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What do we need to know to develop good decision-making for both normal and complex conditions?

Despite the importance, impact and frequency with which we make decisions in our private and professional lives on a daily basis, the actual process of making a decision is surprisingly unknown to us. And that is the case, whether the decisions are made in normal or under complex conditions. Many people just don’t know how to do it: making good decisions.

For many people, decision-making is more like a process of guessing or betting on a result, be that what they eat in a restaurant to choosing a job or investing in the stock market. Many even inform themselves, ask the right questions, but when it comes to act of the actual decision, they muddle through, decide somehow, and hope for a good result.

The Black Box

From cognitive science (and here: Dave Snowden), we know that people make decisions through a way that is called “conceptual blending”: Being faced with a decision we scan only about 5%-10% of the information available and then do a first fit pattern match (not a best fit pattern match) with multiple fragmented memories in a subconscious process. This process, where we assemble some knowledge, blend in some memories, – especially the recently activated ones – leads then to a unique course of action, that often defies logic and insight. Since most of the time we are not aware of these processes, we have come to label this black box process “intuition” or “gut feeling”.

When asked about the actual decision-making process that other people could coherently follow, even senior leaders tend to a list of actions rather than coming up with a comprehensible process. People also often invent a story according to which the decision makes sense afterwards. It is strange that this story depends heavily on the result of the decision: if you were successful, the decision-making process is told very differently than in the case of a failure. Cognitive scientists call this phenomenon of experiencing or describing a decision as good or something that made sense in hindsight “retrospective coherence” – also not really a reliable process.

Most often it is assumed that a positive result of a decision process automatically means that a good process has been used. This is not necessarily the case. It is not uncommon in our society that more significance is given to the result than to the process, since errors in the result are often punished. However, if the process itself is not solid, learning from mistakes will be difficult, intuition will not be trained, and chance, betting and sheer luck will be given greater importance than they are entitled to.

The best way to make a good decision rests on a solid decision

-making process (adapted after Russo & Schoemaker: Winning Decisions): IMG_0901

  • Goal and Framing: the general goal of the decision maker, including how he thinks about the knowledge on which he bases his decision.
  • A realistic approach to gathering information.
  • Organize information and weigh different perspectives.
  • The actual act of deciding.
  • An approach to communicate and implement the decision made.
  • Learn from experience, including a way to measure the effectiveness of a decision so that adjustments can be made

So far so good. Unfortunately, decision-makers face further challenges: Depending on the level of complexity or the degree of uncertainty that provide the context to the decision, these steps not only look different, but are subject to completely different dynamics.

Cynefin Framework DecsionsAn excellent decision making support is Dave Snowden’s Cynefin Framework. It helps to differentiate between ordered domains and complex areas (see also Dave Snowden’s article on HBR, A Leaders’s Framework for Decision Making. ). Ordered conditions include anyone who may be complicated, but predictable, with known cause and effect relationships, such as with a car repair, or the construction of an airplane. There are aspects in the predictable domain and those that require different approaches in most decisions. Most decision researchers are in favour of a good mix of the two.

As decision aids under ordered conditions, the following decision-making support can be used:

  • Manuals, procedures, instructions
  • Probability calculation, calculation models and algorithms
  • Analysis and expert knowledge, logic
  • Formal valuation models, scenario planning, some systems thinking approaches

What if it’s complex?

Complex conditions and uncertainty prevail wherever we are dealing with natural conditions or with people and their relationship dynamics instead of algorithms and technical problems. There are so many unknown factors and interrelationships that we cannot assume cause and effect, nor plan or predict results.

As a rule of thumb: If there are several hypotheses for the way forward or the pending decisions that seem to contradict partially or completely, we are dealing with a complex adaptive context. This means other approaches and methods are required than calculation or logic (if-then connections). It is stunning how often attempts are made to try and make complex conditions manageable and predictable using purely mechanistic methods, an approach that is doomed.

