#96

Beyond Bias: Refining Our Decisions with Nuala Walsh

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Nuala Walsh is a Behavioural Scientist, TEDx Speaker, Non-Executive Director, and award-winning former Executive with three decades in investment management, banking and consulting. She is the Founder and CEO of MindEquity and holds appointments as President of the Harvard Club of Ireland, Chair of the Innocence Project London and Founding Director of the Global Association of Applied Behavioral Scientists. 

Recognised among the Top 100 Most Influential Women in Finance, she held positions at Merrill Lynch, BlackRock, PA Consulting Group and Standard Life Aberdeen. She also served as Non-Executive Director at British & Irish Lions, former Vice-Chair at UN Women (UK), Deputy Chair of The Football Association’s Inclusion Advisory Board, and as an Advisor at World Athletics.

In her new book ‘Tune In: How to Make Smarter Decisions in a Noisy World’, Nuala argues that the most underrated risk facing humanity today is not economic, political or even climate risk – it’s human decision risk. To combat that risk, we must “tune in”. Nuala provides us with the framework for how to do so.

Summary

02:31 Nuala Walsh’s background

• Various roles in consulting, investment banking, investment management, and consultancy.
• Nuala spent 34 years in investment banking and management with Merrill Lynch, BlackRock, and Standard Life Aberdeen.
• Founded own consultancy, MindEquity, 5 years ago, combining interest in psychology and behavioral science studied at the London School of Economics.
• Holds board roles in sports organizations like World Athletics, British and Irish Lions, Football Association, and Basketball in Ireland.
• Currently writes for Psychology Today, Forbes, and Harvard Business Review, and lectures at Harvard Club of Ireland.

05:29 The benefit of working in different disciplines and thought patterns

• Sits on the inclusion advisory board at the Football Association despite not being a footballer, referee, or coach, bringing a different perspective.
• Involved in projects like the Innocence Project despite not being a lawyer, contributing diverse skills.
• Also part of the British and Irish Lions despite not being a rugby player, adding value with other skills.
• There is power in diverse perspectives within the room, which improves decision-making and impacts business outcomes positively.

08:11 The power of quitting

• Nuala recommends reading ‘Quite’ by Annie Duke, which explores societal conditioning to persevere rather than quit.
• She has stayed in roles despite being unhappy, due to having a fear of change and comfort with the status quo.
• Status quo bias can lead to stagnation in businesses, e.g. General Electric’s long-term investments in projects.
• It also impacts high-stakes decisions, e.g. low overturn rates of verdicts by the Supreme Court.
• There are various biases influencing decisions, including time-based biases and identity.
• Learn how to overcome the fear of quitting for better outcomes.

13:24 What inspired Nuala to write ‘Tune In’?

• Nuala feels like each chapter has the potential to be its own book – containing 75 biases and 10 misjudgment traps.
• Nuala remembers being labelled as “tone deaf” in the past, which stuck with her.
• Initially focused on biases but later realised the importance of addressing why people tune out, leading to the exploration of deaf spots in decision-making.
• The aim is to provide readers with a roadmap to understand and avoid decision errors, offering tools for individuals at all levels, from relatives to politicians.
• Utilises mnemonic “perimeters” to categorize traps, making it easier for readers to recognise vulnerabilities in decision-making.
• The book was inspired by the observation of rising misjudgments in various aspects of life, from scandals to school shootings.

19:21 What surprised Nuala most when researching for the book?

• How even highly successful individuals, such as CEOs and presidents, can make significant misjudgments despite their achievements. Examples include Alison Rose, former CEO of NatWest, and presidents of Harvard and University of Penn, who faced consequences for their misjudgments.
• Everyone experiences setbacks but there is always potential for growth and turnaround.
• The importance of providing a high-level overview of behavioural science, offering insights applicable to various fields and situations.

24:32 The impact of emotions in decision-making

• There are 27 emotions
• Emotions like envy can lead to sabotage in organisations and personal struggles like anxiety and depression.
• Labelling emotions as a starting point for managing them effectively, rather than suppressing them unconsciously.
• Highlights the impact of communication framing on triggering emotions, citing examples like messaging during COVID-19.
• External factors and socially generated emotions, like comparison based on social identity theory.
• Use emotionally intelligent tools for leaders and individuals to navigate decision-making, such as using the regret test or pre-mortems for high-stakes decisions.

29:10 The most common cognitive biases

• Confirmation bias is a significant challenge, particularly in contexts like military leadership where ego and overconfidence can hinder recognition of truth and risk.
• Anchoring and the illusion of invulnerability can lead individuals to underestimate risks and overestimate their immunity to negative outcomes.
• How the illusion of invulnerability manifests, from personal decisions like rejecting medical advice to broader societal issues like underestimating the likelihood of war.
• The compounding effect is where multiple biases reinforce each other.
• Understanding these biases for a competitive edge in decision-making.

35:03 Can unconscious bias ever be truly alleviated?

• Complete elimination of biases may not be possible, but understanding and awareness can help modify and reduce their impact.
• Commit to the process of understanding biases to improve one’s influence, credibility, and performance.
• Start with a single chapter or concept from the book to gradually build understanding, rather than overwhelming oneself with complex material.
• Recognise biases in positions of power and ambition, citing real-world examples like Donald Trump’s decision-making during the Capitol riot.

37:40 The pursuit of power

• Single-mindedly pursuing power can narrow one’s perspective and increase risk.
• One example is the Wells Fargo scandal where employees fabricated millions of fake customer accounts to meet unrealistic targets set by the CEO.
• Contrasts this with the approach taken by Paul McGinley in the Ryder Cup, who embraced the underdog position as a source of freedom and creativity, suggesting that being in a position of power can lead to narrow thinking and unethical behaviour.
• Emphasizes the complexity of power dynamics and their influence on decision-making, suggesting that understanding these dynamics is crucial for avoiding pitfalls.

42:14 Advice for people about maintaining their identity to enable better decisions?

• Commitment bias is where individuals feel obligated to remain consistent with their past decisions or promises.
• Group identities can further reinforce commitment bias, leading individuals to prioritize group cohesion over critical thinking, e.g. the case of individuals who harboured Nazi sympathies or blindly followed cult leaders due to their commitment to group identity.
• Contrasts negative outcomes with examples of individuals who successfully transformed their identities, such as Tina Turner and Buzz Aldrin.
• The concept of identity fusion, where individuals become deeply intertwined with group objectives, can lead to both positive societal contributions and harmful extremism.

50:20 Short-term vs long-term thinking

• Short-term orientation in modern society is exacerbated by the digital age and the demand for instant gratification.
• The dangers of short-term thinking, especially for leaders, can lead to rushed judgments and negative consequences for others.
• Strike a balance between short-term and long-term perspectives.
• Practise visualisation of future consequences to encourage long-term planning and decision-making.

54:24 Do better decisions come from subtraction?

• Reducing options to a binary choice hampers decision-making.
• Expand options through novel perspectives and seek other opinions to avoid narrow and binary thinking.
• The “6 thinking hats” technique by De Bono is a way to consider different perspectives and emotional frames when making decisions.
• Avoid defaulting to the middle option and be cautious of marketing tactics like the decoy effect.
• Embrace biases, use decision friction to slow down and deliberate, and provide a checklist for self-awareness.

Links mentioned: 

Tune In: How to Make Smarter Decisions in a Noisy World

‘Quit’ by Annie Duke