Lenny's Podcast: Product | Growth | Career
This will make you a better decision maker | Annie Duke (author of “Thinking in Bets” and “Quit”, former pro poker player)
Thu May 02 2024
decision-makingparentingmeetingsfeedback loopsdata-driven decision-makingintuitionpremortemsquittingfailing ventures
Description
This episode covers key insights from Annie Duke and Daniel Kahneman, the correlation between money and happiness, decision-making in parenting, improving decision quality through structured processes, effective meetings and decision-making, creating productive meeting environments, independent thinking in decision-making, shortening feedback loops, data-driven decision-making and recognizing failure, insights on intuition, premortems, and quitting, recognizing warning signals and quitting, and recognizing when to move on from failing ventures.
Insights
Making implicit knowledge explicit is crucial for improving decision quality.
Meetings should focus on discussion rather than trying to discover or decide.
Pre-mortem exercises can be effective if accompanied by clear kill criteria.
Shortening feedback loops can improve decision-making in long-term outcomes.
Annie Duke shares insights from her experiences with Daniel Kahneman, emphasizing his humility and open-mindedness.
Daniel Kahneman was known for engaging in adversarial collaborations to explore differing viewpoints.
Money and happiness are correlated through all income levels, contrary to the previous belief that money doesn't buy happiness beyond a certain threshold.
Matthew Killingsworth's approach of seeking out different perspectives and collaborating with others led to valuable insights.
In parenting, the most important thing is for children to know they are loved deeply by their parents.
Parents should not be too hard on themselves for making mistakes in parenting, as accidents happen and children are resilient.
Parenting has limited influence on a child's personality, but teaching manners like saying please and thank you is impactful.
Soft spots on a baby's head are natural and babies are built to withstand more than we think.
Parenting can lead to unexpected outcomes, highlighting the importance of decision-making.
Mental time travel is a useful tool for gaining perspective on current situations and decisions.
Considering long-term perspectives can help in making better decisions, especially with children.
Using 'nevertheless' as a leadership skill can balance listening to children while enforcing consequences.
Daniel Kahneman found that by creating structured decision-making processes, hit rates on hiring can improve from 50% to 65%.
Humans tend to overestimate the effectiveness of intuition in decision-making and undervalue structured approaches.
Chapters
- Key Insights from Annie Duke and Daniel Kahneman
- Money, Parenting, and Decision-Making
- Decision-Making in Parenting and Long-Term Perspectives
- Improving Decision-Making with Structured Processes
- Effective Meetings and Decision-Making
- Creating Productive Meeting Environments
- Improving Decision Quality through Independent Thinking
- Shortening Feedback Loops in Decision-Making
- Data-Driven Decision-Making and Recognizing Failure
- Insights on Intuition, Premortems, and Quitting
- Recognizing Warning Signals and Quitting
- Recognizing When to Move On from Failing Ventures
Summary
Transcript
Key Insights from Annie Duke and Daniel Kahneman
00:00 - 07:15
- Making implicit knowledge explicit is crucial for improving decision quality.
- Meetings should focus on discussion rather than trying to discover or decide.
- Pre-mortem exercises can be effective if accompanied by clear kill criteria.
- Shortening feedback loops can improve decision-making in long-term outcomes.
- Annie Duke shares insights from her experiences with Daniel Kahneman, emphasizing his humility and open-mindedness.
- Daniel Kahneman was known for engaging in adversarial collaborations to explore differing viewpoints.
Money, Parenting, and Decision-Making
06:46 - 14:18
- Money and happiness are correlated through all income levels, contrary to the previous belief that money doesn't buy happiness beyond a certain threshold.
- Matthew Killingsworth's approach of seeking out different perspectives and collaborating with others led to valuable insights.
- In parenting, the most important thing is for children to know they are loved deeply by their parents.
- Parents should not be too hard on themselves for making mistakes in parenting, as accidents happen and children are resilient.
- Parenting has limited influence on a child's personality, but teaching manners like saying please and thank you is impactful.
Decision-Making in Parenting and Long-Term Perspectives
14:01 - 20:58
- Soft spots on a baby's head are natural and babies are built to withstand more than we think.
- Parenting can lead to unexpected outcomes, highlighting the importance of decision-making.
- Mental time travel is a useful tool for gaining perspective on current situations and decisions.
