When facing the future, the Japanese have a nice proverb Issun saki wa yami – One inch ahead is darkness.
With this in mind I think there are three factors that we need to consider when addressing the future and having to make decisions. Conveniently they all begin with A, namely Aggregation, Approximation and Abstraction.
We live in a world of truly titanic aggregation of data, so called “Big Data” is being accumulated at an amazing rate. Forbes magazine in May 2018 estimated that 2.5 quintillion bytes of data is currently being created every day, and in the last two years alone 90 percent of all data was generated. All this data is seductive – think how we can slice and dice it, analyse it and make better decisions. But there are traps as well. Over a century ago the distinguished French mathematician, Henri Poincare observed “Science is built of facts in the way a house is built of bricks; but an accumulation of facts is no more science than a pile of bricks is a house!” This is an important warning, just collecting data doesn’t give us insight automatically, of course we need the data but we have to develop insight as well.
Parallel to the explosion in data collection and storage, there has been a huge rise in modelling data and looking to draw ever more sophisticated conclusions about the future. Again a note of caution is required, and here the famous quote by economist John Maynard Keynes is instructive “It is better to be roughly right than precisely wrong”. The age old problem of curve fitting past data until you find a “perfect version” of the past is a very big trap. The rise of cheap data processing allows us to undertake very intensive analysis and develop complex models – but we risk assuming the past will always be a good guide to the future. Precision can be mistaken for the probability of correct future predictions, and it is critical we understand both the data, and the assumptions in any models of the future. Gigantic data optimisation exercises, risk polishing the rear view mirror at the expense of looking forward out of the windscreen.
Perhaps one of the key attributes that makes us human is our highly developed skill at creating abstract ideas and seeing things in a non-linear (dare one say “creative”?) manner. We are able to develop and understand ideas as well as just reacting to data and events. This is an immensely valuable skill, but once again there are downsides. As excellent pattern hunting machines, we are often able to see through problems and come up with new insights, but unfortunately sometimes we draw the wrong conclusions. We seem particularly prone to visual errors, classic examples include “seeing” the image of Jesus on a piece of burnt toast, or believing the rocks on Mars are in shape of a human face. So abstraction also needs to tempered along with the other two previous A’s.
The human desire for knowing what comes next and what is just around the corner is an absolute mainspring of the human condition. But if we are to become better decision makers we need to always consider “The Three A’s” when assessing risks and uncertainties; and to be respectful of their limitations and potential pitfalls.
So the lesson remains the same, decision making is simple in theory, but hard in practice.
2 thoughts on “The Three A’s in Decision Making”
Super stuff and bang on the money. I’m not ordinarily such a shameless self-promoter, but I covered another, complementary, aspect of this only yesterday.
What do you think?
Dominic Too kind! Am rushing about but will read and revert Gerald PS Im v into self promtion!
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