validated items from the SD-WISE, the BWSS, and additional items from my own research and practice. An initial scale of 36 items was formed from each of the 9 elements of wisdom (above), randomized, with positive and negative directions, scored on a 5-point rating scale.
Verified data from 114 data sets was originally tested for multivariate normality, revealing all items on the questionnaire to be normally distributed with only one outlier. The first model was hypothesized to comprise 9 latent constructs, with each construct thought to be measured by four different latent variables. The factor analysis was conducted by observing the variance-covariance matrix with full information maximum likelihood (ML) estimation on SPSS Amos program version.
Investigation of factor loadings, structure coefficients and latent covariation and correlation led to a 7-factor solution as the best model for assessing fit. However, the results of a follow up confirmatory factor analysis with more data sets suggested 6 latent constructs which could be explained by just 18 items with sufficient discriminant power. These 6 factors were labeled:
1.     Focus – items relating to task attention.
2.     Life experience – items from self-transcendence and openness to new experience.
3.     Decisiveness – items about readiness to make decisions and readiness to give advice.
4.     Compassion – items from self-compassion and insight.
5.     Emotional regulation – items about controlling emotions as well as peace of mind.
6.   Tolerance for divergent values – items connected with accepting others’ morals and values, insight into the reasons for one’s actions, and openness to diverse viewpoints.
The current version of the T3 Profile is a self-rating survey of these 6 factors which might best be described as competencies of system 3 thinking. High rating across all 6 competencies is hypothesized to describe an individual who has an increased likelihood of using system 3 thinking effectively when faced with a dilemma. Medium or low rating for one or more of these competencies is hypothesized to mitigate an individual’s capacity to think and act effectively when faced with a dilemma.
Ask how to get your T3 Profile here, it's FREE!

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!