The world is a noisy place, and we often listen to the wrong information, leading to poor or conflicted choices. Can we learn to make more informed, wiser decisions? Nuala Walsh joined Visiting Experts host Brett Hendrie to explain how and talk about her new book Tune In: How to Make Smarter Decisions in a Noisy World...it's worth tuning into to the conversation!
The world is a noisy place, and we often listen to the wrong information, leading to poor or conflicted choices. Can we learn to make more informed, wiser decisions? Nuala Walsh joined Visiting Experts host Brett Hendrie to explain how and talk about her new book Tune In: How to Make Smarter Decisions in a Noisy World...it's worth tuning into to the conversation!
Brett Hendrie: So how do you make the most important decisions in your life? Are you someone who's driven by instinct, relying on your experience and intuition? Or are you more quantitative and data driven, turning to analysis of what can be measured? Whatever your answer, there's a good chance that you're not really taking in the big picture or hearing everything you need to know. In a world increasingly filled with distractions and data overload, that's a growing problem, and it's leading to more misjudgments with critical consequences.
But as author Nuala Walsh sees it, we can all reduce our mistakes and make better decisions. How do you change it all starts with focusing in on what really matters?
Welcome to Visiting Experts, a Rotman School podcast for lifelong learners for business and society featuring thinkers and leaders, featured in our acclaimed Speaker Series. I'm your host, Brett Hendrie, and I'm joined today by Nuala Walsh.
Nuala is a highly acclaimed non-executive director and behavioral scientist with a successful career in investment management, banking and consulting. She's the founder and CEO of Mind Equity, and has held senior positions in global firms like Blackrock and Merrill Lynch.
Her new book is Tune In: How to Make Smarter Decisions in a Noisy World, and it's a terrific roadmap in understanding how we can improve our decision making. Welcome to the Rotman School and to the podcast Nuala.
Nuala Walsh: Thank you very much Brett.
BH: I want to begin by asking you about the context that leaders and professionals are making decisions today. The subtitle of your book is how to make decisions in a noisy world. What do you mean by a noisy world, and what impact does it have?
NW: If you look at today, the noisy world that we live in is making it far harder to hear what really matters. And that's due to a combination of three or four factors: data overload, disinformation and digital distraction. And if you then add in speed and inattention, you really do get a toxic mix for human decision making. So, because of this decision ecosystem, it's much harder for leaders and aspiring leaders to hear what matters. In effect, they tune out of the most important information and rush to misjudgment, and it shows up in very oblique ways.
So, it happens when we take things at face value, whether we jump to conclusions, whether we fail to second guess what we hear, and we just automatically rush to interpret – or misinterpret, in this case – information. And of course, it's amplified under situations of uncertainty, scarcity even, and pressure. So your question about the impact, the impact is enormous. It doesn't matter where you are on the spectrum, the consequentiality of your decisions impact other people. And of course, it's a higher impact based on the degree of power that you hold - if you're a professional at the beginning of your career or at the retirement stage of your career. There are a range of factors that impact these decisions. And of course, as a company, also a cost. Harvard estimates that there is an average cost to a Fortune 500 company of 250 million per annum. I think that's, that's a modest estimate, to be honest.
BH: You mentioned data overload and misinformation. And I think all of us just feel that, instinctively, we have these phones with us that are constantly beeping and chirping and giving us new data points to consider. How can we go about evaluating what information sources we should be paying attention to, and which ones are distractions?
NW: It's not easy, and it does, of course, depend on the context, as every behavioral scientist will tell you. But distractions are only part of the problem. I think Brett, it's this whole combination of distraction, plus the data overload, plus everything else, plus the denial that we have of our own limitations. In the book, I identify a number of factors that bias our perspectives. So for me, I think it's almost not what sources to tune into, because, of course, that's context specific, but if you always rush to the first voice you hear, or the loudest voice that you hear, or the most senior voice that you hear, in any environment, that's obviously a key indicator that you know something is astray, and you shouldn't be doing it. And there's a high risk to your decision making in that situation. But the problem is, is that people do it. We do it without thinking. We do it because of this context of noise and speed and attention deficit. So I think the question is around trying to identify what are the right sources, but when you're doing that, you have to discount the wrong sources. The other point is, around this is that you can't listen to every voice. It's very common for business books to say in this world of equality, we must listen to every voice. But in actual fact, every voice is not the right voice, because cognitively, you're not able to process that anyway. That's contributing to the problem.
