David Deppner on Leadership, Confidence, and Humility
Sep 2 2019

Businessman in spotlights, politician.jpg Can a great leader or manager be humble in public? Or is exuding confidence, even when it may not be merited, a key part of leadership? In this episode of EconTalk, host Russ Roberts talks with David Deppner, CEO of Psyberware, about an email David sent Russ wondering how Russ might reconcile his passion for humility and honesty with the demands put upon leaders to inspire followers with confidence in their vision.

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Explore audio highlights, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.

READER COMMENTS

Eric
Sep 2 2019 at 12:00pm

“Argue as though you are right, but listen as though you are wrong.”

— Karl E. Weick, Rensis Likert Distinguished University Professor at the Ross School of Business at the University of Michigan (via Russ Roberts recalling comments of earlier EconTalk guest Charlan Nemeth)

Best sentence in this episode!  That insight in this episode is so needed in our time.  More of that would make for a better world.

Dr. Duru
Sep 2 2019 at 4:31pm

This episode really spoke to me because I have started teaching decision analysis to teenagers. The field of Decision Analysis or Decision Science has frameworks for answering a lot of the questions in this interview or for at least providing additional layers of insights.

I want to first react to the loaded term “wrong decision.” There is no such thing as a wrong decision if you indeed have made a decision “doing the best you can.” A poor outcome in this case does not make your decision wrong, it just means you did not get the outcome you preferred.

What does doing the best you can mean? It means using a decision process that includes the following six things (from the “Decision Chain” or “The Elements of A Good Decision”):
1. A helpful framework
2. Clear values
3. Creative alternatives
4. Useful information
5. Sound reasoning
6. Commitment to Follow-Through

The quality of your resulting decision is only as good as the weakest link in this chain. You spend time and resources on strengthening the weakest link to the extent you can afford to do so and to the extent you can gain improvement (it’s a balance of course). After that, your decision IS good for you no matter the outcome.

After the outcome you should indeed learn what you can and re-examine your decision-making process for potential improvement. You can and should discover knowledge that you lacked before and did not know how to obtain. Learning by doing is also a legitimate path for improving decision-making.

On the issue of confidence and conviction…when the people you lead need to see conviction and confidence in order to execute, you should indeed give it to them. Their decision chain may be different from yours and perhaps you do not have the time, resources, or even ability to “upgrade” their decision chain. So, give them the confidence and conviction they need to execute. After the outcome reveals itself, perhaps then you can afford the time to turn that outcome and the process getting there into a teachable moment. In other words, if the outcome is good, do not just wipe your brow and thank your lucky stars. Make sure the people, employees, etc… understand what really happened no matter the outcome…that they had the ability all along.

When it comes to raising children, I think the information you choose to give is directly proportional to the level of maturity of the child. Give them everything they can handle, even stretch them. But never once wring your hands about the child not knowing the full truth. The time will come soon enough. And hopefully at that time, they will be mature enough to both handle the full truth and understand why they weren’t given the full truth during a less mature time. I don’t think my high school physics teacher ever worried that one day I might learn “full truth” about Newtonian physics (Classical Mechanics)!

Finally, when it comes to life and death situations, we face the biggest challenges of all. If the decision of revelation is not itself a life or death decision, then I think a lot of leeway exists for trying to sculpt the information to align with what you understand as the audience’s preferences. If the decision is itself life and death, I would think ethics demands the full reveal no matter the perceived consequences. I liked the concept of “justice being expensive.” As long as the people who take on positions of great responsibility fully understand and comprehend this concept, then they should be also be ready to accommodate to consequences (think Decision Chain!).

Michael Bishop (@thatMikeBishop)
Sep 20 2019 at 2:09pm

If you’re willing to share some of your teaching materials, even just a list of readings, I’d be very interested!

Bob
Sep 2 2019 at 4:33pm

I experienced the same issue during my years as a trial lawyer. The opinions of expert witnesses who humbly acknowledged uncertainty and  imperfection before the jury were uniformly rejected. They were often surprised by this because many were superbly talented.  Effective witnesses knew that humility and uncertainly were important in doing their analysis but to be effective with jurors, they must present their conclusion as though it were the only reasonable outcome.

