Is right vs. looks right

Shane Parrish, author of the generally excellent Farnam Street blog, had a great post this morning about defensive decision making – the type of decision making that focuses on what “looks right” vs. what “is right.”

Defensive decision making is the “IBM” option. Since “no one got fired for buying an IBM,” it is intended to protect the decision maker. Organizations can often create a massive decision-consequence asymmetry in that they become so risk averse that most decisions come with small upside if they go well and large downside if something goes wrong (e.g. get fired).

So, the natural incentive is to just make the “default” decision. There is no risk to one’s reputation and it is always defensible.

This points to why so many cultures talk about “thinking out of the box” but never actually do so. It also speaks to why cultural change is very hard.

And, finally, it is a great reminder that approaching building products and services for customers with first principles thinking and hypothesis isn’t just about hiring the right people.

It involves building a culture that incentivizes attempting decisions that are right instead of rewarding those that look right.