Can Irrational Decisions Be Corrected? A Football Case Study

Lehrer takes a look at David Romer’s analysis of fourth down decisions by NFL coaches and discovered that they don’t go for the first down enough, and opt for kicking way too much: about twice as much as they should, statistically.

Jonah Lehrer via Wired

If kicking a field goal or punting on fourth down is such a bad idea, then why do coaches always do it? To explain the consistently bad decisions of NFL coaches, Romer offered two different answers. The first is risk aversion. If coaches followed Romer’s strategy, they would fail about half the time they were within ten yards of the endzone. This means that instead of kicking an easy field goal and settling for three points, they would come away empty handed. Although that’s a winning strategy in the long-run, it’s hard to stomach. (As Daniel Kahneman notes, “Worst case scenarios overwhelm our probabilistic assessment, as the mere prospect of the worst case has so much more emotional oomph behind it.”) After a long drive down the field, fans expect some points. A coach that routinely disappointed the crowd would quickly get fired.

The second reason coaches stink at making decisions on fourth down is that they stink at statistics. As Romer politely writes, “Many skills are more important to running a successful football team than a command of mathematical and statistical tools…It may be that individuals involved want to make the decisions to maximize their teams’ chance of winning, but that they rely on experience and intuition rather than formal analysis.”

So firms don’t always maximize profits, if only because coaches aren’t rational agents. But I’m most interested in what happens next. Can coaches learn from their mistakes? Can a rigorous analysis of flawed behavior help us correct that flaw? This is the optimistic hope behind much of behavioral economics, which assumes that identifying the irrational quirks of humans allows us to escape those quirks. Thanks to Romer’s analysis, it’s now easy to make the right decision on fourth down.

So how have coaches reacted to this data? In 2001, before Romer published his findings, the average team went for it on fourth down 15.1 times per season. During the 2010 season, the average NFL team went for it on fourth down…15.125 times. Perhaps 2011 will be the year coaches start to maximize profits. But I’m doubtful.

There are a few sad lessons here. For one thing, it appears that NFL teams don’t closely follow the behavioral economics literature, even when it directly involves the sport. But the lack of change in fourth down decision-making is also a depressing reminder that human biases are exceedingly hard to fix. When the game is on the line we default to our lazy hunches and instincts, even when the rational choice couldn’t be more clear.

What is the equivalent of the fourth down bias in your world, or business? Can we learn from the cognitive biases of football coaches, even if they can’t, or are we just as stuck as they are?

And the lesson to learn isn’t the stats, or just that you should look at the objective reality of things: we need to be able to break out of the social conventions that ensnare us, even if it leads to others questioning our judgment.

This reminds me of the John Holt definition of leadership:

Leaders are not what many people think — people with huge crowds following them. Leaders are people who go their own way without caring, or even looking to see whether anyone is following them. “Leadership qualities” are not the qualities that enable people to attract followers, but those that enable them to do without them. The include, at the very least, courage, endurance, patience, humor, flexibility, resourcefulness, determination, a keen sense of reality, and the ability to keep a cool and clear head even when things are going badly. This is the opposite of the “charisma” that we hear so much about.

[Holt cited by Caterina Fake]

Leaders are not what many people think–people with huge crowds following them. Leaders are people who go their own way without caring, or even looking to see whether anyone is following them. “Leadership qualities” are not the qualities that enable people to attract followers, but those that enable them to do without them. The include, at the very least, courage, endurance, patience, humor, flexibility, resourcefulness, determination, a keen sense of reality, and the ability to keep a cool and clear head even when things are going badly. This is the opposite of the “charisma” that we hear so much about.

John Holt, cited By Caterina Fake (via underpaidgenius)

The psychological profile of a compelling leader — think of tech pioneers like Jeff Bezos, Larry Ellison and Steven P. Jobs — is also that of the compulsive risk-taker, someone with a high degree of novelty-seeking behavior. In short, what we seek in leaders is often the same kind of personality type that is found in addicts, whether they are dependent on gambling, alcohol, sex or drugs.

[…]

So, when searching for your organization’s next leader, look for someone with an attenuated dopamine function: someone who is never satisfied with the status quo, someone who wants the feeling of success more than others — but likes it less.

David Linden, Addictive Personality? You Might be a Leader

Leaders get off on the dopamine that surges with the unpredictable: risk, exploration, indiscreet sex, and invention.

(Sounds like me, actually.)

Simon Mainwaring Interviews Merrill MacDonald

SM: What would your definition of a leader be?

MM: My definition [of a leader is] simply someone who has followers. It could be an assembly man on a plant floor, it could be the CEO, head of marketing, someone trying to drive innovation in an R&D land. They are people with a mission, vision, passion and cause, and who want to engage others behind them.

SM: So this Let Go and Lead project is really for any one of those types of people?

MM: Absolutely.

SM: So who are some of the people that you’ve spoken to in this project?

