Lyrics to a WRAP song

Book Review:

Chip Heath & Dan Heath, "Decisive: How to Make Better Choices in Life and Work", Crown Business, 2013.

This book by the Heath brothers is about the decision-making process, and as such is not about good outcomes per se. As the authors write in chapter 12,

"We can't know when we make a choice whether it will be successful. Success emerges from the quality of the decisions we make and the quantity of luck we receive. We can't control luck. But we can control the way we make choices."

This quote reminds one of a similar point made by Stuart Sutherland in his book "Irrationality", which I have previously reviewed: rational thought and action does not guarantee that you will always achieve the best possible outcome, but in the long run, rationality maximizes your chance of success.

So Decisive is really about using a process for decision-making in order to make better decisions, which cannot be evaluated merely by their outcomes, because as the authors note, otherwise "every roulette winner in Vegas would be a decision-making genius."

What is a good decision, then? Well, it's not about plugging a bunch of numbers into a spreadsheet, or tallying up a list of pros and cons. It's not even about analysis, because researchers have demonstrated empirically that business profitability depends more on a good decision process (i.e. addressing uncertainties and including a diverse range of perspectives) than on financial modeling. According to Chip and Dan Heath, it's about fighting the most pernicious cognitive biases that plague our decision-making -- biases like the ones identified by the psychologists Kahneman and Tversky.

People are too quick to jump to conclusions, because they consider information that is immediately available. Hence, career choices are often abandoned or regretted; business mergers and acquisitions often fail to create shareholder value; people fail to save enough for retirement; people start relationships with others who are bad for them, or let work interfere with family life, and so on. We often trust our guts too much, and even being aware of our mental shortcomings is not enough to fix them. Therefore, what we need is a "process" for thinking through important decisions.

In the book Decisive, the Heath brothers introduce the WRAP process, which aims to tackle the "four villains of decision making".

1. W = Widen your options. Why? Because narrow framing causes us to define our choices too narrowly, often seeing them in binary terms.
2. R = Reality-test your assumptions. Why? Because confirmation bias causes us to selectively seek out information that bolsters our prior beliefs, attitudes and actions.
3. A = Attain distance before deciding. Why? Because short-term emotion causes us to feel conflicted, to lack perspective, and to feel paralyzed.
4. P = Prepare to be wrong. Why? Because overconfidence causes us to think that we know more than we actually do about how the future will unfold. Studies have shown that when doctors feel "completely certain" about a diagnosis, they are wrong about 40% of the time.

The classic "pros-and-cons" approach used by Benjamin Franklin is ineffective at combating these villains. A better approach was exemplified by Joseph Priestly, a scientist who in 1772 had to decide whether to take up a job offer as an adviser to Lord Shelburne and a tutor to his children. Priestly rejected a narrow frame ("Should I take this offer or not?") by looking for additional means of raising his income. He avoided confirmation bias by collecting more data from people who knew Lord Shelburne and took objections from his friends seriously. Priestly attained distance by considering the factors he cared about most in the long term: his family's welfare and his scholarly independence. Finally, he was not overconfident -- he knew that he could be wrong, so he made a deal with Shelburne to secure a payment for life, even if they had to part ways. In the end, Priestly decided to accept the offer.

The four-step WRAP process can be used for important decisions where intuition is rarely accurate. By practicing the process, it can become second nature. The WRAP process can even remind you when there is a need to make a decision -- which is sometimes the hardest part of making a good decision. We need to decide decisively, because when we are indecisive, we miss out on opportunities, which is something that we'll come to regret when we are old. Thus, another benefit of the WRAP process is that by trusting it, we gain the peace of mind and appropriate confidence to take risks when we need to.

***

How can you widen your options? (Chapters 2 - 4)

