Left Brain, Right Stuff by Phil Rosenzweig: Book Review

Why real-world decisions require a combination of left-brain analysis and right-brain ambition

As we know, individuals are prone to various biases, such as looking for information that will confirm what they believe (confirmation bias) or have the illusion of control and imagine that they have more influence on events than they actually do. They also tend to suffer from hindsight bias. That’s the domain of behavioural science. But while several lessons can be learnt from various experiments in human behaviour, many of these lessons may not be applicable to business decisions.

Phil Rosenzweig, a professor at IMD (Institute of Management Development) in Lausanne, Switzerland, focuses his attention on business thinking and managerial decision-making. He points out that apart from behavioural biases, many other factors are at play in business, such as competition, ambition, etc. While research experiments have been effective in isolating the processes of judgement and choice, they occur in a context far removed from the realities that strategic decision-makers face, the author states.

He argues that academic researchers may not be asking the right questions to judge decision-making. Often, researchers give a series of questions (such as the length of the Nile, the year Mozart was born and so on), asking participants to state a range, that they were confident, contained the correct answer. If the range is too narrow, the researcher concludes that the person is overconfident. However, when it comes to making managerial decisions, some level of confidence is required; it may appear excessive to some while others may feel it’s necessary.

People are said to be normally overconfident, too sure about themselves and unrealistically optimistic about the future. But while making business decisions, it may be essential to be confident. As mentioned earlier, many studies of judgements and choice avoid competition. However, in the corporate world, there is a competitive dimension, when we have to do better than others and how to think strategically is crucial. In competitive situations, not only is a high level of confidence useful, it can be essential. The author dedicates an entire chapter to dealing with confidence.

The standard advice for making better decisions is to be aware of the tendency for common biases and find ways to avoid them. The left brain is used for a deliberate and analytical approach to problem-solving. However, problem-solving isn’t entirely a left brain activity. Also, it does not mean either that artists rely exclusively on their right brain. But the left brain is strongly associated with logical reasoning.Therefore, great decisions call for clear analysis and dispassionate reasoning.

The left brain helps in identifying the difference in what we can control and what we can’t, whether to act or not to act, and also to recognise models. Along with the left brain analytical abilities, the ‘right stuff’ is also required such as going beyond past performance and seeking higher levels. The right stuff is about the intelligent management of risk. Real-world decisions require a combination of left brain analysis and rightbrain ambition, he says.

As many as eight chapters of this book cover elements associated with the left brain. These enumerate how to make a fundamental distinction between decisions whose outcomes we cannot control and those which we can. In the chapter on when are winners cursed, he explains that, while taking part in an auction, the apparent winner often ends up the loser by bidding more than the value of the product. The same goes for buying companies. Most acquisitions fail to deliver value and the reason is that excessive bids stem from overconfidence. Some managers do overestimate their ability to drive revenue growth and cost savings.

Winning decisions call for a combination of skills as well as overcoming behavioural biases. Though success is never assured when a decision is made, it is essential to know that the role of analysis and the process of implementation can influence the odds of success. Phil Rosenzweig gets an approving nod from Nassim Taleb who is a merciless critic. Taleb holds the author in high esteem

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