- Considering long-term perspectives can help in making better decisions, especially with children.
- Using 'nevertheless' as a leadership skill can balance listening to children while enforcing consequences.
Improving Decision-Making with Structured Processes
20:30 - 27:36
- Daniel Kahneman found that by creating structured decision-making processes, hit rates on hiring can improve from 50% to 65%.
- Humans tend to overestimate the effectiveness of intuition in decision-making and undervalue structured approaches.
- Implementing independent and asynchronous opinion gathering can significantly improve decision-making outcomes compared to group discussions.
Effective Meetings and Decision-Making
27:18 - 34:15
- Meetings should focus on discussions where people disagree rather than areas of agreement.
- Before meetings, individuals should independently share their opinions and priorities to facilitate productive discussions.
- Decisions should not be made in meetings but through methods like private voting or a single decision-maker model.
- The concept of complete alignment in a group is unrealistic and can lead to coercive behavior; it's important to respect differing opinions and decisions.
Creating Productive Meeting Environments
33:53 - 40:49
- Moving from a coercive model to a model of curiosity in decision-making meetings can make people feel more included and impactful.
- Encouraging open discussion and avoiding coercive behaviors like interrupting or saying 'you're wrong' can lead to more productive meetings.
- Utilizing a nominal group technique where individuals independently provide forecasts with rationale before discussing as a group can lead to better decision-making.
- Reflecting back what participants say without offering personal opinions can help ensure everyone feels heard and understood during discussions.
Improving Decision Quality through Independent Thinking
40:44 - 47:55
- Clarifying and making opinions clear helps people feel heard and more invested in decisions
- Brainstorming independently before discussing as a group can lead to better decision-making
- Encouraging independent thinking is important for effective decision quality, especially in long-term outcomes like investing
- Explicitly stating criteria for decision-making can improve feedback loops and decision quality
Shortening Feedback Loops in Decision-Making
47:32 - 55:11
- Feedback loop in investing can be shortened by focusing on necessary but not sufficient factors and correlated outcomes.
- Shortening the feedback loop allows for faster decision-making and tracking of predictions.
- Psychological safety may lead investors to prefer longer feedback loops to maintain positive self-narrative.
- Human tendency is to prioritize short-term comfort over long-term learning, impacting decision-making.
Data-Driven Decision-Making and Recognizing Failure
54:45 - 1:02:12
- Many decisions are made to maintain a positive self-narrative rather than for long-term benefits.
- First Round initially lacked detailed decision records but improved by introducing precise rating scales and shared definitions for decision criteria.
- Partners at First Round now receive feedback on their decision accuracy and insights into their individual strengths and weaknesses in decision-making.
- Data-driven analysis has allowed for refining decision-making processes based on evidence, leading to more informed and predictive assessments.
Insights on Intuition, Premortems, and Quitting
1:01:49 - 1:09:11
- Diverse opinions are valuable in decision-making as individuals have different strengths and weaknesses.
- Intuition can be both right and wrong, emphasizing the importance of making implicit assumptions explicit.
- Premortems are effective when paired with pre-commitments to set up kill criteria for knowing when to pivot or stop a project.
- Setting up kill criteria based on signals identified in premortems can help avoid sunk cost bias and improve decision-making.
Recognizing Warning Signals and Quitting
1:08:46 - 1:15:12
- Salespeople should be able to identify when to pursue or kill a deal based on certain signals and actions from potential clients.
- Using a pre-mortem approach can help in identifying warning signals during a project and committing to specific actions if those signals appear.
- Quitting is often delayed due to biases, sunk costs, and issues related to ownership and identity.
- Deciding to quit is challenging due to uncertainty and the desire for certainty before making that decision.
Recognizing When to Move On from Failing Ventures
1:14:49 - 1:20:59
- Stuart Butterfield decided to shut down his successful game Glitch despite positive feedback and growth due to realizing it was not a venture scale business.
- He made this decision after calculating that it would take 31 weeks to break even with increasing customer acquisition costs.
- After shutting down Glitch, Butterfield pivoted to create Slack, a successful internal communication tool, showing the importance of recognizing when to move on from unprofitable ventures.
- Butterfield's experience highlights the true cost of continuing with a failing project and missing out on other potentially more successful opportunities.