• Don't be like a teenager who makes "whether or not" decisions, or makes no choice at all (e.g. statements of resolve). Such decisions tend to fail more often than decisions with two or more alternatives. Unfortunately, even organizations sometimes act like teenagers.
• When choosing which university to attend, the question to ask is not "what is the highest-ranking college I can convince to take me?" but rather "what do I want out of life and what are the best options to get me there?" -- in fact, university rankings have little influence on graduates' lifetime earnings after controlling for aptitude.
• The opportunity cost of a decision is that which you give up, i.e. what you could have done with the same amount of time and money. Rationally, you should take opportunity costs into account, but people often forget to do this unless they are reminded. Therefore, you should remind yourself that you have alternatives.
• The Vanishing Options Test can help you avoid a narrow frame by forcing you to think about what you could do if you cannot choose any of the current options you're considering.
• Multitracking is when you consider several options simultaneously. By directly comparing options, you gain a better understanding of the situation, plus you avoid getting your ego attached to a particular one (which also helps undercut politics in teams). You also give yourself a built-in fallback plan.
• Having too many options can result in "choice overload", but this is unlikely to happen in most situations, as you don't need a plethora of options -- just one or two extra options can improve your decisions (as long as these are meaningfully distinct and legitimate alternatives, not sham options).
• Two mindsets that influence our motivation to seize new opportunities are the prevention focus mindset and the promotion focus mindset. Prevention focus is about avoiding negative outcomes, while promotion focus is about pursuing positive outcomes. The former helps us take caution and the latter gives us enthusiasm -- so it's wise to combine both in a balanced way.
• Sam Walton (the founder of Walmart) said: "most everything I've done I've copied from someone else." Walton was able to find a lot of clever solutions by asking himself what he could learn from others struggling with a similar problem.
• As sources of inspiration, you could look toward your colleagues, the industry "best practices" (benchmarking), or look at your "bright spots" (i.e. the most positive points in a distribution of data, for example your past successes).
• Sometimes, a canned "playlist" of prescribed questions can help stimulate new insights. This is especially useful in an organization where certain decisions are common (e.g. how to make budget cuts). A playlist can prevent you from overlooking an option.
• Using analogies can help with problem-solving. Local analogies are comparisons to very similar (granular) problems. Regional analogies are comparisons to broadly similar (conceptual) problems. The idea of "laddering up" suggests that you start locally (e.g. with benchmarks, bright spots) and then move up a rung by expanding your search (e.g. broadening the definition of your problem).

How can you reality-test your assumptions? (Chapters 5 - 7)

• The confirmation bias is much harder to disrupt than narrow framing. In the business world, mergers and acquisitions are often fueled by unwarranted self-confidence on behalf of CEOs. Frequently, this is caused by a lack of opposing viewpoints within the company -- therefore CEOs need to seek out disagreement.
• The value of devil's advocacy is that it allows criticism to be seen as a noble function. But how do you prevent disagreement from devolving into bitter politics? Well, instead of arguing about who is right, take one option at a time and ask, "what would have to be true for this option to be the right answer?" This lets you talk about the evidence.
• We often fish for self-justification (like when calling people's references when hiring them). A better tactic is to ask tough, disconfirming questions, especially to seek specific factual information. However, when you're in a position of authority (e.g. a doctor seeing a patient), it may be better to ask broad, open-ended questions. Ask yourself, "what is the most likely way I could fail to get the right information in this situation?"
• When people challenge our ideas, we tend to act defensively. Counter this tendency by assuming positive intent. If you find yourself thinking that a person is selfish or rude, try to consider the opposite -- what if they're interested in the same things you are?
• When we read product reviews, we implicitly acknowledge that it can be smarter to trust the averages over our own impressions. So how come we often do the opposite in life? In psychological terms, we tend to use the inside view, which is the impressions and assessments of our specific situation we form based on the information in our mental spotlight. This is in contrast to the outside view, which is the summary of people's general experiences across the larger class of similar situations. The outside view is generally more accurate.
• A simple way to reality-test your ideas is to talk to an expert (i.e. anyone with more experience than you on the issue), because they are great at assessing base rates (as long as you ask them the right questions, like "what are the important variables in a case like this?"). However, they may not be better than other people at predictions.
• In addition to looking at the big picture (outside view, base rates) you can also "zoom in" to get a close-up. The statistics need to be combined with an intuitive grasp of the nuances of the situation's "texture". For example, a company might get a close-up of their competitors' products by actually using them.
• Finally, you can test your hypotheses using small experiments. The authors call this "ooch". To ooch means to dip a toe in the proverbial water before jumping in headfirst. Unfortunately, we often fail to test our choices this way; for instance, many students enroll in graduate school without ever working in a profession.
• A related idea used in design is called "prototyping", which is when you quickly get a mock-up product into the hands of customers in order to get feedback, rather than spend six months planning the perfect product.
• People neglect ooching because they are awfully confident about their ability to predict the future. Professor Phil Tetlock's studies of political and economic experts found that the experts did worse at predicting outcomes than even a crude extrapolation algorithm (which assumes that base rate trends will continue). Experts with PhDs and two decades of experience did no better than newbies, but those who made more media appearances made worse predictions! So instead of trying to predict reality,  it is better to discover it by ooching.
• Surprisingly, 60% of Inc. Magazine 500 CEOs did not even write business plans before launching their companies. Entrepreneurs, in contrast to corporate executives, have a preference for testing rather than planning. However, in your personal life, it is best to use ooching when you really need to collect information, not to slow down a decision that deserves your full commitment (e.g. finishing school).
• Interviews are less predictive of job performance than are work samples, job-knowledge tests, peer ratings of past job performance, and even intelligence tests. Yet people continue to rely on interviews because they fancy themselves good at interviewing. (A similar critique of interviews was made by Stuart Sutherland in his book "Irrationality".)