Ruth
Sep 3 2019 at 10:18am

Thanks for your comment, Bob.

I’ve prepared witnesses for expert testimony, and I’ve been baffled by their refusal to admit on the stand they’re unsure about anything. I’ve seen witnesses respond with hubris and falsities, rather than admit to uncertainty.

I’ve also had attorneys ask me for “the number.” As I patiently try to explain all the caveats and qualifiers before revealing my conclusions, the attorneys often say, “just give me the number.”

As an analyst, I see how much uncertainty surrounds every calculation, and I’m generally extremely reluctant to make any decision sound more certain than it actually is.  However, I now see how my reluctance to “have more conviction” can be damaging. To say this discussion has been enlightening is an understatement.

Dan
Sep 2 2019 at 5:23pm

Hi Russ,

I’m a long-time listener to Econtalk. How do we find out about future events such as the one mentioned at Stripe? I’d love to attend any in the future.

Thanks so much!

Dan

 

Amy Willis
Sep 3 2019 at 7:55am

Hi, Dan,

Probably the best way is to follow us on social. Russ’s twitter is @EconTalker, and we also have the broader @Econlib. You can also find Econlib on Facebook, where we typically create events for such meet-ups.

Thanks for listening!
Amy Willis

Doug Iliff
Sep 4 2019 at 4:58pm

I’ve had the same question, Amy, but as a matter of principle and practicality I don’t engage with Facebook and Twitter.  Would it be possible to consider posting such meetings on this website?

Jordan Miller
Sep 8 2019 at 5:37pm

Agree, that it would be very helpful if the Econtalk events could be posted on this website instead of making us work to find them on Facebook (which is chaotic plus has enough information on me already).

Kate Bahen
Sep 2 2019 at 8:20pm

Dear Russ,

one of my favourite EconTalks of all time. A real conversation. Not so much answers, rather a discussion with nuance. Thank you for responding to this email from a listener and “no expert”. Loved it.

Dan Wallace
Sep 3 2019 at 10:03am

There is much in this podcast that I found disturbing – mostly around the implication that to be an effective leader means you need to lie. One possibility that is never raised. . .that the employee David refers to at the beginning of the podcast may simply have had a need for certainty that she was never going to find in a startup company in a startup industry. She may well have been a much better fit in a more institutional environment. The presumption that David’s company was the right place for her and that his proper objective in that conversation with her was to keep her at his company strikes me as quite likely wrong from the outset. He may very well have done exactly the right thing by telling her what the challenges and uncertainties were, although he could have added to that, “We’re in uncharted territory here, and I can absolutely understand how the level of uncertainty that comes with it might not work for you. If it doesn’t, we should help you get to a place that’s better for you.” Great leaders do that.

In times of true crisis, there is absolutely a need for someone to step in and take charge. For a great depiction of this, I would encourage you to see the episode of Band of Brothers in which the company is pinned down outside Foy and Ron Spears is sent to relieve Lt. Dyke.

Beyond that, I think making professional recommendations (i.e., to patients and investors) is not the same as leading. Not to say that lying is good there, but I get the points made above about expert witnesses and presentations to investors.

That said, in my experience great leaders paint a clear, compelling of a better vision of the future and enlist people in wanting to help create it. But they don’t sugarcoat the challenges that will be encountered in getting there. For more on this, I would recommend Robert Sutton’s “Good Boss, Bad Boss.”

