While on holiday a couple of weeks back, I read Niall Ferguson's 'The Ascent of Money'. It's a history of finance and makes particularly interesting reading in light of recent economic events. Ferguson highlights a range of cognitive traps that have played a part in stock market bubbles, bond market failures and economic crashes. Included amongst Ferguson's list of contributing causes are:
Now, these are all cognitive fallibilities that we know, through research, experimentation and observation, that all human beings are susceptible to*. Ferguson places these human biases and shortcuts at the heart of the mass delusion that gripped investors, economists, world and business leaders in the decade leading up to the Credit Crunch.
Reading The Ascent of Money, and having previously read Fooled by Randomness by Nassim Taleb, which covers some of the same territory, led me to think about how many managers are likely to have a good understanding of how cognitive biases affect their judgement and decision-making. We've seen from a multitude of corporate failures that this is an important area. Some people with a background in psychology and/or science will be familiar with many of the cognitive pitfalls that Ferguson, Taleb and others highlight as major contributors to the systemic problems that plague the world's economy. However, given that it can be important to know how these hard-wired, mental shortcuts have an adverse impact on our decision-making, where does this fit into most leadership development programmes? It's certainly not included as part of the learning outcomes for any programme that I've seen recently. Maybe that's because there isn't a need for it, but then how does the need get identified? It won't necessarily come from managers themselves, because it's one of those classic 'you don't know what you don't know' situations. Asked to rate their decision-making ability, I'm willing to bet that most managers would score themselves relatively highly (see overconfidence bias). So, is it then the job of us learning professionals to push this onto the learning agenda?
In an increasingly complex world, the limitations of our own decision-making apparatus (our brains) need to be compensated for. The knowledge and tools to do this are out there, but you won't find them appearing on many lists of management competencies. That's because to become a good manager in the old, industrial economy you didn't need them. To be a great manager in the new, knowledge economy they will be essential. Learning professionals should be familiar with these, and other, new, hidden competency requirements and be able to highlight them as a requirement for managers in their organisation. Not everyone will agree; some will see it as unnecessary but at the very least their awareness will have been raised to the possibility that they should look into the topic further. As learning professionals, we should be equipping people with more than just the essentials, more than the basics. Part of our role should be to expose people to new ideas, which could be the latest thinking in behavioural economics or a new method for calming presentation nerves. The important thing is that new and unfamiliar ideas set people off thinking, which can never be a bad thing. How to highlight these ideas then is the challenge.
Please don't get me wrong, I'm not suggesting that four-day workshops are thrown together on the abstract subject of cognitive biases. Sometimes, new ideas are best digested over time, in a format that the consumer feels comfortable with. Irrespective of what you think of his politics, David Cameron had an interesting way of highlighting what stimulated his thinking when he sent all his MPs a suggested reading list last summer. Note that what's powerful about that example, however, is that the list came from the organisation's leader, and not from a learning function. There's no easy answers to any of this, but what I'm pretty sure about is that two key questions which learning professionals need to be working on answering are:
I'm not pretending to have the answers, but I'm working on getting them. *Incidentally, anyone who believes that they're less susceptible to cognitive bias would do well to read a study by Emily Pronin at Stanford University that found the majority of people rate themselves as less susceptible to cognitive biases than the average person.