Gambler’s Fallacy is the Failure to Realize How Randomness Rules Our World

Gambler's Fallacy is the Failure to Realize How Randomness Rules Our World

The Gambler’s Fallacy is the misleading belief that the probability of a specific occurrence in a random sequence is dependent on preceding events—that its probability will increase with each successive occasion on which it fails to occur.

Suppose that you roll a fair die 14 times and don’t get a six even once. According to the Gambler’s Fallacy, a six is “long overdue.” Thus, it must be a good wager for the 15th roll of the dice. This conjecture is irrational; the probability of a six is the same as for every other roll of the dice: that is, 1/6.

Chance Events Don’t Have Memories

In practical terms, the Gambler’s Fallacy is the hunch that if you play long enough, you will eventually win. For example, if you toss a fair coin and flip heads five times in a row, the Gambler’s Fallacy suggests that the next toss may well flip a tail because it is “due.” In actuality, the results of previous coin flips have no bearing on future coin flips. Therefore, it is poor reasoning to assume that the probability of flipping tails on the next coin-toss is better than one-half.

Gambler's Fallacy: Chance Events Don't Have Memories A classic example of the Gambler’s Fallacy is when parents who’ve had children of the same sex anticipate that their next child ought to be of the opposite sex. The French mathematician Pierre-Simon Laplace (1749–1827) was the first to document the Gambler’s Fallacy. In Philosophical Essay on Probabilities (1796,) Laplace identified an instance of expectant fathers trying to predict the probability of having sons. These men assumed that the ratio of boys to girls born must be fifty-fifty. If adjacent villages had high male birth rates in the recent past, they could predict more birth of girls in their own village.

There Isn’t a Lady Luck or an “Invisible Hand” in Charge of Your Game

The Gambler’s Fallacy is what makes gambling so addictive. Gamblers normally think that gambling is an intrinsically fair-minded system in which any losses they’ll incur will eventually be corrected by a winning streak.

In buying lottery tickets, as in gambling, perseverance will not pay. However, human nature is such that gamblers have an irrational hunch that if they keep playing, they will eventually win, even if the odds of winning a lottery are remote. However, the odds of winning the jackpot remain unchanged … every time people buy lottery tickets. Playing week after week doesn’t change their chances. What’s more, the odds remain the same even for people who have previously won the lottery.

Gambler’s Fallacy Coaxed People to Lose Millions in Monte Carlo in 1913

Gambler's Fallacy Coaxed People to Lose Millions in Monte Carlo in 1913 The Gambler’s Fallacy is also called the Monte Carlo Fallacy because of an extraordinary event that happened in the renowned Monte Carlo Casino in the Principality of Monaco.

On 18-August-1913, black fell 26 times in a row at a roulette table. Seeing that that the roulette ball had fallen on black for quite some time, gamblers kept pushing more money onto the table assuming that, after the sequence of blacks, a red was “due” at each subsequent spin of the roulette wheel. The sequence of blacks that occurred that night is an unusual statistical occurrence, but it is still among the possibilities, as is any other sequence of red or black. As you may guess, gamblers at that roulette table lost millions of francs that night.

Gambler’s Fallacy is The False Assumption That Probability is Affected by Past Events

The Gambler’s Fallacy is frequently in force in casual judgments, casinos, sporting events, and, alas, in everyday business and personal decision-making. This common fallacy is manifest by the belief that a random event is more likely to occur because it has not happened for a time (or a random event is less likely to occur because it recently happened.)

  • While growing up in India, I often heard farmers discuss rainwater observing that, if the season’s rainfall was below average, they worry about protecting their crops during imminent protracted rains because the rainfall needs to “catch-up to a seasonal average.”
  • Gambler's Fallacy in soccer / football penalty shootouts In soccer / football, kickers and goalkeepers are frequently prone to the Gambler’s Fallacy during penalty shootouts. For instance, after a series of three kicks in the same direction, goalkeepers are more likely to dive in the opposite direction at the fourth kick.
  • In the episode “Stress Relief” of the fifth season of the American TV series The Office, when the character Jim Halpert learns that his fiancee Pam Beesley‘s parents are divorcing, he quotes the common statistic that 50% of marriages wind up in divorce. Halpert then comments that, because his parents are not divorced, it is only reasonable that Pam’s parents are getting divorced.

