"When the facts change, I change my mind. What do you do, sir?" - Paul Samuelson
Thank you for joining me for another blog (#37), highlighting decision-making and the brain. This is my public exploration of what drives decision-making and how we can use that information to make better decisions, resulting in better outcomes.
This post is unusual as it responds to a particular moment in time rather than a general result. Today is a quick response to the chatter around U-turns in UK politics and in particular a series of unfunded tax cuts targeted at the top decile by wealth, in the midst of rising yields and a cost-of-living crisis.
Why language matters
A U-turn is a grandiose way of saying that you decided not to proceed with something you had planned to do. Doing a U-turn is another way of saying that you changed your mind.
Language matters. If you complete a U-turn you are a flip-flopper or someone who does not have the courage of his/her convictions. If you change your mind, you are reflective and able to course correct. In politics, it seems that you are rewarded by your tribe if you keep to your ideological purity and lambasted for being pragmatic and 'do what works'.
The decision and feedback cycle
Some of the most destructive business deals, wars or investments have been made when people have not responded to feedback correctly. This also includes trusting good feedback too much. Changing your mind is hard. Regular readers of the blog will remember Change your mind! (hartejsingh.com) where the conclusions were:
1) We have an in-built resistance to change our mind
2) We generally interpret information to fit our original view and that can be because we are personally or tribally attached to a view or just want to give an idea no further thought.
3) Being aware of cognitive inertia, means you can change your mind with knowledge of what doesn't work and be free to consider something else.
Here are some examples. The engineers in many of the world's most successful tech companies or chocolatiers in many of the world's most successful confectionary companies experiment. Sometimes they change a feature or introduce a new product. It will sometimes yield better results than expected and other times yield worse results than expected. They can re-invest this direct experience and put out another experiment. This to me is sensible course correction rather anything that requires an apology.
People will have failed experiments and they are better decision-makers (in my opinion) if they change their mind to reflect the feed-back they get.
Why big U-turns should be used sparingly
Whilst we should celebrate people who do not proceed on a catastrophic path, it does raise the question why they were so certain it would work in the first place. It was quite stunning how many very credible voices came out immediately after the chancellor's 'mini-budget' to say that this was not good policy. It was clear that this was not thought through particularly well.
1) In politics, rewards for ideological purity, leads people into sticking with bad policy in order to avoid doing a U-turn.
2) A U-turn is nothing more than changing course, and that is a very sensible thing to do in business and investing.
3) The best way to avoid making a bad decision in public, is by researching well and testing it in private. That, at a minimum is what good leaders are expected to do.
Thank you for joining. Two weeks' time – 'Persuasion 101'.