Blinkered analyses

When analysing the causes of a problem and seeking a solution, one should consider a few pearls from The Undoing Project by Michael Lewis:

  • Once an uncertain situation has been perceived or interpreted in a particular fashion, it is quite difficult to view it in any other way
  • Images of the future are shaped by experience of the past – n.b. Santayana’s  famous line: ‘Those who cannot remember the past are condemned to repeat it’
  • Without major changes, we all regress to our mean:
    • If we do well, we’re praised
    • But inevitably we then do not so well
    • Thus, we regress to our mean
    • Equally, the guy who performs badly one time does well next time
    • Hence, beware backing the successful manager or stock-picker – the likes of Alex Ferguson or Warren Buffett are extremely rare birds in this world who buck this rule – 99% do not
  • Heuristics is a posh word for a process of learning for yourself by trial and error, where the rules are at best loosely defined e.g. the innovation process or when ‘what if ‘testing – find things that don’t work en route to those that do
  • When managers have no clear decision, most do not seek to maximise the benefits/ upside but minimise the regrets/ downside – the pain of losses always greatly exceeds the joy of winnings
  •  When a manager fails to take action that could have avoided a disaster, he does not accept responsibility for the occurrence of the disaster
  •  USA hospital deaths:
    • Across the USA, more people died every year of preventable accidents in hospitals than died in car crashes
    • Bad things happened:
      • When patients were moved without extreme care from one place in a hospital to another
      • When patients were treated by doctors and nurses who had forgotten to wash their hands
      • When people pressed hospital elevator buttons, since shown as likely to infect you with some disease
    • Worst of all, when doctors made clinical misjudgements, especially if based on unreliable information patients gave them:
      • Doctors tend to pay attention to what patients ask them to pay attention to, and so miss the bigger picture
      • They notice a high heart beat say, find the patient has a history of thyroid problems which can cause this, so decide to treat it
      • They ignore the probability that something else – a lung collapse – might have a much more likely probability of causing it

Conclusions – when analysing any problem:

  • Facts always outweigh opinions
  • Stay open-minded
  • Try to consider the big-picture, the process end-to-end, rather than dwell on some bit-part – bigger problems may be simmering elsewhere

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