BH: Really at the heart of all of it is how we as humans process information, how we make decisions, and how we have really a critical role in what plays out in our lives and in our businesses. And so this was a thread in your book that was really fascinating to me, is that the errors and mistakes that happen in business are almost always rooted back in human agency and human decision making, and they're not necessarily just bad timing or bad luck. Can you help us understand why you think it's so important to trace back decision making to something that's human centered?
NW: Most people, when they do make bad decisions, they will blame timing. They will blame bad luck. I mean, you only need to listen to some of the CEOs quarterly earnings reports to get a handle on what that is. Or you find it in the military. I think it was it was evident in the Abu Ghraib trials as well, where, it was the military, and “I was only obeying instructions.” And you often find that in companies that everybody else is doing it, or the boss told me to do it, and I was just obeying authority.
But I think there are some very obvious reasons why it matters that one must take accountability for this. If you don't take accountability and don't empower yourself, you're unlikely to learn from error. The company will never grow if people are always blaming other people. And it is too easy to blame people, but it's a tendency that people have to shirk responsibility. And I'll just give you one example is maybe the SEC, the Securities and Exchange Commission, in the US with the Harry Markopolos case, who was the whistleblower in the Bernie Madoff Ponzi scheme. Harry Markopolos went to the SEC for nine years, as you may recall, and was continuously turned away, even though he had a database of 29 red flags. And that went on for nine years. And he identified it when the Ponzi scheme was worth $6 billion, and when it ended it was $65 billion. And there are huge number of lives destroyed because of that. So whose fault is that? If the individuals in that case don't take agency, don't look and find who is who was at fault there, it will just be repeated again. So you can take any example, in any scenario, in any situation, political, organizational, and try and trace back what is a human factor.
BH: There's another challenge that you speak about in the book, and it goes beyond the noise, and it's about the information that we're not receiving. And you give us the construct of blind spots, but also deaf spots and dumb spots. And I think intuitively, some of us might understand the idea of blind spots, but how do you think about them, and how are they different from deaf spots and dumb spots?
NW: Yeah, it was a concept, actually, that was developed in 1969 by a psychologist, And blind spots, are these psychological terms that refer to our inability or unwillingness to recognize a problem. So it's perceptual communication, it's decision based. But deaf spots are when we tune out different voices – when we basically don't hear what really matters, or we mishear or we misinterpret, and that is quite different to present to blind spots, which, of course, more visual. And then dumb spots is this unwillingness or inability to speak up. So if you self-silence as a bystander, for example, or by definition, if you don't speak, people can't hear and that is a dumb spot in itself, because people can't hear your voice. And so all three together define what I have termed the trilogy of error, and it's just a different way of thinking about how we hear things or how we don't, because this is a very visual world, and we trust what we see far quicker than what than what we hear.
BH: I want to just dig a little bit deeper on the idea of dumb spots, because that was really interesting to me, that we will self-censor or not express certain ideas that can be really important to the decision-making process, certainly within a team structure. What have your observations or lessons learned been in terms of how leaders can support their teams so that there are fewer dumb spots and that people are not self-censoring?
NW: Well, the number one thing is, of course, psychological safety. But that said, there's a spectrum of whether you speak up and give your opinion in a meeting, which is at the you know it's expected of you as a professional to give your opinion, or whether you complain and report a senior for misconduct, or you go to the SEC again reporting fraud. So there was a whole spectrum of whether people speak up and why they may or may not along that piece. So a manager may do a great job at the early end and say “Please everybody, give your opinion.” Try to discourage groupthink.
But I think that what the leaders can do is, one, make sure that there, and two, make sure that the psychological safety is there, but also make sure that the mechanisms are in place so that if somebody does want to report at the more severe end of the spectrum, if you like, they have that in place. And that's not just psychological safety, that's having anonymous hotlines in place and all of these other different practical measures. And I think that's that is a problem.