Probe Sense Respond

In the complex domain, Snowden advises to test ideas first: “probe – sense – respond”. Ideally, several small test projects can be carried out in parallel and with contradicting basic assumptions. In worst case, we learn something. In the best case, we find a dynamic way forward.  Through these parallel ‘safe-to-fail experiments’, different assumptions, ideas and hypothesis can be tested without building the decision-making process on blind spots or too narrow mental models (frames) – if possible, before a lot of money, time and effort is invested in the development and scaling of new approaches.

With this approach decision-makers can avoid blind spots in their own framing or some of the major cognitive biases, such as:

  • the Hawthorne effect: not the new approach led to increased productivity, but the mere fact that it was new
  • the confirmation bias: you only see evidence that confirms what is already assumed, but not that that confirms the opposite
  • keeping the same frame in the face of change of circumstances: Encyclopaedia Britannica almost went bankrupt because they kept the frame of reference “we sell books” despite the emerging new CD-ROM technology. Only in the last moment they switched to the reframe “we sell information”). This is especially true when decisions concern scaling, growth, or innovation.

Avoiding decision-making blind spots counteracts the automatic first fit pattern match and is especially important with decisions regarding innovation, development and scaling.

What about Intuition?

Intuition is essential for decision-making under complex conditions. Curiously, decision-makers have found that our gut instinct sometimes delivers brilliant results but is usually rather frighteningly mediocre (see “first fit pattern match”). The decisive factor here is probably the training of intuition.

When researchers examined the decision-making processes of successful firefighters, they were initially amazed to find out that these neither followed specified procedures nor seemed to make conscious decisions. More detailed inquiries showed that after years of experience, operations managers “simply knew” what had to be done. More like masters of martial arts, they were able to intuitively recognize even the smallest patterns of fire and smoke, decide and act accordingly (recognition-based decision; see Gary Klein’s research).jakob-owens-kFgMle8LFFo-unsplash

The German decision researcher Gerd Gigerenzer explains that experienced experts rely more on their (trained) intuition or simple heuristics than they do on complicated algorithms and calculation models when there is a high degree of uncertainty. Instead, beginners should train their intuition before relying on it.

Use heuristics

lubo-minar-ECxwQjLRwLA-unsplash (1)Heuristics are mental strategies or simple rules of thumb that help us to concentrate on the essentials with limited knowledge and time and to ignore the rest to be able to make decisio

ns at all. They are essential in the face of complexity and uncertainty. The rules should be simpler the more complex the terrain in which we want to make decisions. Harry Markowitz received a Nobel Prize in 1990 for a super complex calculation model for investment strategies. When asked, he explained that he preferred to use a simple rule of thumb for his own investments: distribute your assets evenly across many options (1 / N).

Befriend complexity

In the end, it is important to develop your own abilities to work effectively with decisions under complex conditions and uncertainty. According to Theo Dawson, it is most likely that good decisions will be made when the complexity of a person’s thinking fits well with the complexity of the challenges in the workplace. The most effective and agile decision-makers rely on additional skills, including the ability to think and communicate clearly, and to learn to understand increasingly complex relationships. This includes the ability to differentiate between complex areas and complex domains and their different requirements for decision making. The recognition of the inevitable complexity of our everyday decision-making requires, not least, the inevitable abandonment of the temptation to want to make everything safe, calculable, and predictable.

Sources:

Dawson, Theo: LDMA – Lectical Decision Making Assessment www.lectica.org

Gerd Gigerenzer (2014): „Risikobewusst: Wie man gute Entscheidungen trifft“. Penguin Books;

Gerd Gigerenzer (2008): „Bauchgefühle: Die Intelligenz des Unbewussten“, Penguin Books

Klein, Gary: Streetlights and Shadows – Searching for the Keys to Adaptive Decision Making; MIT Press, Camebridge,  Massachusetts

Russo, J. E. & Schoemaker, P.J.H. (2002): Entscheidungen gewinnen: Das erste Mal richtig machen.

Snowden, Dave: The Cynefin Framework, www.cognitive-edge.com

Snowden, Dave; & Boone, Mary E (2007): A Leaders’s Framework for Decision Making. Harvard Business Review.

