The probability of a desired outcome

Photo by striatic

Dan Ariely writes a fascinating blog post about outcomes in management:

If you practice kicking a soccer ball with your eyes closed, it takes only a few tries to become quite good at predicting where the ball will end up. But when “random noise” is added to the situation—a dog chases the ball, a stiff breeze blows through, a neighbor passes by and kicks the ball—the results become quite unpredictable.

If you had to evaluate the kicker’s performance, would you punish him for not predicting that Fluffy would run off with the ball? Would you switch kickers in an attempt to find someone better able to predict Fluffy’s involvement?

That would be absurd. And yet it’s exactly how we reward and punish managers. Managers attempt to make sense of the environment and predict what will result from their decisions.

It reminded me of something I wrote not a while back:

But judging results does not mean that we should ignore efforts or processes. In a football game, just like in real life, people have to make many decisions under pressure. Sometimes the outcomes of those decisions are positive and sometime they are not. But even if the outcome is negative it does not necessarily mean that decision was wrong. It just means it led to an unwanted outcome. And vice versa. Good decisions could lead to bad outcomes.

When you think about it, big parts of management are attempts to decrease variance. To make sure the same desired outcomes happen again and again. But as Nassim Taleb will tell you (in The Black Swan), it is all a game of probability. You can never make sure the result will be the same every time. What you can do is try and make the process as tight as possible in order to increase the probability of a desired outcome. This is true for manufacturing and programs like six-sigma and it is true for new product development and innovation.

I agree with Ariely completely. There is a need to change our focus on outcomes and put more focus on the right processes. And this doesn’t have to start with board of directors. Every manager can start this change. Ask yourself – how am I evaluating my employees? Is my feedback and recognition based solely on outcomes or does it take into account the process as well? Do I start a learning discussion by focusing on what the final outcome was or do I start by asking how did we get to that outcome?

Like many biases, our bias toward outcomes is, like Ariely says, understandable. But it does not mean it is something we can’t manage or change. By asking the right questions and focusing managerial effort and concentration on process and decisions we can easily increase the probability of a right outcome.

Elad

Share

Advertisements

One Response to “The probability of a desired outcome”

  1. pure white kidney x Says:

    Everything is very open with a really clear clarification of the
    issues. It was definitely informative. Your website is very helpful.
    Many thanks for sharing!


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: