Happy Heuristics Podcast Episode #1
Happy Heuristics is a podcast about using rules of thumb, decision criteria, or heuristics to help leaders operate with speed and effectiveness in a complex and uncertain world. Podcast partners Jamie Flinchbaugh and Jeff Grimshaw explore specific heuristics, one theme at a time, that you can either adopt or use to shape your own version. Through this podcast, we hope to help cultivate shock-resistant leader routines and rules of thumb for a complex world. Join us for Episode #1
Transcript:
Jeff Grimshaw 0:00
Jamie are you like me, where you have never rushed into a bad decision? You didn’t know it was a bad decision at the time. And then later you figure it out and you wish someone or something had intervened to slow you down a bit.
Jamie Flinchbaugh 0:14
Yeah, absolutely, happens to all of us. That is the challenge we’re going to discuss in Episode One of our new podcast, Happy Heuristics, shock resistant leader routines and rules of thumb for a complex world.
Jeff Grimshaw 0:28
Yeah, I mean, and that title was a mouthful, but I think it speaks to the complexity of the world that we operate in. And one thing we know is that well, humans are, you know, really an amazing species. We have very limited computational power in our brains. And there’s just no way in this world for us to thoughtfully chew on all the decisions that we have to make every day. And so that’s where heuristics come in, is, they are simple rules of thumb that we can use, they’re reliable most of the time to help us navigate.
Jamie Flinchbaugh 1:05
Yeah, and what we’re navigating is that that term called VUCA, which is used a lot. Volatile, uncertain, complex, and ambiguous, the world gets more of that. And we have to operate faster within that construct. So that’s the challenge. And that’s what we’re going to do with Happy Heuristic in examining those rules of thumb. So in each episode, we’ll pick a theme, we will each bring a heuristic related to that theme, we’ll each share it, we’ll explore it, we’ll stress test it, we’ll ask a few questions, then the other person will go and then we’ll wrap things up. And so we’ll cover a different theme each week, so or each episode. So what’s our first thing?
Jeff Grimshaw 1:49
So the first theme is, well it’s all about decision making, but especially the idea of the speed of decision making, and when it’s important to slow down.
Jamie Flinchbaugh 2:02
Right, so we’re each going to have a heuristic around that. So mine will be never make an important decision in just one meeting. We’re going to get into yours first. So what’s yours? Why don’t you tell us what it is and we’ll start exploring.
Jeff Grimshaw 2:18
Yeah, so my heuristic is pause when unsure. And I got exposed to this heuristic in nuclear power plants. And this really comes out of, driven by industrial safety. And the idea is, the idea of pausing when unsure is, it’s about reducing exposure to negative black swan events. What’s a negative black swan event? As you know, and I think many of our listeners will know that a black swan event is an event that is low probability, but has high impact. And so a lot of times what happens in industrial settings, is that bad things can happen. And but a lot of times, when people don’t completely follow the processes, bad things don’t happen. And so you can create complacency. I was at a nuclear plant once and and there was a pilot who was talking about this importance of this heuristic pausing when unsure. He was talking about flying a plane and how there’s so many things that you know, if you follow everything on the checklist, it can really slow you down. And there was a moment when he was flying with his brother. And he and they rushed through a checklist and they didn’t pause when they were unsure about something he’s like, “I’ve been through this 100 times. It turned out fine.” And sure enough, the flight went okay. But then a short time later, and we’ll put this in the show notes, I’m forgetting the guy’s name, but his brother was flying. Similar situation his brother was actually killed in an accident and he feels like he had some responsibility because he did not role model for his brother pausing when unsure.
Jamie Flinchbaugh 4:21
Well, yeah. And that so, you know, those are big, you know, and that the whole point of those black swan events are these these high impact events and nuclear makes a lot of sense right? I grew up near near Three Mile Island, we had to leave our home, you know, but that’s it right, that’s the event in our country’s history. And so most people working in a nuclear plant won’t even remember that, which is really the point is it’s low probability, you get complacent because you’re like, “Oh, this is never going to happen.” So that makes a ton of sense in a nuclear setting, when flying a plane. What’s the value of it in day to day life? Leader life?
