Cheryl Einhorn || Making Good Decisions

have Cheryl strauss Einhorn on the show. Cheryl is a media consultant, award winning journalist covering business, economic and financial news, and a longtime educator as an adjunct professor at both the Colombia University Graduate School of Journalism and at the Colombia Business School. Her latest book is called Problem Solved, A Powerful System for making complex decisions with confidence and conviction. Hey, so glad to talk to you today, Cheryl, Thank you

so glad to be with you. Yes, I'm really glad to talk to you today. Tell me a little bit about your like, tell me about yourself. You know you're a very multifaceted individual. Well, my background's in investigative journalism. I spent a decade as an editor and a columnist at Baron's, the Business magazine, and while I was there, I sort of specialized in what you might call the bearish company story. Those are the stories where you take a skeptical look maybe at a company's accounting or at

their growth prospects. And that's really how I came up with my decision making method. You know, these stories would have a big impact when they came out. The share price might fall, regulators might halt the stock, and there would be wide reaching implications, not only economic implications for people portfolios, but also the human toll of people worrying about their job. And that sort of really made me uncomfortable.

I don't know how else to say it, and I just started to think about could there be a way for me to have better confidence and conviction in my own decision making, and could I have a way to better understand the incentives and motivations of the sources who

came to me with tips about stories. And at the same time, there was all this new research coming out about how we're all so mentally flawed, that we have these assumptions, these biases and judgments that help us every day so that you know, when we're in the serial aisle at the supermarket. We don't have choice fatigue, and we're not overwhelmed. But those same mental shortcuts that help us every day, they don't go away when we're solving

complex problems. And so I really started thinking, you know, coming from my limited background, how could I sort of deal with this fact that I do have these mental flaws? And is there a way that instead of saying that I could ever have something like a beginner's mind where we just say we're going to be objective, and so we're objective. I just started thinking about is there a way that I could just go all in on this idea that I am flawed as a thinker. And that's

really how I came up with my area method. Yeah, it sounds so important. I mean, are you going to help me today, like a make better decisions in my life? Well? Look, the thing about decision making is it's this issue that in some ways just hides in plain sight, right, I mean, imagine if we all learn decision making, is there anything that we do more frequently that really has higher stakes

in our lives than the choices we make? And so I really, you know, I agree with you that we all deserve time and attention when we're solving for complex problems because when we're dealing with an uncertain but important future hours we need time for thoughtful reflection. Oh absolutely. Is there also a time for making poor decisions too? Well?

You know, I think that depends. What I could say is we're all in consistent decision makers, right, I mean, even if we have the exact same decision to make in two different circumstances, we might make it differently. Sometimes we know when we're making a poor decision, but we make it anyway, and sometimes we don't really know. And hopefully those are relatively small decisions, because there are a lot of high stakes decisions in our lives personally and professionally.

In my high stakes I mean decisions that are going to have a long term outcome, where the outcome is also unknown, and where the price for getting it wrong could be really costly. And that's when I think a system like this can really help you. Because there's sort of four updates to the research and pedagogy related to decision making. The first one is that research is fundamental to decision making. Most of the books that are out there on decision making say do research or lump it

together as a single step. But research is actually, as you well know, an umbrella term for a whole series of tricky steps that need to be thoughtfully and carefully navigated. So I break it down so it's not a black box, and I give you an easy, step by step logical progression to follow. The second update is this idea of working with our mental myopia, the flaws and shortcoming in our thinking. Because a lot of the new books on this topic think of thinking fast and Slow or Chaldeini's influence.