How can you attain distance before deciding? (Chapters 8 & 9)

• Car salesmen know that they need to get customers to stop thinking and start feeling. They use techniques like praising the car that the customer is considering, and playing the "good guy" by bravely fighting their managers for a better deal (which of course should be made that day). In cases like buying a car and other tough choices, we need to attain distance from short-term emotions. There is wisdom in the folk advice to "sleep on it", because visceral emotion fades.
• The authors recommend using the 10/10/10 tool, which asks: How will you feel about the decision 10 minutes from now? How about 10 months from now? And 10 years from now?
• Doing a 10/10/10 analysis can help you shift your mental spotlights from the intense short-term emotions like nervousness, fear and dread, to a future moment where they hold less leverage.
• The mere exposure principle says that we tend to like things we are familiar with. The concept of loss aversion says that we find losses more painful (about 2-4 times) than gains are pleasant. The combination of mere exposure and loss aversion leads to a status quo bias. Hence people tend to prefer the way things work today.
• Once again, it helps to get some distance. For example, if you are a business executive, ask yourself: "What would our successors do?". According to the psychology of construal-level theory, more distance allows us to see more clearly the most important dimensions of the issue we are facing. This is why the advice we give to others is often better than what we think of for ourselves. So when you're stuck with a tough choice, ask yourself: "What would I tell my best friend to do in this situation?"
• Sometimes, a decision is about more than a choice of job -- it is about our values. It requires one to ask, "what do I work for, and what's the purpose of it?". Ironically, this does not require you to neutralize emotion; on the contrary, it's about the emotion that drives you and inspires you. Here the WRAP process can't tell you the right answer, but it can help ensure that your decision reflects your core priorities.
• A nonprofit organization could ask, "whom do we ultimately serve?". For example, Interplast (now ReSurge International) had a conflict between the interests of volunteer surgeons and patients with cleft lip, until they decided to prioritize the welfare of their patients. Define and enshrine your core priorities seems like commonsense advice, but too often people don't establish their priorities until they're forced to, or they don't do any real work on their core priorities.
• If you want to spend more time doing a certain thing, you also need to choose which things you are going to stop doing to make that happen. One tip is to sort your tasks into List A (the mission-critical tasks) and List B (the non-core tasks), and then try to stay on List A. Another tip is to set a timer to go off once every hour, and whenever it beeps you ask yourself, "Am I doing what I most need to be doing right now?"

How can you prepare to be wrong? (Chapters 10 - 12)