Pictures: Photos by ThisisEngineering RAEng, Lubo Minar, and David Ownen all on Unsplash, Cynefin® Framework used with permission from Cognitive Edge.

Entscheidungsprozesse sind weitgehend unverstanden

Gemessen an der Anzahl an Entscheidungen, die wir tagtäglich in unserem Privat- und Geschäftsleben treffen, ist es erstaunlich, wie viele Menschen gar nicht wissen, wie das geht: gute Entscheidungen treffen.

Entscheidungsfindung gleicht für viele Menschen mehr einem Prozess des Ratens oder des Wettens auf ein Ergebnis, angefangen von dem, was sie in einem Restaurant essen, bis hin zur Auswahl des Jobs oder dem Investieren an der Börse. Viele informieren sich auch, stellen die richtigen Fragen, aber wenn es zur eigentlichen Entscheidung kommt, schummeln sie sich durch, entscheiden irgendwie und hoffen auf ein gutes Ergebnis.

Werden Menschen nach dem Entscheidungsprozess befragt, listen auch hochrangige Führungskräfte eher eine Liste an Aktionen auf, als einen nachvollziehbaren Prozess zu nennen. Auch erfinden Menschen oft eine Geschichte, nach der die Entscheidung im Nachhinein irgendwie Sinn ergibt. Kurios ist, dass diese Story stark vom Ergebnis der Entscheidung abhängt: Hat man Erfolg gehabt, wird der Entscheidungsprozess ganz anders erzählt als bei einem Misserfolg.  Dieses Phänomen, eine Entscheidung im Nachhinein als stimmig zu erleben, nennen Kognitionswissenschaftler ‚retrospektive Kohärenz‘.

Meistens wird angenommen, dass ein positives Ergebnis eines Entscheidungsprozesses automatisch bedeutet, dass ein guter Prozess genutzt wurde. Dies ist nicht unbedingt der Fall. Dass oft dem Ergebnis eher als dem Prozess Gewicht verliehen wird, ist nicht in unserer Gesellschaft nicht ungewöhnlich, in der Fehler im Ergebnis abgestraft werden. Wenn jedoch der Prozess selbst nicht solide ist, wird das Lernen aus den Fehlern schwierig, die Intuition wird nicht geschult, und den Faktoren Zufall und Glück wird größere Bedeutung eingeräumt als ihnen zusteht.

IMG_0901Der beste Weg zu einer guten Entscheidung ist tatsächlich ein solider Entscheidungsprozess (Russo & Schoemaker: Winning Decisions):

  • Ziel und ‚Framing‘: das allgemeine Ziel des Entscheidungsträgers, einschließlich der Art und Weise, wie er über das Wissen nachdenkt, auf das er seine Entscheidung stützt;
  • Ein realistischer Ansatz zum Sammeln von Informationen;
  • Entscheiden: Informationen organisieren und verschiedene Perspektiven abwägen;
  • Ein Ansatz zur Kommunikation und Umsetzung der getroffenen Entscheidung;
  • Lernen aus Erfahrung, einschließlich einer Möglichkeit, die Wirksamkeit einer Entscheidung zu messen, damit Anpassungen vorgenommen werden können

Nun stellen sich dem Entscheidungsträger noch weitere Herausforderungen: Je nach Komplexitätsgrad oder Unsicherheitsfaktor sehen diese Schritte nicht nur anders aus, sondern unterliegen ganz anderen Gesetzmäßigkeiten.

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The trouble with decision making (DM) as a topic is its complex character which is doesn’t lend itself well to unpack it in a linear mode. For as soon as we want to dive further into our process, we have to determine first which domain we are finding ourselves in: an ordered domain or a complex one?

Most people seem to conflate #risk with #uncertainty. However, risk can be calculated by algorythms and described by probability in stochastics.  Whether that is the probability of winning or losing at the casino, or the risks of flying an airplane under normal conditions.

With uncertainty, all bets are off. The outcome cannot be known or calculated. Both conditions require very different approaches to decision making. The best decision under risk is not the best decision under uncertainty.

