Left brain, right stuff: how leaders make winning decisions

337 Pages·2014·1.392 MB·English

by  Rosenzweig, Philip M

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“ with compelling accounts and research results, Phil rosenzweig takes us through the world of big, strategic
decisions. they are thorny, complex, and risky, and he shows that they require analytic thinking, intuitive judgment, f Left Brain, right Stuff takes up where other books
and personal confidence without certitude. Left Brain, right Stuff delivers an invaluable framework for making
t about decision making leave off. For many routine choices, from
ni good and timely decisions by all who sit in a leadership chair.” —MiChAeL uSeeM, director of the
risO wharton Leadership Center, university of Pennsylvania, and co-author of Boards That Lead shopping to investing, we can make good decisions simply by
ne g B avoiding common errors, such as searching only for confirming
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e-a r BrAin information or avoiding the hindsight bias. but as Phil rosenzweig
rr “ Left Brain, right Stuff will help (force) you to rethink what you thought you knew about behavior and decision
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Pi shows, for many of the most important, more complex situations
making. it will show you how to avoid the traps that have been set by some very popular (and dangerously
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PhiL rOsenzweig we face—in business, sports, politics, and more—a different way
is professor at iMd in Lausanne, erroneous) writings on the topic. this book will surprise you, it will challenge your (and your colleagues’) thinking
in a very productive way, and it will be fun to read. read it twice: once for the enjoyment of it, and once for of thinking is required. Leaders must possess the ability to shape
switzerland, where he works with leading companies on questions i
of strategy and organization. he is a native of northern california, pragmatic applications. it is certain to provoke the right kinds of discussions within your management team, n opinions, inspire followers, manage risk, and outmaneuver and
and to raise your organization’s hit rate for effective decision making.” —AdriAn J. SLywotZKy,
outperform rivals.
where he worked for hewlett-Packard. Prior to iMd, he was an
partner, oliver wyman, co-author of The Profit Zone, and author of Demand

