Book Review: Left Brain Right Stuff

27 Feb 2014

How leaders make winning decisions
ISBN: 9781610393072 (hardcover); 9781610393089 (e-book)

Anyone who has, even perfunctorily, dipped into the science of decision-making will have heard of a couple of factors that distort human judgment. We are subject to confirmation bias, for example, which means that we favour information that confirms our pre-existing beliefs.

We tend to be overconfident when making decisions, which, of course, can be greatly detrimental to us if the scale of the decision is immense, as it can be sometimes for managers. We experience hindsight bias. We often see patterns where they do not really exist. We know these things because scientists have conducted experiments that prove them.

But there is a fundamental flaw in such experiments, or rather in taking their results as a universal guide for human behaviour in the field. As Phil Rosenzweig explains in Left Brain, Right Stuff, decisions in the real world differ from those in controlled settings; real world choice involves “much more than choosing from options we cannot influence or evaluations of things we cannot affect.”

In many real world business scenarios, we can influence outcomes. This automatically changes the nature of decision-making and risk-taking. In terms of risk, a lot of the decisions we make have a competitive element, which means we have to take certain risks to win. Finally, and perhaps most importantly, leaders of organisations have a myriad of concerns affecting their decisions every day; there’s nothing ‘controlled’ about the scenarios in which they operate.

Rosenzweig cites psychologist Philip Tetlock to make his point. Tetlock says “Much mischief can be wrought by transplanting this hypothesis-testing logic, which flourishes in controlled lab settings, into the hurly-burly of real-world settings where ceteris paribus never is, and never can be, satisfied.”

Rosenzweig proposes a new vision of judgment and decision making, which emphasises the importance of both the left brain – logic, fact, analysis – and the right brain – intuition, risk-taking, emotion. If we are to win a big deal, we need to factor in the competitor, to take risk, to sometimes be overconfident. When making a decision, the left brain is essential but not, Rosenzweig stresses, without the right brain – the right stuff. It is important to have “high levels of confidence, even levels that might seem excessive, but that are useful to achieve high performance.” It is important to think positively when we are able to affect the outcome of a particular decision we are making. In short, we should not always consciously try to repress our right brains when we make decisions.

In this book, Rosenzweig starts where other studies finish off. He takes proven hypotheses that are incomplete in analysis and uses real life anecdotes to flesh them out. The first chapter, for example, throws us into the maelstrom of a $1.212 billion design and construction contract for which a selection of organisations is competitively vying. At the core of the contract is the above target price, to which all the competitors are trying, with difficulty, to match or go below without rendering the contract a money-loss exercise for them. Does Bill Fleming, head of Skanska USA Building, play it safe and put in a bid at the target price or take it even lower and risk devastating losses? Is overconfidence and risk taking perhaps beneficial in this case, if combined with critical thought and planning?

To find out, you must, of course, read the book. It’s a fantastic and practical look into “how leaders make winning decisions.”