There's also bystander training, believe it or not, that companies are now doing to teach people the difference. Because people aren't worried about the “will I report fraud or not?” It's, “my boss is annoying me. How do I say things to him, you know? And he is the aggressor in this case.” Or, “how do I speak up against a colleague who is constantly putting me down or undermining me, or using any of these other measures?” It is a spectrum, but I think the best managers are those that recognize that and recognize that it isn't a one size fits all when it comes to creating the right culture and the right environment in an organization.
BH: We also have a lot of internal biases that this information needs to filter through. Can you share with us the biases that you've identified and what's important for us to understand about them?
NH: Sure. Well, the schema is actually a set of misjudgment traps. And I've identified 10 using the acronym PERIMETERS. So just to go through each one: P for power, E for ego, R for risk, I for identity, M for memory, E for ethics, T for time, E for emotions, R for relationships and S for stories. And together, each of these are have a three to four different biases. Each of these traps have a set of associated biases, and each of these traps trigger the risk of misjudgment.
The first one is P for power. I would just say that is power related traps when you are seeking power or desperate to hold on to power, or threatened with loss of power. What biases are activated and make you more liable to misjudgment or not?
Ego, which is probably self-explanatory – high or low ego. In a high-ego state, you will certainly make different decisions than if you are a low-ego person.
Risk that's about sensation seeking, desire for certainty or your tolerance for uncertainty.
Identity. Identity is, I think, a fascinating one in this social media era that's about your desire to be seen, to be heard, but it's all about impression management and in group bias and what you do when you're when you are actually seen.
Memory, which is about the ability to recall or not. A challenge as you get older, Brett.
The next one is ethics. But again, this is to what extent you listen to the voice of conscience or not. And again, you know that there are different biases that will affect you and drive you to either misconduct or, you know, ethical behavior.
Time. Emotion again, self-explanatory, wishful thinking, envy, regret, fear.
Relationships, which is the crowd following the crowd.
And then stories - the voices that you listen to yourself or others.
BH: You mentioned that one of the biases is power, and that's the P in perimeter. How do you define power? And why does having power become something that can be problematic and challenging for leaders to navigate in their decision making.
NW: I defined, in this case, power as being power related. So it's not that you hold power, so it's power related, as in recognition, status, authority – it could be any of those facets of power. The trap is on the power journey, if you like. So you could be a parent. That's power. It's not the same as being the president, but you still have power. You are still subject to the exact same biases, different consequentiality, different order of magnitude, but the exact same biases, narrow focus, conformity bias, champion bias, believing in a just world, all affect your decision making. And so that's why I was very clear to say to title and power-related, or power-based, or power-led traps, rather than power per se.
BH: And what was the example with Jack Ma from Alibaba?
NW: In 2020 he made a speech at the Shanghai Bond, and he was talking about the financial system in China, and it was just a couple of months before they were going to have the greatest IPO of all time for Alibaba. And just as he was about to start, he said, “I don't know whether I should have come here today to make this speech,” and then he proceeded to criticize very aggressively the Chinese government and their financial practices. You know, they were archaic. They needed to be overhauled. And basically slated to the Chinese government. And even if you're a billionaire, the Chinese government didn't take too kindly to this at all. So he, in effect, was canceled, disappeared for two years from public life, and the IPO was canceled. So my interpretation was he had relative power, but not absolute power, and he didn't listen to his inner voice. So on that desire to maintain power, to still be seen as, here I am giving you my opinion, and here's what you should do. He didn't listen. He tuned into the wrong voice. So he didn't listen to doubt. He said it to himself, “I don't know whether to come here today.”
BH: What have you observed in terms of how leaders can be confident externally, but still grounded in their decision making?