Again, my experience. . .great leaders in normal (i.e., non-crisis) situations are simultaneously humble AND confident. As much as people want certainty, I think they want tribal membership and relatedness even more. Human beings can smell inauthenticity a mile away. So great leaders let people know that they are human and fallible, too. They demonstrate their humility by putting the mission and the people who will actually achieve it above themselves, and by admitting that as confident as they are, they might just be wrong and someone else might just be right. When they screw something up, and everyone does, they admit it (see “JFK – Bay of Pigs”). They are willing to say, “I don’t know” and “we haven’t figured that out yet.” But they also project a real and authentic confidence that we WILL know and we WILL figure it out, and that they both need AND trust their people to help make that happen. They ask much more than they tell. They invite the people they lead to help solve the problems and create the future. If you don’t have that authentic confidence, then perhaps you aren’t or shouldn’t be a leader. And if you all you can do is give orders, and you can’t make your role one of engaging and empowering the people who work for you to solve your organization’s problems, then you may be a leaders, but my guess is that you are an ineffective one.

Last note: I found the Monsanto example appalling. If the CEO really cared about safety, perhaps he could have demonstrated his concern not by requiring the plant manager to be in HIS office within 24 hours (classic case of managing by fear) but by him being in the MANAGER’S OFFICE within 24 hours. Oh, and by attending the dead employee’s funeral and making sure his/her family was taken care of. And if he cared about his people, perhaps he could have started the conversation with the plant manager (whom you correctly point out was put in that position by the CEO) not by asking, “Why did you kill that man” (more managing by fear) but by saying, “I’ll bet you feel awful about this. I know I do. Why don’t we talk about that for a bit. Then we’re going to figure out exactly what happened so we can make sure it never happens again.” That wouldn’t prohibit him from firing a plant manager who turned out not to care or to lack the competence to maintain a safe operation. That would be entirely appropriate. But if managing by fear is the definition of “leadership” that’s being used here, then respectfully it seems to me we’re having the wrong conversation.

Peter Baumgartner
Sep 3 2019 at 10:21pm

I’m glad I wasn’t the only one that was appalled at the Monsanto example. I was originally hopeful they were going to take it in a positive direction, or just cite it and leave it at that, but the fact that Russ and David seemed to endorse this example of “leadership” leaves a stain on an otherwise amazing episode.

Doug Iliff
Sep 4 2019 at 5:05pm

The best example I have ever read of humility and honesty in a  critical situation is Joe Morganstern’s “The 59 Story Crisis,” from a 1995 issue of The New Yorker.  It can be accessed at https://bob.cs.ucdavis.edu/assets/ecs188/fifty-nine.pdf

Adam
Sep 3 2019 at 1:04pm

Interesting episode – I have some responses:

first, there is work in sociology as well as ‘science and technology studies (STS)’ — especially the literatures in expertise and knowledge — that speak a bit to the question posed in the discussion.

second, is work on the sociology of religion or from religious studies, empirical and theoretical work about how people are keen to seek answers in the faith in God and the bible, and those who are authorized to preach on behalf of a denomination.

the last has to do with social movements and doubt. When people hang their hats on an expert/leader/authority and the brand of ‘certainty’ that they hand out, they tend to doubt the veracity of other, competing authorities. So if I am a conservative, I trust my conservative leadership while doubting the progressives (and vice-versa). If I am of certain religious denominations I doubt the medical advice of a trained physician. If I am a defendant I expect my lawyer to have the answers while doubting the prosecutors’ judgment.

Ultimately, confidence and doubt create social divisions that may germinate into social movements.

Anonymous Neurosurgeon
Sep 3 2019 at 5:13pm

“Will she wake up?”

The family of 29-year-old Tamera Hendrickson looked at me with despair in their eyes.  Their faces are distorted by desperation, fear and helplessness.  They do not mask it, nor should they.

I never knew Tamera.  She enters my life as a phone call, then a series of black and white CT scan images and then as an unmoving patient, breathing tube in place, her face streaked with blood and bruises.  I never knew the person her family knows, full of emotion, vigor, passion and life.  To me, she is simply a dying patient.

I also can’t tell the family what they want to hear.

“I don’t know,” I say.

An anguish I hope to never experience moves through the small group.

“I do know that if we don’t take her to surgery right now, she will die.”  I’m not going to sugar coat things.  I need consent from Tamera’s mother.  I need to get her back to the operating room.  I need to let them know there’s a good chance they won’t see their daughter again.  There are times to be confident.  There are times to be humble.  This is a time to be both.

