We’re back!

For new subscribers, at the Uncertainty Project, we explore models and techniques for managing uncertainty, decision making, and strategy. Every week we package up our learnings and share them with the 1,500+ leaders like you that read this newsletter!

In case you missed it, with the last post of 2023, we highlighted a few actionable challenges to improve decision making in 2024. You can also find all previous posts here.

A few announcements to kick off 2024:

• We’re changing our schedule to weekends in 2024: We tend to lean towards a longer format - we used to post on Wednesdays/Thursdays, but we’ve found that readers get more time on the weekends (even if open rates go down)

• Closing the gap between theory and practice: We do curate a library of tools/techniques and began to structure and share some playbooks, but we’ve received feedback that there’s an opportunity to share more practical techniques in our posts - and we’re thinking about better ways to do this.

• Doing more in-person sessions: We’re excited to have more live discussion with members of this community - and we’ve set up a series of 5 live sessions to cover topics around Decision Architecture. It’s free and exclusive to Uncertainty Project subscribers, but we will have a limited number of spots (just to make sure we can facilitate/manage actual discussion).

Diving into organizational sensemaking

Very little is understood about human cognition, sense-making, and understanding - but quite a bit has been theorized. The most provocative theories challenge the ways we’d like to (or do) perceive ourselves (or human nature as a whole).

That said, the most popular studies for understanding how people make decisions tend to relate to behavioral economics and neuroscience (or specifically, fMRI imaging of the brain under decision making scenarios)

These studies (and the books the succeed them) tend to focus on the flaws in human judgement in individual decision making. But this project is interested in strategic, group, and organizational decision making through the greatest human capability - cooperation.

There seems to be a common ‘launchpad’ in exploring decision making

The reason I personally became interested in behavioral science and decision making was because I picked up a copy of Dan Ariely’s book, Predictably Irrational - and, like many readers of this newsletter, it led me to Daniel Kahneman and Amos Tversky’s work on biases and heuristics.

Based on the conversations I’ve had over the last year, this seems like a common origin story, but I’ve always struggled with the question, “If irrational human judgement is wrong (and needs ‘correcting’), then what’s considered ‘right’?”

Would decision making be better if we were all just logical, data-driven, and… rational? If we could model every variable, build an exhaustive outcome tree, assign probabilities to all potential outcomes and calculate expected value we can just throw this decision making thing on autopilot!

In many cases we can. Today, we have plenty of systems built to make quality decisions on autopilot - applying for a credit card, fraud detection, actuarial work, underwriting, automated investing, inventory management, and of course whether or not to show you an ad on your favorite social media platform.

And this isn’t a bad thing - it allows us to shift our human decision making capacity towards more sophistication.

But many of these ‘decision engines’ break when the underlying models become less useful - when inevitably the world shifts below them. And when they break, humans are there to ask “What’s going on here?”, apply context, abstract, reflect, and reconstruct.

In an environment of radical uncertainty, we’re surprisingly capable of going beyond optimizing and fine-tuning. We’re able to make seemingly irrational bets that pay off - but why? How?

That leads us to some of the least understood areas of decision making - group and long-term (or strategic) decision making. It’s an environment that thrives at the edge of chaos - requiring sensemaking through thick uncertainty.

An introduction to sensemaking: From decision making to meaning

In past posts, we’ve talked about many subjects underpinned by this focus on meaning over the actual decision point. For example, this phrase of ‘make better decisions’ (plastered on the landing page of almost every business/analytics tool) is typically assuming that our access or processing of data is the primary contributor to poor outcomes from decisions.

• The ‘data-driven’ mindset feeds our dangerous craving for certainty

• From data-driven to decision-driven

We’ve also explored the concepts of narrative, conviction, disagreement, and broader social dynamics that influence decision making.

But maybe we’ve mislabeled these posts. If decision making is better described as the conclusion (or as John May says, the ‘punctuation’) followed by action, then as teams and organizations, how can we better understand the dynamics leading to that decision point? Or more broadly, how teams and organization react to interruptions that require novel decision making?

Enter Sensemaking…

Recently, I’ve become increasingly interested in the research and philosophy around complexity and sensemaking. As an area of focus in management and organizational research, it seems underserved (maybe because it’s not as sexy as observable quirks that can be converted to catchy stories in business books).

I’ll likely stick to this topic over the next couple of months (and if you’re out there and have resources to share, I’m all ears!). To start, one paper helped bring a few pieces together for me - a paper by Karl E. Weick (considered the father or organizational sensemaking) takes a unique perspective to the Mann Gultch Disaster as an example for organizations.

Before Weick breaks down the series of events through the lens of sensemaking and relates it to organizations, he summarizes this ‘shift from decision making to meaning’ in a great way:

Packed into this paper, Weick describes a few factors that helped explain the series of events that led to the disaster itself, but also the post-rationalization of what happened - and how these factors are often present in how decision making unfolds (and is ultimately evaluated) in organizations:

• Construction of Reality: Reality is not a fixed, external entity that individuals simply discover and adapt to. Rather, it is something that people actively construct through their perceptions, interpretations, and interactions.

• Rationalization of Actions: The 'images of a wider reality' that people create serve in part to justify or rationalize their own actions and decisions. This means that individuals often shape their perception of reality in a way that aligns with their actions, beliefs, and values.

• Reading Patterns of Meaning: People understand and make sense of their world by identifying patterns and inferring meanings. This is a subjective process, as different individuals might interpret the same situation in various ways based on their personal experiences, beliefs, and cultural backgrounds.

• Subjectivity of Experience: Subjectivity is inherent in the human experience and understanding. Each individual's reality is unique, shaped by their personal context and perspective.

Weick’s work has been focused on how collective understanding and perspectives come from the collaboration of individuals - how sensemaking stitches together a cohesive narrative or model from which the organization makes decisions (often implicitly).

We intuitively understand how important sensemaking is - this is why similar organizations with different people can (and do) operate so differently. Even with identical processes and policies, it’s impossible to ‘templatize’ the emergent properties from the interactions between a unique collection of individuals with their own unique preferences.

Many of topics explored in sensemaking echo those in fields like naturalistic decision making and areas of study that focus on radically uncertain environments. These are not scenarios, like games of chance, where we expect a probabilistic outcome and the rules of the game stay the same. In these low-validity environments, we’re often faced with unique situations where very few variables are known and information is limited - all relative within the context of a competitive arena.

Understanding sensemaking in turn may help us make sense of how teams and organizations react to or actively manages uncertainty.

Getting started with sensemaking?

In future posts, we’re excited to dig into the properties of organizational sensemaking through Weick’s interpretation and outline his ‘recipe’ for enactment, selection, and retention.

We’ll also cover complimentary topics and frameworks including Radical Constructivism (Ernst von Glasersfeld), the Ecological Framework (David Hurst), 360° Strategies (Chris Butler), Topological Maps (John May) and Estuarine Mapping (Dave Snowden).

As always, thanks for reading! Excited for 2024!

If you’re out there and want to contribute a post (on topics around strategy, decision making, and dealing with uncertainty) - we’d love to chat! Feel free to reply to this email!

And again, we’ve set up a series of 5 live sessions to cover topics around Decision Architecture. It’s free and exclusive to Uncertainty Project subscribers, but we will have a limited number of spots (just to make sure we can facilitate/manage actual discussion). Sign up for the waitlist if you’re interested!