Psychologist Daniel Kahneman speaks onstage during The New Yorker TechFest 2016 on Oct. 7, 2016 in New York City.
Craig Barritt—Getty Images for The New Yorker
By Alan Murray and David Meyer
March 4, 2019

Good morning.

The Age of A.I. promises a revolution in business decision making, driven by ubiquitous data and ever more powerful algorithms that will lead to ever better predictions about how options play out in the future.

But at the end of the day, most important decisions, while assisted by A.I., will continue to be made by humans, with all the unconscious biases and errors that human judgement inevitably introduces. And that means business success will continue to depend critically on reducing those biases and errors.

How do you do that? Well, a good place to start is with the world’s leading expert on human judgement: Nobel Prize (economics) winning psychologist Daniel Kahneman. If you haven’t read his brilliant book, Thinking, Fast and Slow, you should start now. But in the meantime, he has co-authored a short piece for the MIT Sloan Management Review, which is out this morning. CEO Daily got a sneak peak, and recommends it to every business decision maker.

The crux of the piece is this: humans have all sorts of known biases that infect their decisions. Among them: confirmation bias—we look for evidence that confirms our initial impression; availability bias—we give too much weight to the most recent evidence; and excessive coherence—we create coherent stories too quickly from scant evidence, suppressing nuance and contradictions.

Using Kahneman’s wisdom, a number of talent-focused companies, such as Google, Amazon and McKinsey, have created structured interviewing techniques to reduce such biases in hiring. In this new piece, Kahneman and his co-authors argue for extending that framework to other business decisions—whether to make an acquisition, for instance, or a major investment. They advocate a process that begins by identifying a handful of “mediating assessments”—key attributes that are deemed critical to the evaluation—and then scoring each of those individually and independently (executives making assessments should not be influenced by one other.) Then, unless a deal-breaking fact is uncovered, the final decision is made after all the key attributes have been scored, and the assessments assembled. You can read the piece here.

I’ve just landed in Singapore, where Fortune’s annual Brainstorm Design conference starts tomorrow. First up on stage will be a man who helped make “design thinking” a thing: IDEO CEO Tim Brown. Brown has recently turned his attention to using design thinking to solve some of the world’s thorniest problems…as described in this Fortune excerpt from his new book.

I’ll be reporting from Singapore for the next few days. Other news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

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