The “Monty Hall” door problem has been discussed for years. After Hall opens the first door, which always has a goat or a goof behind it, he then asks, “Do you want to switch your original guess?”
I will make it easy. Statistically, it is better to switch. I encourage you all to read the voluminous material that proves the premise. It is deliciously counterintuitive. But even when given mathematical simulations and formal proofs, even when they intellectually grasp that switching is better, many folks do not fully accept that switching is the best strategy. They insist on standing pat.
This behavior asymmetry is called “omission bias.” We feel worse when a bad outcome arises from something we did, an action we took, rather than from something we didn’t do. The “stuff happens” lets you off the hook, and you give yourself a pass. When you take an action and bad stuff happens, then you take the fall, you think it is on you — except not really and not always.
We kick ourselves, we excoriate our own supposed stupidity, when in fact, lots of stuff is random and the outcome may have no connection whatsoever to our decision making. But we blame ourselves anyway.
OK, I agree we can’t see the future. If you were making buggy whips, how were you going to know that Karl Benz was about to turn the corner with an internal combustion engine?
You just graduated with a $150,000 MBA in finance and management consulting. And this thing called artificial intelligence shows up and eats your lunch.
Now think about the daily decision making you do as a founder or executive in your company. Let’s go back to Monty Hall. When you know the right answer why do you delay or ignore it?
In my own little world, I sometimes know the right decision to make, yet I ignore the signal and do the stupid thing anyway. Then I am surprised when the stuff hits the fan? How did that happen? No place to run, no place to hide.
The subtext in the above material is that decision making in your company is hard. Should you stay the course or pivot? Sell the company or toss in another million bucks and bet on black? Let someone go or hope they will quit? Nobody is buying your product, so it must be the salesman — can’t be the product or the story or the value proposition.
Now add to the puzzle your own nature, your default way that you behave, and I come to my favorite suggestion — that every CEO should have at least two years of psychoanalysis. Not all company decisions are mathematical like the door decision, but all of them in some way touch on behavior bias.
I have a friend. Smart, very. I point out to him that he might consider being more complimentary when his development team creates a great new feature in a timely way with no bugs, production ready. He says he never compliments developers. He thinks that producing great code is their job. He subscribes to the Bill Belichick school of motivation: “Do your job.” You think maybe Brady could use an occasional pat on the back.
I have a personal rule, learned the hard way. It is exactly when I am angry, frustrated, impatient and waiting for a resolution or a conclusion that I want to pick up the phone and “let somebody have it.” And every time I have done that, I have regretted it.
The default behavior for many CEOs is to do something. The infamous mantra “make it happen” is ingrained in the DNA of being a leader. Given my personal experience, if I invoke mathematics, based on the history of the disasters that I have incurred from blindly following that mantra, the best action often is to do nothing. Sometimes, the best decision is not to pick any door.
That is what you call a data-driven decision. The goat can stay behind the door a little longer. Easy to say, but when you hear him relentlessly butting his head against the door, demanding attention, it challenges your resolve to resist your impulse to yank open the door and butt heads — and last time I looked, most goats have horns.
Rule No.822: What if it is a revolving door?
Senturia is a serial entrepreneur who invests in startups. Please email ideas to neil@askturing.ai