Horasis:The Global Visions Community Horasis China and business Asian business Asian business globalization systemic risk sustainability management consulting Asian trade globe visions leadership skills scenario-building World Economic Forum Frank-Jürgen Richter Frank-Jurgen Richter Frank-Juergen Richter Frank Richter
      Home Site Map Email
Home
Philosophy
Management
Events
Contact
Opinions
 
2017
Asia Needs more Dialogue
Solutions to urban pollution may prove complex
Spread of ESGs could herald new global movement
Investing in quality education is imperative if India wants to reap demographic dividends
China needs to lead in new multi-stakeholder world
China’s B&R initiative leading a resurgence of Asia
Education is key - but long-term: Can we survive?
New wave of robots will be beneficial to all
China needs to continue with its ‘heavy lifting’
Time is right for Chinese firms to invest in Europe
Robots to the rescue for China?
Asian Multinationals are Going Global, But to Where?
China ratchets forward with energy efforts
China’s calm necessary for globalization push
Bridging managerial gaps involves trust-building
China well-placed to power its future through green technology advances
China's new 'springtime' is here
2016
China’s moves show it’s banking on the future
Mindset for action at the G20 summit will be determined by Chinese presidency
Chinese head-hunting intensifies for rare managers that can steer overseas firms
US talk of isolation jars with growing links in Europe and Asia
Electoral rhetoric on global trade not in sync with reality
Is it time to be prudent and consider austerity policies again?
What will we do if we have no oil?
Unlock talent by finding the right fit for a person
The benefits are real and tangible
Trade along China’s ‘One Belt, One Road’ won’t succeed without the currency of trust
Reasons for optimism about the long term
2015
Can big oil go green and win?
Poorer Nations Could Sway Climate Talks
Combating Idleness and Deprivation
How China can be a model of food sustainability for the developing world
Kyoto II – Is it a Done Deal?
A meeting of the two largest economic powers
Why China will experience a 'soft' landing
Beware of superstitions
The Elephant and Dragon move ahead
G-7 target on fossil fuels raises many questions
Why Battle for Net Neutrality in the US Matters Globally
China’s resurgence – the ‘normal new’
Wanted: A managerial culture that embraces cultural differences
China's early education plan a smart investment in the future
The New Normal for China and India
2014
China's infrastructure push offers a sure track to better growth
US-China climate pact a good start, but not quite enough
Rethink the human’s place in the ‘digital revolution’
China springs a carbon surprise
Infrastructure - the invisible hand in full view
Dialogue vital for survival of Iraqi nation
China must nurture a new generation of beautiful minds
Great expectations in China and India
GM Cereals – The Pros and Corns
Time to be Honest about Our Energy Prospects
Weathering the Storm of Climate Change
Making a Big Decision? Beware of Your Biases
West Deserves Better Logistics Infrastructure
Digital Currencies do Represent the Future
From 'Printed' Houses to Wooden Skyscrapers
It’s time to bail out our schools, not our firms
Solution to India’s housing shortage – print new ones!
And the most promising green technologies of 2014 are ...
Transport infrastructure key to domestic, export growth
Oil stopgaps: Not worth risking
2013
Why the US should grant Edward Snowden amnesty
May we be more optimistic!
China headed for another massive social experiment?
A dialogue that worked
Yes, politicians deserve vacations - because we benefit
NPOs, NGOs invaluable as creators of dialogue
Look closer and ask: Is America reinventing itself?
Boston bombings case underlines need for dialogue
Millennium Development Goals or own goals?
As usual it's about balance - and timing - of course
Chinese strategists make right moves for growth
2012
Preparing for tomorrow
Austerity or growth?
Japan in danger of becoming 'just a place to fly over'
Beware of the business cycle?
An inconvenient truth
Limited offer sale: Buy a country
Where did our money go?
Leading from behind - a year of elections is almost over
Driving towards a green future
Waiting for springtime
Preserve or Perish
Startlingly similar Asia policy for Obama, Romney
Globalisation remains an irresistible trend
Google has the edge in smartphone war
U.S. Braces for China's Rise
Mankind’s General Scourge
The summer holidays are over and nothing has changed!
Put the hidden trillions to work
Making sense of India’s woes and wonders
Storm in a teacup!
Let’s give bad bankers a venue to admit their sins
News is about depth, not puff or velocity
Booming India, but too few toilets
Delayed Court decisions doesn't mean one may continue to play 'Great Game'
We need media to reflect on data and offer public a balanced view
Big polluters can lead in forging common purpose
The weighty issue of choosing a leader
EU-India Relations - Facing similar challenges
Educating with a goal
The Judicial Malaise
We are growing out, but not growing up
EU´s retrenchment enigma
Urbulence in the Eurozone and the effect on SMEs
Skolkovo May Help Russia to Diversify
Make things more effective
Tapping into the Commonwealth connection
Innovative models for public finance
Facebook revolution but Indian style
The feel-good factor
Asian investors - a private equity opportunity
India needs to be taller and stronger
China´s low sales volume...
Nations playing leapfrog
Shafts of sunlight
What webs we weave
As performers go to Davos, the circus steals the show
Can we control the politicians?
 