Making winning decisions calls for a combination of skills: clear
assistant professor at harvard business school. rosenzweig’s Phd
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analysis and calculation—left brain—as well as the willingness
is from the wharton school, the university of Pennsylvania. he is the
“ no one thinks as clearly—and writes as clearly—as Phil rosenzweig does about the diagnostic challenges of i to push boundaries and take bold action—right stuff. Of course
author of numerous articles in journals including harvard Business
assessing the quality of business judgment and about the prescriptive challenges of improving it.” g
leaders need to understand the dynamics of competition, to antic-
review, California Management review, Management Science,
—PhiLiP e. tetLoCK, Annenberg university Professor, university of Pennsylvania, author of
how LeAderS MAKe PhiL
and Strategic Management Journal. his 2007 book, the halo effect... Expert Political Judgment: How Good Is It? How Can We Know? h ipate rival moves, to draw on the power of statistical analysis, and
to be aware of common decision errors—all features of left brain
and the eight Other Business Delusions that Deceive Managers, winning deCiSionS roSenZweig
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thinking. but to achieve the unprecedented in real-world situations,
was described by the Wall Street Journal as “a trenchant view of
“ Left Brain, right Stuff intrigued me on a number of levels. by parsing strategic situations, rosenzweig convinces
right
business and business advice” and lauded by nassim nicholas taleb much more is needed. Leaders also need the right stuff. in business,
us that we control more than we think we do. when we believe in ourselves, we increase the probability of a great
S
they have to devise plans and inspire followers for successful exe-
as “one of the most important management books of all time.” outcome. then add in an understanding of ‘winner take all’ competition and the need to assess relative performance
(not absolute performance), and my eyes were opened wide.” —JoAnnA BArSh, director emeritus, t cution; in politics, they must mobilize popular support for a chosen
McKinsey and Co. program; in the military, commanders need to commit to a battle
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strategy and lead their troops; and in start-ups, entrepreneurs must
“ this fine book argues that the accepted tenets of behavioral economics are inadequate when dealing with strategic f manage risk when success is uncertain. in every case, success calls
decisions in which the players can influence the outcome. the gripping stories neatly reveal the true complexity for action as well as analysis, and for courage as well as calculation.
f
that is not captured in laboratory experiments, and put a needed reality check on the standard dogma of decision
always entertaining, often surprising, and immensely practical,
making. essential reading.” —dAvid SPiegeLhALter, winton Professor for the Public understanding
r Left Brain, right Stuff draws on a wealth of examples in order to
of risk, Cambridge university o Stuff
S propose a new paradigm for decision making in synch with the way
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Jacket design by Pete garceau nh we have to operate in the real world. rosenzweig’s smart and per-
$28.99/$32.00 CAn Zi
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insights on topics such as confidence and overconfidence, the
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uses and limits of decision models, the illusion of control, expert
viSit www.PuBLiCAffAirSBooKS.CoM performance and deliberate practice, competitive bidding and new
foLLow @PuBLiC_AffAirS on twitter www.PuBLiCAffAirSBooKS.CoM venture management, and the true nature of leadership.
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L E F T
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L E F T
B R A I N
R I G H T
S T U F F
HOW LEADERS MAKE WINNING DECISIONS
P H I L R O S E N Z W E I G
PublicAffairs
New York
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Copyright © 2014 by Phil Rosenzweig.
Published in the United States by PublicAffairs™,
a Member of the Perseus Books Group.
All rights reserved.
Printed in the United States of America.
No part of this book may be reproduced in any manner
whatsoever without written permission except in the case of
brief quotations embodied in critical articles and reviews. For
information, address PublicAffairs, 250 West 57th Street, 15th
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Book Design by Pauline Brown
Typeset in Goudy Old Style Std by the Perseus Books Group
Library of Congress Cataloging-in-Publication Data
Rosenzweig, Philip M., 1955–
Left brain, right stuff : how leaders make
winning decisions / Phil Rosenzweig.—First edition.
pages cm
Includes bibliographical references and index.
ISBN 978-1-61039-307-2 (hardcover)—
ISBN 978-1-61039-308-9 (e-book)
1. Decision making. 2. Decision making—
Psychological aspects. 3. Leadership—Psychological aspects.
I. Title.
HD30.23.R6725 2013
658.4'03—dc23
2013031990
First Edition
10 9 8 7 6 5 4 3 2 1
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For the home team
Laura, Tom, and Caroline
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CONTENTS
Chapter 1: Crunch Time on a Hot August Night 1
Chapter 2: The Question of Control 23
Chapter 3: Performance, Absolute and Relative 45
Chapter 4: What It Takes to Win 64
Chapter 5: Confidence . . . and Overconfidence 80
Chapter 6: Base Rates and Breaking Barriers 101
Chapter 7: Better Decisions over Time 123
Chapter 8: Decisions of a Leader 145
Chapter 9: Where Models Fear to Tread 165
Chapter 10: When Are Winners Cursed? 191
Chapter 11: Starting Up, Stepping Out 218
Chapter 12: The Stuff of Winning Decisions 238
Acknowledgments 253
For Further Reading 257
Notes 263
Bibliography 287
Index 303
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CR UN CH TI ME ON A | 1
HOT AUGUST NIGHT
COMPARED WITH MANAGING, TRADING WAS ADMIRABLY DIRECT.
YOU MADE YOUR BETS AND EITHER YOU WON OR YOU LOST.
MICHAEL LEWIS, LIAR’S POKER, 1989
It was a billion-dollar decision, give or take a few million.
On the night of August 12, 2010, Bill Flemming, president of
Skanska USA Building, faced a tough choice. Get it right, and the
upside could be very lucrative. Get it wrong, and the results could
be disastrous.
The story began a year earlier, when the National Security
Agency (NSA) announced plans to build a computer facility for
the security information it gathers around the world. The Utah
Data Center (UDC) would be fully self-contained, with its own
power plant and water supply, and would come equipped with anti-
terrorism defenses. The site for this sprawling complex was the
abandoned airfield at Camp Williams, a National Guard base in a
lonesome canyon south of Salt Lake City. A forbidding location,
but ideal for this purpose. It was vast, remote, and very secure.
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