They tell us that we're flawed thinkers, but they don't tell us what to do about it. And so my area method, which is what my book Problem Solved introduces, is a perspective taking process so that you inhabit information in part based on the source. And it's a series of concentric circles going from what is essentially the target of the decision you need to make, to the sources that are somewhat related to it, and so on until you then finally turn your lens specifically in on yourself

as a decision maker. But perspective taking actually gives you a two for one because as you are looking from somebody else's perspective. You're thinking about their incentives and motives, and that has a mirroring effect that shows you, to a certain extent, what do you think and feel about that information? And so the perspective taking is really, I think, the first system that can control for and counteract these

cognitive biases. The third update is that I build strategic stops into the process because just as you were saying, a lot of times we rush to judgment, but we know that what we really need is thoughtful reflection, and we don't even always know what to do during those pauses. So I build strategic stops in that tell you what to do when I ask you to pause, by giving you sets of information about where to look for data

or to collect information. And then I also give you tips on what kind of analysis do you want to do with what you have. And then the final thing is that it's a feedback loop because not all investigations are linear, nor should they be, and so we need constant re entry points where we need new information or new analysis. Basically, you just went through your model the four factors without the area model. Well, the area method. Area is an acronym for the four steps of the process.

So what I gave you was really the value proposition for it, but the process itself. The letters stand for the different parts of the process. So A is absolute information. It's information collected from the target of your decision. The R relative our secondary and tertiary sources, sources somehow related to your decision. The EAN area is actually two e's,

and I call them the twin engines of creativity. Area exploration is about getting beyond document based sources to help you identify good prospects and great questions the people who you think could give you information to help you understand your situation and what types of questions to ask them. That broadens your research breath. And then area exploitation, which turns its lens inward on you as a decision maker to go deeper into how you think about your evidence

versus your assumptions. And the exploitation part is filled with exercises that I learned from other disciplines such as intelligence gathering and journalism and medicine. And then the final A analysis helps you think about solvability and mistakes and then puts all the pieces back together so that you can come to conviction on your decision. Gotcha. So the value proposition part you're talking about was relating word of the what you call cheetah pauses. Well, the cheetah pause is

that's what I call the strategic stops. And the reason why I call them for everything, I tried to come up with terms that hopefully could resonate with people. But the reason why I called it strategic stops cheata pauses is because the cheatst prodigious hunting skill is not its ability to accelerate like a race car. It's actually its ability to decelerate by up to nine miles an hour

in a single stride. And in hunting, that's a better skill than accelerating like a race car because it builds in agility and maneuverability, and that's what a good research and decision making process needs, flexibility and agility. Absolutely. So this is a good sort of model you laid out. Can we get into some degree details. You have some really vivid examples in your book that we could talk about,

some of them that are based in your consulting experiences. Right, Well, sure, I mean the book follows four stories so that as you're learning about the theory, you can understand it in practice, and hopefully through the four stories, you can see yourself in the parts of the process that the stories take you through, so that you can see its direct applicability to your situation. So one of the stories that I think many high school students around the world just went

through was how do you choose the right college? And there was this young boy, Micah, and he was deciding between two very different college options, Johns Hopkins with no financial aid and Pit with some financial aid. And he knew that he wanted to be a doctor, so for him, he was very interested in the pre med program. He had already done some research in a lab, and so in his a area of his process, he actually looked and defined his targets as the binary choice that he

had Johns Hopkins in Pit. And then what a couple of the steps in that process ask you to do is to collect information directly from those targets. So where do we start nowadays we start on the computer. So he went to the website for both of the schools and he saw that Hopkins showcases this very august history all the Nobel Prize winners that have worked at the school, and it was really showing you that if you went to Hopkins, you would be part of this rich history,

and that was exciting to Micah. When he looked at Pitt's website and its fact book, it displayed entirely different facts. It told you right off the bat with the student teacher ratio was what different types of opportunities and clubs there were for the students, and it really showcased a student experience. And so depending upon which of these two visions you looked at, you would see that you were

buying really very different opportunities. In his relative research, getting beyond his basic targets, some of the steps that are involved in that are understanding how other people think and feel about the two schools. So he checked US News and World Report to see how the schools and medical schools were ranked for each school. He also went onto College Confidential to see what the students were saying about

the opportunities at those schools. He checked ratelind Professor, which talked about the teach who taught the pre med courses that Micah would be signing up for. And then in his exploration work, when he started to actually talk to people and get beyond the document based sources, he reached out to the undergraduate Advisory Office for pre Med students at both of the schools. He also reached out to current students and alumni. Could you get undergraduate research opportunities?