Tamera has a subdural hematoma, a blood clot from her trauma, compressing her brain.  I must cut open Tamera’s scalp, drill off a large part of her skull and remove the clot from her brain.  This is the only way she will survive.  I must be confident in my abilities as a surgeon to tell Tamera’s family this.  At the same time, I can’t fix everything.  I can’t promise her family that she will wake up, or even that she will still be alive tomorrow.  I can’t see exactly how damaged her brain is from the accident.  The CT scan is too crude to indicate if the delate neurons that regulate alertness and consciousness have been destroyed.  I can’t predict if she will have any number of complications that come with traumatic brain injury: uncontrollable brain swelling, blood clots, infections, seizures.

I can be humble and confident at the same time.

Physicians, surgeons especially, are expected to be confident.  They are often portrayed this way in media.  It takes a certain level of confidence, even bravado, to look someone in the eye and say, “I’m going to cut you open to make you better.”  Surgeons fulfill this stereotype to differing degrees.  The best surgeons will know their limitations and be happy to talk about them.  They will explain the risks and have, if not the exact percentages, a rough sense of the likelihood.  We are good at whittling it down to a simple decision: cut or not?  In fact, even if given the exact risk percentages, it doesn’t change the likelihood of a surgeon recommending a given procedure.

The VERY best surgeons will have a sense of what each patient needs to hear and chance the conversation to suit the individual.  Instead of reciting facts or overwhelming the patient with self-assurance, they can sense where the conversation needs to head.  Some patients are OK with hearing “I don’t know,” when they ask a question.  Some patients want an extensive discussion, to hear nuance, and to come to their own conclusion.  Some patients need to be told what to do, need an authoritative figure.  Great surgeons can figure out the subtle dance of communication, read the body language of the patient and their family to figure out what they need to hear.  Unfortunately, these skills are not taught in medical school.  In fact, the process seems to select against them.

For Tamera, her family needed to hear that she might die unless we take her to the operating room.  They need a confident surgeon who will try everything possible to save their loved one’s life.  For the next few agonizing hours, that’s all they will have.  They also need a humble surgeon who conveys the uncertainty and gravity of the situation.  Consent is obtained and she undergoes surgery.

One method surgeons can use to express confidence is using the best-case, worst-case scenario (if you are ever speaking to a surgeon and they don’t use it, maybe you can coach them along).  When going over different options for treatment, the surgeon should state the best-case scenario, the worst-case, some reasonable outcomes in-between and relative chances of each.  In Tamera’s case, the best-case scenario for surgery is that she survives, wakes up and has minimal cognitive deficit from her brain injury.  Worst-case scenario is that she dies or is left in a permanent vegetative state.  The chance of her having a full recovery is low (<5%), but so is the chance of her dying with surgery.  A reasonable outcome would be that she recovers and is able to carry on a conversation but isn’t fully independent ever again.  If she does not have surgery, the best-case and worst-case scenarios are the same: she is going to die.  That makes the decision easy for the family.

Now take a much more difficult situation for a neurosurgeon: spine surgery for low back pain.  This is filled with nuance with unmeasurable patient factors and much is left to chance.  For the most carefully selected patients with the best surgeons, about 80% are happy after spinal fusion for low back pain on two-year follow up.  If I think a patient is a candidate for spinal fusion (and remembering that only about 2-5% of low back pain patients are), I will often tell them that number.

“Best-case scenario if we do surgery, you have a significant reduction in your pain and are happy with the result.  About 4 out of 5 patients have this outcome.  Worst-case scenario, even if the surgery goes perfect, you could have worse back pain.  If there’s a serious complication, which happens to around 1 out of 20 patients, you could need more surgery, be in permanent pain, have spinal fluid leaks, infections, permanent leg weakness, loss of bowel or bladder control and even die.  Best-case scenario without surgery is your pain improves slightly with rigorous therapy, exercise and weight-loss.  Worst-case scenario without surgery, your pain continues to worsen.  That’s it.”

