Media and well regarded books celebrate the ones that managed to heroically redefine our economic world. They are restless, innovative, hard working, dedicated, usually highly talented and intuitive. For sure, their emotions were captured in the products and services they launched. Based on the articles, one of their most important assets was the courage to bet everything on a bold move.
We certainly like the glorified world of outliers and also a newspaper knows how a good article looks like.
Welcome to the media endorsed casino business stories.
Behaviorists try to highlight how our decision making is dependent to emotions, and how our cognitive biases can be measured, have similar impact in time (Richard Thaler, Misbehaving, 2015). More difficult the decision, higher the emotional implication. Higher the bet, higher the perceived risk of losing and the “courage” needed to out pass the uncertainty effect (Kahneman and Tversky, Prospect Theory, 1979). And this is how the “Adoption Curve” works: Innovators have a different risk attitude than the Late Adopters. How can we challenge our fear of failure?
Based on their past experience, CEOs decision making style is paramount for the future growth of the organizations. The art consists in turning emotional decision, based on “courage”, “intuition”, “feelings”, prone to personal anxiety and flawed by context, into fact based rational choices, hedged with probabilities over many bets.
Fact based decisions was the underlying idea of our second module in Oxford EMBA.
We spend one week building Decision Trees on various cases. We learned to use probabilities, Expected Values, regression curves, even our intuition probably had prepared already a faster, less energy depleting response. Brain does not really like when goes into over-drive.
“Use data, don’t use your intuition!” said in the end, the infinite calm Prof. James Taylor.
Sometimes I felt at the mercy of the Gods of statistics. My brain refused to capitulate its beloved intuitive approach, that saves itself time and energy, despite the repeated fallacies it exposed me over the time. Probably I was not the single one experiencing this sensation.
Faced with this heresy that pushed us outside the comfort zone, the entire cohort started to up-grade its collaboration, going to the next level, understanding and applying the concepts. During evenings, beer also had a better taste while working together.
The real life utility of the second module focuses on building a replicable system of decision making, by using data, facts, figures, dependencies and probabilities over many individual bets. This system can evolve over time, understanding the cause-effect links. A rational system beats intuition over a longer period of time, just because of its steady evolution and learning ability.
Once again, progress involves a small change of mindset.