Oblique Decision Making

Female interviewer: When faced with a complex decision to make or an ambitious goal to achieve, what’s the best approach for us to take? In his 2010 book, Obliquity, Professor John Kay, a pre-eminent economist, argues that an oblique approach to making decisions and achieving goals can often prove to be the most effective.

Here we speak to Professor Kay about obliquity, what it means and how it can help us make better decisions and achieve our goals more effectively.

I began by asking Professor Kay, what is obliquity?

Professor John Kay: Obliquity is the idea that complex goals are often best achieved by being pursued indirectly. The happiest people are not actually the people who pursue happiness. The most profitable companies are generally not the most profit oriented. The wealthiest people are not generally the most materialistic and so on. And the reason actually is that these objectives, these central objectives, are typically best achieved indirectly by building, you know, great businesses, by pursuing great relationships with other people and with the jobs people do. By building great businesses, people achieve profits. By pursuing good relationships at home and at work, they become happy and so on. Happiness is not achieved by a series of actions that make you happy and the same is true of profits.

Female interviewer: Can you describe the difference between a direct approach to achieving our goals, making the decisions and an oblique one?

Professor John Kay: The direct approach says we define our objectives, we list all the ways of achieving these objectives, we write down the pros and cons of these alternative routes to these objectives and then we attach costs and benefits and weight, and we make our decisions. And all that sounds great, but everyone knows we don’t really make decisions in complex situations in that kind of way and we don’t make them in that way because we can’t.

Oblique decision-making says that actually we live in a complex environment where we only have a limited degree of knowledge of both the possibilities and of what is going on in these situations and how we will interact with them, and we actually make our decisions and determine our course of actions step by step and iteratively.

Female interviewer: So what is it about the oblique approach that makes it so effective?

Professor John Kay: It is inevitable in an environment which we, when we don’t know what is going to happen, understand the options only to a limited extent and where the overall environment is just too complicated for any model that we build of it to give us the complete truth. And we keep saying to ourselves, these things ought not to be true and therefore we need to structure them and simplify them in such a way that we can apply a more direct approach but that isn’t reality and can’t be.

Female interviewer: Can you provide us with an example of when an oblique approach has proved to be more effective than a direct one?

Professor John Kay: One of the classic examples that I elaborate in the book is a story of architecture which was one of the great fields of modernism in the twentieth century. People believed that technology had changed everything so you could redesign buildings from first principles instead of, as it were, redesigning them in light of well established architectural traditions. Le Corbusier designed tower blocks from first principles in that kind of way and sat down with a blank sheet of paper and designed every detail, down to every item of furniture in the buildings. The trouble was that people hated living in tower blocks because that kind of approach didn’t recognise the complex interactions between social life and the physical environment that are part of what makes busy cities exhilarating places to live in. I contrasted that with Notre Dame, which took two hundred years to build, was built by several different people and no one had a clue what it was going to look like at the end.

Female interviewer: So does this mean that we shouldn’t plan?

Professor John Kay: No, we should plan. And equally we should use models. And one of the paradoxes for me in thinking about all of this, I have spent a large part of my life thinking of building models, indeed I have spent a fair part of my life in business, working through models for large corporations. It is just we take models too seriously. Models and planning are just parts of our toolkit. What we bring to real decision-making is a whole variety of experiences, techniques, processes and the skill and judgement of the manager is actually understanding which particular group of methods and techniques you want to use in particular situations, and that will always be a matter of judgement. The mistake in all of this is to believe that there is a sort of science in decision-making, and if only you get the process right, not only would you get the right answer but everyone who used that process would get to the same right answer. We kind of have a desperate need to believe in the kind of rationality that says that is true but it is not true.

Female interviewer: You point out that not every decision-making model is appropriate to the situation that we are in. How can we learn how to identify which model to use in which situation?

Professor John Kay: Skill, judgement, experience, and it’s really important to say that. I have spent a lot of my career building models but one of the things I learnt very quickly was that illuminating models and insightful models were typically built by people who had an understanding of the problem to which the model was addressed and not just an understanding of how you built models. There is a terrible tendency to use bad models as kind of black boxes, which probably nobody, and certainly not the people who are taking reassurance from them, you know, actually understand, but which people believe delivers the truth to them in some sort of way.

There are models in the real world of business that are actually like that.

Female interviewer: In the book you talk about high level objectives, intermediate goals and basic actions. Can you just tell us a bit more about what you mean by these?