The Gambler’s Fallacy is a Powerful and Seductive Illusion of Control Over Events That are Not Controllable

Don’t be misled by the Gambler’s Fallacy. Be aware of the certainty of statistical independence. The occurrence of one random event has no statistical bearing upon the occurrence of the other random event. In other words, the probability of the occurrence of a random event is never influenced by a previous, or series of previous, arbitrary events.

Idea for Impact: Be skeptical of most judgments about probabilities. Never rely exclusively on your intuitive sense in evaluating probable events. In general, relying exclusively on your gut feeling or your hunches in assessing probabilities is usually not a reason to trust the assessment, but to distrust it.

Presenting Facts Can Sometimes Backfire

Presenting Facts Can Sometimes Backfire People tend to have contempt for ideas that they disagree with. What’s worse is the possibility that some people, when presented with information that goes against their beliefs, may not only snub their challengers, but also double down on their original viewpoints. Cognitive psychologists call this the backfire effect.

For instance, voters have been shown to judge the political candidate they support even more favorably after the candidate is attacked by the other party. In the same way, parents opposed to vaccinations have been shown to become more convinced of their alleged apprehension that vaccination causes autism after reviewing studies showing that vaccinating their kids is the best course of action.

The backfire effect explains why, when people argue against conflicting information strongly enough, they wind up with more supportive arguments for their cause, which further aligns them with their preexisting positions.

The backfire effect is related to confirmation bias—the rampant propensity to seek, interpret, synthesize, and recall information in a way that substantiates one’s preconceptions. For instance, when people read an article that describes both sides of an issue, they tend to select that side that they happen to agree with—thus reinforcing their viewpoints.

See also: the phenomenon of group polarization explains why people who share opinions and beliefs get together in groups, they tend to be even more persuaded in their beliefs.

Smart Folks are Most Susceptible to Overanalyzing and Overthinking

Many High-IQ People Tend to Be Overthinkers: They Incessantly Overanalyze Everything

Smart Folks are Most Susceptible to Overanalyzing and Overthinking There’s this old Zen parable that relates how over-analysis is a common attribute of intelligent people.

A Zen master was resting with his quick-witted disciple. At one point, the master took a melon out of his bag and cut it in half for the two of them to eat.

In the middle of the meal, the enthusiastic disciple said, “My wise teacher, I know everything you do has a meaning. Sharing this melon with me may be a sign that you have something to teach me.”

The master continued eating in silence.

“I understand the mysterious question in your silence,” insisted the student. “I think it is this: the excellent taste of this melon that I am experiencing … is the taste on the melon or on my tongue …”

The master still said nothing. The disciple got a bit frustrated at his master’s apparent indifference.

The disciple continued, ” … and like everything in life, this too has meaning. I think I’m closer to the answer; the pleasure of the taste is an act of love and interdependence between the two, because without the melon there wouldn’t be an object of pleasure and without pleasure …”

“Enough!” exclaimed the master. “The biggest fools are those who consider themselves the most intelligent and seek an interpretation for everything! The melon is good; please let this be enough. Let me eat it in peace!”

Intelligence Can Sometimes Be a Curse

The tendency to reason and analyze is a part of human nature. It is a useful trait for discerning the many complexities of life. It’s only natural that you could go overboard some times and over-analyze a point or an issue to such a degree that the objective becomes all but moot.

Don’t get me wrong. Intelligence is indeed a gift. But intelligence can trick you into thinking you should be overthinking and calculating everything you do. The more intelligent you are, the more investigative you will be. The more your brain analyzes people and events, the more time it will spend on finding flaws in everything.

Intelligent People Overanalyze Everything, Even When it Doesn’t Matter

Intelligent People Overanalyze Everything, Even When it Doesn't Matter Many intelligent people tend to be perfectionists. Their overanalysis often cripples their productivity, especially by leading them to undesirable, frustrating, and low-probability conclusions that can limit their ability to understand reality and take meaningful risks.