MM: What I was really interested in is getting out of breathing my own air and stewing in my own soup, so to speak. So I thought it would be fun to tap into people from different walks of life, and who were doing a lot of work in the areas that most interested me. For example, storytelling, we talked with Mitch Elbom, the author of Tuesdays with Morrie, and The Five People You Meet in Heaven. We talked with Bruce Mau, who started in Toronto as a designer. First he was in the world of design, now he wants to design the world. He’s been engaging people all around the world through a process called Massive Change, bringing together leaders to make the world a better place. Julio Patino, who is the dean of engineering at Northwestern University, and who’s passion is the intersection of art, technology and science. Stephanie Pace Marshall, who is one of the leading thinkers on education reform. She founded the Institute of Math and Science. There have been very different kinds of people who have been bringing unique perspectives and thoughts so that we can take them and share with one another to create something new.

SM: With the intersection of all these types of leaders, have you discovered things that have resonated with you that you didn’t expect, or are there any commonalities between what they’re saying?

MM: One of the key commonalities is the general acceptance that we have a lot to let go of. That each of us as individuals have a lot of stuff, and a lot of that stuff comes to us honestly because many of us were brought up through a very strict management discipline, which is all about control, it’s about maintaining, harmony and it’s about stability. That’s not the world we’re in now. We’re in a world that’s rapidly changing.  It’s beyond us, it’s bigger than us, and so many of us get stuck because we try to keep the opportunity to a size that we can manage it, rather than growing by busting it open and going with it.

[Go to letgoandlead.com and join the conversation.]

In the liquid world, a leader is anyone who has a following, at least the sort of following that can be influenced to take action.

Dick Costolo Named Twitter CEO

Ev Williams has stepped down as Twitter CEO to spend more time focused on product strategy.

#newtwitterceo

I am most satisfied while pushing product direction. Building things is my passion, and I’ve never been more excited or optimistic about what we have to build.

This is why I have decided to ask our COO, Dick Costolo, to become Twitter’s CEO. Starting today, I’ll be completely focused on product strategy.

When I insisted on bringing Dick into the COO role a year ago, I got a lot of questions from my board. But I knew Dick would be a strong complement to me, and this has proven to be the case. During his year at Twitter, he has been a critical leader in devising and executing our revenue efforts, while simultaneously and effectively making the trains run on time in the office.

This reminds me of the recent interview with Paul Maritz conducted by Adam Bryant, where Maritz underscores how the job of a leader changes as groups grow in size:

As you manage bigger groups of people, you cannot be as closely connected to specific underlying issues and challenges. Your contribution has to become more of making sure that you’re getting the best out of others, that others are really thinking the issues through, and that you’re creating the broad framework in which they can get their jobs done and be as productive and focused as they can be. What makes it a challenge is that every time you cross one of those boundaries, you become less of a specialist, less knowledgeable about specific issues.

You have to realize that your contribution becomes more symbolic, in the sense that you’re trying to set a general direction. People want to see you as representing the general mission, not just yourself.

And, as the groups get bigger, the period over which you measure your own performance gets longer, and the way you get your feedback changes. The bigger the group, the easier it is to spend days wondering whether you had any impact at all. You really have to take a longer-term view. So you’re going to have to discipline yourself and take a step back to ask yourself the question, “Are we moving in the right fundamental direction?” And, if so, take satisfaction from that.

My hunch is that Ev was getting less enjoyment from that ‘symbolic’  sense of reward from work increasingly less connected to the product.

Also, in Costolo he has a manager with real experience ramping up large organizations. As Baritz points out in the same interview, there are four types in a great leadership team:

You need to have somebody who is a strategist or visionary, who sets the goals for where the organization needs to go.

You need to have somebody who is the classic manager — somebody who takes care of the organization, in terms of making sure that everybody knows what they need to do and making sure that tasks are broken up into manageable actions and how they’re going to be measured.

You need a champion for the customer, because you are trying to translate your product into something that customers are going to pay for. So it’s important to have somebody who empathizes and understands how customers will see it. I’ve seen many endeavors fail because people weren’t able to connect the strategy to the way the customers would see the issue.

Then, lastly, you need the enforcer. You need somebody who says: “We’ve stared at this issue long enough. We’re not going to stare at it anymore. We’re going to do something about it. We’re going to make a decision. We’re going to deal with whatever conflict we have.”

You very rarely find more than two of those personalities in one person. I’ve never seen it. And really great teams are where you have a group of people who provide those functions and who respect each other and, equally importantly, both know who they are and who they are not. Often, I’ve seen people get into trouble when they think they’re the strategist and they’re not, or they think they’re the decision maker and they’re not.

From this perspective it’s clear that Ev is a product visionary, while Costolo is the ‘classic manager’: a business man. But Ev might have opted to be a Jobs-type visionary, and built his team around him to match his skills.

I guess that there is a hidden deal in here: Costolo took the COO job under the condition that if he was able to settle things down at Twitter — to make the trains run on time — then he would get the CEO job, and Ev would step aside into a Chairman/Product Visionary role. Now that Twitter has started to become more focused on money, and less obsessed with building an ecosystem, this lines up.

I bet the investors will sleep better tonight.

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