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Why does leadership bring a release home to great adulation only to have the next release crash and burn? Did the leader’s skill change between releases or were other random factors, such as luck, involved. Kahneman suggests a simple formula as a thought experiment.  Success = skill + luck. Chapter 17 of Thinking, Fast and Slow, Regression To The Mean, discusses correlation and causal interpretation.   (more…)

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Chapter 16, Causes Trump Statistics, was revelatory for me the first time I read  Thinking, Fast and Slow, and it was revelatory during this read. Over my career, I have been shocked many times to see a perfectly sane leader stand up and show a single statistic or estimate which promises delivery of a product at a cost or in a timeframe that is well outside of normal performance.  This chapter provides a rationale for what often seems to be less than rational. The content in this chapter helps me understand why statistical facts aren’t perceived to generate black and white answers, even when they do. Kahneman uses a story about taxi cabs to illustrate the difference between statistical base rates and causal base rates.  Statistical base rates are facts about the population but are not specific to any individual case. Causal base rates are effective because they are specific and are easily woven into a narrative about the case.   (more…)

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In Chapter 15 of Thinking, Fast and Slow we explore two types of fallacies. Logical and conjunction fallacies can impact any process improvement effort, typically in a manner that does not benefit change. 

The central plot device in this chapter is an experiment performed by Kahneman and Tversky that asked sets of respondents to rank attributes by representativeness and another group to rank by probability. The experiment begins with a description of the person, Linda,  (similar to the experiment at the center of Chapter 14). A set of statements about Linda’s potential profession is then listed. In this case (as compared to the experiment in Chapter 14), there are items in the list that require the application of logic to judge. For example, one item is “Linda is a bank teller” and a second is “Linda is a bank teller and is active in the feminist movement”. The lightbulb moment from the experiment was when there are two items that have a logical relationship, respondents distinguished between the two based on the story System 1 constructs.  (more…)

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Chapter 14 continues the discussion of cognitive biases and heuristics.  In Chapter 14 of Thinking, Fast and Slow we explore the representative heuristic.  

Tom W’s Specialty is an exercise/puzzle that Kahnamen uses throughout Chapter 14 to explore how the perception of representativeness impacts conclusions originally made from the base rate (the percentage of an attribute in the population). This might sound somewhat esoteric, but consider how many contracts are signed based on estimates that include representations of performance above and beyond the norm. Alternately how many agile teams pull more work items above their median performance based on representations of simplicity from stakeholders. The representative heuristic can negatively bias any intuitive decision.  (more…)

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The availability heuristic, introduced in Chapter 12,  states that we make judgments about an attribute based on how easy or hard it is to retrieve information about the attribute. In Chapter 13, Kahneman dives deeper into how the availability heuristic functions and provides some hints on how it can be used. (more…)

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Today we dive into the availability heuristic.  The availability heuristic is useful for understanding what people believe and how they will act.  A twist in using the availability heuristic is useful for disrupting beliefs based on impressions or events that can be quickly remembered. All leaders need to understand the impact of top of mind experiences on decision making and how to disrupt those biases, the availability heuristic is a tool for building that knowledge.  (more…)

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Today we dive into the concept of Anchors and the impact of anchor bias. This is one of my favorite topics for understanding behaviors in negotiations. Negotiations are all around us whether you are discussing salary, buying a car, or wrestling with a request for an impossible due date.  All this and more in Chapter 11 of our re-read of Thinking, Fast and Slow, so to quote Jackie Gleason, “Away we go!” (more…)