Intelligent people are too hard on themselves and others—family, friends, and co-workers. They can’t settle for anything less than perfect. They tend to be less satisfied with their achievements, their relationships, and practically everything that has a place in their life. What is more, many people with speculative minds hold idealistic views of the world and lack a sound acumen about coping with the practical world.

Idea for Impact: Don’t Make Everything Seem Worse Than it Actually is!

Thinking too much about things isn’t just a nuisance for you and others around you; it can take a toll on your well-being and on your relationships.

Check your tendency to overthink and overanalyze everything. Don’t twist and turn every issue in your head until you’ve envisaged the issue from all perspectives.

Sometimes it does help to overthink and be cautious about potential risks and downfalls. But most times, it’s unnecessary to ruminate excessively. Don’t make everything seem worse than it actually is. Set limits and prioritize. Learn to let go and manage your expectations.

To avoid overthinking, use my 5-5-5 technique. Ask yourself if your decision will matter 5 weeks, 5 months, and 5 years in the future. If your answer is ‘no,’stop stressing yourself out!

This is Yoga for the Brain: Multidisciplinary Learning

In Praise of Multidisciplinary Frameworks for Better Thinking You need a broad-based understanding to succeed in today’s increasingly complex world.

Modern scientific and technological advances are increasingly born at the frontiers of more than one science disciplines.

It’s impossible to know everything. However, if you work to understand the basics of the biggest, most important paradigms in the fields of science, humanities, and social sciences, you can progressively expand your decision-making process.

A multidisciplinary methodology entails drawing suitably from multiple disciplines to examine problems outside of their normal boundaries and reach solutions based on an understanding of complex situations.

Multidisciplinarity Leads to Better Internalization of Knowledge

Multidisciplinarity allows you can transform a perspective in one discipline to expand your thought-frameworks in other disciplines. The renowned venture capitalist Paul Graham, author of the bestselling Hackers & Painters: Big Ideas from the Computer Age, said this best when he once wrote,

Studying things from unrelated subjects (multidisciplinary learning) is a lot like yoga for brain. You don’t actually get anywhere when you do yoga. You stand in one place and bend yourself in various shapes. But it makes you more flexible, so when you go out and do walk around, you can walk better.

“Cross-Training for the Mind” à la Charlie Munger

'Poor Charlie's Almanack' by Charlie Munger (ISBN 1578645018) The great investor Charlie Munger, Vice-Chairman of Berkshire Hathaway, is a big proponent of multidisciplinary thinking. This distinguished beacon of rationality and wisdom coined the term “latticework of mental models” to enable the “cross-training for the mind.” Rather than silo your mind just in the narrow areas you tend to concentrate on at college and work, Munger advocates developing a broad, functional set of interdisciplinary knowledge about the world, which can serve you in all parts of life. According to the anthology Poor Charlie’s Almanack, Munger said at a 1998 talk at the Harvard Law School,

If A is a narrow professional, B consists of the big, extra-useful concepts from other disciplines, then, clearly, the professional possessing A plus B will usually be better off than the poor possessor of A alone. How could it be otherwise? And thus, the only rational excuse for not acquiring B is that it is not practical to do so, given the man’s need to A and the other urgent demands in his life. I will later try to demonstrate that this excuse for unidisciplinarity, at least for our most gifted people, is usually unsound.

Many of the world’s leading companies in science and technology are employing multidisciplinary people for managerial positions. These people understand a range of science principles and methods and can synthesize the works of domain-specific experts to invent creative solutions to problems.

Idea for Impact: Pursue Multidisciplinary Thinking

People who think very broadly and comprehend many different models from many different disciplines make better decisions.

Pursue multidisciplinary thinking. Open your mind to new ideas and new experiences. Make new friends, travel afar, read more, and discover new stories.

Interact with people who work in different disciplines and dabble with the arts and the media. Let the new sights, sounds, smells, languages, tastes, sensations, stories, and perspectives spark your creativity.

One of the Tests of Leadership is the Ability to Sniff out a Fire Quickly

One of the tests of leadership is the ability to recognize a problem before it becomes a disaster

I’ve previously stressed the importance of problem-finding as an intellectual skill. I’ve also highlighted why risk analysis and risk reduction should be one of the primary goals of any intellectual process. In this article, I’ll write about being proactive in identifying problems before they evolve into crises.

