Tag Archives: decision making

Challenging Cassandra – The two risks of prediction for the decision-maker

We live in a time of great uncertainty, where many predictions and strongly held beliefs have been brutally disproved by the facts, especially in the last three years. And yet, we continue to make predictions. This seems rational: we want to protect ourselves against bad surprises and prepare for the worst. But this preparation comes at a significant cost.

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In the face of uncertainty, be vulnerable

Decision-making in uncertainty is a difficult art. One of the reasons is that the tools and concepts we use are, for the most part, design for risk, i.e. for clearly defined and repeated situations. Such tools assume that uncertainty is something to protect against. This mental model of protection, which seems so logical, is in fact counterproductive. What if, on the contrary, we should not protect ourselves (too much) from uncertainty?

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Entrepreneurship and human action: Why the award received by Darden’s Saras Sarasvathy is important

Saras Sarasvathy, the originator of the entrepreneurial theory of effectuation, has just received the prestigious Swedish Global Award for Entrepreneurship Research. Organized since 1996 by the Swedish Foundation for Small Business Research (FSF) and the Swedish Agency for Economic and Regional Growth, the award recognizes researchers who made major contributions to entrepreneurship research. She joins such great researchers as Sidney Winter, Shaker Zahra, Kathleen Eisenhardt, Scott Shane, Israel Kirzner, William Gartner, William Beaumol or Zoltan Acs and David Audretsch. The prize is the recognition of more than twenty years of efforts to promote a radically different approach to entrepreneurship. But its significance goes far beyond that, as effectuation is above all a vision of human action and freedom.

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The three (wrong) reasons why you want to motivate your employees in the face of uncertainty

We live in a world marked by uncertainty and punctuated by major surprises that call into question many of our beliefs. This questioning can be very anxiety-provoking as it seems that we can no longer rely on anything stable to move forward in life. This is particularly true in companies: the situation can go as far as a form of paralysis, caused by the feeling that whatever we undertake, an unforeseen event will call everything into question. This can lead to a loss of motivation. And yet, there is no reason why uncertainty should be demotivating.

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It’s the economy, stupid! Europe’s strategic dilemma after Ukraine

[Version in French here]

The invasion of Ukraine is a rude awakening for a Europe that had been asleep for many years in a naive idealism. If the response to the invasion was quick, Europe remains very weak. Beyond the next few weeks, its strategy must involve a profound change of mental model for its economic development.

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Putin, Ukraine and the paradox of strategy

[Version in French]

Strategy is a complex art governed by a paradoxical logic where failure can lead to success and vice versa. The Russian attack on Ukraine offers a good illustration of this nature.

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What A Dead Economist Can Tell Us about Risk, Uncertainty, Profit… and Ourselves

What can we learn from the book of an almost unknown economist, published exactly one century ago? A lot. Is it useful to us in the face of current issues? Yes, very. It turns out that Risk, Uncertainty and Profit, published by Frank Knight in 1921, is an essential book, even if it is difficult to read. It is the first book to really define uncertainty, and to show what this notion implies in decision making. And in doing so, it also tells us a lot about who we are by revealing us as fundamentally speculative.

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The public decision-maker in the face of uncertainty: towards the technical democracy

The generalized uncertainty in which our societies are immersed, combined with their growing complexity, undermines the authority of experts whose knowledge is more easily questioned. This is particularly true for public decision-makers, who are now faced with systematic challenges to their decisions, whatever the field. Understanding the causes and stakes of what some call “technical democracy”, but also its potential dangers, is becoming essential.

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Covid-19: Four Rules for the Decision-Maker to Work with Experts in the Face of an Unprecedented Event

[Version française disponible ici]

The situation has become familiar with the covid-19 epidemics, and in particular with the controversy over the use of chloroquine: everyone has an opinion and groups are being formed in favor or against it. Yet regularly, people are being called to order by others who demand that only experts should be allowed to talk on issues relating to the management of the epidemy. The message seems to have been heard: for the past three weeks, doctors have been massively present on television sets. The country has become a large proxy medical consultation room. But the question remains: faced with a complex and unprecedented situation such as the coronavirus, who has the right to speak out? To what extent can experts be trusted? More importantly, how can the decision-maker work with them?

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Covid-19: How Crises Disrupt our Mental Models and What That Means

[Version française ici]

The coronavirus constitutes a major event that completely disrupts world life, rendering all forecasts and plans based on them obsolete within a few weeks. The very nature of a surprise is to bring to light an element of our mental model (deep beliefs that guide our actions) and invalidate it. Our model told us that the world was going in direction A, but it turns out to be going in direction B and we are surprised. This surprise can have more or less serious consequences. Most of the time the reaction will be to dismiss it. When there is a difference between reality and our beliefs, we try at all costs to maintain the latter by inventing all sorts of reasons to minimize the meaning of surprise; it is a matter of integrity because our mental models are constitutive of our deep identity: how we see the world is also how we see ourselves, and how we are in the world. With the coronavirus, learning to manage our mental models has become critical.

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