Managing Excerptations: Adopting Appropriate Beliefs

Rationality Decision Making Analytics

I started my blog to kick my non-writing habit. I've now got enough material to start blocking out a book (hooray!). So while I'm doing that, I thought I'd start a small series looking at some of the books that have influenced me.

"Managing expectations" is one of my least favourite managerialisms. I cringe whenever I hear it. Expecting is about hope, which is the only thing that keeps many professionals going. We take what we can from life and do our best with it.

So this series is about some of the excerpts that caught my eye over the last six months. They're part of what gives me hope about the profession of management.

One of the outcomes of the data revolution has been reinforcing the idea that business leadership comes from a commitment to rationality.

A commitment to rationality is a good thing. Rationality is a complex beast and consists of three basic elements:

  1. Taking the appropriate action given one's goals
  2. Holding beliefs commensurate with available evidence
  3. Adopting appropriate beliefs in the first place

Because we humans are easily befuddled and our brains run on autopilot most of the time, we tend to mash all sorts of stuff up.

One common idea that surfaces is that successful business is an application of disciplined logic. However, taking the first element of rationality into account means that sometimes it is best not to apply logic to something.

At some point in most discussions around data and analytics, someone will point out the problems associated with 'making emotional decisions'. Yes, emotion is something to be aware of in decision making.

But then the discussion can veer towards this strange thing called 'evidence based decision making' (and our first question should be, "whose evidence?"). And emotion gets chopped out as being unreliable (or just too touchy-feely).

It turns out that our emotions are an important part of decision making. In one of my go-to books, Keith Stanovich's 'Decision Making and Rationality in the Modern World, he writes

"In folk psychology, emotion is seen as antithetical to rationality. The absence of emotion is seen as purifying thinking into purely rational form."

This is a dangerous (or lazy, depending on how you look at it) approach to decision making. Stanovich,

"It is perfectly possible for the emotions to facilitate instrumental rationality [taking the appropriate action] as well as to impede it. In fact, conceptions of emotions in cognitive science stress the adaptive regulatory powers of emotions"

"... emotions serve to stop the combinatorial explosion of possibilities that would occur if an intelligent system tried to calculate the utility of all possible future outcomes. Emotions are thought to constrain the possibilities to a manageable number based on similar situations in the past."

Devotees of analytics and machine learning will (correctly) note that we can now deal with the combinatorial explosion of possibilities. Which is good news for us all, because this helps with establishing reliable decision rules. It also helps us with the second element of rationality, holding beliefs commensurate with available evidence.

But it doesn't help us with the third element of rationality, holding appropriate views in the first place. Because this is where issues of morality are required. This is where we have to exercise our humanity to make judgements around what is right and wrong. What we should and should not do.

And this is not something we can reasonably delegate to machine learning.

Image via Gratisography