How Wells Fargo Failed to Recognize a Problem and Address it before it Became a Bigger Problem

As the Wells Fargo accounts scandal unfolded, it was clear that Wells Fargo’s leadership was well aware of the burgeoning problems early on, but failed to act decisively and nip the problem in the bud.

Given impossible sales quotas to reach, Wells Fargo’s “high pressure sales culture” opened as many as two million bank and credit card accounts on behalf of its customers without their consent. Employees were rebuked or even fired for not meeting aggressive cross-selling targets.

Human nature is such that high-pressure demands can deplete the willpower people need to act morally and resist temptations. And such demanding circumstances encourage people to go into defensive mode, engage in self-interested behaviors, and consider only short term benefits and dangers.

Leadership Lessons from the Wells Fargo Accounts Scandal: “A Stitch in Time Indeed Saves Nine”

Leadership Lessons from the Wells Fargo Accounts Scandal Wells Fargo’s leadership reportedly had data about ethical breaches, but they ignored or misjudged the impact of the problem. Wells Fargo even held a two-day ethics workshop in 2014 unequivocally telling their employees not to do that. As per an internal review, managers knew that 1% of employees had been fired for “sales integrity” violations.

Wells Fargo’s leadership didn’t act quickly and decisively to mitigate the effects of the crisis. Warren Buffett, one of the Wells Fargo’s biggest investors, summarized this leadership inaction at the 2017 Berkshire Hathaway annual meeting:

There were three very significant mistakes, but there was one that was worse than all the others … The main problem was that they didn’t act when they learned about it … at some point if there’s a major problem, the CEO will get wind of it. And at that moment, that’s the key to everything, because the CEO has to act. It was a huge, huge, huge error if they were getting, and I’m sure they were getting, some communications and they ignored them or they just sent them back down to somebody down below.

Leadership: “Only the Paranoid Survive”

Andy Grove (1936–2016,) the illustrious cofounder and CEO of Intel, was a famous worrier. At Intel, the focal point of Grove’s leadership style was worry and skepticism. He believed that business success contains the seeds of its own destruction, and that in order for an organization to have longevity, it needs to continue to worry about the future.

'Only the Paranoid Survive' by Andrew S. Grove (ISBN 0385483821) Grove’s principle was immortalized in his famous proclamation, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” He eloquently explained his worrisome mantra in his bestselling corporate memoir, Only the Paranoid Survive (1996.) He wrote in the preface:

The things I tend to be paranoid about vary. I worry about products getting screwed up, and I worry about products getting introduced prematurely. I worry about factories not performing well, and I worry about having too many factories. I worry about hiring the right people, and I worry about morale slacking off. And, of course, I worry about competitors. I worry about other people figuring out how to do what we do better or cheaper, and displacing us with our customers.

At Intel, worrying about the future created a culture of triumph that propelled change and innovation. Grove never let Intel rest on its laurels and led the company to break boundaries in microprocessor innovation. During his tenure as CEO from 1987—98, Intel’s stock price rose 32% a year. Grove also said, “A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation.”

Idea for Impact: Learn to Sniff out a Fire Better than Anyone Does

The principal tasks of leadership are (1) identifying the biggest risks and opportunities, and (2) allocating organizational resources. Therefore, one of the tests of leadership is the ability to recognize a problem before it becomes a disaster. If identified and addressed early, nearly any problem can be resolved in a way that is beneficial for everyone involved.

Many leaders tend to be reactionary—they claim, “why fix something that isn’t broken.” Even when they see an impending problem, they may assume that the problem “isn’t that big of a deal” and wish the problem will just go away. Alas, many problems never go away; they only get worse.

To become a good leader, be paranoid—always assume that “there’s no smoke without fire.” If, according to Murphy’s Law, everything that can go wrong will go wrong, the paranoid leader has an advantage.

Whenever you are doing anything, have your eyes on the possibility of potential problems and actively mitigate those risks. Never allow a problem to reach gigantic proportions because you can and must recognize and fix it in its early stages.

As the medieval French philosopher and logician Peter Abelard (1079–1142) wrote, “The beginning of wisdom is found in doubting; by doubting we come to the question, and by seeking we may come upon the truth.”