Jeff Grimshaw 5:06
Yeah, I think about this all the time, because I think, you know, obviously, we’re not all working in, with the kind of, with the high stakes situation that nuclear power plants are in. But I think the idea is to buy cheap insurance relative to your downside risk. So here’s a couple of examples. So, for example, let’s say that you are wrapping up a meeting with your team, and you go, you know, and pausing when unsure would be, might mean, you know what, I’m not 100% sure that the team really gets what the heck we’re, what everyone is responsible for here. And so at the same time, you know, the meetings, sort of like, you’re all ready to be done, especially if you’re on Zoom, everybody wants to take a bio break, everyone wants to get out of there and move on to their next thing. But you go, I don’t, I’m not sure that everybody really gets what we’re doing or who’s going to do what, but so pausing when unsure, would be to say, okay, so cheap insurance relative to the downside risk, could be saying, “Hey, you know what, it really is going to stink, if it turns out that we’ve had this meeting, and we don’t have the clarity that we’re pretending to have.” Cheap insurance would be to say, “Hey, why don’t we take two minutes,” the cheap insurance, “and have everybody go around the room and say what it is they think they are doing, as a result of this, of this meeting that we’ve just had.” That would be pausing when unsure. You know, in personal lives, I you know, I had a little experiment this morning, where I like to buy razor blades that always have three or four blades in them, but my wife really likes to always get the cheapest thing possible. So and then when she finds blades, whether they’re like, you know, the disposables, or whether they’re, you know, the CVS store brand, or whatever, she just throws them all in a drawer. And one time, she bought these blades, and they looked okay, but like, every time I use them, I was cutting up my face. And so I tried to route them all out, but they’re all green. They’re all in a drawer. So like these terrible ones, these terrible ones, I think I’ve routed them all out. So you know, I mostly have not been shaving during COVID, but I thought Jamie’s gonna look good today, I want to you know, clean up a little bit. So I get a fresh blade, and I get in the shower and I start using, I go, this is one of those, this might be one of those. I’m like, so pausing when unsure would mean hey, you know what, I’m not gonna shave, I’m gonna show up unshaven. I thought, you know, what actually be a little more of an interesting experiment, if I don’t pause when unsure. And so you know, that’s why I’m showing up with, you know, these nicks on my neck and upper lip, as you know, an added feature for today’s podcast. And, you know, when I get home, you know, Tanya’s gonna say why were you bleeding into our towels this morning? But that’s an example. You know, cheap insurance would have been, pausing when unsure would be to say, it turns out this blade is one of the bad ones. So how about I don’t do that. Now, when you have? Yeah, I mean, so, you know, a lot of times, if you are constantly finding yourself pausing when unsure over the same things, then that means you probably need a process improvement.
Jamie Flinchbaugh 8:39
Yeah, yeah. So that’s a place where it wouldn’t work. But just to talk about where it would work, you’re not just talking about, you know, like, Hey, should we do this merger? Or should we hire this new CEO or, you know, those types of massive decisions that have big consequences? Because as you said, you’re talking about cheap insurance, your pause is not a significant investment, it’s a small investment to give you a little more confidence that you’re making the good decision. So this really is, I guess, when when hearing about it first, it sounds like at low use heuristic, but it really is a high use, almost everyday kind of heuristic.
Jeff Grimshaw 9:24
Yeah. And I mean, the more colloquial term, that means pretty much the same thing is, you know, measure twice, cut once, because again, cheap insurance. And so it definitely has day to day impacts. And it also, for big decisions, like a merger or big things like that. It is about taking the pause to really reflect on things and do some latent processing.
Jamie Flinchbaugh 9:48
Yeah.
Jeff Grimshaw 9:49
Yeah.