What were they like, would the students recommend them? And what he realized by actually talking to people was how important the undergraduate advisory office was to the success of the students in getting through the pre med requirements and in the exploitation phase. As he began to turn his lens in on himself to look at his assumptions versus his evidence, what he realized is that he had actually

been framing the problem incorrectly. It wasn't which college should he choose, It was which college would actually help him get to medical school because he realized that if he couldn't get through those very difficult pre med requirements, he

wasn't going to be able to realize his dream. And so it drove him back into the process to again talk to the advisory office for pre Med students and to talk to more students at each of the schools to find out what role did that advisory office play, how supportive and accessible was it, and he ultimately an analysis came to a very unexpected decision, which was he felt that he was going to choose Pitt because at that time he was learning that their pre med office

had a much more robust and accessible group of faculty to help the students through. And then he conducted a pre mortem which basically says, well, how could this decision fail? Even now that I think I know it, I'm going to do how could it fail? And so he was able to be able to creatively think about how Mike fail and that gave him a series of markers by which he could look for as signposts even once he went to pit and where he could also set up

safeguards to prevent his decision from failing. So it was a very unexpected outcome that he came to that he certainly wouldn't have not gotten to had he just made the decision based on the pure reputations of the schools at the outset. Oh that's great. Can that apply equally to choosing a marriage partner? So I've been asked that before, and here's what I would say. Some decisions should be

a leap of faith. Right, Some decisions are really about emotion, and a rational decision making system isn't going to do you any good marriage has so many different pieces to it that the commitment is not necessarily a rational commitment. And so sometimes you just want to take a leap of faith and you should probably be guided by your emotion as opposed to a decision making system. Okay, fair enough.

So you're dealing mostly with decisions that seem to have some sort of objectivity to it, like a rational objectivity like that we can figure out. I mean, how can you figure out which demeans are more suitable to this than others? Well, you know, I would say that that's an assumption, right, because one of the main stories in the book is just this incredibly heartwarming story about a fellow named John Christopher who founded the Oda Foundation in Nepal.

And he had moved to Nepal shortly after he graduated. His mother died in his senior year, and he really just wanted to do something to help people. And he noticed when he was working in a school in Nepal in a very rural area, that all sorts of students were missing school and dying for things where you know, we had time and all or very simple solutions to and so he ended up letting up a basic healthcare charity, even having no medical background, and he was at the

point ready to expand. And a college buddy of his was one of my former students and had sent him my textbook that I had written back in twenty eleven that I use for teaching at Columbia at both the Business School and the Graduate School of Journalism. So he came to meet me in the halls of the Business School asking me if I would do this project for him to help him figure out his growth strategy, and

I said yes. And then two days later, the devastating earthquake kit Nepal, and all of a sudden, he needed this plan yesterday. And he was also going to have

a very interesting structural advantage. The world's healthcare charities were going to be landing on the tarmac in Katmandu, and he was going to get one opportunity to meet with them and to ask them to vertically integrate to allow him to help many more people very quickly, because he was already there and he needed to show them a strategic plan that he not only had confidence in, but that he felt had a very good chance of succeeding.

And the reason why I point this out is that he had all sorts of assumptions that he just wasn't going to be able to find data that was going to really help inform him about his growth strategies, especially given that in many emerging economies the data sets are just incomplete or it's very hard to trust them right,

maybe they're outdated. And so one of the things by going through this system and with the help of the Cheetash sheets and these strategic stops, is he really found opportunities to triangulate the information that he couldn't get directly from Nepal so that he could get enough information and of the right kind, and identify enough good prospects who had done projects and other emerging economies amidst a very volatile backdrop such as a natural disaster, so that he

could actually put together a growth strategy that not only was incredibly surprising, the one that he thought he would choose was the one where his charity had the most

expertise and was in their core competency. If he had chosen that, he actually through the process recognized he would have bankrupted his charity, and instead he came to an extremely unexpected outcome that not only succeeded but where by the time he went back to Katmandu to meet up with all these charities landing there, he was able to bring to a whole new group of donors who had never been able to reach out for before based on the adjacencies and the triangulation of the information, so that

he had fully funded the plan for his growth strategy, and he also had raised more money than the entire history of his organization's existence. Wow, and so he owes a bit of that to your program. Well, he had never used a system like this before, and it was