NW: It's very hard, because it's about the peer group, isn't it. I think setting up what Adam Grant might call it - the challenger network so a decision buddy for greater accountability. The best ones go outside their circle where there is no agenda. But the problem is that we automatically default to familiar voices, or the voice that will tell us what we want to hear. I mean, a recent example might be the British Prime Minister Liz Truss, if you remember. She lasted 44 days in office because she didn't listen to anybody. So she had this massive opportunity professionally and policy wise for the country, but she tuned out the voice of the chancellor, her party and even the IMF, the International Monetary Fund, and took no advice whatsoever. I wasn't in the woman's mind, but you could make a reasonable guess as to what factors were at play there. I think having these decision bodies, having decision rules, having a balanced network outside of your work that keep you grounded, I think is the easiest way.
BH: Is there another, any other bias trap that is particularly fascinating or interesting to you, that you think is worth noting because of how detrimental it can be for leaders?
NW: Yes, the default to truth, and Tim Levine is the architect of this particular bias. And I think it's fascinating. It basically means that we trust too much Brett, and we've evolved on it, and we all do it. We default to truth. We don't think that the impossible will happen. We take people at face value. It is one of the fundamental biases as a deaf spot. We think the good people get rewarded. You work really hard in your career, you're going to get rewarded, and you know only it's those underperformers that will be top of the list when it comes to redundancy time. That's not always the case.
BH: Let's talk about the advice that you have for leaders and emerging leaders in terms of how they can tune in and make better decisions. One of the things that I really appreciated in the book is that you dedicate multiple chapters to the idea of decision friction. Can you help us understand what that is and how we can bring it into our workplaces?
NW: When you talk about friction, it's normally negative. So you know, if you're looking online and you want to cancel a subscription and you have to press a button five times – that is painful. That is called friction for the customer, and nobody wants that. But in this case, what the idea of decision friction is you deliberately interrupt yourself, you find a nudge or a prompt or a question or a technique to stop yourself. So you might decide in this team. We're never going to decide on a Friday, or we're not going to ever going to decide until we ask four people, and they all have to be different from us, outside of our industry, or whatever. You decide, the rule you decide what works for your team. But what you're doing is you're applying a mental speed bump so that you slow yourself down and that gives you time. Now, if you're an emergency situation, you don't have that luxury. I know that. But in many situations, you do have the luxury. You just choose not to apply it and not to go there.
BH: And I think at the speed with which so many of us are operating in business today, it's important reminder to slow down and be deliberate in terms of those speed bumps in your decision making, so that you know that you're not falling into one of those, one of those traps. As we wrap up here, as you look back on your career, which of these insights do you wish you had understood earlier? And what's your advice to other leaders on how to benefit from your hindsight?
NW: I think there's tremendous power if you can label what you see. We are associative people. We think in associative ways. If you could put a name to something, to some behavior, yours or someone else's, it makes it easier. And the other thing that I wish I had known was as a leader, the onus is on you to make great decisions, but sometimes you can't. Indecision is a curse. And I actually wrote this book for my nieces and nephews, who I'm still waiting to read the book by the way – I hope you're listening – so they keep telling me they're halfway through. I'm not sure, but I wrote it for them. But again, they're so busy. This is but this is the problem. Brett, ambitious people, are so busy, so busy working. They're not taking the time to step back and learn so that they can actually fast track their performance and sidetrack errors. And that is the problem of the noisy world.
BH: Those are terrific insights for all of us, but especially for leaders. Your book is full of terrific insights and stories that I'm sure will help leaders and emerging leaders think about how we all process information. The book, again, is Tune In: How to Make Smarter Decisions in a Noisy World. If people want to find you, Nuala, where should they look?
NW: LinkedIn is always the first port of call. And secondly, my website, nualagwalsh.com/.
BH: Terrific. Well, Nuala, we really appreciate you being here at Rotman and having you on the podcast.
NW: It's been a pleasure. Thank you very much, Brett.
BH: This has been Rotman visiting experts, backstage discussions with world class thinkers and leaders from our acclaimed speaker series to find out about upcoming speakers and events visiting us here at Canada's leading business school, please visit rotman.utoronto.ca/events this episode was produced by Megan Haynes, recorded by Dan Mazzotta and edited by Damien Kerns. For more innovative thinking, head over to the Rotman Insights Hub, and please subscribe to this podcast on Spotify, Apple or wherever you get your podcasts. Thanks for tuning in.