Red Flags for Leaders

Obsessed? No, but I'm pretty sure I could spend every day for the next year writing about my latest read, Thinking, Fast and Slow, by Nobel Prize in Economics winner, Daniel Kahneman. Regular readers of this blog know that my first commentary was last week.

Knowing how our two systems of thinking--one fast and intuitive, the other slow and analytical--shape our judgments and decisions, says Kahneman, is the key to minimizing the aversive impact of cognitive biases, illusions, and inattention to statistical laws.

Arguably, the impact of failing to act on what we know would be most aversive for those individuals responsible for others' well-being. I am talking, of course, about people in leadership positions. People like you. I have distilled from my reading then a few simple lessons I call, Red Flags for Leaders. My hope is that when you see the flag, you will think--fast and slow--before you act.

The first red flag is ignoring the Law of Small Numbers. It is particularly timely inasmuch as I teach a unit on statistical sampling to my aspiring school leaders in the Gardner-Webb University Master of Executive Leadership in Schools program in a couple of days. If principals are not taught to be reflective practitioners, there is little hope that their teaching staff will be either.

Kahneman broaches the subject by describing that research has found that the highest incidence of kidney cancer in the United States is found in sparsely-populated, rural counties of the South, Midwest, and West whose citizens vote predominantly Republican. As an intelligent reader, you may quickly and accurately dispense with political affiliation as a related factor. You may remember, however, that the rural lifestyle is often characterized by a high-fat diet, lack of access to quality health care, and tobacco and alcohol abuse. 

Momentarily bracketing further thoughts about the story you are telling yourself, you need to know that research has also found that the lowest incidence of kidney cancer is found in sparsely-populated, rural counties of the South, Midwest, and West whose citizens vote predominantly Republican. What?

If you had been told the last research finding first, you may again rightly assess that being a Republican is inconsequential. You remember, however, that with country-living comes clean air and water, reduced stress, access to fresh food, and greater social cohesion. Of course folk there have less kidney cancer, you tell yourself. It's the lifestyle.

Would you believe that the statical Law of Small Numbers makes both findings true? In any small sample, such as rural counties with small populations, extremes will be found. Not convinced? Let's do an experiment:

From an urn filled with equal numbers of red and white marbles, you draw 4 marbles and have a friend draw 7 marbles. Over repeated drawings, the chance that you will obtain all red or all white marbles--the extreme--is exactly eight times greater than that of your friend drawing the larger sample. It works out to expected percentages of 12.5% and 1.56%, respectively.

It's simple math really, but we ignore it. Why? It's just how we think. System 1, the intuitive, associative, story-telling mind strives mightily to create a causal narrative from any set of observations, even if the story ignores statistical law. You probably found yourself caught up in System 1 thinking as you read about the incidence of kidney cancer in rural counties. System 2 is more deliberate and analytical but it's also lazy.

So leaders, here is your Red Flag of the Week: When you have only a few data points to work from, do not fall prey to the Law of Small Numbers. Whether it is assessing human performance or evaluating an intervention, the pressure to tell yourself a potentially inaccurate story will be great. Dismiss the pressure. As Quality advocates say, "Sometimes you have to go slow to go fast." Put lazy System 2 to work and then decide. We will talk about the Law of Regression next week.