One of the keys to why decisions fail is that we often have a tendency to look for universal, across-the-board rules for what to do. Yet success most often comes from maintaining the right kind of balance between different rules or requirements. Remember, it’s usually the assumptions people make which are likely to cause them to lose money or fail.
In fact, one of the best ways to look for those blind spots and hidden assumptions is to look for the balances that have been ignored.
One of the most important of these is the right balance between looking at a situation in general and specific terms.
Take the last post about medical errors. A physician or surgeon has to be alert to the immediate details of a particular patient. You can’t ignore the specifics. You can’t assume distinctive individual characteristics are infernal from the general.
This happens a lot in applied or professional situations. Good reporters or detectives or short-term traders also often tend to focus on “just the facts, ma’am”, and get impatient with anything that sounds abstract. Their eyes glaze over at anything which is not immediate and tangible. Foreign exchange traders have traditionally often known next to nothing about the actual underlying countries or economics in a currency pair, but are very attuned to short-term market conditions and sentiment.
But the essence of expertise is also being able to recognize more general patterns. The most seminal investigation of expertise was Chase and Simon’s description of “chunking” in 1973. They investigated chess grand masters, and found that they organized the information about pieces on the board into broader, larger, more abstract units. Years of experience gave grand masters a larger “vocabulary” of such patterns, which they quickly recognized and used effectively. More recent work also finds that
Experts see and represent a problem in their domain at a deeper (more principled) level than novices; novices tend to represent the problem at a superficial level. Glaser & Chi, quoted p.50, The Cambridge Handbook of Expertise and Expert Performance
Indeed, one of the biggest reasons experts fail is because they fail to use that more general knowledge: they get too close-up and engrossed in the particular details. They show off their knowledge of irrelevant detail and “miss the forest for the trees.” They tend to believe This Time Is Different.
This is why simple linear models most often outperform experts, because they weigh information in a consistent way without getting caught up in the specifics. It is also why taking what Kahneman calls the “outside view” and base rates are essential in most situations, including project management. You have to be able to step back and think about what generally happens and that requires skill in perceiving similarities and analogies and patterns.
People’s mindsets often tend to push them to one extreme or the other. Too little abstraction and chunking? You get lost in specific facts and noise and don’t recognize patterns. You don’t represent the problem accurately, if you see it at all. You get too close, and too emotive, and too involved. On the other hand, too much detachment, and you lose “feel” and color and tacit knowledge. You become the remote head office which knows nothing about front line conditions, or the academic who is committed to the theory rather than the evidence. You lose the ability to perceive contrary information, or see risks that do not fit within your theory.
You need the right balance of general and specific knowledge. But maintaining that kind of balance is incredibly hard, because people and organizations tend to get carried away in one direction or the other. Looking for signs of that can tell you what kind of mistaken assumptions or blind spots are most likely. Yet people hardly ever monitor that.