The authors extend existing decision theory by drawing on cases from epistemology, cognitive psychology, complexity theory, analytic philosophy, and economics to examine how successful thinkers think. Readers are likely to be rewarded with an improved grasp of the process necessary for sound decision making.
A bookstore that is not filled with books and audiotapes of gurus discussing winning business strategies, successful investing, and entrepreneurship would be hard to imagine. But if you are trying to get a handle on how titans of industry arrive at their decisions, you are generally out of luck. How does a CEO decide to pursue a merger or expand into a different market? On what basis does an effective leader elect to outsource operations or divest certain divisions? What the topflight managers ultimately choose to do is not as informative as how they decide.
Expert managers may not even be aware of the thought process that impels their decisions. Diaminds: Decoding the Mental Habits of Successful Thinkers is Mihnea Moldoveanu and Roger Martin’s attempt to shed light on the matter. Both Moldoveanu and Martin have written extensively on integrative thinking, which underlies the educational program at their institution, the University of Toronto’s Rotman School of Management.
The Rotman School’s website defines integrative thinking as
the ability to constructively face the tensions of opposing models, and instead of choosing one at the expense of the other, generating a creative resolution of the tension in the form of a new model that contains elements of the individual models, but is superior to each.
This concept is the key point of Diaminds.
Theories of sound thinking and good decision making are not new to business. Moldoveanu and Martin extend existing decision theory by drawing on cases from epistemology, cognitive psychology, complexity theory, analytic philosophy, and economics to examine how successful thinkers think. The book is filled with numerous examples of integrative thinking from a broad array of areas. Not surprisingly, they draw many examples from business, but one of the more interesting cases concerns tennis player John McEnroe’s court strategy.
McEnroe faced what Moldoveanu and Martin refer to as a “wicked” problem, one with so many possibilities that analyzing each one is impossible. Also, unlike business decision makers, tennis players do not have the luxury of collecting data, analyzing probabilities, and creating decision trees. Decision making during a tennis match requires constant adaptation. Because the two players will likely have studied each other’s tendencies, outwitting the opponent requires an unpredictable strategy. McEnroe’s strategy involved a “real-time” adaptation to defeat opponents. An economic analysis of McEnroe’s serving patterns shows that he consistently followed a mixed-strategy Nash equilibrium. McEnroe’s ability to solve problems while literally on the run enabled him to become one of the all-time greats.
Another wicked problem confronted Rob McEwen, the founder and former CEO of Goldcorp, a Canadian gold mining company. McEwen faced a number of hard questions: Was there any gold? If so, where should the company begin prospecting? Given the large costs of incorrect decisions, finding the optimal strategy was critical to Goldcorp’s success. What makes this type of problem wicked is that there are many locally optimal solutions but only one global solution. McEwen’s solution was to invite proposals from experts all over the world, an approach that drew much criticism from within the company. Although the idea of giving away information and topographical maps to just anyone, including competitors, seemed counterintuitive, it allowed McEwen to use an integrative approach of randomness (permitting any graduate student in geophysics to enter) with intelligence (only those with sufficient training could input solutions). This “wiki” approach allowed Goldcorp to develop the richest gold mine in the world.
To provide a better understanding of their “diaminds” approach, Moldoveanu and Martin diagram the mind’s eye or window as a square in x–y space, with the x-axis representing breadth and the y-axis representing depth. What one thinks about is a subset of what one could think about. The key to diaminds is to expand the size of the window. Individuals can think “mile-deep, inch-wide” thoughts, with great depth but little breadth (the economist or physicist), or they can think “inch-deep, mile-wide” thoughts, with great breadth but little depth (the journalist or historian). The key to good thinking is to stretch those bounds in order to produce both greater depth and greater breadth. Moldoveanu and Martin’s approach is to teach mile-deep, inch-wide thinkers to expand their breadth of knowledge and inch-deep, mile-wide thinkers to seek greater depth.
Diaminds goes beyond analyzing how successful thinkers process information by striving to improve the reader’s thinking ability through numerous exercises. Although everyone spends a great deal of time thinking every day, most people take one of two incomplete approaches. On the one hand, those with no formal training in decision making spend their time pondering what to do next in a rather random fashion. On the other hand, well-trained decision makers often attack a problem with a more organized and intellectually appealing approach by using a decision tree or a probability-based method. One would expect the systematic approach to be the more efficient one, but in certain situations, such as search, the random approach can be more effective.
Eschewing the traditional academic approach, Moldoveanu and Martin forgo large samples that facilitate statistical testing and focus on individual case studies. They refer to this approach as the painstakingly precise case study method. It enables the authors to focus on the outliers rather than the averages and to gain insights from the great thinkers.
Not for the passive reader, Diaminds requires active participation to fully appreciate the book. Those who diligently work through the exercises are likely to be rewarded with an improved grasp of the process necessary for sound decision making.