Jamie Flinchbaugh 9:50
So this can be done for individuals, as you talked about, should I really send this email let me just save it as a draft for a few moments or Hey, all the way through, you know, should we lower our price for our biggest customer, which we can’t undo? Right? So all sorts of things. And it can be a group one, which is more likely the latter. And it could be an individual one, which is, you know, do I send that email?
Jeff Grimshaw 10:15
Right. Cheap insurance, I’m a big fan of cheap insurance and what counts as cheap is relative to the downside risk. And, taking into account that it’s not just what probably happens, but it’s also about reducing your exposure to bad things that are not highly probable, but are really gonna stink if they do, in fact happen.
Jamie Flinchbaugh 10:38
Yeah. So yeah, we’re talking about how to move faster with heuristics, right? So in some ways, this is the opposite. It’s going slower. But that I think is key for this particular heuristic is the trade off between how much extra time, how long is that pause relative to the downside risk, which means we have to be, have at least enough intuition and experience to quickly assess what the downside risk is. So is that is that required to make the use of this heuristic work?
Jeff Grimshaw 11:13
Yeah, I mean, I think part of it is, you know, part of why it works so well in nuclear power plants is that it becomes part of the conversation. It gives people license to actually pause or to, you know, to pull the end on board from a lean perspective. It makes it safe to do that in situations that would otherwise be pressurized. So yes, I mean, it requires some experience, I think if you’re going to use it well in your day to day life, but I also just think getting it into the conversation, getting into your head, helps create the conversation and create the meaning where people sort of discover what counts as cheap insurance and when to deploy it. So let’s also talk about the big limitations, because you and I have both worked in a ton of organizations where they are so freakin slow, and it’s so hard to make a decision. And you know, they can say, “Hey, we’re just pausing when unsure.” Right? So I’ve been thinking about this a lot, because the, this definitely has limitations, because sometimes pausing when unsure just means stopping.
Jamie Flinchbaugh 12:29
Well, yeah. And the term analysis paralysis comes to mind, right? Where you do get paralyzed pausing, right. So pausing means stop, because we’re just we’re stuck looking at it forever and ever and we can never move on.
Jeff Grimshaw 12:42
Yeah. And we live in a probabilistic world. I mean, you know, we talked about VUCA, and the U is uncertainty. So if you’re pausing when unsure, well, actually, in today’s world, you’re always unsure.
Jamie Flinchbaugh 12:53
Yeah, you’re never gonna get to zero uncertainty.
Jeff Grimshaw 12:56
Yeah. So here’s what I think might be probably an oversimplified but potentially a useful distinction. And that is, what kind of risk are we talking about? Because let’s take what we’re doing right now as an example, like, if I was strictly applying the heuristic of pause when unsure, we wouldn’t be doing this podcast, right? Because we don’t know for sure that this isn’t going to suck, right? This could totally suck, right? But one of the things that I like about agile methodology and you know, agile software, the methodology, and then you know, as its transcended software development into agile ways of working across different spheres, is this idea that it is better for something to exist in a flawed physical state than it is for something to exist in a perfect theoretical state. And the reason for that is that we don’t learn from theory we learn from empirical reality. And so why would we not want to do this podcast? Well, the risk is that it sucks, and then I’m embarrassed, right? But one thing we know about humans is, you know, our brains are wired for survival, like, you know, natural selection, selected for the things that would help us to survive, but not necessarily be innovative or great leaders or things like that. So, you know, our brains don’t really know the difference between or don’t care about the difference between threats to us physically and threats to our egos. So I think a lot of times you have to ask yourself, what’s at risk for you? And if what you’re saying is well I’m pausing when unsure because I’m worried about the, you know, the fear that is motivating the pause is that I I might be wrong. Well guess what, in an uncertain world, you’re going to be wrong all the time, you’re gonna have a ton of failures, you might have a podcast that sucks. On the other hand, it also creates learning opportunities. And if your pausing when unsure prevents you, has you pursuing the perfect theoretical state versus getting comfortable with the flawed physical state, that you actually create learning opportunities, then you know that I think that’s a really bad application of the heuristic.
