![Science of Intuitive Decision-Making
How people make
judgments and
decisions
. . . in uncertain
situations
Men are as accurately intuitive
• Based on research
as women
• Max Plank Institute for Human Development,
Berlin, Germany [Study of 15,000 people]](https://image.slidesharecdn.com/asis2009speakerspresentationbruceblyth-091125004646-phpapp02/85/Crisis-Decision-Making-10-320.jpg)
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Crisis Decision Making
Crisis decision-making involves relying on both analysis and intuition. Bruce Blythe, CEO of CMI, discusses how effective crisis decision-making requires skills, planning, training, and functioning as a team. He notes that decisions during crises must often be made with partial information, limited time, and an uncertain future. Research shows intuitive decisions can be as accurate as analytical ones, and simple rules of thumb can predict outcomes better than complex analyses. Effective crisis decision-making involves balancing analysis and gut feelings.
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Crisis Decision Making
- 1. Crisis Decision-Making For: Asia-Pacific Security Conference – February 2009 Bruce T. Blythe, CEO www.cmiatl.com 404-841-3400
- 2. Crisis Decision-Making Crisis decision-makingis . . . “. . . located somewhere between analysis and intuition” Bruce T. Blythe
- 3. Objective • Increase qualityand timeliness of decisions during unexpected situations that involve: • Personal stress • High consequence • Inadequate information • Insufficient time • High visibility by others Applies to: Large and small crises Work and personal situations
- 4. Crisis Decision-Making Effective evenwhen: Personally overwhelmed Self Skills Skills Planning Crisis Management Training/ Integrated Exercising/ Team Plan Incidents Team overburdened &/or Plan inadequate
- 5. Crisis Decision-Making Focus on: Self Skills Skills Planning Strategic Crisis Training/ Preparedness Integrated Exercising/ Team Plan Incidents “Chance favors the prepared mind” Dr. Louis Pasteur
- 6. Decision-Making Context Decisions madewhen: • Partial information • Time is limited • Future is uncertain
- 7. Decision-Making Context Decisions made when: • Partial information • Time is limited • Future is uncertain University “You have to understand how fast things were occurring.” Charles Steger, President VA Tech University
- 8. Decision-Making Context Mumbai, India 26 Nov. 2008 • Man made vs. natural • Your fault vs. victim • Blame and outrage • Crisis history • Reputation • Perception vs. reality • Tested crisis plan/team Man Made Explosion • Business disruption • Long- vs. short-term • People killed vs. only $ • Your company vs. many Hurricane Katrina
- 9. Crisis Decision-Making Quality of a decision is False Assumption: directly correlated with time and effort invested ________________________________ • Weigh all alternatives • Haste makes waste • Look before you leap • Don’t judge a book by its cover • List pros and cons What if we took our instinctive decisions seriously during crises ?
- 10. Science of IntuitiveDecision-Making How people make judgments and decisions . . . in uncertain situations Men are as accurately intuitive • Based on research as women • Max Plank Institute for Human Development, Berlin, Germany [Study of 15,000 people]
- 11. Crisis Decision-Making • Intuition. . . . . . knowing the right answer without knowing the reason why
- 12. Unconscious Rules ofThumb Which box of circles is concave (curved inward)?
- 13. Crisis Decision-Making Anatomy of gut-level judgment: • Strong enough to act upon • Appears quickly in consciousness • Not fully aware of underlying reasons For prepared professionals, gut-level decisions: •More accurate when based on “one good reason” •Less prone to estimation and calculation errors Research: Max Plank Institute for Human Development, Berlin, Germany
- 14. Unconscious Rules ofThumb Four decks of cards: Each card: Wins or loses money “Adaptive Unconscious” Findings . . . 80 vs. 10 cards Research: U. of Iowa: Bechara, Damasio, Tranel, Damasio (1997)
- 15. Crisis Decision-Making Simple Rules of Thumb • Can predict complex phenomena . . . as well or better than • Complex rules do
- 16. Crisis Decision-Making Simple Rules of Thumb Contradict 2 core beliefs: • More information is always better • More choice is always better
- 17. Crisis Decision-Making Simple Rule of Thumb Based on . . . • One good reason • That’s good enough Research: Catching a fly ball Picking stocks Putting a golf ball . . . less is more
- 18. Simple Rule ofThumb Catching a fly ball • Analyze: • Speed of ball • Wind speed and direction • Trajectory / angle • or, Watch only . . . • Fixed angle of ball in the air • Rising = go back • Falling = run up Keep your eye on the ball and adjust accordingly
- 19. Simple Rule ofThumb • Capital Magazine • Stock-picking contest • 10,000 participants/ 6 weeks • 50 international Internet equities • Asked 100 pedestrians in Berlin • Identified recognized stock names • vs. mutual fund managers and financial experts Stocks • Recognized stocks did 47% better than fund managers and experts Go with what you recognize Research: Ortmann et. al., in pres; Barber and Ordean, 2001
- 20. Simple Rule ofThumb • Research with pros and beginning golfers: • #1 = Talk about every part of putting before hitting ball • #2 = Put the ball within 3 seconds • Findings: • Pros did worse when thinking about it (#1) • Beginners did better (#1) • Pros did better without thinking (#2) Once you skill is developed, • Beginners did worse (#2) don’t over think your decision
- 21.
- 22. SIP-DE Strategic Response • Scan • Crisis fact pattern • Identify • Problem area(s) • Predict • Likely progression • Decide • Based on anticipation “Spatial Pattern Recognition” • Execute • Sequential by priority
- 23. Crisis Leadership Checklist •Strategic Mapping • Define the crisis (beyond the obvious) • Impact on core assets? • How can the situation escalate? • What would successful resolution look like… for each stakeholder? • Stakeholders • Anticipate needs of every affected stakeholder • What would you want if you were in their position? • Impact • What would be the impact of our actions? (Intended vs. Unintended) • Implementation • What needs to: Start? Stop? • Who is going to do it? (Reports to whom?) • Timing? (Immediate, Delay, Defer?) • Communications to and from each appropriate stakeholder
- 24. Crisis Leadership Checklist •Strategic Mapping • Define the crisis (beyond the obvious) • Impact on core assets? • How can the situation escalate? • What would successful resolution look like… for each stakeholder? • Stakeholders • Anticipate needs of every affected stakeholder • What would you want if you were in their position? • Impact • What would be the impact of our actions? (Intended vs. Unintended) • Implementation • What needs to: Start? Stop? • Who is going to do it? (Reports to whom?) • Timing? (Immediate, Delay, Defer?) • Communications to and from each appropriate stakeholder
- 25. Crisis Decision-Making Colin Powell:40-70 Rule • Army General • Chairman of the Joint Chiefs of Staff • U.S. Secretary of State • Once information is in the 40-70% range: • Go with your gut • Judgment is more important than additional data at this point • Waiting until 100% sure = too late Beneficial point where gut feeling outperforms more knowledge and information
- 26. Crisis Decision-Making Crisis decision-makingis . . . “. . . located somewhere between analysis and intuition” Bruce T. Blythe
- 27. Published by PenguinPutnam ISBN 1-59184-000-7 Available at www.cmiatl.com
- 28. Objective • Increase qualityand timeliness of decisions during unexpected situations that involve: • Personal stress • High consequence • Inadequate information • Insufficient time • High visibility by others Applies to: Large and small crises Work and personal situations
- 29. Crisis Decision-Making For: Asia-Pacific Security Conference – February 2009 Bruce T. Blythe, CEO www.cmiatl.com 404-841-3400