2011
Europe’s reminiscence
China firms should go for win-win in overseas ventures
Of procrastination...
Making sense of profiteering
Truth about financial mess must be laid bare
Small is also beautiful
China can help Europe with debt crisis
Excising the cancer of global corruption
Education, a critical asset
Arab uprisings set in motion forces of creative destruction
A new era of change
We must ensure better education for all
Beijing wary of bankrolling a lost cause
Asean's re-emergence as a local and global leader
Why India's Role in the Global Economy is Still Work in Progress
Its the leadership, stupid!
Reverse globalisation: The new buzzword
Making a Big Decision? Beware of Your Biases
By Frank-Jürgen Richter
Nikkei Asian Review, May 29, 2014
 

"We didn't see it coming!" is the usual response to unintended consequences. We hope this excuse will ease our critics' anger, but most of the time they just think we are uncaring or inept. Perhaps, we are simply poor at thinking things through. Which raises a question: How can policymakers and business leaders make better decisions?

We can trace the study of unintended consequences to Adam Smith. In the mid-1700s, he articulated the notion of an "invisible hand" capable of guiding our self-interested actions toward broadly beneficial outcomes.

Human flaw
Often this leads to what may be considered windfalls, but our errors can be costly, too. As Daniel Kahneman and Amos Tversky wrote in their paper "Prospect Theory," "... we simply do not think things through. In fact we cannot, as we are too tied to several biases that cloud our decision-making." Kahneman's contributions to behavioral economics, which earned him a Nobel Prize, are centered on the idea that human reason is flawed, and that if we want to make smarter choices, we need to be aware of our biases.

Nassim Nicholas Taleb, author of "The Black Swan," reminisces that he once failed to convince a group of financiers of their natural inability to make good decisions because they were blinded by their biases.

This worries me in a broad way. Almost half of the politicians in the U.S. are lawyers; they make laws of such complexity that only they may debate them. Once the majority of the Chinese Politburo were engineers; they would seek to make things work better, but did they stop to consider whether they were taking the right path? In France, many leaders come from the Ecole Nationale d'Administration; might they be too anchored in one mode of decision-making? Half of the CEOs of top French businesses are ENA graduates, too.

Consider the Sarbanes-Oxley anti-fraud law, enacted in the U.S. in 2002. Though it is relatively brief at 66 pages, the law was criticized for being too complex. Many complained that because it requires a separation of duties, the law forces companies to hire larger accounting teams.

That, in itself, may not be such a bad outcome. The real problem with the law was its failure to rescind earlier legislation. This was only compounded later, in 2010, with the 2,319-page Dodd-Frank act, with its complicated arguments and amendments of amendments.

All governments have bill drafters responsible for ensuring new rules jibe with or cancel out old ones. But when faced with more than 2,000 pages, who could blame them for a few errors? Who will point fingers at these guys -- let alone the politicians themselves -- when unintended consequences arrive?

In times of conflict, decisions obviously carry huge significance. On May 7, Valeriy Konovalyuk, a candidate for Ukraine's presidency, challenged Russian President Vladimir Putin to a judo match -- winner take all. It is not for me to judge the wisdom of this, but surely if such a medieval joust were to take place, there would be consequences.

Balancing act
If unintended outcomes are the result of a lack of clear, systemic distillation of the facts, what are we to do?

Open discussion of data and potential courses of action may lead to the realization that some decisions are simply too costly for society. But this may be so democratic that nothing is ever accomplished.

At the same time, many in society say they are uninterested in the process of government and wish for a quiet life. This means decision-makers have a responsibility to protect these people and think on their behalf. At the government level, we must not raise the stakes by indulging in tit-for-tat decisions, which only raise the potential for unintended consequences. And we cannot see decision-making as a zero-sum game, since those who lose will fight back ever more violently.

Everyone in society needs to stand back and be calmer about political decisions. The herd mentality can be as bad as despotic management. Theorists like Kahneman are adamant that we are individually illogical -- stating that we ought to discuss before acting, and that we must open up our decision-making models for debate and experimentation.

I think every government must have itself carefully and independently monitored to control excesses. A regulator acts like a valve -- blowing off steam if government becomes overheated, and presenting new ideas if it starts running out of intellectual fuel. Societies need this in order to develop in our globalized world.

 

Frank-Jürgen Richter is founder and chairman of Horasis, a global visions community.


Horasis is a global visions community committed to enact visions for a sustainable future. (http://www.horasis.org)

For more information, please contact:
 
Communications and Public Affairs
Horasis. The Global Visions Community
phone: +41 79 305 3110
fax: +41 44 214 6502
e-mail: visions@horasis.org
 
 
Copyright © 2005 Horasis Web by Toronto Web Design