olivier-sibony

Olivier Sibony

Thinker

Even the Experts Need Help

Intro

Olivier Sibony is an expert strategic thinker, a well-known writer, a keynote speaker and a consultant whose insights have helped people improve the quality of their decision-making skills. The French strategy specialist has dedicated his career to coming up with practical tools and solutions to help people make the best decisions possible, which he communicates in various books, lectures and academic papers. By helping powerful business people and managers realize the cognitive biases and thinking traps that we are all susceptible to, Sibony has placed himself as a master of behavioral science who is able to give advice on when to trust our instincts and when we need to resist them.

He is particularly interested in uncovering the heuristics involved in real-life management, which, unlike the textbooks students read, involve complex, uncertain and ambiguous situations. Wanting to better capture the real-life circumstances under which people make decisions, his ideas emphasize the need for individuals to gain behavioral science knowledge alongside industry-specific knowledge.

A wise leader, therefore, does not see herself as someone who simply makes sound decisions; because she realizes she can never, on her own, be an optimal decision maker, she views herself as a decision architect in charge of designing her organization’s decision-making process.

– Olivier Sibony, in his book You’re About to Make a Terrible Mistake: How Biases Distort Decision-Making and What You Can Do to Fight Them 1

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Intelligence isn’t all that matters

Sibony has made it a point of his career to show that even the best managers and leaders are susceptible to cognitive biases. All too often, companies and businesses hire experts to try and solve their issues without realizing that a high IQ doesn’t protect someone from flaws in their processes of thinking.

In his book Cracked It, he suggests that we can’t rely solely on ‘experts’ to solve problems in the domain of the problems because they too might fall victim to the same heuristics as the average layman. In fact, a study found that 80% of complex problem-solving effectiveness is explained by factors other than intelligence or expertise.2 Knowing everything there is to know about a particular industry isn’t going to translate to making perfect decisions within that industry. Instead, Sibony suggests that problem-solvers are the best people for managers to hire, regardless of what their background is or what field they’ve worked in.

The fact that expertise isn’t a one-size-fits-all solution also causes Sibony to suggest that advances in technology and artificial intelligence (AI) aren’t going to help companies fix the issues that they run into when making decisions. He actually predicts that the more AI is employed, the more value will be placed on human problem-solving capabilities.2

Essentially, Sibony’s claim that expertise, intelligence and technology aren’t the right tools to ensure industries are operating with optimal decision-making capabilities means that we can’t approach issues thinking of ‘what’ is wrong. He asks people to approach problems differently and think of the ‘how’ – how to come up with problem-solving strategies that will help solve multiple issues rather than coming up with a band-aid fix for one particular issue.2

The Downfall of Blockbusters

Sibony has zeroed in on two particular types of biases that often impact the decisions of large corporations: the confirmation bias and the overconfidence bias (also known as the Dunning Kruger effect).3 The confirmation bias describes our tendency to seek out and attach greater value to information that aligns itself with our pre-existing beliefs while discarding information that contradicts our opinions. The overconfidence bias describes our tendency to overestimate our capabilities and knowledge within an area when in fact we are performing poorly. Successful companies are especially vulnerable to these biases because success makes companies more likely to believe the way that they have been doing things is the ‘right’ way and therefore only listen to advice that is similar to the way they have been doing things and because previous success makes them believe they will continue being successful, even though that is not always the case.

In his article with Philip Meissner and Torsten Wulf, Sibony uses Blockbuster as a company that fell victim to these two biases.3 In 2000, Netflix (at the time a small start-up), approached Blockbuster and tried to make a deal for $50 million to join forces to create a click-and-mortar video rental model. Although it was hard to predict the sheer volume of success that Netflix would go on to have, the managers at Blockbuster made some crucial mistakes in their decision to reject the deal. At the time, the stock market index had seen internet-based companies collapse, so Blockbuster managers let their confirmation bias neglect the threat of Internet-based models. Instead of seeing Netflix’s proposal as an opportunity, they saw it as evidence that the company was desperate because they weren’t performing well. Furthermore, they believed that they could replicate Netflix’s model themselves since they’d already enjoyed success in the video-rental sector. This was an error of overconfidence.3

In 2015, Netflix was worth just over $25 billion, whereas Blockbuster filed for bankruptcy in 2010.3 This example provides support for Sibony’s suggestion that corporations should focus on the how rather than the what. It isn’t about the fact that Blockbuster turned down a deal from a small startup, but the cognitive biases that caused them to make this decision. Through a focus on the reasons behind the decision, managers can ensure not to repeat the same mistakes when a different circumstance or situation presents itself.