Jamie Flinchbaugh 15:38
Yeah. So if I can play that back in a different way, and I’ll be the first to use a legal reference here, but it’s similar to how the courts look at, particularly around business cases, a restraining order, or a temporary injunction. They look at it is, can, if there’s damage done by what you’re doing, can it be fixed with money? And if it can, then we’re not going to issue a restraining order, go ahead. And if you were in the wrong, we’ll fix it with money. But if you can’t fix it with money, if the damage is permanent, like, “Hey I’m going to tear down this building to put my building up,” well, I can’t just fix that with money, the building’s gone, it’s irreversible damage, essentially. So, no, we’re gonna we’re gonna pause and let the courts decide what’s right before proceeding. So that’s sort of one of the rules of issuing a temporary injunction. So that’s sort of here is looking at how reversible is the damage to be done? There’s risk but some risk is death. Some risk is not as bad as death, but still, unreversible. Another risk is just its downside, but it results in learning. Not so harmful.
Jeff Grimshaw 16:55
Yeah. And, you know, so this is getting a little ponderous but like, you know, Nassim Taleb that wrote the Black Swan and Antifragile and is, you know, a big proponent of heuristics is, for example, he called it, it’s called the precautionary principle. And the idea there is like, this is, for example, why he is totally opposed to Bill Gate’s plan to get to rid the world of mosquitoes. Because his point is, yeah, that, you know, of course, that’d be great if we got rid of mosquitoes because they spread malaria, and malaria kills a lot of people, but in a complex, uncertain world, you don’t know what the unintended consequences of getting rid of mosquitoes is going to be. And the effects could be so devastating that you can’t sue Bill Gates or anybody else to get appropriate damages. And so therefore, the precautionary principle has to come into effect. So that’s like, you know, pause when unsure writ large. So yeah, I think there’s, you know, big, big micro applications, like, you know, like, you know, should I go unshaven versus risking cutting up my face to, you know, like, world-changing sorts of complex decisions.
Jamie Flinchbaugh 18:22
Okay. Great. Anything else to share on that one?
Jeff Grimshaw 18:25
I think we drained that one pretty well.
Jamie Flinchbaugh 18:28
That’s a good one. That’s one that pretty much anybody can use.
Jeff Grimshaw 18:32
Yeah.
Jamie Flinchbaugh 18:33
So mine is a similar vein, but perhaps a little narrower in its application. And it’s never make an important decision in just one meeting. So it’s meeting centric, it’s group centric, right? So right away, those are two conditions that sort of define what box this heuristic works in. But this came to me years ago, I was part of the National Association of Corporate Directors, I was taking the director professionalism course, and one of the directors who was, experienced directors, who was leading a panel discussion mentioned this as one of his heuristics, one that he thinks others should adopt for boards. And, you know, and so I, that resonated with me immediately as simple and very applicable, certainly in the boardroom, right? But then I started really just paying attention to and stress testing it, both in my own board meetings that I would sit in on, and I’d watch when it’s followed when it’s not followed, and not just if bad outcomes happen, right? But was there, even if a good outcome happened and we didn’t follow a heuristic, was that just luck, right? Or was it really simply an unneeded heuristic and the more I started tested it, the more I looked at specific case studies of it, it just seemed like a really, really good heuristic, especially for boards. I’d say on the board’s I’ve sat on over the years, I’ve adopted it as one of the highest level, most important heuristics for the, ffor my role on a board, but I’ve used it in other, with management teams and others and introduced it in a lot of other ways. So I think there’s important things around why it works, and it’s similar to pause when unsure. You know, one is simply the consideration of the risk, right. So, you were talking about how to do it within a meeting. But the opportunity of two meetings, right, no matter how far spaced apart they are, is, I think, primarily twofold. One, it allows you some headspace, collectively and individually to go bring in extra criteria that perhaps didn’t enter in the conversation, right? So we start talking about three criteria. And then overnight, we realized, well, what about this, this, and this, like, those are important too, and we weren’t considering those. The other thing that I think is even more important that I’ve watched and recently I’ve been reading the book Noise by Daniel Kahneman, he talks about the social construct of decision making is, there is momentum in decision making. And that momentum has nothing to do with anything sound. Momentum is simply momentum. And having two meetings to make an important decision essentially breaks the momentum, and allows you, if you would make the same decision in two separate instances, it’s much more likely to be a good decision. But if your momentum carries you into the decision, and then if you were to go back and have that decision a second time without that momentum, if you would have made it differently, you definitely shouldn’t have made it in that one instance. So that momentum, I think, is really what I’ve looked at as perhaps the most important value of that heuristic.