Many patients are happy with that level of candidness and some will opt out of surgery.  However, some patients just don’t want to hear all that.  I had one listen intently and then say, “so I have a 50% chance of being paralyzed either way?”

I should have realized this particular patient didn’t want to hear numbers and percentages.  All he wanted to hear was if the surgery would help his pain.  He was a great candidate, so I switched to more confident mode and told him I recommended surgery.  I still gave him the caveat that surgery is not perfect, but he wasn’t willing to hear it.  He was somebody that would follow his doctor’s orders without question.  If I have five patients like this one, one will be unhappy with me and I will have improved the lives of four.  It’s the one that keeps me up at night but the four that keep me coming to work every day.

Despite the musings on the latest episode of EconTalk, medical malpractice does not play a large role in surgeon bravado.  Medical malpractice plays a role in defensive medicine, over-ordering of tests and meticulous documentation.  Our surgeries are high risk and, unfortunately, mistakes happen.  We are simply cautious, knowing that, as a neurosurgeon, it’s not a matter of “if” we get sued, just “when.”  The one patient out of five who is unhappy with surgery may sue.  Tamera’s family may sue.  It’s simply the risk we take.

I could be shunned by my peers for mentioning this, but I will anyway: what plays a role in physician confidence is their financial incentives.

Physicians function on a variety of different contract agreements.  Some are paid a straight fee-for-service (FFS), where each surgery or office visit is reimbursed based on a negotiated rate with private insurers (or a set rate by Medicare/Medicaid).  These are typically the private-practice doctors.  Some physicians are paid on salary but have production bonuses in their contracts.  These bonuses (or penalties) are typically based around relative value units (RVUs), an arbitrary value assigned by the government to every type of physician procedure.  For example, a new office visit for a “complex” patient (CPT code 99205) is worth 3.17 RVU.  Tamera’s surgery for her traumatic brain bleed (CPT code 61312) is worth 30.17 RVU.  Some physicians are paid on salary with no production clause in their contract.  Some physicians are paid a lump sum to care for a population of patients and any costs incurred come out of their own profits (capitation).

We surgeons like to think we are above the influences of money on our treatment choices.  We are not.  Patients in a fee-for-service model are much more likely to undergo a spinal fusion procedure than those who have a physician working on salary.   The lack of financial incentive is still an incentive.  In primary care settings, capitation models lead to fewer doctor visits and worse patient compliance.

Our confidence is influenced by our financial situation.  If my paycheck relies upon you agreeing to surgery, I will be a lot more confident and persuasive in convincing that an operation is necessary (and safe).  If I’m on salary, I probably won’t work so hard to convince you, although my institution may be pressuring me to “produce” more.  If I’m on capitation (or my hospital system is), I could attempt to convince you surgery isn’t needed, even if it might help.  I wish I was above these sorts of influences, but I will admit I’m not.

My confidence cannot reach that of Churchill, which is why I entered medicine and not politics.  Telling Tamera’s family that she will die without surgery is not the same as staring down the Luftwaffe and stating that this will be our “finest hour.”  My failures are seared in my mind.  I’ve had a few Gallipolis.  Instead of making me think I’m a god, neurosurgery has made me realize how little I can control and how imperfect I am.  I’ve had too many conversations with families like Tamera’s, telling them there’s nothing more that can be done.  That’s why when they ask if she will wake up, all I can say is “I don’t know.”

 

Dr. Mitchell
Sep 3 2019 at 6:18pm

I am a practicing oncologist and I found this episode very germane to my work.   Every decision that we make has a cone of uncertainty that usually starts as a small amount of uncertainty in the near future and expands to a large amount as time passes.   For example, if a patient with a resected cancer asks me “Will my cancer come back tomorrow?” I can say with very good certainty that it will not return tomorrow.  However, if the question is “Will my cancer return in the next five years?” I have to fall back on the probability of a group of similar patients and the group’s risk of recurrence.  In 1000 patients, 200 of them my have their cancer recur, so the group probability is 20%, but for that individual patient the result is binary – either it does recur or it doesn’t.  The farther I try to peer into the future the greater the uncertainty.    The problem becomes even trickier when I try to answer the question “Will the drug you are recommending keep my cancer from coming back?”  Again, I have answers to risk reduction for ta group of patients (“Yes it reduces your relative risk of recurrence by 20%”) but I cannot say for that individual whether the treatment will “work” because of the cone of uncertainty.