Professor John Kay: Yes. I always illustrate it with a famous story of the person who went and talked to the builders working on one of these cathedrals like Notre Dame and asked them what they were doing and one of them said, ‘I am chiselling a piece of stone to shape’, and another said, ‘I am building a great cathedral’, and another said, ‘I am working to glorify God.’ And in a sense all of these people were right. You know, one of them was concerned with the high level objective, the glorification of God, the second was dealing with the translation of that into an intermediate goal which was building the cathedral, and the third translating that into the specific actions that were required which was chiselling the piece of stone. Now, one of the things that constructing the great cathedral story illustrations is that you didn’t and you couldn’t do all that in a top down way and, you know, the site manager who came on site and said, ‘What will I do to glorify God today?’ wouldn’t actually get very far. It is an iterative process in which you have your high level objectives, you translate them into goals and actions and you learn more about the nature of the goals and the high level objectives by performing the actions. And that’s the way it operates.

Female interviewer: And how does the oblique approach to objectives, goals and actions differ from a more traditional and direct view?

Professor John Kay: Well, I am not sure that direct view is the more traditional view. It is rather a modernist view that this is how we ought to make decisions even if we know we don’t. What you see endlessly is people who think they should be making business and public decisions by reference to these detailed processes and checklists and appraisal forms and the like, which they would never dream of using in their ordinary lives. And one asks why.

I take the quite famous example of Charles Darwin, who thought he ought to adopt the checklist approach decision as to whether he should get married or not. So he set down a list of pros and cons and attached weights to each of these and yet at the bottom he realised that this was a complete joke and although if you looked at the list of pros and cons there actually seemed to be more cons than pros. He scribbled at the bottom of the page ‘marry, marry, marry’.

Female interviewer: As you mentioned, organisations that pursue their objectives directly can often have less success than organisations that pursue the same objectives but obliquely. What lessons can today’s organisations take from this?

Professor John Kay: Well, this is, well for me a lot of this began, which was trying to understand and explain to people why the shareholder value movement was so often unsuccessful even in its own terms; that is it wasn’t successful at creating shareholder values. And the very first time I talked about all of this, I made the point using the contrast for ICI, between what ICI said about its missions and goals up to and including the 1980s and what it said about them in the 1990s. Its traditional statement of objectives was to say what ICI is about is the responsible application of chemistry to business, through achieving that, it said, ‘We will make profits for our shareholders, contribute to British society, give satisfying employment to our workforce’ and so on. They changed that to ‘Our purpose is to create shareholder value’, and in the end a company which had been Britain’s leading industrial company for most of the twentieth century no longer exists as an independent entity.

Female interviewer: So what does this mean for organisations when it comes to articulating their objectives in documents such as mission statements?

Professor John Kay: I used to be very sceptical about corporate mission statements and the like and I still am to a degree, but I think the value of a mission statement is more about what it says we don’t do than about what we do do. I think a statement of objectives for a business, and this makes clear how the objective interacts with the achievement of the objective, the statement of objectives says what is special about this particular business and what distinguishes it from other businesses which are doing similar and related things. And that’s, I think, the key to understanding the nature of a company’s business and the key to understanding how it interacts with its environment and its connectors.

Female interviewer: What can individuals take away from that in terms of setting their own personal objectives?

Professor John Kay: In a sense, as I was describing earlier, individuals have taken it away already. I mean, we have these endless formal procedures in big organisations for making decisions which we wouldn’t dream of applying to our own personal decisions about what houses we live in, what partners we live with, whether we have children or not. So it is much more, in a way, learning that you know the way we make decisions is to some extent alright. I emphasise an evolutionary perspective and so actually we can’t be that bad at making decisions, otherwise we wouldn’t still be around making them.

Female interviewer: Franklin’s Gambit is advice that can affect our decision-making capability in a number of situations. Can you tell us what it involves?

Professor John Kay: We feel obliged to pretend that we are making decisions in different ways to the ones in which we are really making decisions and I am willing to bet that everyone listening to this has done that kind of thing quite often in their organisation. They have to fill in an appraisal form or a risk assessment or to explain why they have chosen course of action A rather than course of action B, and having made up their minds, you know they then sit down to fill in this form.

Female interviewer: What impact can this have on us in the workplace?

Professor John Kay: I think it has a huge impact because a business of pretending we are making decisions in ways different from the ones that we actually are, feeds back into the decisions we actually make, firstly because we are deceiving ourselves about how and why we have made these decisions and secondly because we often end up, I think, making decisions because they are easy to justify rather than because we think they are the right decisions. We do that more and more. I also am concerned with the way people feel that, as it were, filling in these forms somehow validates their decision.

Female interviewer: And this is something that we all susceptible to.

Professor John Kay: And I think this is something that we are all susceptible to. And there is more and more, I think, internal and external pressure on people to justify what they do in these kinds of terms.

