Resulting (Outcome Bias)

The hazards of resulting

Take a moment to imagine your best decision in the last year. Now take a moment to imagine your worst decision.

I’m willing to bet that your best decision preceded a good result and the worst decision preceded a bad result.

That is a safe bet for me because resulting isn’t just something we do from afar. Monday Morning Quarterbacks are an easy target, as are writers and bloggers providing instant analysis to a mass audience. But resulting is a routine thinking pattern that bedevils all of us. Drawing an overly tight relationship between results and decision quality affects our decisions every day, potentially with far-reaching, catastrophic consequences.

The Super Bowl that illustrates the trap

One of the most controversial decisions in Super Bowl history took place in the closing seconds of Super Bowl XLIX in 2015. The Seattle Seahawks, with twenty-six seconds remaining and trailing by four points, had the ball on second down at the New England Patriots’ one-yard line. Everybody expected Seahawks coach Pete Carroll to call for a handoff to running back Marshawn Lynch—one of the best running backs in the NFL, in a short-yardage situation.

Instead, Carroll called for quarterback Russell Wilson to pass. New England intercepted the ball, winning the Super Bowl moments later. The headlines the next day were brutal: “Worst Play Call in NFL History,” “Dumbest Call in Super Bowl History,” “A Coach’s Terrible Super Bowl Mistake.”

Although a few outlying voices argued that the play choice was sound—pointing out that an interception was extremely unlikely (out of sixty-six passes attempted from an opponent’s one-yard line that season, zero had been intercepted, and the rate over the previous fifteen seasons was about 2%)—those dissenting voices didn’t make a dent in the avalanche of criticism. Whether or not you buy into the contrarian analysis, most people didn’t want to give Carroll the credit for having thought it through.

We can sum up why in four words: the play didn’t work. Take a moment to imagine that Wilson completed the pass for a game-winning touchdown. The headlines would have changed to “Brilliant Call” or “Carroll Outsmarts Belichick.” Or imagine the pass had been incomplete and the Seahawks scored on a subsequent running play—what Carroll called on second down would have been ignored entirely. Carroll got unlucky. He had control over the quality of the play-call decision, but not over how it turned out. He made a good-quality decision that got a bad result. As he later acknowledged, “It was the worst result of a call ever. The call would have been a great one if we catch it.”

Pete Carroll was a victim of our tendency to equate the quality of a decision with the quality of its outcome. Poker players have a word for this: “resulting.”

The CEO who fired his president

When I consult with executives, I sometimes start with an exercise. I ask group members to come to our first meeting with a brief description of their best and worst decisions of the previous year. I have yet to come across someone who doesn’t identify their best and worst results rather than their best and worst decisions.

In one meeting, a CEO identified firing the president of his company as his worst decision. He explained, “Since we fired him, the search for a replacement has been awful. We’ve had two different people on the job. Sales are falling. The company’s not doing well. We haven’t had anybody come in who actually turns out to be as good as he was.”

That sounds like a disastrous result, but I was curious to probe into why the CEO thought the decision itself was bad. He explained the decision process: the company looked at direct competitors and comparable companies, concluded they weren’t performing up to that level, and identified it as likely a leadership issue. They worked with the president to understand his skill gaps and hired an executive coach to work with him on improving his leadership skills. After coaching failed to produce improved performance, they considered splitting the president’s responsibilities—having him focus on his strengths and moving other responsibilities elsewhere—but rejected that idea, concluding that the president’s morale would suffer, employees would perceive it as a vote of no confidence, and it would put extra financial pressure on the company.

I asked the assembled group, “Who thinks this was a bad decision?” Everybody agreed the company had gone through a thoughtful process and made a decision that was reasonable given what they knew at the time. It sounded like a bad result, not a bad decision.

The companion bias: hindsight

The imperfect relationship between results and decision quality devastated the CEO and adversely affected his subsequent decisions. He had identified the decision as a mistake solely because it didn’t work out. He felt anguish and regret, and stated clearly that he thought he should have known that firing the president would turn out badly. His decision-making behavior going forward reflected the belief that he made a mistake.

He was not only resulting but also succumbing to its companion, hindsight bias—the tendency, after an outcome is known, to see the outcome as having been inevitable. When we say, “I should have known that would happen,” or, “I should have seen it coming,” we are succumbing to hindsight bias. Those beliefs develop from an overly tight connection between outcomes and decisions. The CEO was treating the poor outcome as if it were an inevitable consequence rather than a probabilistic one.

In the exercise of identifying your best and worst decisions, I never seem to come across anyone who identifies a bad decision where they got lucky with the result, or a well-reasoned decision that didn’t pan out. We link results with decisions even though it is easy to point out indisputable examples where the relationship isn’t so perfectly correlated. No sober person thinks getting home safely after driving drunk reflects a good decision or good driving ability. Changing future decisions based on that lucky result is dangerous and unheard of—unless you are reasoning this out while drunk and obviously deluding yourself.

Yet this is exactly what happened to that CEO. He changed his behavior based on the quality of the result rather than the quality of the decision-making process. He decided he drove better when he was drunk.