Think in Bets To Advance Your Knowledge
Our beliefs can wreak havoc with our decision-making. We’re hard wired to defend and protect our beliefs. Think in bets to qualify your beliefs so you can understand decision drivers.
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Introduction
The way that we approach decision-making can often be very narrow. Decision-making is not as black or white as it may seem.
There are always other alternatives that need to be considered, risk assessed and the likelihood of other events occurring that need to be factored.
The problem with decision-making is that it is viewed as binary. Decisions are thought to be right or wrong, we succeed or fail, or the answer is yes or no.
Choosing to do something means that you preclude yourself from pursuing other opportunities. There’s always an opportunity-cost in choosing one path over another. Decision-making is never binary.
Change your decision-making framework to think differently about how you make decisions. Train yourself to think in terms of probabilities.
Use probabilistic thinking to determine your level of confidence in an idea or belief. How confident are you in your beliefs that an outcome will occur?
Our beliefs are difficult to shift
We’re optimised for efficiency
As discussed in this previous post, our brain is optimised for efficiency and survival.
This is an evolutionary adaption that has occurred over time to support an ever-increasing volume of decisions that we’re required to make every day.
In order to process such a high-volume of decisions, our default thinking system is the “reflexive” system.
This system uses shortcuts (heuristics, beliefs and prior experiences) to quickly and efficiently process information to support decision-making.
Beliefs are stubborn
Our beliefs are how we experience the world.
Once we form beliefs, and they’re “believed to be true”, it can be very difficult to change or correct our beliefs.
Our beliefs determine how we process new information.
We’ve got beliefs on absolutely everything, from food, politics, sports teams, countries, religion, parenting, exercising etc. You name it, we’ve got beliefs for it.
“We’d like to think that we’re the consummate truth seekers, however, rarely do we take on board new information and update our beliefs”.
Pretty scary heh!
We’re more inclined to alter our interpretation of new information, creating a narrative that supports our existing beliefs. Hashtag confirmation bias.
Beliefs can be a little like a snowball.
Once they become formed, they generate significant momentum and velocity, increasing in size as they roll unstoppably down a mountain. The bigger the snowball, the more difficult it is to stop.
“Our beliefs wreak havoc with our decision-making. We’re hard wired to defend and protect our beliefs”.
To better calibrate our beliefs we need to think in bets.
Think in terms of bets to learn
Thinking in terms of bets is very similar to designing experiments. It’s an iterative loop of search, discovery and learning.
Thinking in bets …
Designing experiments …
“When we’re thinking in terms of bets, or probabilities, we’re not trying to calculate in terms of success or failure, right or wrong”
It’s rare that we would be absolutely certain that an outcome will have a 100% likelihood of occurring.
Likewise, it’s also unlikely that we would have a high-level of confidence of an event having 0% chance of occurring.
Practically nothing is black or white, 0% or 100%.
Long shots hit some of the time.
An example, the Trump presidency …
“After Donald Trump won the presidency there was a huge outcry about the polls being wrong. Nate Silver, founder of FiveThirtyEight.com, drew a lot of that criticism. But he never said that Hillary Clinton was a sure thing. Based on his aggregation of polling data, he had Trump between 30% and 40% to win in the week before the election. That’s still a 1 in 3 chance. An event predicted to happen 30% to 40% of the time will happen a lot”.
In business, we’re more working in the they grey area, the middle ground of probabilities and confidence, rather than at polar ends of the spectrum.
“By treating decisions as bets, poker players explicitly recognise that they are deciding on alternative futures, each with benefits and risks” - Annie Duke
Want to bet?
Our decisions are always bets. We’re constantly evaluating opportunity-cost.
The next time you have a difference of opinion with a colleague ask, “Want to bet?” This approach shifts our thinking from what “will” happen, to what may “probably” happen.
When making a bet, we naturally seek additional information to try and evaluate our bet.
Why are your beliefs correct? Why is your declaration of confidence so strong?
Betting forces you to be more objective in your assessment of information. It changes the frameworks for how we think about decisions.
Ask yourself:
How did I establish this belief?
What information contributed to forming this belief?
Where did I get this information from?
Who did I get the information from?
What is the quality of the source? Do I trust the source?
How current is my information? Are my facts and information up-to-date?
What other things like this have I been confident about that turned about to be true?
Has this belief been confirmed previously?
What are the other alternatives?
Why are the other alternatives plausible?
Who is challenging my beliefs?
What is the credibility of the person challenging my beliefs?
What do they know that I don’t know?
What am I missing?
“Want to bet?” helps us to examine information in a more considered and rationale manner.
It helps us to qualify our beliefs much more strongly. Making bets helps us to understand what’s driving our beliefs and our decisions.
Conclusion
Decision-making is not all-or-nothing, black or white. Decision-making is always three dimensional, with alternate possibilities and outcomes to be considered.
Decisions are bets about our beliefs. Thinking in terms of bets allows us to be more comfortable with uncertainty.
Flip your decision-making framework to think in terms of probabilities. In business we operate in the middle ground of possibilities.
Thinking in terms of bets forces you to be more objective in your approach. It helps us to qualify our beliefs more strongly so that we can understand what is driving our decision-making.
Our end game should always be to continually advance our knowledge and understanding, rather than being right or wrong.
Need help with your next experiment?
Whether you’ve never run an experiment before, or you’ve run hundreds, I’m passionate about coaching people to run more effective experiments.
Are you struggling with experimentation in any way?
Let’s talk, and I’ll help you.
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