MAY THE ODDS BE EVER IN YOUR FAVOR
How to maximize your odds and avoid "resulting" in business decisions
Sari M. Kern, RN MBA
On the radio the other day a former member of government discussed a decision that was made and received consequent public and political backlash from the fall-out. In an interview, this individual outlined the rigorous process that occurred in reaching the decision, expressing his confidence in the reasoning for the pronouncement and his assurance in the intelligence and the data that was available at that time which contributed to the final decision. He said that there was very little reason to believe that the decision made would have such terrible political repercussions. And yet, when asked by the interviewer if he should have done anything differently, he answered, “yes.” He made a data-driven decision, but when questioned on his confidence expressed that perhaps he should have steered the decision away from the data, which would have led to the desired outcome (in hindsight). He believed he had made the wrong decision.
This concept is common in business and is called resulting. Annie Duke does a brilliant job of dissecting this concept in her book Thinking in Bets which discusses the psychology behind resulting and how smarter decisions can be made in the face of uncertainty. The past government employee had plenty of data and he and his department had done their due diligence in making an evidence-based decision with great confidence that the results would most likely have been favorable. But life is not a vacuum, and sometimes the other guy chases the river (the last card to be revealed in Texas Hold ‘Em) and hits that 2.27% chance card, winning the pot and your entire bankroll. Things do not always go as planned and happen according to the odds. Our job as consultants and business executives is to analyze the data, assess the ambiguities, and make a sound decision based upon the information and the capabilities of the company, maximizing the odds and the chances of success. When advising or steering a company or a board on a costly venture, the risk and reward need to be deeply analyzed prior to making an important business decision.
Business, like poker, is a game of calculated risk and luck. Data and evidence are used to make sound business decisions, mitigating the risk of low-percentage bad-luck outcomes. And the quality of business decisions should be evaluated by the process of coming to the decision, rather than the outcome of the decision. As an example, if your methods are thoughtful and sound utilizing reasonable assumptions for missing information, but an unfavorable result occurs, there is nothing to be gained by adjusting your methods to bet against the data and odds. Shit happens, in life and in business. Similarly, if you make a business decision that goes against any available data or evidence, or is sloppy and is not driven by data, do not let a favorable result lead you to believe that was the best approach.