Enabling the Highest Degrees of Understanding: Book Summary of ‘The Unschooled Mind’

Traditional Schooling Fails to Teach Kids to Ask the Right Questions

'The Unschooled Mind' by Howard Gardner (ISBN 0465024386) In The Unschooled Mind (1991,) Harvard developmental psychologist Howard Gardner makes a persuasive case for why even the brightest students often lack a deep understanding of what traditional schooling purports to teach them.

According to Gardner, students (in elementary schools to graduate colleges) may take exams and earn degrees, but their supposed knowledge turns out deficient in situations that are at variance from the “text-to-test” framework in which they learnt it. To some extent, this disconnect is an outcome of teachers’ settling for “correct-answer compromises” whereby students take the rote repetition of facts, formulas, concepts, and theories for a real understanding of fundamental concepts.

Robust Forms of Intuitive Knowledge

Overall, Gardner argues that children tend to acquire well-established models for perceptive learning and intuitive thinking by the time they are five years old. They develop wide-ranging beliefs about the physical world and distinctive models of events and people.

Traditional Schooling Fails to Teach Kids to Ask the Right Questions Subsequently, when children begin their schooling, they are launched into pedagogic methods that often sidestep—even interfere with—the children’s entrenched patterns of learning and understanding. That is to say, children have to put up with a disagreeable dichotomy between their intuitive learning patterns and the academic learning:

In its theoretical resourcefulness and intuitions, [a 5-year old’s mind] is powerful; in its artistic endeavors, it can be creative and imaginative; in its adventurousness, it is exemplary. … Education that takes seriously the ideas and intuitions of the young child is far more likely to achieve success than education that ignores these views, either considering them to be unimportant or assuming that they will disappear on their own.

Experiential Learning, Supplanted by Critical Analysis and Synthesis, Can Enhance Students’ Points of View

The Unschooled Mind contends that far-reaching knowledge and appreciation of education can occur only when students are allowed to integrate their “prescholastic” learning modes with the scholastic and the disciplinary ways of traditional school education. “The problem is less a difficulty in school learning per se and more a problem in integrating the notational and conceptual knowledge featured in school with the robust forms of intuitive knowledge that have evolved spontaneously during the opening years of life.”

Gardner’s solution to this problem is to situate students in educational environments that pique their curiosity about the subject matter and, at the higher levels of education, challenge their preexisting assumptions. Educating children for the utmost degrees of understanding involves designing educational systems that help students synthesize these several patterns of learning.

Real Education Opens the Way to Thinking, Knowing, and Deeper Understanding

Real Education Opens the Way to Thinking, Knowing, and Deeper Understanding For real learning to occur, Gardner argues, students must have an opportunity to realize their own ignorance, and then ask and explore their own questions. Teachers must regularly expose students to “Christopherian encounters”—compelling personal discoveries of the inconsistencies between their various frames of reference—by approaching any subject matter through at least five instructive channels:

Gardner claims that traditional schooling should incorporate more apprenticing—apprenticeship programs build most effectively on the ways children learn—and schools should become more like children’s museums.

Recommendation: Read The Unschooled Mind by Howard Gardner, especially if you have a child in school. The key takeaway: to enable the highest degrees of understanding, any skills instruction must be systematically reinforced by instruction in which the deployment of the skills makes holistic sense.

Rapoport’s Rules to Criticize Someone Constructively

'Intuition Pumps' by Daniel Dennett (ISBN 0393082067) In Intuition Pumps and Other Tools for Thinking, philosopher Daniel Dennett lists Anatol Rapoport‘s rules of constructive argument and debate:

Just how charitable are you supposed to be when criticizing the views of an opponent? If there are obvious contradictions in the opponent’s case, then you should point them out, forcefully. If there are somewhat hidden contradictions, you should carefully expose them to view—and then dump on them. But the search for hidden contradictions often crosses the line into nitpicking, sea-lawyering and outright parody. The thrill of the chase and the conviction that your opponent has to be harboring a confusion somewhere encourages uncharitable interpretation, which gives you an easy target to attack. But such easy targets are typically irrelevant to the real issues at stake and simply waste everybody’s time and patience, even if they give amusement to your supporters. The best antidote I know for this tendency to caricature one’s opponent is a list of rules promulgated many years ago by social psychologist and game theorist Anatol Rapoport (creator of the winning Tit-for-Tat strategy in Robert Axelrod’s legendary prisoner’s dilemma tournament).