This issue of uncertainty plays into how Russ addressed the issue of being confident or telling the truth.  Do you have to lie to imbue confidence in the above situation?  I do not think that truth telling and confidence are mutually exclusive.  People want leaders (and doctors) who have a vision of the future even though that vision has a degree of uncertainty.  As Dr. Duru mentioned above a bad outcome does not mean that a bad decision was made.  I tell may patients in the above situation the data about recurrence, but then I do through my decision making process with them and recommend a course of action.  They know that there is uncertainty, but they also understand my reasoning why I think a certain action should be taken.  Such an approach acknowledges the uncertainty inherent in the decision, but gives confidence in the approach to decision making.  Although the ultimate decision is up to the patient, I do feel that the physician should make a recommendation rather than telling the patient “Here are three choices what do you want to do?”  Physicians must be leaders in their patient’s health, but the physician must be cognizant of the vulnerability of most patients and must walk the line between confidence in their decision making framework and overconfidence in the outcomes. (As an aside, there was a question of doctors changing their approach based on fear of litigation.  I can only speak for myself but I do not alter my approach because of this fear.) I would be interested to hear from Econ Talk listeners how they would want their doctor to approach this discussion.  I am always looking to improve in what are very tough conversations.

Finally I wanted to talk about how we deal with uncertainty individually.  We know theoretically that we or any of our loved could die in their sleep tonight, but most of us are not racked with worry about this possibility.   With no data except my own observations, I think that most of us create a “Veil of Certitude” in our minds.  We know that tomorrow will look very similar to today (because our experience has taught us it will) but we rarely look or think much farther in the future than a few months (except in the abstract such as retirement planning, etc).  I think that the reason we do this is first because of experience and second because if we truly internalized the truth of uncertainty that we would be wracked with anxiety which would dramatically hamper our functionality.  Again, would love to hear how EconTalk listeners address this cone of uncertainty in their own lives. (I ignore mine in blissful ignorance!)

 

Jim
Sep 3 2019 at 10:36pm

Thanks for the interesting episode. Perhaps Professor Roberts could have summarized his “squaring the circle” with a modified version of the Serenity Prayer. Give me the confidence to inspire others, perform my best, and maintain my convictions when they are right or just. Give me the humility to learn from those who disagree with me, correct my errors, and change my mind when I am wrong. And give me the wisdom to know when to be confident and when to be humble. Not easy and not all of one or the other.

Another digression that would have been interesting, talking about confidence in the context of performance. Perhaps this is most clear in terms of athletic performance, but applies elsewhere in life and business. I believe it is Dr. Bob Rotella who tells the story of how Jack Nicklaus was giving a speech and stated that he had never three-putted on the 18th hole of a major championship. One of the members of the audience came up to Dr. Rotella and said something like “I know he’s wrong, I’ve seen him three-putt. Is he delusional or just getting old?” Dr. Rotella said something to the effect of “Are you questioning the mental approach of the greatest golfer that ever lived?” Whether it is earned confidence (not suggesting everyone can be Jack Nicklaus by pretending they have never failed) or selective memory, sometimes you can’t afford too much humility or doubt if you want to achieve something extraordinary. Plenty of athletic anecdotes to support that, and again, not all one or the other. If you aren’t honest about your weaknesses or mistakes, it is unlikely you will ever achieve something extraordinary.

Andrew Wagner
Sep 4 2019 at 12:21pm

I’m reminded of so many things by this episode. One of the first to come to mind is the Stockdale Paradox:

You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.

Churchill, undoubtedly held this level of conviction, but I think more than we can find examples of him learning from his mistakes, we do find him confronting his mistakes and not hiding from them. “Brutal facts of current reality” might very well be what Churchill did best.