Interesting added dimension: DM researcher @Gerd Gigerenzer states that with high uncertainty and unstable conditions, with only little data available but many variables, experienced experts do better relying on their (trained!) #intuition or simple #heuristics rather than trusting complicated algorithms and calculation models as DM support. Novices should instead train their intuition first before relying on it. And for anything that can be calculated (risk), algorithms can help. Most DM researchers argue for a good mix of the use of intuition and formal decision making support.

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In the last blog I ended with establishing a baseline around decision making, drawing on the Lectical Decision Making Assessment (LDMA) and Russo & Schoemaker (“Winning Decisions”):
  1. Framing: the general goal of the decision maker including the way they think about the knowledge upon which they base their decision
  2. A realistic approach to gathering intelligence
  3. Coming to Conclusions: organising and analysing the information and a way to coordinate different perspectives (weighing)
  4. An approach to communicating and implementing the decision made
  5. Learning from Experience, including a way to measure the decision’s effectiveness so adjustments can be made

It seems that already the first step, Framing, is much undervalued, or even overlooked. The way we frame a problem exerts enormous control over the options we recognize, the data we collect and the solutions we choose.

Poor framing can lead people to sensible-sounding but fundamentally limited views of the world to structure their decision making process. According to Russo & Schoemaker (“Winning Decisions”), we experience frames when we meet people who just seem to immediately understand us. Or in the frustration of trying to talk with others who just don’t seem to get it, no matter how much we try to explain. Cognitive scientist call these different ways of looking at the world “frames”. They are mental structures that simplify and guide our understanding of a complex reality. Everyone must inevitable adopt some kind of simplifying perspective.

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With the amount of decisions that we make every day, it is astonishing that the process of making decisions is not well understood. So how do we make the best choice?

The very act of deciding seems a bit like the piece of soap in the bathtub: the more you want to get a grip on it the more it slips away. Much is talked today about VUCA conditions, and decision-making in complex adaptive spaces with highly uncertain outcomes, volatile ingredients and complex relationships are a different animal all together to deal with. Many leaders that we worked with, when asked to portrait their decision-making process in a way that it could be followed or repeated by others, tend to come up with a list of actions rather than a solid decision-making process. That made us curious. We ventured more into the terrain of choice-making.

The weird thing is that even in ‘normal’ conditions people are not aware of how they make choices. Some people pose their questions attentively, gather relevant information superbly and then “wing” it with the actual act of deciding. And then come up with a perfect explanation in hindsight.

So, starting to establish a baseline around decision making, let’s consider basic steps, drawing on the Lectical Decision Making Assessment and Russo & Schoemaker (Winning Decisions):

  1. Framing: the general goal of the decision maker including the way they think about the knowledge upon which they base their decision
  2. A realistic approach to gathering intelligence
  3. Coming to Conclusions: organising and analysing the information and a way to coordinate different perspectives (weighing)
  4. An approach to communicating and implementing the decision made
  5. Learning from Experience, including a way to measure the decision’s effectiveness so adjustments can be made

Outlook: In some next blogs I intend to bring in more and more layers of decision making, exploring input from different topics, authors, influenzers  and frameworks: Dave Snowden, Gary Klein, Bonnitta Roy, Gerd Gigerenzer, Andy Clarke; Lectica.org; concepts/models/ methods: Framing, Cognitive Biases; Intuition; Sensemaking; Cynefin Framework, OODA Loop, Risk vs. Uncertainty, Heuristics, Constraints, Learning, Failure, Innovation, Theory of Change….

This is a recent interview conducted by Joanne Wood for a partner organisation Rise Beyond, UK:

A conversation with Anne Caspari

 

Anne is a specialist in transformative processes and change, for both personal and leadership development. With a MSc/MPhil in Ecology and Environmental Development from Hannover University, Germany, she draws on three decades of experience with complex systems, adaptive pushback and obstacles to self-organisation. This knowledge, combined with more than 18 years of work on adult development (developmental coaching) and transformation gives her a unique edge. She works with teams and groups to tap into what is actually happening, uncovering obstacles and pushback in the business ecology and setting free team intelligence and alignment.