The Hero Narrative

One area of incorrect judgment Sibony narrows in on in his book You’re About To Make A Terrible Mistake is the narrative that people embellish between a particular individual and a company’s success. Sibony uses Steve Jobs, Apple’s founder, as an example of our tendency to attribute success to a particular individual and use them as our role model.4

In particular, Sibony identifies three mistakes that we make. First, we attribute an entire company’s success to just one individual. Then, we see every behavior of this person as a reason behind their success and then we believe we need to copy their behavior. 4

Sibony suggests that the first mistake occurs because humans are storytellers. We like to find connections between things that actually might be separate, or believe that there is a causal relationship when really, there is just a correlation between one person and the success of the company they work for (check out our article outlining the difference between correlation and causation). Since we are storytellers, we also like to identify people as certain characters within a story. We look for archetypes and end up seeing real-life people as if they were characters within a novel. We search for the brave knight that comes to the rescue and end up believing that figures like Steve Jobs or Jeff Bezos are solely responsible for the success of their companies, which ignores the other talented and intelligent people that work for their companies as well as the environment in which they operate.4

Sibony goes on to suggest that the second mistake is caused by the halo effect. The halo effect suggests that our positive impression of an individual influences our judgment of all aspects of their character.4 For example, Elon Musk, founder and CEO of SpaceX, has been able to insert himself in various fields because his initial success in the environmental sector has led people to believe he will be successful anywhere he goes. Another dangerous bias that the halo effect can lead to is survivorship bias, where we take a successful subgroup of people as representative of an entire group because the wider group hasn’t ‘survived’. For example, people often use Mark Zuckerberg, founder of Facebook, as evidence that you can drop out of school and still be successful. In reality, he is the anomaly, but he and other anomalies like him take precedence in the media.

The issue with our third mistake is that because we reduce a company’s success to one individual and then might believe any one of their behaviors are responsible for their success, we end up imitating the wrong kind of behaviors (like dropping out of school).4

Historical Biography

Olivier Sibony was born in France and began his education at HEC Paris, a world-class business school. After graduating from HEC, Sibony completed a Ph.D. at Paris Dauphine University.5 Pursuing his interest in business and management, after graduation, Sibony became a consultant for McKinsey & Company. He spent 24 years at the global management consulting firm, serving, amongst other roles, as the Global Leader of the Corporate Strategy Practice, the European Leader of the Consumer sector and as a member of the Partner Review Committee. These roles allowed him to gain experience across various management and consulting sectors, particularly to do with consumer packaged goods, luxury goods, private equity and retail.5

After making a name for himself as a thought leader, Sibony left McKinsey & Company in 2015 to pursue other roles. He returned to where he had begun his education and is now an affiliate professor at HEC Paris, where he teaches business and corporate strategy courses and runs a problem-solving and communications workshop for MBA students. He also teaches a Behavioral Strategy elective for students in the finance program.6 When he’s not completing one of his many responsibilities at HEC, Sibony is also an associate fellow of Oxford University’s Saïd Business School and a guest lecturer at London Business School.7 He continues to act as a consultant and strategic advisor to a number of businesses and sits on the board of many fast-growing companies.5

Throughout his career, Sibony mostly worked with business moguls and managers. However, because of his growing fame as a thought leader, he’s also enjoyed working alongside other behavioral scientists like Daniel Kahneman and cognitive scientists like Dan Lovallo. In fact, the three of them published a paper in 2015 titled “Before You Make That Big Decision”, which was cited in Harvard Business Review’s selection of all-time “10 Must-Reads on Making Smart Decisions.” 7

Sibony has also been a guest on our very own TDL podcast, where he shared his expertise on how to make well-calculated, strategic decisions when it matters most.

Insights from Olivier Sibony

For Sibony, great managers are not purely rational thinkers who avoid the pitfalls and traps of cognitive biases. He views heuristics as an unavoidable part of thinking and decision-making, which means that what is important is an awareness of these influences and the cultivation of tools to diminish their impact. He says, in an article with Philip Meissner and Torsten Wulf, that “good managers – even great ones – can make spectacularly bad choices. Some of them result from bad luck or poor timing, but a large body of research suggests that many are caused by cognitive and behavioral biases. While techniques to “debias” decision-making do exist, it’s often difficult for executives, whose own biases may be part of the problem, to know when they are worth applying”,3 which is why they provide a simple check-list approach to helping managers see when decision-making has been suboptimal.