I’m also reminded of the leadership style of the character Captain Miller from the film Saving Private Ryan. Miller, having picked men by name to send to their death in the face of a German machine gun in the opening scene of the film, is depicted later in the film as a great unknown. None of his troops know anything about his life before the war, even his first name is hidden from us until the closing scene when we read it on his tombstone. Part of his armor of certainty, in his persona as “leader” is this level of mystery and anonymity to his men… until at the climax of the movie–when the men are about to mutiny and turn their backs on finding Ryan–Miller finally opens up: “I was a school teacher,” he says–breaking the wall, showing his humanity just right when it’s needed for him to show his humanity.

Leaders aren’t monoliths with one set of fixed character traits. They are folks who know how to adapt flex to meet the situation at hand. If you read about George Washington, the way he presented himself to his army or to Congress, or the public, was not the way that he came across to his staff–men like Hamilton had a different picture of Washington because on the inside their interactions were completely different.

Accidents and uncertainty in medicine are an interesting topic in their own right. Two people who come to mind are Sully Sullenberger–the airline pilot, and Paul O’Neal–the former Treasury Secretary. A seemingly odd combination! Both are very involved in the movement around safety in healthcare and reducing preventable medical errors. Its interesting that Russ brought up the story about the Monsanto CEO, because O’Neil had a similar experience at Alcoa, when he was CEO there. He lead a charge toward zero workplace injuries, that has become a model around industry–and part of it included required phone calls where every manager who had an injury “on his watch” had to call and report each injury and the actions they were taking to prevent recurrence. O’Neil gave his personal phone number to employees so they could call and report safety risks. The result of this conviction was a drastic reduction in injuries *and* a dramatic increase in employee engagement and productivity in Alcoa’s mills.

Sullenberger, after his famous “Miracle on the Potomac” started working with O’Neal in Pittsburgh area hospitals, applying principles from Flight Safety to reducing preventable medical errors. Commercial air travel has had a long track record for improved safety even as traffic volumes have increased dramatically. One element of the system is the Aviation Safety Reporting System–run by NASA. This is a system for reporting “near misses” where pilots, maintenance crews, controllers, manufacturers etc. can write up things that they have done or witnessed or nearly done without fear of retribution. This open reporting enables the sharing of common risks across company lines and without liability risks. Getting them out in the open, sharing the data with others, means they can be addressed with permanent technical or training solutions. (Note: it’s run by NASA because the FAA is a regulatory body that can fine airlines, take away pilots and mechanics licenses, etc. NASA has no power to do these things–they are a neutral observer). ASRS is a forum where those responsible for our flight safety have the freedom to be humble in a way that allows the whole community to learn and benefit.

 

A.G.McDowell
Sep 4 2019 at 2:34pm

If a manager delivers a confident statement and it is politely received, they should not assume that they have raised the confidence of their staff. Their staff may have detailed knowledge of a small part of the picture which allows them to check a small part of the manager’s statement against reality. This effect is large enough in engineering to create the stereotype of the honest-to-a-fault engineer and the incompetent and untrustworthy boss – A Pointy-Haired Boss in the Dilbert cartoon strips, which unfortunately can be an uncannily realistic picture of large organisations. See for example https://dilbert.com/strip/1995-11-10

Scott G
Sep 4 2019 at 3:33pm

This episode really raises the bar for Econtalk listeners.  I thought I was doing pretty well to get email responses from Russ over the years, but Deppner has shown that listeners can become legit guests in the show!  I need to start working harder.   Who among us listeners will become the next guest?

Eugene Kernes
Sep 5 2019 at 11:46am

This conversation stems mostly from western philosophy which is based on the idea-practice dichotomy. In the west, the individual is key to the decision so the leader and employees are expected to have the answers. Not so in Chinese (eastern) philosophy as it is based on flow, motion. The leaders in Chinese philosophy can set up incentives and circumstances to have a particular outcome, but they themselves do not determine the outcome. The way the outcome comes about is by the various individuals shaping the outcome in their own way. No individual can claim responsibility for the outcome, as everyone is involved in shaping it. The way the outcome forms at the end, may not even be close to how the leaders thought the outcome would go. There is no problem with the difference because it is expected to be different.