Jo: I would love to get an idea of what your focus is on at the moment.

Anne: We are focusing on both personal transformation and organisational change. And on the interfaces between both. For personal transformation we run courses at our retreat centre. The people who come are already quite aware of their patterns, just not sure how to integrate them. Some of them are also coaches and change professionals. What do they want to work on? It’s different for everybody, it could be in a job, money, relationship, health, something you are doing to keep you in a certain place, and you are sick and tired of it.. We work with them on the capacity to find these patterns, resolve the underlying resistance and the ability to deal with whatever it is, to be with what you normally push away into either the subconscious or outside of yourself. For example this could show up as blaming everyone else for triggering your anger.

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This picture below (please excuse yet another iceberg image, but it is so fitting) should be self-explanatory. This is also what we are doing in our Transformation Intensive Courses, where we go down to that level at day 2 (of a 7 days course). Then the real fun starts, cleaning up, lightening up and prototyping personal stuff. Just imagine what you could accomplish.

The only other thing that might need an explanation is shadow work and the Lucky Luke Move. If your reactive patterns, most importantly the ones you are now aware of, are called “shadow”, mostly from fans of Jung and some of us Integral Theory People. It is mostly things that you get triggered by or you don’t want to be with that stuff. Most of the time it is disowned and pushed to the subconscious and hidden there (hence: deeper iceberg layers), or pushed outside your self-boundaries and projected onto others. They seem the source of your reaction (hence: shadow). If you learn to be aware of, identify, and be faster than your f**cking fast shadow moves, you got it.  The picture above shows the Master at work: The Man who draws faster than his Shadow. While never quite reaching this level, this is what we do at the TI courses ;-). 

Group transformation processes, much like individual transformative processes, follow different phase with distinctly recognizable stages. According to these patterns, a skilled coach/facilitator can keep the individual or the group in the process. The main task is to counteract the conscious or unconscious attempts to escape or to sabotage the process because of phenomena that are considered uncomfortable, irritating or even painful (e.g. Scott M. Peck’s “Groan Zone/Authentic Chaos”/ R. Kegan’s “Immunity to Change”).   

Individual processes can take the form of individual coaching, intensive retreats in self-leadership with awareness based technologies. They are geared towards reintegrating disassociated parts of the self-system or the dis-identification with mapping errors in the meaning making system of the individual. Group processes can have different intentions that go from more coherence in teams, integrating pathologies, towards more authentic participation, innovation and other emergent properties. Most of the time they are not automatic and require facilitated and committed process work with the respective team or group. In an ideal case, group facilitation requires only those minimum elegant structures that keep the group in process while resisting the temptation to go with any of the easy solutions that inevitably pop up along the way, while constantly scanning the quality of presence that is arising in the group and mirror that back. This would ideally also require a kind of ‘process literacy’ of the participants; the ability to distinguish between the self and the (power) moves of identity. The phases and stages of these processes along with the phenomena normally showing up are pictured above. For further reading on the dynamics of group processes see Bonnitta Roy’s article in Kosmos Magazine or this chapter published on group processes. The process traps and the tools and method to counteract escape mechanisms are pictured in Slides below. Please note that the representation with the U-Figure is oversimplified, these processes are non-linear and can’t be followed as a recipe (e.g. “step 5: find deeper meaning and purpose”.) Each phase is emergent from the prior one and can’t be planned, forced, constructed, or jumped. The figure U makes only sense as a coherent view in hindsight and thus differs from the majority of Theory U applications.

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Company Values and Mindset

are an emergent outcome, not prescribable. 

Companies have become aware of the fact that core values – integrity, trust, fairness – can function as attractors that drive beneficial behaviours in the workplace. What they are not getting is that core values just can´t be prescribed, top down or in any other direction.