Jeff Grimshaw 22:14
Okay, so a couple of thoughts. One is, one of the things I’ve learned and and read, it’s not my original idea, is that the test of a heuristic is not whether you can explain how it works, but just that it does work. So just the fact that you said that you have seen this be valuable, you know, should be enough, right? But as I was as scrutinizing your thinking, I mean, I am a big believer in the value of latent processing, I mean, it is amazing. It is amazing, I think what your brain can, you know, work through when you’re not even really consciously thinking about things. And so if that’s all jammed into one meeting, then that’s not going to happen. I totally get that. I guess it all just is about the threshold, because there’s so many meetings that suck. And there’s so many meetings that it’s like, why are we here? And decision rights are not clear. And so I guess my anxiety about this heuristic is knowing what the threshold is. And also just knowing that, you know, just like when pausing when unsure that it’s like, it could be used to justify a lot of, you know, slow indecision, when really, it would be good, better to just, you know, like, do something, try something. So what do you think?
Jamie Flinchbaugh 23:29
Yeah, so I think that’s important, because yeah, it’s, well, let’s make that in the future. Let’s decide later. And we could make every decision that way. So, you know, in the heuristic, I include the word or the other person included the word, I wish I remember who said it, I don’t have those notes. But the word important, right? So it’s an important decision. I don’t think that’s quite enough. Right? So there’s lots of important decisions. And if you’re in a executive team, or you’re in a board of directors, fundamentally, they probably, if you’re actually making a decision, it probably should be important otherwise you should delegate it. So all decisions are important. So I think there’s a couple other factors that come into play. One, and this comes into play of the what factors do we include, is how rare is the decision, right? So if on a board, we make decisions around capital frequently, you know, and so that’s a frequent decision. We know how to look at it, is this necessary? Can it be delayed? Because you don’t want to spend capital if you don’t need to. What risks are there? What’s the balance sheet look like? Okay, you know how to make those decisions, and take it from one board meeting to another, a different company or a different management team or a different situation, same criteria, right? So it’s not likely that other criteria are going to enter it because you already have your algorithm for making that decision. But if you’re firing the CEO, if you’re making an acquisition or a merger, if you’re looking at a massive reorg, I, you probably aren’t doing that often, right? So you lack the muscle memory, the algorithms, the well balanced set of criteria to make that decision consistently and rapid. So I think that the rarity of the decision is one factor. I think the emotional aspect is another one. Because I think the emotional aspect is what really builds momentum, right? You know, is there, whether it’s fear or anger or frustration or excitement, “Hey, somebody’s made us an offer. Wow, look at all, look at the return on our stock, look at what we can do. Somebody’s made me a job offer, ooh, look at the bonus signing, they’re giving me.” There’s there’s a lot of excitement in that, right, so it doesn’t matter if it’s risk or excitement, there’s an emotional appeal to the decision. And that process, and that momentum that builds, chasing down a path can overwhelm the analytical side of the conversation. And so I’ve been part of decisions to remove CEOs, I’ve been part of decisions to make major acquisitions and things like that. And it doesn’t matter how analytical you try to be, there is emotional aspects in that. And you get, you know, sort of built up as a group. Again, this is a group heuristic, you get built up pretty quickly, and start to see how people get excited or scared. And then that carries the decision in a predictable manner, overwhelmed by the emotion. So I think that emotional aspect around it, which relates to either positive or negative outcomes, which relates to momentum, you don’t have to delay law, because this relates to the other aspect of important, if you have quarterly board meetings, well, if it’s important, then hey, let’s do a phone call meeting tomorrow. So how you put this into use doesn’t have to be “Let’s wait a quarter,” right? It could be, “let’s sleep on it. Let’s break the momentum of our energy and our flow towards a yes. And let’s come back and just reconsider ittomorrow.” If the decision looks the same with consideration and a night’s rest, then it’s probably more likely to be a sound decision, not necessarily the right decision, again, we’re not going to be right with any of these all the time, but a sound decision, right. And that’s where we’re trying to break the momentum of the emotion, and the crowd. And also just give yourself room to consider criteria when it is a more unusual or rare decision that you have to make.
