The Decision Strategist

Anyone who has worked with statistics, models, or data of any form has probably run into the situation where someone wants a measure for something regardless of how useful that measure is.

Maybe it’s some version of the conjunction fallacy or other decision making error: A number gives us confidence regardless of how useful the number is.

Or maybe, like valuing the status quo over innovation, it’s a liability issue. Workers and managers want to be able to cover their own ass if something goes wrong. In such cases it’s always better to have some numbers, regardless of how applicable they are.

My bet is on the second reason, and it’s ruining the world.

Take an abysmal measure of inflation: the CPI. Granted inflation is a difficult thing to measure, but there are several bad problems that only make things worse.

The same goes for GDP, unemployment rates (or here or wikipedia) and basically any other measure of economic activity.

But maybe other disciplines aren’t like that? Don’t bet on it.

A friend of mine who is an accountant says that there is enough error and flexibility in accounting rules to make most balance sheets suspect. Consider the value of goodwill and brand value (look at that equation).

Measures of worker efficiency, political polls and statistics in scientific research all have regular problems.

Earlier I was talking about ourreference and discuss our tendency to slap a measure on everything, but the effect is that it causes us to shift our focus to maximizing the measure rather than what we really want.

As a policy analyst, I run into the ‘a garbage number is better than no number’ mind frame regularly. Government officials and big companies, the havens of bureaucracy need a number to justify their decisions. They need something to protect themselves if something goes wrong.

The problem isn’t really that we want to rely on numbers. It’s that we’re making big, important decisions based on numbers that have high measures of error at best or are just plain irrelevant at worst.

Our desire to cover our own ass is causing us to make bad decisions. In complex, important decisions the situation is always more nuanced than the reduction to measures indicates. But we can’t cover our ass if we make a decision based on a judgment call after considering all the complexities of the situation. That is an opinion and is open to dispute.

Yet what do we miss by relying on approximations so heavily? We miss all the subtle implications of the situation that can’t be measured easily or that get lost in the aggregation of data.

We often forego the time and effort of gaining a deeper understanding of a decision in the name of cost and efficiency. For small decisions it might be worth it to search less and ignore more information. But for large policy decisions it is almost certainly worth the effort of getting more information.

So to conclude this long rant (my apologies), lets reflect a bit on the importance of considering things that can’t be quantified, interactions that can’t be written down in a list, and factors that may only be known to us subconsciously.

Our reliance on numbers as the ultimate truth is ultimately misguided.

-zot

Popularity: 17%

Vote for this post on: These icons link to social bookmarking sites where readers can share and discover new web pages.

This Sunday’s strategic discussion is a little late due to pesky internet problems. Last Sunday’s strategic discussion covered strategy in conflicts where one force is vastly out-gunned. This time we’ll focus on something a little closer to home for most of us: The strategic value of meetings.

Those of us who enjoy being productive share a common hatred of meetings. They are costly and produce very little obvious value. I regularly take work to meetings so that I can think while people are talking. But I read an article recently at Overcoming Bias that made me rethink my approach to meetings.

The main argument of the article is that meetings are not effective from a productivity standpoint, but they are important from a social standpoint. Meetings let us form alliances, assess confidence, and determine heirarchy.

My Old Meeting Strategy

Till now I have generally approached meetings as with a”too cool for school” attitude and image. I bring work so that I can write and think while people are talking. I stare out the window. Occasionally I crack a joke. Generally I don’t have strong opinions.

This strategy may seem self-destructive, and probably is, but it has been my attempt to deal with what I feel is a waste of my time. Meetings generally aren’t run efficiently and endlessly hash over old topics. In my current job they are basically used as a way to disseminate information from the Director. Something that could better be handled with an email.

But if the real purpose of the meeting is to determine social factors. Might I want to approach things differently? In life I have found that doing the hard thing almost always results in honest participation from others. In this case, the hard thing is to engage directly and openly in meetings, even if I feel like they are a waste of time.

New Meeting Strategy

Any good strategy needs an explicit statement of goals. Making use of social work in meetings, my new goal is to become central to discussions and the decision making process of the organization. There are two basic strategies, I’ll call them manipulation and compassion, that I could use to approach this, but only one that I think is likely to succeed.

A manipulation-based strategy in this case would involve making other people look bad by pointing out errors and generally speaking in a derisive tone. While this approach might gain me some measure of authority, it would only lead to resentment on the part of coworkers and dislike on the part of managers. No one likes someone who is rude and lacking respect.

