Why good leaders admit they don't know it all

Not all decisions can be data-driven, so leaders have to take ownership of uncertainty and surround themselves with diverse views, says Katarina Skoberne.

by Katarina Skoberne
Last Updated: 01 Oct 2015

I don’t know is the bravest sentence in any language. It shows you have the courage to own up to what you don’t know. People in places of considerable power and success don’t have a problem with that - you can hardly imagine Bill Gates struggling to admit he doesn’t know something. Usually that’s because they’ve proven they know enough. As for the rest of us: that’s a good question.

A great part of a leader’s value lies in their decision-making. Steve Jobs, for example, would have said one of his biggest plusses was the many times he said no. Decision making in business should be quite straightforward: take the facts, analyse, project, decide. Except it is rare that there is sufficient data to inform the more strategic, longer-term decisions, where there is often no pattern recognition or experience to rely on. Then, a leader has to take ownership of uncertainty.

There is much business writing on data driven vs. gut decision-making. But unless you find a fully risk averse strategy that can work for your business longer term – if there is such a thing – there will be things you don’t know and fully data driven decisions won’t be possible.

Comfort with uncertainty is naturally higher in areas that are accepted as high risk. In the media industry people who had a good feel for whether a song or a television show would be a success were called golden guts in the fifties – and there’s an argument to be made that, after all the research is done, that’s still where the best decisions lie.

In venture capital firms, after all the due diligence is done, intuitive final decisions are acknowledged as necessary. Venture capitalists can sometimes also acknowledge their own bias, particularly towards products they are more likely to use. That’s how Peter Thiel explained what he perceived as the undervaluation of Airbnb, which for years was unfunded and considered not feasible as a business, compared to Uber. VCs use cabs, but would not rent out their apartments.

But it’s not just about high-risk industries. According to studies, CEOs across industries own up to making the majority of their pivotal decisions from the gut. And where there are intuitive decisions, there is cognitive bias – like with VCs’ preference for Uber. The real challenge, then, is drawing the line between where data becomes relevant and where we let our instinct take over.

We’ve all witnessed various attempts at either packaging gut decisions as data driven, or devolving the decision to a third party, or a combination of both. Most commonly it’s confirmation bias: we seek data to confirm a gut decision, offering post rationalizations and thereby seemingly removing a layer of uncertainty. After all, it’s only human to seek control, however illusory.

In order to optimise decision-making under these circumstances, there needs to clear ownership of the grey areas - and diversity to avoid the bias that inevitably comes with them. How to achieve that?

Taking ownership of uncertainty

In theory, a leader will take full accountability for decisions - and most people at the very top of the leadership pyramid will have developed the skills to do that. However, there are hundreds of decisions in the multiple layers of larger organisations that need the same kind of ownership.

1. Acknowledge uncertainty exists.
2. Ensure a clear delineation of accountability at every level - it must be clear whose gut call it is.
3. Put in place contingency for failure - in order for people to take inevitable risks without masking them as certainty, there must be allowance for negative outcomes.
4. Have zero tolerance for post-rationalisation and wishful thinking.

Tackling bias with diversity

No matter how rigorously you feel you are stripping decisions of any biases, there will always be cognitive blind spots. The only way to eliminate those is by capturing a plurality of views.

1. Surround yourself by diverse demographics and diverse professional backgrounds.
2. Create a culture of openness and acceptance of diverse opinions to give the views voice.

There will have to be a fair amount of ego management, a humility that any collaborative leader needs. You need the humility and courage to answer, ‘I don’t know.’

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