How to compose a successful critical commentary:

  1. You should attempt to re-express your target’s position so clearly, vividly, and fairly that your target says, “Thanks, I wish I’d thought of putting it that way.”
  2. You should list any points of agreement (especially if they are not matters of general or widespread agreement).
  3. You should mention anything you have learned from your target.
  4. Only then are you permitted to say so much as a word of rebuttal or criticism.

One immediate effect of following these rules is that your targets will be a receptive audience for your criticism: you have already shown that you understand their positions as well as they do, and have demonstrated good judgment (you agree with them on some important matters and have even been persuaded by something they said).

This comports with the following sage advice gentle art of criticizing people effectively:

  • “If you disagree with somebody, you want to be able to state their case better than they can. And at that point you’ve earned the right to disagree with them. Otherwise you should keep quiet.”
    Charlie Munger, Warren Buffett’s business partner (see this article)
  • “The man who can hold forth on every matter under debate in two contradictory ways of pleading, or can argue for and against every proposition that can be laid down—such a man is the true, the complete, and the only orator.”
    —Roman Orator Cicero (see this article)
  • “I have yet to find a more efficient and reliable way to probe the depths of a person’s knowledge and seriousness about an issue than asking them to explain the other side’s perspective.”
    —Entrepreneur Ben Casnocha (see this article)
  • “If you can’t imagine how anyone could hold the view you are attacking, you just don’t understand it yet.”
    —Philosopher Anthony Weston in Rulebook for Arguments (see this article)
  • “When you think you can nail someone with your argument, take a breath & see if you can phrase it as a face-saving question.”
    —Career Coach Marty Nemko

Good Questions Encourage Creative Thinking

Thought-provoking questions: potential game changers that are not asked nearly enough

Asking Questions to Encourage Creativity “To think creatively, we must be able to look afresh at what we normally take for granted,” wrote George F. Kneller (1909–1999), the American academic and pioneer in the field of philosophy of education, in Art and Science of Creativity (1965.) Many people don’t know how to probe their thought processes with questions that encourage creativity.

Consider a brainstorming meeting where a new idea was received with comments and judgments like, “this won’t work,” “we’ve never done it this way,” “the customer won’t like it,” or, “if this is such a great idea, why hasn’t it been done before?” Immediately, a dysfunctional pattern ensues. Defensiveness sets in and the meeting’s participants will resist making any more suggestions and will fail to explore those ideas that were previously made. (One of the key principles of “divergent thinking” for idea-generation is to defer judgment. Neuroscience has suggested that the human prefrontal cortex—the self-monitoring element of the brain—is less active when we’re most creative.)

Creative thinkers ask open-ended, accommodating, and exploratory lead-in questions such as,

  • “I wonder if/why/whether … “
  • “Perhaps we could … “
  • “That would work if/when … “
  • “In what ways can we … .” This favorite of mine was introduced by Edward de Bono, the lateral thinking pioneer and creator of the “Six Thinking Hats” method for group creativity. De Bono called this lead-in question the ‘IWW.’

Instead of declaring “we could never do this,” ask “IWW (in what ways) may people start to do this?” In practical terms, this rephrasing may seem a small thing, but it embodies a leap in unhindered, open-minded thinking. The former seems a categorical rejection; but the latter invites an exploration of possibilities and signals the beginning of the search for solutions to constraints.

Idea for Impact: The ability to pose meaningful—and often deceptively simple questions is the hallmark of creativity

Good Questions Encourage Creative Thinking Often, what leads a creative person to get fresh insight is the quality of questions he/she asks. Questions such as “I wonder if …” and “In what ways can we … ” ignite dialogues in your mind that can lead to creative insights and new discoveries.

