Noise: A Flaw in Human Judgment is an excellent book. But if you’re a reader of business books, Noise may not be the book for you. Most business books get right to practical applications of the author/s key ideas. This book does not. It’s an academic book with business applications. The big question is whether this book is worth your time as a business reader.
The first two thirds of the book set up the later chapters. The later chapters cover many specific techniques you can use to reduce noise and improve judgement and prediction. Don’t jump right to them, though. The early part of the book lays the necessary groundwork for you to understand why the techniques work. Later I’ll identify chapters with particular value for business readers.
Noise is about two things that affect our judgment. Bias is systematic deviation. Noise is random scatter. We need to understand both to improve judgment. Alas, most of the time noise hardly gets any consideration while bias is the star of the show. The authors wrote this book to “redress the balance.”
They say that the key theme of the book is: “wherever there is judgment there is noise –and more of it than you think.”
The book is divided into six parts. Part one is about the difference between noise and bias. Part two is about human judgment. Part three is about predictive judgment. Part four describes the psychological causes of noise. Part five explores several practical issues. This is the part that would be of greatest interest to most business readers. Part six wraps up the book with techniques for measuring and overcoming noise.
There’s a lot of actionable value for businesspeople, but as I said earlier, you need to read the first two thirds of the book to get to it. Here are some things that may make the book worth your time.
This is an excellent overview of structured decision processes and why they often improve judgment. There are also specific chapters you may find interesting and helpful.
Chapter 23 is “Defining the Scale in Performance Ratings.” Some research indicates that performance only has a 20 percent impact on the final performance evaluation. This chapter includes techniques you can use to reduce both bias and noise and make your evaluations fairer and more consistent.
Chapter 24 is “Structure in Hiring.” Hiring almost always involves at least one interview. And interviewers make subjective judgments about the person they interview. We know that humans aren’t very good at sussing out whether a particular person will succeed or fail on the job. We know that different interviewers often have wildly varying assessments of the same candidate. This chapter will give you some tools for improving the results of your interviews.
Chapter 25 is “The Mediating Assessments Protocol.” This has special value for you if you are a maker of deals and subject to what has been called “deal heat.” The mediating assessment protocol is a tool for overcoming deal heat and making better decisions.
Chapter 28 is “Rules or Standards?” I never thought about the difference between these two until I read this chapter. You learn how rules and standards affect the amount of judgment in particular situations.
In a Nutshell
Noise is an excellent book about improving our judgment by reducing scattered results (noise) and reducing inconsistencies in the decision process. The first two thirds of the book establish the definitions and principles for dealing with noise. The final third of the book has several chapters with practical applications of the principles.
From the Conversation: “Daniel Kahneman on ‘noise’ – the flaw in human judgement harder to detect than cognitive bias”
From Theodore Kinni: “How noisy is your company?”
Simple Rules: How to Thrive in a Complex World by Donald Sull and Kathleen M. Eisenhardt
Decisive: How to Make Better Choices in Life and Work by Chip Heath and Dan Heath
Superforecasting: The Art and Science of Prediction by Philip Tetlock and Dan Gardner
You can check out some of my highlights and notes from this book on GoodReads.
What’s the fastest way to learn the big ideas from a great business book? Book summaries. Check out summaries from The Business Source, where you can watch, read, or listen to the big ideas from a great book in under 20 minutes.
There are no comments yet, why not be the first to leave a comment?