only because we had use the area method. I mean, here he is this brilliant young hero right helping people in a very far away place, and he had been succeeding through his hard work and his creativity and his intelligence, and yet he had never sat down to do a really thoughtful and systematic research process where he was going to make a decision at the end of it. Gotcha, So this is helpful. I'm trying to wrap my head around the idea of like, is this thing as objectively

poor decisions? It's very contextual and personalized based on what your higher level goals. What makes I think right? Well, look, I think that's exactly right. The other thing I would say about my area method is it inverts the entire process of decision making. Many people feel very anxious when they're faced with a complex problem, right, they don't know how to start, or they have a big decision to make. How do they start? How do they really know what

a thoughtful system looks like? And so what I say with the area method is don't focus on the problem. This is a much easier question for most people. What to you constitutes a successful outcome? Most people can answer that they can say to you, I know what success for me personally. And then once you create a vivid picture of your success by inverting the problem, you now

simply need to tell the story of that success. And so now I say to you, Okay, now that you understand your success, identify what I call your critical concepts. Those are the one, two or three things that really matter to you and the outcome. Don't do some open

ended research project that's not gratifying. Instead, deeply and creatively investigate your critical concepts, those one, two or three things that really matter to you in the outcome, so that you can uniquely solve your problem for your own picture of success. Good. I like that. I like that your own picture of success. So what's new about this model? You obviously drew on ideas of contum in and others about fast and slow thinking and stuff like that, But

tell me what's new about it? So the things that are new are the four things that I outlined before. It is the fact that research is fundamental to decision making, that the perspective taking is a new way to control for encounteract our cognitive bias. That I have these strategic stops.

The Cheetah pause is built in so that you've got time for thoughtful reflection and that you know what to do during the stops, because the Cheetah sheets give you lists either for where to collect new information or how to analyze it. And then the fourth part being that the area method is a feedback loop. Those are the four things that I think are new and the inversion of the problem itself right right right, Yeah, the point you just made. That's great. You know how does this

relate to empathy? Well, so, perspective taking is all about empathy. By walking in somebody else's shoes and better understanding their incentives and motives, you are basically building a way to better connect and be more relational, and you're also checking your ego so that you can be more mindful of the world around you. And that really is about creating a way where we can get along better with other people.

I was talking before about how decision making is one of these things that can really make your life more meaningful. It really does give you the opportunity to have greater agency over your life and therefore really to interact with other people in a more empathic way. No, I can definitely see that. Also, you know, there's definite linkages here to creativity, right, absolutely, because I think research is also

very much about creativity, right. It is very much about being able to recogniz is that even when you don't think that, there is data that can be brought to a situation that you can And then in the exploration phase, I think this whole idea of reaching out to people and getting beyond document based sources is very much coming up with great questions and those kind of questions that uniquely answer what kind of information do I really need and what would I do with that information if I

were to collect it? And I think these are really nice ways that people don't even recognize that they have a lot of creativity, and I think it can bring a real sense of again agency and confidence building when you feel like you can solve your high stakes decisions well, because there's two kinds of learning, right, there's knowledge and

their skill. And the nice thing about a research and decision making system is I can teach it to you and then it can become yours and you can decide which of the steps you want to try, and you can make it your own. Yeah. Yeah, I definitely would want to make this my own personally. Out of the four things, there's some things that excite me more than others, Like exploration excites me more than analysis, even though I admit that they're both important, I could admit it. So

here's what I would say about that. First of all, the exploration chapter is clearly one of my favorites because of my background and investigative journalism. I have an interview formula GP plus GQ equals IQ good prospects the sources who you identify plus great questions equals your interview quality. And I think what's really nice is that the area method for me is not just about a decision making system.

