Thinking Managers

Robert Heller of explains why experts aren’t always all they’re cracked up to be.

Management and Psyche

The massive growth of blogging has afforded the world wide web a fresh and ever-changing dimension where the bloggers communicate in an up-to-date, effective and mutually beneficial dialogue.

One of my recent blogs was inspired by Philip Tetlock’s book ‘Expert Political Judgement: How Good Is It?’ in which new evidence on forecasts is uncovered.

The title asks a question and the answer is relevant to all business managers because political decisions directly affect their fortunes.

But it is also relevant to all other managers who depend on forecasts in their particular businesses and industries.

It is well known that most fund managers, who forecast the rising and falling of shares, fail to beat the market. So how do other pundits fare?

For 20 years, Tetlock analysed the performance of 284 people making money from ‘commenting or offering advice on political and economic trends’.

Reviewing the book for the New Yorker, Louis Menand commented that the study showed pundits to be ‘poorer forecasters than dart-throwing monkeys’. What he means is that these so-called experts would have been more successful if they had allocated an equal probability to the three alternatives (33.33%).

You might think that experts in a particular field would have a commanding edge but this appears not to be the case.  Experts, it would seem from the study, are no more reliable than non-experts. The specialists often fall in love with their own perceived expertise – ie, they fall in love with themselves.

There are a number of possible futures from which the pundits select, but hindsight reveals the trail of events that could only lead to the situation that came about. Reflecting on success, managers are often mistaken in thinking that what happened was always bound to occur.  Wishful thinking can also play its part, where pundits or managers hope for or against a situation.

A book called ‘The Psychology of Military Incompetence’ by Norman Dixon first made me aware of the significance of the mind and heart’s role.  On page after page, Dixon, a professor of psychology, demonstrated how officers made catastrophic errors in planning and execution, risking men’s lives and nation’s fates.  An inexorable connection between the poor management of these leaders and the inadequate nature of their psyches was made by Dixon.

Commonly, the failures were a result of not thinking or poor thinking through irrelevant emotional factors rather than being outthought or outmanoeuvred or misunderstanding complicated situations.

Managers need a guide to their own psychological behaviour and that of their subordinates to help them on the road to competence.  If managers rely only on psyche and habit in their thinking and strategy, they will lose effectiveness both as individuals and members of a group.

I can confidently predict that just a few managers would put an unfamiliar yet intelligent approach into practice when introduced to it.

Rejection would mean keeping things as they are and sticking to what is familiar while accepting it would mean having to take action and risking something new and unfamiliar. This approach is not logical or competent – it is the opposite and based on emotion.

By all means use your emotional powers but only providing you acknowledge their use and the effect they have on others whose emotions will also affect the outcome.

Do your own thinking instead of relying on that of the pundit. At times it is necessary to admit you were wrong – sometimes very wrong.

About the author
Robert Heller is one of the world’s best selling authors on business management.