Making good decisions is challenging for everyone, especially when those decisions relate to important matters, for which the consequences often extend far into the future. I thus read Steven Johnson’s book Farsighted: How We Make the Decisions That Matter the Most with considerable anticipation.
Johnson previously wrote 10 other bestselling books, and his background is in literature, not business. Thus, it is not surprising that his book will more often call upon examples from areas such as literature, meteorology, city planning and politics, compared to typical business books. To be clear, however, Johnson’s book nevertheless provides many key insights that can be applied to business decision-making.
Let me highlight two of these insights:
First, Johnson argues that greater diversity supports better decisions. Top management teams that consist exclusively of middle-aged white males with similar political beliefs thus are not ideal for good decision-making.
Second, he notes that good decision-makers do not rely entirely on their gut instincts. Instead, they have a creative, future-oriented approach that involves considering as many options as possible. Good decision-makers draw heavily on analysis, but in the end, experience and intuition also play important roles.
Johnson starts the book with a discussion of how, some 200 years ago, authorities determined how to fill in the then 192.000 m² large Collect Pond in lower Manhattan after muddling through a tough decision-making process (ultimately, a wise decision as can be observed when one visits what is now the modest Collect Pond Park). He then discusses how Darwin made a long list of pros and cons regarding the decision of whether to get married (such was his uncertainty), and how Franklin developed an approach to decision-making based on moral algebra (i.e., through a somewhat impractical weighting of each of the key factors).
Johnson positions his reasoning as largely dealing with the slow (analytical) approach to decision-making from Daniel Kahneman’s Thinking Fast and Slow; this approach typically involves considering many variables and pressures from reality.
Johnson proposes the use of maps, models and influence diagrams as a useful first step when considering complex decisions. He makes the point that divergent views can lead to new ideas; this is another plea for diversity. In a crisis, leaders are typically responsible for making a multitude of difficult decisions; it is, as they say, lonely at the top. Examples in Farsighted include General Washington’s handling of infighting during the battle of Brooklyn, in which the British defeated his American forces, and President Obama’s ultimately successful decision to deploy special forces to go after Osama bin Laden. In addition, Johnson provides one of only two business-related examples in the book, as he quotes Jeff Bezos regarding his principle of always being ready to commit to a decision once he assesses a success rate of at least 70%.
If mapping is the initial step in decision-making, then the next step is predicting. Scientists are gradually starting to understand how the brain works in this situation. Wharton professor Philip Tetlock confirms that experts’ insights do not have much more predictive power than other groups’ predictions. For example, Charles Darwin relied on a method without much predictive value – the so-called “water method” – to treat his own and his daughter Anne’s health problems, with few positive results. Initial efforts to develop the necessary systematic methodology for predictions came from the field of meteorology. Today, the available tools for improving predictive power in decision-making include simulations, war games and scenario planning – the last of which was pioneered by Shell’s Pierre de Weck.
In the end, of course, a decision must be made. Procrastinating is rarely helpful, even with the best maps, predictions and simulations. Unfortunately, however, Johnson largely falls short of suggesting effective heuristics for improving decision-making. Nevertheless, here are the four approaches that Johnson recommends:
Cost–benefit analysis - asking if the yields of an activity are high enough or examining if the risks are too high in relation to the possible rewards;
Linear value modeling, which – similar to decision-tree analysis – involves giving weights (Bayesian probabilities) to each option;
Improving on decisions post facto (i.e., after the initial decision is made), despite dogmatism (what James B. Quinn calls “logical incrementalism”); and
Brainstorming to come up with new perspectives.
Some of the most far-reaching and complex decisions involve the development of approaches for dealing with possible life from other planets or galaxies (e.g., the measurement of extraterrestrial intelligence) and with changes to the Earth’s climate (global warming). Supercomputers are essential tools for improving analysis in these areas by, for instance, predicting weather conditions decades into the future. Typically, it is necessary to apply several axioms in making complex decisions. Perhaps the biggest challenge involves determining how to anticipate emergent problems. Unfortunately, we see a trend toward more homogeneity and populism among decision-makers in politics today – groups of all white males or polarization between Democrats vs. Republicans, for instance. Prudent, globally driven decision-making is thus becoming increasingly difficult to achieve.
In the final chapter of the book, Johnson deals with personal choices by presenting three case studies:
Charles Darwin’s decision to publish, in 1859, On the Origin of Species by Means of Natural Selection; he knew that this book would provide him with fame and academic recognition but also would create stress in his marriage. His wife was deeply religious and believed in Genesis´ literal story of creation, which thus was at odds with Darwin’s scientific work. When Darwin published his book, he indeed became established as the leading scholar on evolution. However, his decision also significantly increased the stresses in his marriage.
The five-volume 1852 novel Middlemarch by George Eliot (a synonym for Mary Anne Evans) mainly details how the main characters, Dorothea, Lydgate and Casaubon, deal with several complex decisions. However, Eliot also alludes to some of her own choices, particularly her decision to live with author and philosopher G. H. Lewes.
Johnson’s own decision to move from New York City to the Bay Area of California. His wife initially resisted this decision, and, indeed, the move turned out to be much harder for her than for him. They thus later modified their decision, and the Johnson family established two residences – one in California and one in New York.
In an epilogue to his book, Johnson wonders why decision-making is not taught more in schools at all levels. His explanation is threefold:
Educators simply do not have enough information to justify a full-fledged program on decision-making.
Realistically, a wide variety of disciplines must be cited to do justice to this topic, which makes it difficult to track.
The pedagogy of decision-making is simply not very well-developed; doing so is challenging!
Clearly, Steven Johnson´s Farsighted: How We Make the Decisions That Matter the Most is a relevant book. Yet despite the author´s notable ambitions, it is hard not to be left somewhat disappointed upon reading it. Specifically, Johnson fails to highlight even more clearly how best to make difficult and important decisions. As a practicing business executive, I wish that Johnson’s book contained clearer answers to this question. Still, there is a lot of value in Johnson´s farsightedness, particularly in how he identifies ways that people can better prepare themselves for good decision-making. In the end, decision-making remains as much of an art today as it ever has been; it probably will never become a science.
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