On the other hand, a compassion based strategy would involve validating people’s work and point of view while not necessarily agreeing with them. By treating others with respect, I gain their respect and as I take part in more discussion would become increasingly relevant to decisions that need to be made as an organization. To that end, these are the major points I’m going to try and follow:

• Contribute in a useful way to each topic of conversation that is brought up, but without being derisive. This will be difficult because often I feel like people are repeating questions, preaching, or otherwise taking up verbal space with meaningless noise. The trick here will be to respect someone while trying to minimize irrelevant discussions.
• Be willing to confront issues that everyone is avoiding. This may not be popular in the short term, but hopefully over the long term bringing up difficult issues will encourage more genuine discussion.
• Endeavor to change the perception of the meeting to be more of an exchange of information instead of a top-down dissemination. This means I will have to have valuable information to convey at each meeting. Hopefully my bringing up information can snowball into other people also bringing up information.
• Create a strike team of coworkers who are effective and productive and shift their perception of the meetings. This group can serve as the core that further shifts the behavior of other workers. To some extent I already have this, but though the group is effective, efficient and possibly the most productive group of employees, right now we identify more as mavericks than as the core of the organization.

To often we view a situation as hopeless or unchangeable. Our organization faces serious problems of motivation and productivity, and a strong fear of confronting anyone about failure. Over the past two years, I have essentially accepted this situation and worked to set myself apart from other employees who are ineffective and unproductive. But perhaps the better and more noble approach is to engage the community directly and work to change the situation and improve both moral and productivity.

I’d be interested in hearing what strategies you use to cope with useless meetings or how you go about creating effective meetings. Both are important and useful skills.

-zot

Popularity: 10%

Vote for this post on: These icons link to social bookmarking sites where readers can share and discover new web pages.

When I was discussing strategies for competing against big business, I mentioned that big companies have trouble innovating. The basic problem is that businesses reward their employees based on success, giving little reason for employees to try anything other than what has worked in the past.

This thing is, truly bright and creative people don’t like doing the same old thing that has worked the past 10 times because they aren’t learning or doing anything new. Motivation tends to be fairly low, and as a consequence you get surveys saying that people waste 2.09 hours a day at work.

So this got me thinking: what if a company organized itself to reward employees for creativity and new ideas more than they are rewarded for success? What would that look like? For small businesses this is easier, because you have to innovate to survive. Even small businesses fail at this though. For large businesses it is even harder to not get stuck using a solution that works instead of a solution that makes them and industry leader. The idea would be to institutionalize innovation as the center of your business culture.

How you ask?

It’s a good question. I don’t know that anyone has solved it yet. I have a general idea that I will present in depth soon, but it’s still pretty rough.

Part of the answer may lie in using good hiring practices. Part may be in seeking employees who are freaks of nature and, like entrepreneurs, have a higher risk tolerance. The environment and situation is probably relevant.

Most importantly and most difficult, the reward structure has to shift to reward quality creativity more than profitability. Unfortunately it’s very hard to tell a quality creative idea. It’s much easier to use profit as a measure of performance because it is an actual number. Most people would probably argue that it is the right measure also, because a business is supposed to make money.

The thing is, focusing on profit leads to a short term strategic focus where companies end up sacrificing long term benefits for short term growth. The same thing happens in the federal government with popularity replacing profitability.

In fact, the proliferation of data is leading to the desire to quantify all performance. If no easy number exists, we prefer to rely on a proxy with a nearly worthless signal to noise ratio than to take the time and effort to evaluate the situation.

The thing is, if what you’re making isn’t easily quantifiable, measuring a proxy shifts efforts to the maximization of the proxy.

Think national testing requirements and the shift of education to teaching the tests. Tests are actually a poor measure of intelligence and education, but we prefer to use them as a bandaid than to consider what is really contributing to the decline of education: lack of money.

-zot

Popularity: 15%

Vote for this post on: These icons link to social bookmarking sites where readers can share and discover new web pages.

I’m looking to get an entrepreneur group together in Albuquerque. If you are interested in starting your own business or already have and would like to meet and talk with other people involved in the same process, please contact me. There doesn’t seem to be much of a community for small businesses that are just starting, but it could be really helpful. It would be great to sit down with people once or twice a month and talk about challenges, strategies and ideas. I see five (at least!) big ways in which an entrepreneur group like this could help:

• Exchanging information and ideas encourages new ways of thinking about things and solving problems.
• Free networking and marketing. Meeting other people involved in starting a business introduces new people to products and services and maybe would create a bit of a feedback loop for generating new business.
• If you are looking for a co-founder or a partner, an entrepreneur group is a great way to meet other like-minded people.
• If you are looking for investors, you might meet potential investors at the group, and being part of an entrepreneur group will help when talking to investors.

As I’ve mentioned in a few previous posts, I’m in the middle of starting a web-based company called decyder, but I’d be interested in talking to anyone who is starting a business, regardless of the whether or not it is tech based.

Even if you aren’t in Albuquerque but are in New Mexico, let me know if you’re interested. Maybe we can shift meetings around to different locations.

contact me here.

-zot

Popularity: 8%

Vote for this post on: These icons link to social bookmarking sites where readers can share and discover new web pages.