Translator: Lúcia Sánta Reviewer: Csaba Lóki
MK: Okay, so I'm Mikael, I'm from Finland, and this is Roman.
RT: I'm from Switzerland.
MK: And this is the end of PowerPoint for tonight.
RT: We'd like to start with a little test, it's a one-question decision test.
MK: Imagining the following situation: It's Sunday night, you're home alone,
and you've ordered a pizza, you've opened up a good bottle of wine,
and you decide that you'd like to watch a movie.
So you switch on to Netflix, or whatever you're using,
and you start browsing the different movies.
Now, how difficult is it for you to choose a movie?
RT: You have to rate yourself on a scale from one to ten.
One meaning 'I have no problem at all',
ten meaning 'It takes me until the morning to choose a movie'.
I give you three seconds to pick a number.
Three, two, one, stop. Okay!
Everybody with a number from one to five, please stand up!
MK: Okay. I'd say that's 80 percent... RT: Maybe, yeah.
MK: Please remain standing!
For those of you who stand up,
this is a typical 'good news, bad news' situation.
(Laughter)
Bad news is you're not quite as good a decision-maker as the other group.
(Laughter)
Good news, however, you're quite happy with your not so good decision.
(Laughter) (Applause)
RT: Okay, you can sit down now.
Now everybody else, from six to ten, please stand up and receive your verdict.
(Laughter)
MK: So, again, it's 'good news, bad news'.
Good news, you're better at decision-making, than the other ones,
bad news, however, even with your best decisions,
you're not really happy, because you ask yourself:
maybe there could've been an even better option.
(Applause)
Roman and I, by the way, we both struggle with decision-making.
He's an extreme, a one or a two, (RT: Yes)
and I'm not even on the chart.
And we asked ourselves, why?
Why is it that we find it so difficult to choose?
Not only we, many, in this room also.
And why is it that we find it difficult to take decisions?
And we looked into the research behind decision-making,
we wrote some books about it, and tonight, in the next minutes,
we're going to show you the three problems of decision-making.
RT: Problem number one: it's preparing. So it's the question of
how do you prepare your decision, or what is your information strategy?
[Preparing, timing, regretting.]
We'd like to illustrate it on two axes: you have the x axis, which is
the amount of information you need in order to come up with a decision,
comapred to the degree of confusion in your head,
that this information provokes.
So what's the relation of confusion and information?
It's an inverted bell curve.
And that's what we call the TMI paradox, the Too Much Information paradox.
MK: It looks like this: if you have very little information,
you feel confused, and if we are confused, our brain tells us:
go get some information for me; so we start to research.
And the more we know about any given topic,
the more confident we feel to make a decision about it.
But there's a tipping point, you can actually know too much.
I think we all have experienced that situation.
It's the moment when you start questioning your own knowledge,
you get confused until you don't know who you are, and where you come from,
and you feel unable to make a decision.
And if you'd look at brain scans from people who have too little information
and those who have to much information, those scans look pretty much the same.
This Too Much Information paradox can also be applied to other situations.
The American scientist Sheena Iyengar did that
when she looked at our behaviour in supermarkets.
She realised, if we have too few choices, we don't like to buy anything,
because we ask ourselves, maybe there's another shop with more stuff.
If we, however, have too many choices, we like to look at things,
but we feel overwhelmed.
We experience, what she called,
the choice overload problem.
According to her theory, there is, obviously, a right amount of items
the human mind likes to choose between.
I think that's approximately somewhere between three and six.
So that's the amount we like to choose between.
RT: But life is not a supermarket.
(Laughter)
MK: If it comes to the really big, life changing decisions,
so the things, that really matter to you, when do you know that you know enough?
RT: That brings us to the second problem of decision-making: it's the timing.
It's also referred to as the OMG TIU problem,
and all the TED talkers know that one, having this countdown clock in your face,
it's the Oh My God, Time Is Up problem.
And again, we'd like to illustrate it on two axes.
[Knowledge]
MK: Now, the older we get, the more we know.
So maybe we can say, at the end of our lives,
we can really tell, [Old man]
(Laughter)
At the end of our lives, we can actually tell
what was a good decision, and what was not such a good decision in our lives.
We might tell at the end of our lives, it was a good choice to pick that job
and it was maybe not such a good choice to marry that person.
But the problem with life, as the Danish philosopher,
Soren Kierkegaard said: it can only be understood backwards,
but unfortunately, we have to live it forwards.
So we can't take all the big decisions at the end of our lives,
we have to take them early on, at a stage, where we know very little about
the outcome of these decisions. [Consequences of decisions]
The problem with early decisions is that the consequences are very huge.
Let me explain that to you with a little metaphor.
It's a little bit like archery.
If you shoot and you aim at a goal, and you just move a little to your right,
that arrow will fly many meters to the right.
But if you stand directly in front of a goal,
or, so to speak, if you are at the end of your life
or at the end of a project, and you make the same movement,
this hardly changes the goal.