• The method of bookending entails the estimation of two different scenarios: the lower bookend, which is very negative outcome, and the upper bookend, which is a very positive outcome. This method helps you avoid false confidence about the future, because instead of targeting a precise point it considers a range of possibilities.
• Researchers theorize that when people consider each bookend separately, they tap into separate pools of knowledge, which lets them make more accurate estimates.
• To prepare for the lower bookend, you can do something akin to insurance. To prepare for the upper bookend, you need a plan for dealing with unexpected success.
• A tool for making more accurate estimations is called prospective hindsight, which is when you assume that a certain future event has definitely happened, and then work backwards to generate reasons for why the event could have happened. A related tool developed by psychologist Gary Klein is called the premortem, which is like a postmortem analysis but carried out before you start a project. In this case you would imagine the future "death" of your project and ask, "What killed it?". 
• Another related technique is called failure mode and effect analysis (FMEA), which requires one to identify what could go wrong at each step of the plan, and for each potential failure to ask "how likely is it?" and "how severe would the consequences be?".
• In addition to the premortem, we also need "pre-parades" to prepare for unexpectedly good outcomes. Basically, it asks you to consider that in the future, your decision has been a wild success and a parade will be held in your honor. How do you ensure that you're ready for it?
• You could also just assume that you are overconfident and give yourself a healthy margin of error, as engineers do when they build a "safety factor" into their designs.
• Some call centers use a "realistic job preview" in order to give potential recruits realistic expectations (which reduces employee turnover even when they are given after the employee is hired). These realistic job previews provide a sort of "vaccination effect", and helps employees think about how they will respond when they encounter a tough situation (like an angry customer). Likewise, cognitive behavioral therapy (CBT) uses a similar mental simulation approach to help patients rehearse how to respond in difficult interpersonal situations.
• Unfortunately, even with extensive planning things sometimes go wrong anyway. In these cases, we need a tool to remind us to cut our losses or maximize our opportunities. This is the idea of the tripwire. One benefit of setting a tripwire is that it shakes us out of autopilot mode. For example, people often stick around in a job they don't like -- so the online shoe store Zappos offers its new employees over $1000 to quit! This forces them to think about their commitment to the company.
• Inside organizations, infrastructure gets built up around past decisions. This can lead to problems, as demonstrated by the fall of Kodak, whose managers knew that digital technology was coming, yet they refused to abandon the older film technology. A tripwire could have told Kodak when to jump (e.g. "we will act when more than 10% of the public express satisfaction with digital images").
• Autopilot can make us neglect opportunities or lead us to persist at doomed efforts. Variants of tripwires that we can use in our personal lives include deadlines and partitions (which are ways of breaking up a resource into discrete portions -- e.g. wrapping each cookie in an individual foil, or putting your money into ten separate envelopes instead of one -- such that we become more aware of escalating commitment to our choices). 
• Tripwires can even encourage healthy risk by letting us carve out a "safe space" for experimentation. They put a cap on the risk (e.g. "we won't spend more than $10,000 to jump-start this failing project") and quiet your mind until the trigger is hit.
• By labeling a tripwire, you can make it easier to recognize patterns of threat or opportunity. This works thanks to the "seeing it everywhere" effect; like when you learn a new word ("haberdashery") and suddenly start to notice it everywhere. Tripwires can even remind you that you have a choice to make.
• When making decisions in organizations, those whose ideas were not accepted may experience anger, hurt feelings, or loss of confidence in the new direction. This is why it is so important that the decision process be perceived as fair -- and routine and consistent use of the WRAP process can help with that.
• Ideally, you want as many people as possible to be involved in the decision and to get them to agree. The art of compromise can help make better decisions, because when people bargain they come to the table with different opinions (which helps the group avoid a narrow frame). Although bargaining is a slower way of making a decision, it can help speed up the implementation since people are more likely to use it enthusiastically.
• Research shows that procedural justice (i.e. the sense of a fair process) is crucial in how people feel about a decision. It helps if you can articulate someone's point of view better than they can (because it demonstrates that you are listening). When defending a decision, be sure to admit your plan's flaws -- it actually makes others more comfortable that your idea has been reality-tested. (Notice the reminiscence to Dale Carnegie's advice to "let them feel like your idea is theirs" and "admit that you are far from impeccable".)
• Process can provide us with the confidence to make bolder choices, which is relevant because studies of the elderly show that they regret not what they did but what they didn't do.

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So, an "express version" of the WRAP process might look like this: add one more option to your consideration set; consult an expert about the base rates in your situation; ask which option best fits your core priorities; and prepare for the contingencies in which things go wrong and in which they go right.

The great thing about this book is that it is practical. Readers can take away many tips to apply in their daily lives, and the WRAP acronym is easy enough to remember. At the same time, the advice in the book is based on extensive research from the likes of Kahneman, Tversky, Ariely, Thaler, Tetlock, etc. in tandem with case studies of individual people or organizations who faced tough decisions. It is also well-structured (it follows the WRAP process), and occasionally entertaining to read (although for the most part, the writing style is not very invigorating). My main complaint is similar to the one I made in my review of Maria Konnikova's "The Confidence Game", which is that it can feel repetitive at times, and that it confusingly jumps back-and-forth between psychological research and journalistic story telling. While the summaries at the end of each chapter are very convenient, one feels that Decisive could have been slightly shorter than it is.

Overall, I give this book 4/5 stars (it would be 5 if not for the length, repetition and dry prose). No doubt many readers will emerge from this book being more rational in their decision-making, so I would definitely recommend it.