No one is safe in Sibony’s eyes – “the point we haven’t conveyed effectively enough is that however aware you are of biases, you won’t necessarily be immune. You should see yourself as the architect of the decision-making process, not as a great decision-maker enhanced by the knowledge of your biases. 9

Part of the problem, Sibony suggests, is that people tend to get defensive if they are told they have biases, even though they are just a part of our life and cognitive processes. When consulting, his approach instead is to say “‘Let’s talk about what works and what doesn’t work in your strategic-planning process.’ We don’t talk about biases, because no one wants to be told they’re biased; it’s a word with horrible, negative connotations.9

That is why Sibony has worked on building a concept of decision-making styles to help describe different kinds of thinkers. He said in an interview that he was “trying to build a language that would help people see how to get better at making decisions. The hope is that it would make individuals more conscious of their own style and also enable debate. If you and I are around the same table, rather than telling you that you’re out of your mind, I can tell you, ‘We know that you’re a visionary right? So you would see things in this way. Well, I’ve got a different style, so here’s how I would think about it.” A bit like the Myers-Briggs Type Indicator.9

Sibony believes that revealing the mistakes that managers make is useful not only for managers but for students of business to also understand that no one is a perfect decision-maker. Sibony says that his students say “Ah, at last someone who talks about the world like it is. Someone who talks about the organizations that we’ve lived in, that we’ve experienced, and the way decisions are really made in those organizations, not the theoretical perspective of economists or something disconnected from reality.10 Usually, he says, “we have a total difference between the people who on the one hand think about management theory and on the other the management practitioners”, and he hopes to bridge that gap.11

One of the issues Sibony identifies in his book Cracked It is that we often frame decisions of having to choose between two opposing options. He claims that “framing the situation in this way simplifies the challenge. Instead of a lengthy and difficult task of defining, structuring, and analyzing the problem and then generating and choosing among potential solutions, we just reduce the problem solving process to a choice between [two things]… When we stop presuming we know what’s going on, and instead question the sufficiency of the information we possess and search for more, we become more likely to overcome our assumptions and see the problem differently, enabling us to generate different and potentially better solutions. 2

Where can we learn more?

Sibony has written a number of well-received books, many of which the ideas discussed here have come from. His first, Cracked It, was published in 2018 and gives readers an easy-to-follow four step approach for solving complex problems. His second book, You’re About to Make a Terrible Mistake, asks people to take a second to consider the decisions they make on a daily basis in order to better understand what makes for a good decision versus a bad decision. He also has another book coming out in May 2021, which he co-authored with Daniel Kahneman and Cass Sunstein: Noise: A Flaw in Human Judgment. The book examines all of the factors that can impact a decision and tries to sift through the noise to show people how to make better judgments. It can be preordered here.

You can also find a list of various articles, podcasts and conferences that Sibony has been a part of on his website. In particular, he’s recently written an article for Forbes that takes a behavioral science lens on the current COVID-19 pandemic and what leaders are thriving throughout these unprecedented times. He also was the first guest on the podcast Trium Connects, where he discussed strategies for making smart decisions.

References

  1. Goodreads. (n.d.). You’re About to Make a Terrible Mistake Quotes. Retrieved January 14, 2021, from https://www.goodreads.com/work/quotes/74074410-you-re-about-to-make-a-terrible-mistake-how-biases-distort-decision-mak
  2. Garrette, B., Phelps, C., & Sibony, O. (2018). Cracked it!: How to solve big problems and sell solutions like top strategy consultants. Springer.
  3. Meissner, P., Sibony, O., & Wulf, T. (2015, April 1). Are you ready to decide? McKinsey & Company. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/are-you-ready-to-decide
  4. Sibony, O. (2020, July 13). Worst Practices: How to Learn From the Mistakes of Others (and Avoid Making Them Yourself). Startup Nation. https://startupnation.com/books/worst-practices-learn-mistakes/
  5. Saïd Business School. (n.d.). Olivier Sibony. Retrieved January 14, 2021, from https://www.sbs.ox.ac.uk/about-us/people/olivier-sibony
  6. HEC Paris. (n.d.). Olivier Sibony. Retrieved January 14, 2021, from https://www.hec.edu/en/faculty-research/faculty-directory/faculty-member/sibony-olivier
  7. Cross Knowledge. (2018, October 31). Olivier Sibony. Retrieved January 14, 2021, from https://www.crossknowledge.com/faculty/olivier-sibony
  8. French Founders. (2020). You’re About to Make a Huge Mistake: 30mn MBA by Olivier Sibony. Retrieved January 14, 2021, from https://private.frenchfounders.com/public/event/1857/2020-02-18-18-30-30mn-mba-the-art-of-bullshit-by-olivier-sibony
  9. Sibony, O., & Heath, C. (2013, April 1). Making great decisions. Interview by The Quarterly. McKinsey. https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/making-great-decisions
  10. Ethier, M. (2020, October 21). HEC Paris’ Olivier Sibony: How MBAs Can Avoid Terrible Mistakes. Poets & Quants. https://poetsandquants.com/2020/10/21/hec-paris-olivier-sibony-how-mbas-can-avoid-terrible-mistakes/?pq-ab-wall=b&pq-category=business-school-news
  11. Outils du Manager. (2020, March). Podcast – interview Olivier Sibony. Outils du Manager [Audio podcast episode]. https://forum.outilsdumanager.com/t/podcast-interview-olivier-sibony/177

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