You'll hit exactly the same spot.
So the decisions that are taken early on have way bigger consequences.
RT: This chart of two Danish organisational theorists,
brings us probably to the core of decision-making, and that's uncertainty.
If we have to take decisions early, we don't know what their outcome will be,
that's in the future.
And just think it through,
if you'd be 100 percent sure of something,
then we wouldn't talk about the decision any longer, then it's just a fact,
an imperative, so there's nothing to decide,
you just have to act.
And that brings us to the third stage of a decision: it's regretting it.
It's the point of view, the retrospective, you've decided and now
it's the question of how you live with your decision,
and we like to call it the PDF, the Post-Decision Feeling.
(Laughter)
MK: Post-decision - you can measure that with two parameters.
One is, how happy you are with your decisions,
compared to how much you expected from a decision.
This is a fairly simple concept.
One can say:
the more you expect of a decision, the happier you get
if this decision turns out to be good.
But again there's a tipping point, you can often expect too much of your decisions.
That's when you try to aim for the perfect decision.
And perfection is something that, I think, we all strive for.
We all would like to have a perfect job, or the perfect partner.
Roman and I'd like to do the perfect TED talk tonight,
but the longer I'm up here on stage, the more I feel,
[Satisfaction, Perfection, Expectation]
maybe perfection is a little bit like Nessie, the monster from Loch Ness.
It's rumoured to exist, but no one has ever seen it.
(Laughter)
RT: Now, remember the test we just did five minutes ago. What was your number?
MK: Those of you who scored under five, you'd be on the left side here,
it's called pragmatic decision-making style,
or as a scientist put it: you're a "satisficer".
Satisficer is a word combination out of two words,
you can say you're satisfied with your decision
but it also comes from the word suffice, so enough.
You realise it wasn't maybe the perfect decision,
but the decision was good enough.
Those of you who have scored over five are what scientists call "maximizers".
You try to maximize your decision and make the absolute perfect choice,
so you aim for little Nessie up there.
RT: Preparing, timing, regretting, it's like kind of three phases,
or three stages in the decision-making process,
and now we try to sum them up in one drawing.
(Laughter)
That's why he does the talking and I'm drawing.
MK: I'm a pragmatist.
If we look at these three problems,
and we try to translate them into questions,
you could ask yourself: do I know enough?
Secondly: is this the right moment for decision?
Then we have the third difficult question:
what if Nessie exists?
(Laughter)
So this is the retrospective, regretting question,
could there have been a better option?
All of these three questions deal with the uncertain.
Because the answer to the questions only lies in the future.
And the future, as we heard today all day, is invisible.
We'll never know what will happen.
So when it comes to decision-making, how do you deal with the unknown?
There's a guy who thought he knew the answer to that.
He himself took some poor choices in life,
but he had a very interesting approach to decision-making.
I'm talking about former US Secretary of Defense,
Donald Rumsfeld.
During a press conference he once said that unknown question
the future has two parameters.
We only have the known and the unknowns.
And Roman and I translated this now into a little matrix.
[Unknown, Known; Unknowns, Knowns]
What we have is the known knowns. The things we know we know.
It's very simple to make those decisions, you know what to do.
If you're afraid of burglars, lock the door.
But there are also the known unknowns. The things we know we don't know.
These are things we know will happen
but, for example, we don't know when they will happen or how.
The perfect example for this is maybe the stock market.
Everyone knows they'll go down once in a while, but no one knows
when this will happen or how hard it will crash.
RT: Then we have the unkown knowns.
MK: The things we don't know we know.
Most researchers agree that
there's a thing in us that knows more than we actually think we know.
And you can call that intuition, or inner voice or gut feeling,
or blink - as Malcolm Gladwell put it.
It's the thing that gives you a good feeling when you decide.
And when it comes to decision-making, and intuition, you could say
that we all make bad decisions.
But those bad decisions that we make intuitively, we regret less,
than those we made rationally.
So human beings tend to forgive their gut more than their head.
RT: The unkown unknowns.
MK: So the things we don't know we don't know.
Donald Rumsfeld explained this with Pearl Harbour.
The Americans weren't prepared, because they didn't know that they didn't know
that the Japanese could attack with kamikaze pilots.
A more recent example for this could maybe be 9/11,
and 9/11 and Pearl Harbour are just examples for this,
what we call "black swans".
So the concept that we didn't expect something.
Before the first black swan was discovered, no one had ever thought about it.
But once it was there, it seems quite logical.
[Swan (black)]
(Laughter)
RT: My limited drawing skills. That's a swan.
So what's the takeaway?
MK: Now, I would not recommend that you should hire Donald Rumsfeld
as your chief decision-maker.
However, I think it's interesting to think about the question he raises.
When do you take the time to think about the unthinkable?
RT: And with this little brain-teaser, we would like to send you home,
and thank you very much TEDxDanubia for the invitation! Have a great evening!
MK: Thank you!
(Applause)