Psychologists have known for some time that we possess blind spots in our decision-making. When faced with uncertainty, we fall back on mental shortcuts that can get us into trouble. Among our many bad habits, we ignore information if it contradicts our beliefs. We cling to facts that have been disproved. We're overconfident in our ability to make predictions. And we're easily impressed by a vivid story or the most recent bit of trivia.
Business leaders are often praised for making bold, intuitive decisions. But recent research has shown that, when faced with a difficult choice, an ant colony makes more rational choices than people do.
It has to do with the process they use to make decisions, Pratt says. Rather than relying upon individual ants to examine all three options, compare their relative merit, and then select the best one, as a group of people might do, the colonies divide up the decision-making duties, sending scouts to only one site each. If each scout judges her site to be acceptable, she returns to the colony and recruits another scout to visit the site. (I say ‘she' because all ant workers are females). If the second scout approves of the site, she joins the first in recruiting two more ants, then four more, then eight more, in an exponential build-up of support.
Meanwhile, other ants are evaluating the remaining sites in a kind of race to see who can attract the most scouts to their site the fastest. The winning site becomes the colony's choice.
By spreading out the decision-making among many scouts, in other words, “They're actually avoiding the irrational behaviour that they would otherwise have made if they'd had to do the whole problem as individual ants,” Pratt says.
Such intelligent group behaviour is more common in nature than you might think. Ants and honeybees use swarm intelligence to find the best sources of food. Termites use it to build elaborate mounds filled with passageways to regulate the air and moisture inside. Shoals of fish use it to sense predators and alert individuals from one end of the group to the other. Herds of caribou use it to follow migration routes to distant calving grounds. Such behaviour also offers us intriguing models for our own problem-solving. If ants can do it, after all, why can't we?
That was the question posed by managers at American Air Liquide in Houston not long ago. The company, a subsidiary of a £10bn-a-year group based in Paris, was searching for a way to manage its increasingly complex business. As a producer of industrial gases such as oxygen, nitrogen and argon, Air Liquide was dealing with fluctuating energy prices, uncertain customer demand, variable production costs and multiple delivery systems.
Although its managers had a wealth of data available to them from 100 or so plants, they were never sure what challenge the next day might bring. So a consulting group suggested they borrow a few ideas from ant colonies, which have evolved problem-solving techniques to cope with similarly complex environments. These techniques, translated into computer algorithms, were adapted to fit Air Liquide's problems, helping managers there to optimise thousands of decisions a day and save the company millions of dollars a year.
Such original thinking comes at a good time, according to experts. In a recent survey of business executives, McKinsey Quarterly found that only about a fourth believed their companies are currently making good strategic decisions. Two thirds said their organisations are making bad decisions about as often as good ones. The rest said good decision-making is the exception rather than the rule.
“Our candid conversations with senior executives behind closed doors reveal a similar unease with the quality of decision-making and confirm the significant body of research indicating that cognitive biases affect the most important strategic decisions made by the smartest managers in the best companies,” write Dan Lovallo and Olivier Sibony.