Don’t Be So Quick to Go with Your Gut

Nobel Prize-winning psychologist Daniel Kahneman — along with Amos Tversky, his longtime collaborator who died in 1996 — changed the way the world thinks about economics, upending the notion that human beings are rational decision-makers. Along the way, his discipline-crossing influence has altered the way physicians make medical decisions, political scientists think through foreign policy and investors evaluate risk on Wall Street. It’s fair to say he’s changed the way many think about thinking itself.

Now, in a new article written with two co-authors, Kahneman could help influence the way senior executives approach decision-making. In a paper published Monday by the MIT Sloan Management Review, Kahneman and professors Dan Lovallo and Olivier Sibony outline a process for making big strategic decisions — things like whether to make an acquisition, launch a new category of products or invest in a start-up.

Their suggested approach, labeled with the wonky name “Mediating Assessments Protocol,” or MAP, has a simple goal: To put off gut-based decision-making until a choice can be informed by a number of separate factors.

“One of the essential purposes of MAP is basically to delay intuition,” Kahenman said in a recent interview with The Post and his co-author Sibony. The structured process calls for analyzing a decision based on six to seven previously chosen attributes, discussing each of them separately and assigning them a relative percentile score, and finally, using those scores to make a holistic judgment.

Kahneman said that while it may be common for teams of executives to make briefing books that are divided into topics or chapters for big decisions like an acquisition, it’s not as common to have a decision divided into subcomponents and each one evaluated independently.

“That, I think, is a departure from the way most important decisions are made, and that’s the unique element in MAP,” he said.

He compares it to thinking of big strategic decisions like job candidates.

“When you’re making an important decision, any option is like a candidate,” he said. “You should think of what are the essential dimensions that would make a difference between a good option and an option that should be rejected, and you should look at those dimensions one at a time.”

In addition to being a more disciplined approach to big strategic decisions, it may also help limit dreaded groupthink.

“By breaking up the process and making it fact-based, we’re doing as much as we can to inhibit groupthink,” Kahneman said. “Groupthink is as about the conclusion, [and with MAP] you’re trying not to get to the conclusion too early.”

Sibony, a former leader of McKinsey & Co.’s corporate strategy practice and now an affiliate professor at HEC Paris, said that while many companies have detailed processes in place for making lower-level decisions, ones made at the higher level can be subject to more gut-based instincts.

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