Female interviewer: How can we avoid falling into the trap of Franklin’s Gambit, particularly at work when we are often required to use formalised systems to present our decisions and ideas?

Professor John Kay: In some ways the largest thing is we have to understand this and stop apologising for the ways in which we really make decisions. I think a lot of what we have at the moment is we feel we ought to be making decisions by references to these forms and checklists and the like and that is why they are so popular, even though we know we really don’t. It is the forms and checklists that are wrong, not the way we make decisions and that’s, oversimplified a bit, but that’s basically, you know, how things are.

Female interviewer: So do you think these tools have a role in the workplace?

Professor John Kay: I think they can encourage people to think about the problems which they are facing, you know, in a structured way. One of the things that worries me in talking in the terms I do is that it encourages people to think they should make decisions by reference to some very loose idea of intuition and I don’t mean that at all. I really do believe in rational evidence-based decision- making; it is just these forms and checklists aren’t it.

Female interviewer: How does the oblique approach differ from intuitive styles of decision-making?

Professor John Kay: I mean the trouble is, intuition is a sort of poor mantra word that covers at the one end of the spectrum the very genuine expertise that people have that they can’t articulate. I give in the book the rather hilarious example of the people who worked out the differential equations which they said David Beckham would have to be solving to keep his goals. Well, we are pretty sure that Beckham can’t actually solve differential equations so, however, he is kicking the goals, he is not doing it that way, but he clearly is rather good at doing it and is better at doing it than the people who can solve the differential equations. So that’s, as it were, genuine expertise. The difference is between what we loosely call intuition with validities demonstrated by evidence and experience and the unsupported assertion which a lot of people describe as their intuition. I am not in favour of unsupported assertion but there is such a thing as expertise. You know, Beckham is a striking case of someone who has skills but cannot articulate the basis of these skills.

I give examples which have been quite widely studied of people like firefighters and experienced nurses and so on where there are people, equally people who are clearly very good at it who find it quite difficult to explain, you know, what the basis of the skills they deploy are. But they are real. Malcolm Gladwell got a lot of attention talking about intuitions of various kinds which I think needs to be looked at a bit carefully. His kind of signature example is the people who recognise that the Getty Kouros was a fake, you know, just by looking at it and in a way that misses the point, because the point is not that they made the decisions very quickly, they blinked; the point is that they were genuine experts. If you and I walked into the Getty museum and said, ‘That’s obviously a fake’, no one would care. The reason this observation was striking was that the people who made these kind of judgements were people who had made these kind of judgements well in the past on the basis of a great deal of experience and knowledge of Greek artefacts.

Female interviewer: An oblique approach involves making decisions based on only a limited number of options. Can you tell us a bit more about this?

Professor John Kay: I mean, in a properly formulated direct approach, we have to be able to define what all the options are and choose between them, but we can’t. We really make decisions in complex situations by reference to what Lindblom called the method of success of limited comparison and that we look at one or two options, take a view as to which of them is better and if that doesn’t work, we drop them and look at another set of options. And that’s what real practical decision-making typically does.

Female interviewer: Do you think people feel under pressure to assess every available option before making a decision?

Professor John Kay: Yes. And you see people often in big bureaucracies who are all kind of paralysed by that supposed requirement.

Female interviewer: We have talked a lot about the benefits of using an oblique approach to decision-making and achieving our goals. Are there any situations in which a direct approach would actually be more appropriate?

Professor John Kay: Yes of course there are, where the problem is simple, well-defined and you know all there is to know about it. So when you are emptying the wastepaper bin, you don’t adopt an oblique approach, you adopt the direct approach to that very well-defined problem. The key issue is to understand that most problems, the difficult problems we face in business, are actually typically much looser, more open-ended, more ill-defined than these and we can’t turn them into emptying the wastepaper basket problems.

Female interviewer: And finally, what are the key practical things that we can do to master obliquity?

Professor John Kay: I think a lot of the learning about obliquity is to get rid of a lot of this kind of negative baggage of believing there is a rational approach to decision sciences which ought to govern our decision-making. It is bit by bit understanding the process, of incremental learning from experience, reassessment, reappraisal. To understand that we should use models but we need a toolkit of models. To recognise that we make decisions by successive limited comparison. That decision-making ought to be evidence based but we will never get all the evidence we need for decision-making.

We learn a lot about the problems we face by the process of tackling them, throwing ourselves into them in some sense is going to be an inevitable part of the process of solving them. And above all, the metaphor which keeps coming to my mind, is this metaphor of steering, that we are navigating, either in our personal or business lives, boats along a meandering river whose next bend you can’t quite anticipate and that’s the reality of complex decision- making and it isn’t sitting down before you start and working out the route down the river whereas the next bends you don’t actually know.