The prospect for creative thinking expands when you can reframe restraining statements into creative questions. Consider the following examples:

  • Restraining statement: “We can’t possibly do that.”
    Creative question: “If it were possible, how would you do it?”
  • Restraining statement: “It’ll take too long.”
    Creative question: “If it’s time-consuming, how can I make it short?”
  • Restraining statement: “I can’t talk to her.”
    Creative question: “If you could talk to her, what would you say?”
  • Restraining statement: “I’m too busy to do this.”
    Creative question: “In what ways can we free up some time for you?”

During brainstorming, asking questions in a way that opens participants’ minds to newer possibilities can have a transformative shift in the creative atmosphere. When participants suspend their judgments, everyone in the brainstorming session will feel comfortable enough to explore creative solutions to constraints.

How to Handle Conflict: Disagree and Commit [Lessons from Amazon & ‘The Bezos Way’]

How Amazon’s Jeff Bezos Propels Innovation

Entrepreneurial Lessons from Amazon Founder and CEO Jeff Bezos Amazon’s founder and CEO Jeff Bezos once remarked that it takes five to seven years before the innovation seeds that Amazon plants flourish enough to have a significant impact on the economics of the business.

Since its founding in 1994, Amazon has made endless investments in expanding its business models. It has successfully used its money-making ventures to bankroll explorations into peripheral lines of business. Many of its capital allocation decisions haven’t yielded strong profits; yet, Amazon has flourished beyond everyone’s expectations and its growth potential is undeniable.

Central to this innovation strategy has been Bezos and his leadership team’s foresight, early commitment, and stubborn confidence in the prospect of R&D. Under Bezos’s direction and long-term focus, Amazon still operates as a founder-driven start-up in several major areas.

Bezos has a compelling cultural influence and has institutionalized his distinctive entrepreneurial mindset across the company. His core values are codified as Amazon’s 14 Leadership Principles, one of which is “Have Backbone; Disagree and Commit”:

Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

“Disagree and Commit”

Jeff Bezos’s latest short-but-compelling annual letter to his shareholders contains pearls of wisdom on leadership, management, and teamwork. Read the letter; it won’t take long.

Speaking about high-velocity decision making in an ingenious culture, Bezos says he encourages Amazon’s leaders and employees to use the phrase “disagree and commit” to disagree respectfully and experiment with ideas:

Use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.

This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time. We recently greenlit a particular Amazon Studios original. I told the team my view: debatable whether it would be interesting enough, complicated to produce, the business terms aren’t that good, and we have lots of other opportunities. They had a completely different opinion and wanted to go ahead. I wrote back right away with “I disagree and commit and hope it becomes the most watched thing we’ve ever made.” Consider how much slower this decision cycle would have been if the team had actually had to convince me rather than simply get my commitment.

Note what this example is not: it’s not me thinking to myself “well, these guys are wrong and missing the point, but this isn’t worth me chasing.” It’s a genuine disagreement of opinion, a candid expression of my view, a chance for the team to weigh my view, and a quick, sincere commitment to go their way. And given that this team has already brought home 11 Emmys, 6 Golden Globes, and 3 Oscars, I’m just glad they let me in the room at all!

Entrepreneurial Lessons from Amazon Founder and CEO Jeff Bezos: Disagree and Commit Bezos’s “fail-and-learn” refrain echoes what he wrote on risk-taking in Amazon’s first annual shareholder letter in 1997: “Given a 10 percent chance of a 100-times payout, you should take that bet every time … Failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.” That letter has become Amazon’s manifesto on the benefits and methods to long-term thinking and Bezos quotes that letter in every year’s annual letter.

To “disagree and commit” compels people to step out of their comfort zones and to sincerely commit to a project’s success. There is no room for sabotage and disruption—neither can people wait in the wings to exclaim “I told you so.” To “disagree and commit” is to be willing to take prudent risks by acknowledging that others may have diverse beliefs, approaches, ideas, and styles.

Idea for Impact: Embrace Failure because it Leads to Innovation

Many people want to be curious, creative, and experimental—they like to take initiative and investigate new products and solutions. But, when facing difficult choices, they’re naturally afraid of what they don’t know. Self-doubt sets in. They resort to safe and predictable processes. This mindset stifles the very inventive approach they want to apply and foster.