Jeff Grimshaw 27:52
Okay, okay. You know, Annie Duke, the former poker champion, who I’m a big fan of says, you know, our, says it really simply, in life, our outcomes are determined by two things, the quality of our decision making, and luck, and we can’t do anything about our luck. So we really have to focus on our decision quality. And that means knowing, in part, some of the biases or skews, the obstacles to quality decision making that were predictably prone to, and I think that is, and so we, I think that’s the key thing, is that if you know that momentum, I like how you describe it, if you know that one of the risks of a quality decision is like that emotion or that momentum, can prematurely push you to a place, then that becomes I think, a good nudge that becomes sort of like, you know, decision making architecture to save. When if we are, know we are prone to that, then even waiting a day to finalize a decision, I think is a good due diligence step. Yeah. Yeah. Then I buy that. Yeah, for sure.
Jamie Flinchbaugh 29:01
And I think that’s, you know, that’s the important consideration because fundamentally, from a process standpoint, right, the emotion often is about the luck component, right? Which we really have to kind of go, luck is luck, let’s not try to use predictions of luck in our decision-making process. So there we have two heuristics. One, yours is much broader. Mine’s more specific to both teams and meetings. But all related into the same theme of how, when we make decisions. So I’d like to thank everybody for joining us for the Episode One of Happy Heuristics. And thank you for joining me in this process as well.
Jeff Grimshaw 29:49
Yeah. Well, Jamie, thank you for hosting this. It’ll be interesting the feedback we get, whether people say, that’s good, you know, you made the case for those heuristics and I’m going to adopt those as reliable heuristics that gives me, you know, less things to think about, I’ve already got too many things to think about, or whether they say, in thinking about the application of those heuristics, now I’ve just got more cognitive overload, but I hope it’ll be interesting for people regardless, but you know what, we might find out the podcast sucks. And, again, it’s a it’s only that interaction with empirical reality and being willing to take a shot on being wrong, where you actually create opportunities for learning and positive black swans, you know, low probability, but high impact events that actually are positive in nature.
Jamie Flinchbaugh 30:40
Yup. And hopefully, you know, if nothing else, you and I make each other smarter in the in the process of-
Jeff Grimshaw 30:45
Love that, worth the price of admission.
Jamie Flinchbaugh 30:47
Yeah, so please do follow us, rate us, review us, give us feedback. We love all of that, it helps other people find us as well. So you can find us at jflinch.com/happyheuristics or at mgstrat.com/happyheuristics. If you’re on the show notes, we’ll have links to both of those. And just to wrap this up, we like to plan on leaving with a simple heuristic, a fun one.
Jeff Grimshaw 31:17
Yeah, this bonus heuristic is actually one of the oldest known heuristics that we’ll leave folks with, which is, if it smells bad, don’t eat it.
Jamie Flinchbaugh 31:26
Very good.