Anxiety over not knowing leads to irrationality, writes Kate Cooper
Richard Thaler has just won a Nobel Prize for saying something that many already knew. Those of us who have been party to decision-making within organizations are acutely aware that the calls made are sometimes – perhaps often – irrational. Yet Thaler’s challenge to the neoclassical economic model of rational decision-making leading to optimum satisfaction and allocation of resources has been extremely influential. The creation of the UK’s Behavioural Insight Team – the so-called ‘Nudge Unit’ – being one notable example.
We hear much about leadership and decision-making. Decisiveness has a longstanding history as a desirable leadership attribute; indecisiveness an unwelcome trait. Being in a state of indecisiveness – not knowing what to do – was found, almost universally, by researchers Shelley Taylor and Peter Gollwitzer to induce a state of neurotic pessimism.
Once a decision has been made and we start acting i.e. implementing the decision, we cheer up, feel confident and – ironically – much more able to make decisions. The period of not knowing, being uncertain and faced with a degree of ambiguity is, for many, stress-inducing. We all know people for whom the state of not knowing is almost unbearable and the quest for certainty imperative. At this point, it would seem obvious that ill-informed decisions are likely to be made: the drive to quieten the emotions arising in the period being a rational response; the decision itself anything but.
The role of decision-making as a key organizational process first appeared in Chester Barnard’s 1930’s book The Functions of the Executive. Subsequently there have been many different takes on how we should, and do, make decisions. Malcolm Gladwell’s Blink offers insights into the value of intuitive judgments; Daniel Kahneman’s Thinking, Fast and Slow has made a significant contribution to how we understand decision-making processes, distinguishing between intuitive and rational thinking.
What is often forgotten about decision-making is that a decision should be a choice between real alternatives. Let’s not fool ourselves that we are making a decision if the proposed courses of action are not genuine alternatives and properly informed. Too often the formulation of the decision, or, put another way, the problem to be solved, says more about the definer than the problem itself. It is during that period of uncertainty – which is likely to be stressful – that we must seek these alternatives and ensure that, as far as is possible, they are feasible and viable so our choice is genuinely informed.
An informed choice is an array of options about which you have knowledge, intelligence and credible information; it is not based on individual opinion, anecdotal evidence or weak research. There should be some sort of evidence base – or explanation of its absence – for each option. If the quality of information gathered to support an alternative is variable, with for example, a more robust and persuasive case presented for the already favoured option, the decision could be considered irrational.
There is much dishonesty in organizations about processes which are mere window-dressing for faits accomplis. This threatens not just rationality, but also authenticity. If leadership teams are to deliver high-quality decisions, they must develop their capacity to deal with uncertainty, to recognize that, for many, it’s not a comfortable place.
The best decision-makers tolerate not knowing. They are aware that, given the abundance of available information, it is not so much the value of the answers they seek, but the quality of the questions they ask.
– Kate Cooper is head of research policy and standards at the Institute of Leadership & Management