The Science of Better Decision-Making

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Among my favourite books growing up was the Foundation trilogy by Isaac Asimov. Central to the story is a fictitious science called psychohistory that predicts the future through the laws of statistics applied to large groups of people. Asimov didn’t call it “big data” back then but that’s what the clairvoyant mathematics resembled. Now it seems that science fiction has become fact.

Alex Pentland, a seriously big brain at MIT, has developed a science called social physics that explains human behaviour through its connections with information and idea flow within social networks.  It can help us tune communications networks so that we can reliably make better decisions.

According to Pentland in his book, Social Physics. How Good Ideas Spread – The Lessons from a New Science, “…people act like idea-processing machines combining individual thinking and social learning from the experiences of others.

Success depends greatly on the quality of your explorations and that, in turn, relies on the diversity and independence of your information and idea sources.”  Apparently, the trick to good decisions is the right amount of idea flow and idea diversity.

Idea flow is the pace at which ideas are shared among people.  Sufficient idea flow is necessary but too much could indicate groupthink in which a few ideas are repeatedly echoed back. Idea diversity is the range of sources from which ideas are explored.

Finding common thinking among widely diverse sources is good.  Making investment decisions is a fine example of idea flow and diversity in action.

In our hyper-connected world of broadcast and social medias, there is often too much idea flow making it harder to make good decisions. As a result we should probably pay more attention to where our ideas are coming from, being more skeptical of common opinions and more open to contrarian ideas.  We should also be aware that our social networks (real and virtual) influence our behaviour more that we might care to admit.

What does this mean for managers facing frequent decisions?  First, surround yourself with different types of people and build a diverse business network to tap into.  Second, seek input from these diverse sources when making a decision (less when you’re confident in your knowledge and more when you aren’t).  But your mental alarm should sound if everyone around you is saying the same thing. In this case look outside your normal network for a second opinion. Your goal is to access “collected wisdom” not groupthink!

There is a scientific basis for the decision-making practices that most of us have developed over time.  These principles can also be employed proactively by managers to engage and improve the performance of groups of people like teams and companies (even cities and societies). Pentland’s explains how we can achieve our full potential in his fascinating book.

I’m just furthering the idea flow through this blog!

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