Range - David Epstein Page 0,43

and a half years. Kahneman then asked a team member named Seymour, a distinguished curriculum expert who had seen the process with other teams, how this one compared.

Seymour thought for a while. Moments earlier, he had estimated it would take about two more years. Faced with Kahneman’s question about other teams, he said he had never even thought to compare this instance to separate projects, but that about 40 percent of the teams he’d seen never finished at all, and not a single one he could think of took less than seven years.

Kahneman’s group was not willing to spend six more years on a curriculum project that might fail. They spent a few minutes debating the new opinion, and decided to forge ahead trusting the about-two-years wisdom of the group. Eight years later, they finished, by which point Kahneman was not even on the team or living in the country, and the agency that asked for the curriculum was no longer interested.

Our natural inclination to take the inside view can be defeated by following analogies to the “outside view.” The outside view probes for deep structural similarities to the current problem in different ones. The outside view is deeply counterintuitive because it requires a decision maker to ignore unique surface features of the current project, on which they are the expert, and instead look outside for structurally similar analogies. It requires a mindset switch from narrow to broad.

For a unique 2012 experiment, University of Sydney business strategy professor Dan Lovallo—who had conducted inside-view research with Kahneman—and a pair of economists theorized that starting out by making loads of diverse analogies, Kepler style, would naturally lead to the outside view and improve decisions. They recruited investors from large private equity firms who consider a huge number of potential projects in a variety of domains. The researchers thought the investors’ work might naturally lend itself to the outside view.

The private equity investors were told to assess a real project they were currently working on with a detailed description of the steps to success, and to predict the project’s return on investment. They were then asked to write down a batch of other investment projects they knew of with broad conceptual similarity to theirs—for instance, other examples of a business owner looking to sell, or a start-up with a technologically risky product. They were instructed to estimate the return for each of those examples too.

In the end, the investors estimated that the return on their own project would be about 50 percent higher than the outside projects they had identified as conceptually similar. When given the chance at the end to rethink and revise, they slashed their own initial estimate. “They were sort of shocked,” Lovallo told me, “and the senior people were the most shocked.” The investors initially judged their own projects, where they knew all the details, completely differently from similar projects to which they were outsiders.

This is a widespread phenomenon. If you’re asked to predict whether a particular horse will win a race or a particular politician will win an election, the more internal details you learn about any particular scenario—physical qualities of the specific horse, the background and strategy of the particular politician—the more likely you are to say that the scenario you are investigating will occur.

Psychologists have shown repeatedly that the more internal details an individual can be made to consider, the more extreme their judgment becomes. For the venture capitalists, they knew more details about their own project, and judged that it would be an extreme success, until they were forced to consider other projects with broad conceptual similarities. In another example, students rated a university a lot better if they were told about a few specific science departments that were ranked in the top ten nationally than if they were simply told that every science department at the university was ranked among the top ten. In one famous study, participants judged an individual as more likely to die from “heart disease, cancer, or other natural causes” than from “natural causes.” Focusing narrowly on many fine details specific to a problem at hand feels like the exact right thing to do, when it is often exactly wrong.

Bent Flyvbjerg, chair of Major Programme Management at Oxford University’s business school, has shown that around 90 percent of major infrastructure projects worldwide go over budget (by an average of 28 percent) in part because managers focus on the details of their project and become overly optimistic. Project managers can become