Uncertainty & Risk: Are we good at seeing the present?


A recent blog posting (Putting Together The Pieces of the Personal Computing Puzzle) in Tech Opinions suggested that not only are we not good at seeing/predicting the future we are not even very good at seeing the present. The article goes on to talk about how this insight can apply to what is happening in the computing industry. I found the article very interesting.

I believe there are cognitive and psychological reasons for the above suggestion (which I happen to agree with). This post is an important one for me as it links several issues that have been circulating in my mind for some time:

1. Why do we seem to prefer to talk about “uncertainty” as “risk”. Risk situations are ones that we know a lot about (what, so what, and an operationally useful notion of likelihood). Uncertainty can range from events we can serious envisage (but there are serious gaps in what we do know about them) to out and out surprises. I suggest that you begin to observe when we and others use the term risk: “Are we/they talking about risk or is it more accurate to conclude that it more uncertain like?”

2. Why do we often denigrate the ideas of others by labelling them as “just theories”. in parallel we often say that we “need to be practical/pragmatic” versus “theoretical. When is it important to our lives to be theoretical first and practical second?

3. Why do we sometimes take a long time (even a life time) to change our minds when there is so much evidence indicating that we are mistaken?

I think all these issues are connected.  For me the illuminating and significant thought is the suggestion that we are not very good at seeing the present.

Why do we have difficulty in seeing the present clearly?

It is because we have a theory about how the world works (at least that part of it we are particularly interested in. Whenever, we say that something occurs because something else is true/present/involved etc. we are theorizing.

Why is it a theory and not the truth? Because we never know all that is at play in what is happening. This is a cognitive issue, we just don’t have the capacity to know everything that is at play so the world turns as it does. This is why we have theories, we highlight some aspects of our world and decide they are the critical instrumental elements and if we pay attention to them we can be reasonably effective at understanding and explaining the past and present; and predicting the future. Another reason why these are theories, is they often end up being clearly wrong or seriously deficient in some way. Then, they can’t be the truth. The best we can say is that any one of our assumed valid views on why what happens does is that we have not encountered any falsifying evidence yet.

Yet contrary evidence may not indicate that we should abandon our theory. Perhaps we just need to refine it a bit. This effort to expand our theory to incorporate the “outlier” is a common practice, even in science.

So we can not always see the present well because we have a weak theory about it. And, our efforts to extend our theory to deal with contrary evidence takes work that takes time. The time aspect means that we end up clarifying the past. Once finished strengthening our theory, we are now in a new present and new information may cause us to question anew our world views and related theories.

But there is a second, almost insidious, element at play with our views: we often become emotionally wedded to them. We hold these views as referents for our value as a person/group/society. Why? Because some important value (to us) is attached to the theory. If the theory is questionable, so must our value in some way(?), so might our sense of self, so might our sense of worth.

Let me give an example that if it doesn’t touch you emotionally, you will be able to relate to it such that you can see the point.

“Diversity in the workplaces is at best a distraction and more often a road to performance mediocrity or worse!”

In North America and especially in the field of OD the above statement is lunacy or heresy. For most of us, we cannot read this statement and consider it clinically as possibly true. Our reactions can range from dismissal to outrage. Truthfully (sic) now, none of us can really be just dispassionate about the statement. Yet the statement is a theory about how the world works and any who hold it will be passionate about their belief in its veracity. The key here, hold it or reject it (i.e., hold the contrary view that it brings significant benefits to performance) you are certain it is not only true/untrue, but you are sure you are right (as in righteously right). Neither you or the other view holder will easily change your minds.

Let’s see how this plays out in a way that masks our ability to see the present.

How might we resolve this disagreement(sic)? We might look at studies done. Yet studies are often unconvincing, contradictory, marginally relevant, etc. Look at the studies on the health benefits and risks of this or that medicine, supplement, food item, etc. Personally, I only choose to pay attention to studies that support my views on the health benefits of red wine and coffee. Guess what, if a new study (the definitive one at that said red wine is dangerous) came out tomorrow, how likely am I going to pay it any mind and change my mind because of it.

Yet the evidence is now there. Red wine is dangerous! Yet my emotional attachment to the supposed benefits (health, enjoyment, etc.) are not going to make it easy for me to quickly change my views on the subject. Think about my willingness to change on a perspective where I have a very emotional/value driven view. I may rather die first, than change my mind. Histrionic? Yet history is full of martyrs.

But even under circumstances where we are not all that “attached” we can be interminably slow to change our minds. Why? Because we don’t really see the need to.

