Optimising financial processes

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Daniel Kahneman – It’s Right To Be Wrong . . . .

Sadly, Daniel Kahneman, Nobel Prize winning economist, died on 27 March at the age of 90.

I have been fascinated by his work, much on cognitive biases.

He had one universally applicable lesson, we could all apply.

“Your ideas are not your identity. They’re just hypotheses. Sometimes they’re accurate. More often, they’re wrong or incomplete.”

It’s OK To Be Wrong.

We live in a world where we have been primed to think that transformative success is just a fixed number of steps away.

This formula has been used to persuade us that we are just seven habits, five lessons, three objectives (and so on . . ) away from outstanding success in our field.

Daniel’s 2011 bestseller “Thinking Fast And Slow”, which redefined our understanding of neuroscience, even stimulated me to run a podcast/webcast in it’s honor! “Thinking Fast and Slow: 3 Keys to Process Excellence

He describes the many factors that shape the decisions we make, often subconsciously. These include all the cognitive biases such as the anchoring effect, focusing illusion, planning fallacy and sunk cost syndrome.

His Nobel Prize was for his work on prospect theory, which proposes that when assessing risky situations, we are usually driven more by fear of loss than hope of reward.

Remember THAT in your next business case!

His thinking also reminds me of that memorable “known knowns” quote from Donald Rumsfeld . . .

  • There are known knowns; there are things we know that we know.
  • There are known unknowns; that is to say, there are things that we now know we don’t know.
  • But there are also unknown unknowns – there are things we do not know we don’t know.”

You can read Paul Simpson’s Management Today article that stimulated this here . . .  

You can listen to the recording of that webcast “Thinking Fast and Slow: 3 Keys to Process Excellence” here . . . .

Thanks for reading . . .