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Anxious Leaders Make Better Decisions

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Cass R. Sunstein is the law professor who with economist Richard Thaler introduced the world to “nudge”, a concept that they say shows how governments and other organizations can encourage individuals to make better decisions. The idea and the book of the same name struck a chord with President Barack Obama and UK Prime Minister David Cameron and led to Sunstein spending a period in the Obama Administration. Now back in academe, Sunstein is still thinking about how people make decisions and with a new co-author, Reid Hastie, a  professor of behavioral science at the University of Chicago, has published a book that claims to challenge the notion that decisions made by groups are better than those made by people on their own.

Wiser (Harvard Business Review Press) is not the justification some leaders might be seeking for abandoning any pretence of democracy in their organizations. Those that think they have all the information they need on their own can blunder just as much as those that seek advice from many others.

Sunstein and Hastie understand why some leaders may take decisions on their own. “Making good group decisions is hard, and the difficulty sometimes makes us wonder whether it is worth the effort. For some people, a good group discussion is a rare experience,” they write. They point out that group decisions inevitably cost more because more people are involved, but they can also increase the cost of errors because they can make bad decisions.

Part of the problem can be put down to “groupthink”, the idea associated with the Yale psychologist Irving Janis, who suggested that members of a group tended toward uniformity and self-censorship in an effort to avoid conflict. As a result, decisions are often not properly considered from all aspects – and the results, in all kinds of areas from politics to business, can be as disastrous as if one person had made them alone.

However, Sunstein and Hastie stress that there is more to it. They seek to use the sort of behavioral research that informs not just Nudge but also Daniel Kahneman’s Thinking, Fast and Slow and Dan Ariely’s Predictably Irrational and other recent books in this area to go beyond groupthink and show how small steps can have a big impact on decision making.

They outline eight factors for improving the quality of group decision making:

  • Inquisitive and self-silencing leaders;
  • Priming, or triggering, critical thinking;
  • Rewarding group success;
  • Assigning roles to group members;
  • Changing perspective;
  • Devil’s advocates
  • “Red teaming”, or setting up a rival group to challenge the decision-making group;
  • The Delphi method, a formal means of aggregating the views of group members.

However, over-riding all of these are two critical elements. The first is the need for leaders who are “anxious”, ie always worrying about whether everything that needs to be has been taken into account in making a decision or concerned about the consequences. Such people, say Sunstein and Hastie, are much more likely to create the conditions for good decisions than those who are always positive and favour subordinates who only bring them good news. The second is the requirement for the group to be genuinely diverse – not so much in demographic terms, as is the preoccupation these days, but in terms of ideas and perspectives.

And then there is the Moneyball issue. Showing their allegiance to the sort of thinking espoused by Billy Beane, the manager of baseball’s Oakland As and star of Michael Lewis’s book, Sunstein and Hastie plead the case for decisions to be based on data and evidence rather than intuition and hunches. Now, that would be interesting.