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While many companies large and small have come to the laudable conclusion to focus their organizational development efforts on values rather than behaviours, most go about this strategy in a wrong way.  When values are defined upfront without letting them emerge through a process and paying attention to which values are currently operative, people tend to game the system and display what HR and HQ want to hear. Dave Snowden puts it this way: “As soon as you write your values down, you´ve lost them”. Read More

Complexity Coaches

“The temptation to lead as a chess master, controlling each move of the organization, must give way to an approach as a gardener, enabling rather than directing. A gardening approach to leadership is anything but passive.
The leader acts as an “Eyes-On, Hands-Off” enabler who creates and maintains an ecosystem in which the organization operates.” ― Stanley McChrystal, Team of Teams: New Rules of Engagement for a Complex World

Coaching and Leadership from a Complexity Perspective 

Complexity science and application alters the way we look at change, transformation, leadership and organisational development.

Today’s leaders are asked to navigate in complex environments, while most of their technical skill sets enable them for more transactional, expert style interactions. The distinction between complex and complicated domains has become a crucial one in the VUCA world, with a capital C for Complexity.

The onset of the COVID-19 pandemic has made it quite clear that the world has become more volatile and unpredictable. Uncertainty and ambiguity are no longer buzzwords, but people have a felt sense of what it means to face these challenges for real on a daily basis in both personal and professional life.

“In a world where causality is systemic, entangled, in flux, and often elusive, we cannot design for absolute outcomes. Instead, we need to design for emergence. “ Ann Pendleton-Jullian

How to respond to an increasingly ‘white water world’ is the primary challenge facing today’s leaders and leadership, and it changes coaching and leadership development accordingly in these contexts. 

There is an emerging quality, a different dimension, that defines coaching and leadership development from a complexity viewpoint:

The complexity part signifies, that we draw on a multitude of perspectives based on a coherent theory and practice of leadership for today’s disruptive, volatile, and intensively networked society. We are commited to working with what is, with probing, sensing and safe-to-fail experiments for adaptive contexts.  

The coaching aspect means that we don’t come with ready made solutions and recipies and that we enable our clients, private and corporate, to find their own solutions in the circumstances of their everyday challenges. However, Complexity Coaching goes beyond the aspect of bringing out the fullest personal and professional potential in a leader. It brings in the whole relationship with people’s embeddednes in different systems and environments. Complexity coaching looks as much at the ecosystemic context, the ‘inbetween’ and the relationship dynamics as well as the actions and skills of individual leaders. 

 

 

 

“In a world where causality is systemic, entangled, in flux, and often elusive, we cannot design for absolute outcomes. Instead, we need to design for emergence. “. Ann Pendleton-Jullian

The onset of the COVID-19 pandemic has made it quite clear that the world has become more volatile and complex. Uncertainty and ambiguity are no longer buzzwords, but people have a felt sense of what it means to face these challenges for real on a daily basis in both personal and professional life.

How to respond to an increasingly ‘white water world’ is the primary challenge facing today’s leaders and leadership.  At EZC.Partners, we help people, leaders, CEOs, managers and other professionals to navigate these challenges.

  • we are thinking partners to our clients, and help probing the system, developing viable directions and solutions toghether
  • we support individual leaders with personal learning, individual growth, insight, and leadership skill development and decision-making under complex conditions
  • we help teams towards healthy, creative coherence and self-organization
  • help to strengthen the health and generativity of the organization’s culture
  • we help the organization with change and transformative processes especially in the face of resistance and pushback

Vertical Development

“Seeking the ideal has a long history, it produces many saints but few paradigm changes”. Dave Snowden

We work with developmental models and find them helpful in many ways, especially when working with leadership development. We draw on models from different researchers, such as Susanne Cook-Greuter (ego development), Bill Torbert (action logics), Robert Kegan (orders of consciousness and immunity to change) or Theo Dawson and her team (Lectica/LDMA). photo-1439337153520-7082a56a81f4-landscape

We work with developmental models where they are adequate in order to cope with ever increasing complexity in the VUCA world. We don’t focus on teaching people to think at “higher levels”. “Higher levels of performance emerge when knowledge is adequately elaborated and the environment supports higher levels of thinking and performance. We focus on helping people to think better at their current level and challenging them to elaborate their current knowledge and skills”  (Theo Dawson). Read More