Our research has shown that people usually do what they decide to do. The good news is that there are ways to consistently make better decisions by using practices and technologies based on behavioral economics.
The most successful decision-making approach boils down to a simple checklist. But it’s important to note that understanding the items in the list is not enough; this checklist must be used to be effective, since our biases don’t go away just because we know they are there. So each time you face a decision, use these steps as a tool to counteract your biases:
- Write down five preexisting company goals or priorities that will be impacted by the decision. Focusing on what is important will help you avoid the rationalization trap of making up reasons for your choices after the fact.
- Write down at least three, but ideally four or more, realistic alternatives. It might take a little effort and creativity, but no other practice improves decisions more than expanding your choices.
- Write down the most important information you are missing. We risk ignoring what we don’t know because we are distracted by what we do know, especially in today’s information-rich businesses.
- Write down the impact your decision will have one year in the future. Telling a brief story of the expected outcome of the decision will help you identify similar scenarios that can provide useful perspective.
- Involve a team of at least two but no more than six stakeholders. Getting more perspectives reduces your bias and increases buy-in — but bigger groups have diminishing returns.
- Write down what was decided, as well as why and how much the team supports the decision. Writing these things down increases commitment and establishes a basis to measure the results of the decision.
- Schedule a decision follow-up in one to two months. We often forget to check in when decisions are going poorly, missing the opportunity to make corrections and learn from what’s happened.
Our research has found that managers who regularly follow the seven steps above save an average of 10 hours of discussion, decide 10 days faster, and improve the outcomes of their decisions by 20%.
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Blockchain is an approach to storing data that allows a ledger of transactions that …
- can be visible to anyone, allowing transparency into the complete history of the ledger;
- can be distributed across many devices, supporting many independent copies and sources of data;
- can be verified as consistent, giving confidence to users that the embedded data is correct;
- can work with intermittent connectivity, supporting data generation and replication without robust networking requirements;
- is resistant to malicious actors, preparing for widespread use where all users cannot be trusted.
BitCoin, for example, provides a distributed database of coin ownership that is used to exchange coins between parties without requiring mutual trust.
Managers need to build their organization’s “absorptive capacity” around this topic for at least three reasons: (1) the potential effects on organizational value chains, (2) communication within and between organizations, and (3) benefits from cooperation.
One huge effect of the widespread adoption of the Internet is the ability for producers to directly link to consumers, bypassing wholesalers and retailers. Blockchain is another enabler of disintermediation. Why do we need institutions to enable trust in ledgers of information if an alternative method of enabling trust exists? If your organization creates value by legitimizing trust in a registry or exchange, blockchain may herald changes to your business model.
Considerable time in organizations is spent verifying, monitoring, and enforcing agreements. Did the buyer pay on time? Did the seller ship on time? Monitoring this is a loss of societal welfare — a form of overhead that each side must pay, but one that often adds little value to either side. Both sides would prefer not to incur these costs, but both must in order to protect themselves. Yet many straightforward contracts could be automated with reduced transaction costs for either party. Smart contracts embed contracts in protocols, such as blockchain, that can make contract execution more efficient and automated.
Blockchain has a similar role. It is unlikely that many organizations will have distributed data storage as a core competency. But IoT devices require distributed data storage. By working with shared protocols like blockchain, organizations can focus on what differentiates their value. This shared infrastructure can spur IoT deployment by decreasing development time and increasing the return on investment for candidate projects.
The “chain” of blockchain conjures the wrong connotation. The chain of blockchain can liberate rather than shackle by enabling trust, freeing companies to allocate resources towards value-creating activities rather than infrastructure.
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According to Kurzweil’s law of accelerating returns, technological progress is moving ahead at an exponential rate, especially in information technologies.
This means today’s best tools will help us build even better tools tomorrow, fueling this acceleration.
But our brains tend to anticipate the future linearly instead of exponentially. So, the coming years will bring more powerful technologies sooner than we imagine.
Of all the technologies riding the wave of exponential progress, Kurzweil identifies genetics, nanotechnology, and robotics as the three overlapping revolutions which will define our lives in the decades to come. In what ways are these technologies revolutionary?
- The genetics revolution will allow us to reprogram our own biology.
- The nanotechnology revolution will allow us to manipulate matter at the molecular and atomic scale.
- The robotics revolution will allow us to create a greater than human non-biological intelligence.
Let’s take a look at what’s happening in each of these domains today, and what we might expect in the future.
The Genetics Revolution: ‘The Intersection of Information and Biology’ Since the Human Genome Project was completed in 2003, enormous strides have been made in reading, writing and hacking our own DNA. Now, we’re reprogramming the code of life from bacteria to beagles and soon, perhaps, in humans. The ‘how,’ ‘when,’ and ‘why’ of genetic engineering are still being debated, but the pace is quickening. Kurzweil proposes that most diseases will be curable and the aging process will be slowed or perhaps even reversed in the coming decades.
The Nanotechnology Revolution: ‘The Intersection of Information and the Physical World’ While we can already see evidence of the ‘genetics revolution’ in the news and in our daily lives, for most people, nanotech might still seem like the stuff of science fiction. However, it’s likely you already use products on a daily basis that have benefitted from nanotech research. These include sunscreens, clothing, paints, cars, and more. And of course, the digital revolution has continued thanks to new methods allowing us to make chips with nanoscale features.
The Robotics Revolution: ‘Building Strong Artificial Intelligence’ We’re already well into the era of “narrow AI,” which is a machine that has been programmed to do one or a few specific tasks, but that’s just a teaser of what's to come. Strong AI will be as versatile as a human when it comes to solving problems.
The more we anticipate and debate these three powerful technological revolutions, the better we can guide their development toward outcomes that do more good than harm.
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DDI’s research was based on studying 15,000 leaders across 300 companies in 18 countries. First they compared the performance of undergraduate business degrees and MBA degree holders against eight skills:
- financial acumen
- business savvy
- compelling communication
- driving execution
- driving for results
- entrepreneurship
- influence
- inspiring excellence
Unsurprisingly, the MBA grads had better scores in financial acumen, but they also has strong business savvy and strategic decision making. Areas where they fell short were coaching, results orientation, and visionary leadership skills.
"Long-term leaders still struggle with visionary leadership skills," because it’s a slow-growth skill and "one where leaders need sustained practice in a real-world environment."
At the undergraduate level, humanities degree holders got high marks for five of the eight leadership skills as did those with business degrees, but for slightly different competencies. Those who earned a bachelor’s in business had the financial acumen and business savvy their humanities counterparts lacked. But they scored only in the mid-range for compelling communication, driving results, and inspiring excellence. Despite this deficiency, a recent survey from CareerBuilder found that employers were currently favoring business graduates above all other majors.
These findings suggest that degrees aren’t always a good predictor of leadership success.
Sinar observes, "A job candidate with the skills that his/her degree counterparts lack will have to recognize that assumptions may be made about his/her lack of leadership skills." He adds, "For them, it will be particularly important to find ways to demonstrate these capabilities to overcome hiring biases—and to differentiate yourself from others holding the same degree, to gain an advantage in the job hunt."
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