It's really become my operating system for thinking because it addresses both the human behavior aspect of social performance and it has the metric aspect the evaluation of decision making. And so I find that really very reassuring for me to be able to have both pieces together. What I would say is my students often complain about the exercises initially and then they do them. Yes, And then they do them and they say, you know what, I now

understand something that I never understood before. And the exploitation phase where I put in there a couple of these great exercises from some other really smart people, such as a competing alternative hypothesis exercise which I got from Richard Hoyer, who used to run the intelligence gathering part of the CIA. And then I also use Ben Franklin's pro con list. Yeah, I was going to mention that, yes, so I'll tell you what I like about that, but that many people

don't really follow with integrity. So the pro con list is very simple. Right one side of the ledger, you write down all the reasons why you want to make the decision, and the con size you write down all the reasons that you don't like. But it's not that simple because if you're really going to do this in a high fidelity way. Everything that's on the pro side of the ledger you have to address on the negative side, so that you see both sides of the coin for

each piece of information that you are evaluating. So I recommend to everybody that you keep what I call an area journal. And this clearly comes from lots of other smart people who have said the same thing before me. I recommend that you keep either an electronic journal. You can keep it as a word document. Soon you will be able to use my app for it, or you

can just commit it to paper. And the reason why I recommend that you write down the different steps of the process that you go through and that you enter into it all of your information is because we, as human beings, one of our great mental flaws is that we tend to have evolving hypotheses. Now that's not that useful when we're solving complex problems, right, we want to

keep ourselves from allowing ourselves to completely move the goalpost. Right, once we decide what our vision of success is, we want to stay focused on that and on our critical concept, and we do want to iterate it over time. But we also want to create an audit trail that not only holds us accountable, but that later on, when we face another big decision that we need to make, we can begin to build a book of ourselves as a decision maker and see what our strengths are and where

our potential blind spots are. What did we do well, what was really creative that we did? And in another place, where did we collect information that we thought was meaningless and turned out to have great import but we missed it? And that happens so often when we're solving complex problems. Well, that sounds helpful. Are you selling the journal guys? Like maybe with prompts and stuff. So right now I have

for free on my website. My website is areamethod dot com, a web based app that is problem solved and when you click on it, you can take a short personality quiz about yourself as a decision maker that will then give you what I call your problem solver profile, which is basically your decision maker archetype. And I broke decision maker archetypes down into sort of five different types of archetypes. And then what I do is I give you a template that basically says, if you are a thinker or

a detective or an adventurer. Here's the strength of being that kind of a decision maker. And then here's your potential blind spots, where I outline a couple of the key cognitive biases that might be most relevant for your archetype. And then I tell you about a historical figure who is an archetype and problem solver like you, and why here she fits that particular archetype. And then you can use your archetype to help you begin to use the

area method electronically to solve the high stakes problem. And right now I'm only in version one point oh, so I basically give you then as you start to solve your problem, I give you a couple of cheetah sheets tailored to your archetype. And over time, as people use this and fill out the evaluation, what I'd like to do is to make the cheetah sheets and to make the app more interactive and to make it more useful for you and other users who come to the site

to use the app. Well, that sounds super helpful, you know. Look, it's really been very exciting, and I recently did something very exciting with the area method, which is I worked with the Future Project, which is a national not for profit in our nation's high schools, and they asked me if I would develop a boot camp to test out teaching the area method and teaching decision making to high

school students. So about a month ago, we got together a whole bunch of students from Newark and from Brooklyn and we did a Sunday boot camp three and a half hours to teach them parts of the Area Method, and it was such a rewarding experience because at the end of it, one hundred percent of them said that it was valuable. One hundred percent of them also said

they'd recommend it to somebody else. So I initially developed the app to think about where do you meet high school students, and as the mom of three teenagers, you often read them through their phone. So that's how I initially got started on that, and we're now working on rolling this out nationally into a four year curriculum for high school students. Okay, well, that's super exciting, And of course that's how we got introduced to each other is

through Andrew Mangino from the Future Project. They are big fans of yours, and now I am I feel the same way too, and same here. Yeah, and now I am a fan too, Cheryl. Cheryl, really, congratulations on this book and I am sure that it will be a lot of value to our listeners. And yes, thanks for chatting with me today. Thank you so much, Scott. It's really been terrific. Thank you, Thank you so much, so much for listening to The Psychology Podcast with doctor Scott

Barry Kaufman. I hope you found this episode just as thought provoking as I did. If something you heard today stimulated you in some way, I encourage you to join in the discussion at the Psychology Podcast dot com. That's the Psychology Podcast dot com.