Meta-cognition. Thinking about thinking. In today's harried, data-soaked world, we rarely get time to think about how we think. The holidays are a good time for that.
If we don’t notice what we don’t notice, we’re much more likely to fall prey to poor decision-making and groupthink. I’ve written about decision-making before, so let’s look at groupthink.
Groupthink is an interesting phenomenon. What is it exactly? I'll rely on Daniel Goleman's description in his latest (excellent) book, Focus: The Hidden Driver of Excellence. When speaking of the financial meltdown and the subprime derivatives scandal:
"Of course, seemingly very smart people did invest in those derivatives, ignoring the signals that they were not worth the risk, and emphasizing whatever might support their decision. When this tendency to ignore evidence to the contrary spreads into a shared self-deception, it becomes groupthink. The unstated need to protect a treasured opinion (by discounting crucial disconfirming data) drives shared blind spots that lead to bad decisions."
Daniel Kahneman also writes about groupthink in Thinking Fast and Slow and in particular how people so easily dismiss disconfirming data and continue on as they always have. Groupthink begins with the unstated assumption that we know everything we need to know.
In Kahneman’s book, he recounts research he conducted when looking at a financial advisory company for high net worth individuals. He was granted access to 8 years of investment results for 25 investment advisors. His conclusion was that none of the advisors was consistently any better than the others at managing the clients’ money. The results were no better than chance.
Yet, when bonus time came around, the executives were “rewarding luck as if it were skill.” When told of the results of Kahneman’s research, it was quickly disregarded. According to Kahneman, “facts that challenge such basic assumptions - and thereby threaten people’s livelihood and self-esteem - are simply not absorbed.”
The research on the effectiveness of traditional management practices aren’t any different than those of the financial advisors above.
And not surprisingly, the evidence is simply not absorbed.