Fear of failure and self-doubt are not usually rooted in facts. They’re emotional. Don’t let this emotion make you play it safe. Don’t overthink your way out of challenges. Understand the types and amounts of risks that are acceptable to you. When facing the prospect of failure, you’re more likely to get unstuck by trying low-risk actions. Experiment. Fail. Learn. Innovate.

Success may instill confidence, but failure imparts wisdom.

The Curse of Teamwork: Groupthink

The Curse of Teamwork: Groupthink

Many teams tend to compromise their decisions for the sake of consensus, harmony, and “esprit de corps.” The result is often a lowest-common-denominator decision upon which everybody in the team agrees. This predisposition for a team to minimize conflict and value conformity is the psychological phenomenon of Groupthink.

'Victims of Groupthink' by Irving Janis (ISBN 0395317045) In the 1970s, American psychologist Irving Janis defined Groupthink as “a mode of thinking that people engage in when deeply involved in a cohesive in-group, when the members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action.” Janis argued that Groupthink “undermines critical analysis, legitimizes ignorance, reinforces collective biases, and promotes a group self-image of infallibility.”

Negative Effects of Groupthink in Teamwork

Teams are prone to Groupthink and a variety of other detrimental decision-making approaches, but are seldom aware of it.

  • Groupthink suppresses dissent Individuals resign to group pressure, thereby conforming their opinions to a decision that they believe will achieve consensus. Groupthink discourages dissenters from “rocking the boat.” Over time, nonconformists are gradually shunted aside or excluded from the team altogether.
  • Groupthink engenders self-censorship. Individuals who disagree with the chosen course of action remain silent because they reason they cannot change others’ minds. Consequently, the team tends to focus its discussions on ideas that everyone agrees about rather than ideas that everyone disagrees about.
  • Groupthink gives team members greater confidence in their collective decisions than their individual decisions. Therefore, Groupthink leads individuals to publicly endorse ideas and decisions that they view as common for the group, even if they personally have reservations about them.
  • Groupthink stifles creativity and independent thinking. When individuals are unwilling to bring up and confront difficult issues, the team fails to examine alternative viewpoints that could be contentious. This leads to irrational and flawed decisions.

Antidote to Groupthink in Teamwork

Negative Effects of Groupthink in Teamwork An awareness of Groupthink and other group dynamic biases combined with some hands-on intervention, self-reflection, and control can help teams make better decisions.

  • Create an organizational environment where individuals can freely voice their ideas, challenges, and concerns. Individuals must feel comfortable with taking interpersonal risks, admitting hesitations, and challenging one-another. Absent an inclination to avoid conflict, a team can easily discuss and debate different perspectives.
  • Think about the right information required to make sound decisions. Consider the strongest counter-argument to every idea.
  • Do not suppress disagreements or dominate the dissenters. Carefully examine the reasons and implications of alternate viewpoints.
  • Divide a team into sub-teams or partnerships and set each sub-team to work on a problem independently. Encourage them to take into account the plusses and the minuses of each idea.
  • Designate one team member as a devil’s advocate to argue enthusiastically against all contemplated ideas. This can force the team to discuss and debate the concomitant merits and demerits of different ideas. In Edward De Bono’s Six Thinking Hats process (see my book summary), the devil’s advocate wears the “black hat.”
  • Invite outside consultants and subject-matter experts to discuss key issues and review decisions.
  • Appoint a moderator who can engage the team collectively and individually by gathering all points of view, giving feedback, and challenging the team’s thinking. Ideally, the moderator should be an independent third party who can be comprehensive and forthright.
  • Step back regularly from the team’s deliberation process to reflect on the effectiveness of the team’s decision-making and intervene where necessary. In the Six Thinking Hats process, De Bono suggests adding reflection time at the end of each meeting to analyze the process’ effectiveness.

Idea for Impact: Sometimes, Teamwork is Overrated

Don’t get me wrong: teamwork can be very powerful, but only when teams consist of individuals who have the right expertise and who are willing to voice their forthright opinions, dissent, and build consensus. Avoid teamwork when one person or a partnership with complementary skills and styles may achieve identical objectives.

To prevent Groupthink, establish an environment where speaking up is encouraged and rewarded. Welcome disagreements, avoid dominating dissenters, and contemplate the strongest counter-argument to every idea.