Organizational Development Perspective on Uncertainty & Risk: How we bring it into our lives


A recent article titled “61 Common Behavioral biases that Screw up your Thinking” in Business Insider (http://www.businessinsider.com/common-behavioral-biases-2012-5?op=1) outlines how our mental and behavioural biases can lead us to making inappropriate decisions. For this post I wish to explore how they bring uncertainty and risk (U&R) into our lives.

I have argued in other posts (Uncertainty and Risk: Continuing the Organizational Development PerspectiveAn Organizational Development’s Perspective on Uncertainty and Risk) that we live in a U&R like universe because of how we interact with and consider our world.

This post examines more closely the how “considering the world” perspectives introduce &R into our lives. I consider a bias as any unwitting predisposition to be selective in what we pay attention to and how we selectively use the information at hand to help us make choices.

This is a loaded notion: We always have perspectives on the world, but if we operate without appreciation of these perspectives they can become biases. A bias is dangerous if we are oblivious to the fact that we have it. Ignorance means we make choices with a false view that we are being logical, systematic, thorough, etc. For many decisions (i.e., our bias towards certain foods and styles of cooking) these biases may be limiting in the choices we consider, but they are not materially U&R inducing.

But there decisions in our lives are significant in their implications (wittingly or unwittingly). If choices are made and acted upon with unappreciated biases present we may actually expose ourselves to U&R implications  that another choice would have avoided. Note, no matter what choice we make, we bring U&R implications into play. The issue is are we knowingly accepting the U&R set that we are most comfortable with living with?

What are these biases? The 61 listed in the Business Insider article include:

  1. Anchoring – over reliance on one piece of information. Exposes us to black swan like U&R.
  2. Attentional bias – focus on few choices to the exclusion of other possibilities. Exposes us to a limited set of U&R sets that may be more problematic than that provided by other choice.
  3. Availability heuristic – over reliance on the information we have at hand. Exposes us to U&R in a similar manner as 2 above.
  4. Availability cascade – We prefer simple notions because they are simple. Exposes us to black swan like U&R as we fail to appreciate nuances that could signal an impending dire event.
  5. Bandwagon – choose that with is popularly held  because of the belief that it must be correct. Just because a point of view is widely held, does not make it true. In  group decision session this can take the form of being “encouraged” (sic) to be a loyal team member by getting “on board”.
  6. Belief bias – often a logical error based on extrapolating what we know into a more general conclusion. Creates unwitting U&R exposure because we do perceive its existence at all.
  7. Blind Spot bias – failing to realize you have thinning deciding biases Exposes us to walking backwards into U&R exposures.
  8. Choice supportive bias – where we think positively about a choice we have made and ignoring obvious flaws (e.g., a beautiful dog that bites).
  9. Clustering illusion – seeing patterns within data when the data is random.
  10. Conservatism bias – viewing older evidence more positively than newer more recent evidence (which may be contrary). Exposes us to U&R where the dire events are becoming more likely to happen.
  11. etc.

Again, we use our experiences in life ( and borrow from those we respect and/or honour) but we are faced with the fact that we do not understand all that is important in the world/universe. Hence beliefs that have proven useful in the past get elevated into truths (when they are not). Any scientist understand that their most cherish views on their field of study are hypotheses and open to being shown false or limited in their application (e.g., Newtonian physics versus Einstein’s).

Being aware of our biases enables us to check to see if we are blundering into undesired areas. They are undesired because of the U&R exposure they bring. Remember, when we make choices that unwittingly and unknowingly expose us to U&R we in effect elevate the associated risk events and the grey swan like uncertainty events into black swan like events. This is a complete rejection of U&R management principles.

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About 123stilllearning456

As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
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