Did we ever need Newton and subsequently Einstein to live with gravity?

No, if you are living in a preindustrial society! So a practical person (one who only has a sense of what happens, not necessarily why or how) learns and accepts that things fall. They can use this knowledge to build structures, in agriculture, in warfare, in all manner of ways.

A practical/pragmatic person would not be too interested in Newton. In fact they would not even be able to understand him (too theoretical via his use of calculus). In fact I suspect when Galileo demonstrated that different weighted items fell to earth at the same speed, there were questions about whether this might be borderline heresy as it probably violated the Aristotelian view of how the world worked.

Eventually, many people really did set out to change the world we live in utilizing Newton’s theories. Furthermore, the theories are remarkable in their usefulness in todays world (even though Einsteins theories are much better at explaining what Newton’s theories couldn’t).

Yet in comparison to Einstein, Newton’s views on gravity are remarkably “down to earth”. Really now, gravity is not a force (Newton’s view) but varied dimpling of the space time continuum by different magnitudes of mass.

Because it is not obvious to the practical/pragmatic person how this has any bearing on our lives, we can just state that he is “theoretical”. And yet,….

The problem is not in being theoretical, it is espousing or holding onto a weak or poor theory when: there is a much better/useful one around, or, what is being espoused is weak in demonstrated advantages.

If we want to be fair about what someone is proposing we would be more accurate saying:

“You’re theory is not very useful/superior/helpful. Another theory is better because …”

If we just say to someone proposing something strange: “You’re just being theoretical!” You deny yourself to possibly seeing the present even better than you do now.

What has this to do with uncertainty and risk?

Everything. At its root, uncertainty and risk are the result of our limited abilities to know how the world works. Limited knowledge means we are subject to surprises. Limited knowledge  means we will experience surprises.

We compensate (even try to over compensate – more on later) by doing two things: we theorize, and we socialize.

Theories add to what we experience (what happens) by adding insights on how they happen and why they happen. Great theories will not only help us see the present but also give us useful insight to the future. How? They lay out causal chains of reasoning. And this helps us to know “how”? If we know how and why we can observe for preceding events (that suggest the likelihood of an event’s occurrence is increasing) that give us “lead time” to events that really matter to us.

No theory, everything connected will by definition be uncertain. It is only by having robust theories that we can move future (now envisage-able) events from the realm of uncertainty to those of risk. More theories enable us to envisage more uncertain like events. With envisagement, maybe we can make them more risk like?

Yet, any one of us can only have and work with so many theories. This is the benefit of socializing and organizing. Between us we can know more theories about more of our world. By association we are exposed to more risk and somewhat less uncertainty.

I would suggest that this principle is a major touchstone for designing organizations and/or assessing their effectiveness: how well do they anticipate uncertainty like events and successfully deal with them as risk like ones.

I mentioned above about “over compensation”. This is my polite way of hopefully gaming uncertainty and risk. How? By having a theory that suggests that events happen due to active agents (gods, bureaucrats, some hated out group, force of malice, etc.) Whenever in doubt about why or how, always personalize it I say. If we have a person/agent event mover, then our task is to somehow find a way to appease, befriend, neutralize, eradicate, etc. him/her or them.

I would think that we love conspiracy like theories, as they enable us to adopt the victim stance. And, there is so much comfort in being a victim. Saves work, effort and taking responsibility (except for the requisite offerings and sacrifices). The other advantage of conspiracy like theories, they can’t be falsified, ever. At best, we can show that there is no evidence to support the conspiracy. My rebuttal as a confirmed conspiracy holder is that they are too clever to be so easily found out, but …

Let us end by considering how we want to take advantage of the above thoughts.

1. Always be open to the fact that my worldview is a set of theories.

2. Always be looking for opportunities to hold theories that have observable chains of cause and effect.

3. Always be open to the fact that if my pet theory is frequently weak at explaining and predicting, find a better theory.

4. Actively listen to theories that cause you discomfort (they may be preferable views, if not they can help you strengthen the utility of your theories).

5. Challenge others’ theories to demonstrate how they provide superior outcomes. For example, “Why should we pay attention to Einstein’s theory of gravity over Newton’s?”

6. Take responsibility for your theories and consider that if others are likely to be impacted if you end up being wrong. Will you make them whole again? Actually you might best consider acting at all.

7. Always look for that which should not be occurring if your theory is robust. The outlier is your friend. The inlier(?) is a yes man (always agreeable).

8. Choose your friends wisely: may they always support you when you need and deserve it, be fun to be with, have divergent perspectives to you in some important ways, and call you on “it” when you need to be.

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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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