A good book about this is called ‘On Efficacy: The Difference Between Western and Chinese Thinking’ by Francois Jullien. (Just a warning: The book was not an easy read.)

Eastern philosophy can actually be compared to the Austrian school in which outcomes are about emergent order, not by singular design.

Mark
Sep 5 2019 at 5:49pm

I’m a radiologist and this episode made me reflect on importance of certainty to the physicians who refer their patients for testing.  I have often said that referring physicians too often accept my findings as Charlton Heston coming down from Sinai, when oft times it more akin to Mel Brooks!   You want to give your best thoughts about the best diagnosis, but how you convey certainty and the potentially the need for additional testing is equally important as making the findings and generating a differential diagnosis.

The episode was a great reminder that physicians and patients are not facile with statistics.  For example, a practical result of Bayes’ theorem is that a commonly used blood panel of twelve parameters (SMA-12) would return one ‘abnormal’ value in ~50% of normals.

I would echo my surgical colleague’s advice regarding the difference between confidence and certainty.

Great episode!

Jesse
Sep 6 2019 at 8:29pm

Super interesting episode to me.

I too attended Russ’ Stripe event and remember David’s question. I also remember thinking that Russ’ answer wasn’t quite on point, but it was a broad question delivered at the tail end of a rapid-fire Q&A, so I couldn’t have realistically expected more. Had I been the questioner, that would have been the end of the matter. It would never have occurred to me to follow up with an email. And then for Russ to get the email, read it, chew it over, and not just respond but turn the discussion into a podcast is remarkable. I view this episode as a double-unicorn event.

While I thoroughly enjoyed the episode and found it highly thought-provoking (I would pause playback every few minutes to noodle over points that were brought up), I ended up with a similar feeling of dissatisfaction. I just don’t want to accept the fundamental point that over-confidence is ever desirable or required. Gene Krantz made that famous quote that ‘Failure is not an option’ and a successful outcome followed. Russ argued that that level of confidence was needed in that situation. But why? In an alternate world where he just said ‘I can’t guarantee an outcome, but we’ll do everything within our power to bring them back,’ would the astronauts have perished?

Russ presents this need for certainty as part of the human condition. Based on what? It certainly seems prevalent in modern society, but maybe it is nurture and not nature. There have been several beliefs in our history that at one time seemed innate or part of our evolved DNA that did slowly change over time. Racial attitudes and homophobia are some examples. Why can’t our need for certainty follow a similar path? Surely the first step would be for some courageous, public figure to say that this attitude is unacceptable and we need to change. Knock on wood if you’re with me.

John Alcorn
Sep 7 2019 at 11:45am

Experts are prone to overconfidence at diagnosis, prognosis, and prediction. Moreover, algorithms usually are more accurate or reliable than clinical (expert) judgment.

Daniel Kahneman explains:

Those who know more forecast very slightly better than those who know less. But those with the most knowledge are often less reliable. The reason is that the person who acquires more knowledge develops an enhanced illusion of her skill and becomes unrealistically overconfident. […]

The number of studies reporting comparisons of clinical and statistical predictions has increased to roughly two hundred, but the score in the contest between algorithms and humans has not changed. About 60% of the studies have shown significantly better accuracy for the algorithms. The other comparisons scored a draw in accuracy, but a tie is tantamount to a win for the statistical rules, which are normally much less expensive to use than expert judgment. No exception has been convincingly documented. […]

Simple equally weighted formulas based on existing statistics or on common sense are often very good predictors of significant outcomes. In a memorable example, Dawes showed that marital stability is well predicted by a formula: frequency of lovemaking minus frequency of quarrels. You don’t want your result to be a negative number. The important conclusion from this research is that an algorithm that is constructed on the back of an envelope is often good enough to compete with an optimally weighted formula, and certainly good enough to outdo expert judgment.—Thinking, Fast and Slow (Farrar, Straus & Giroux, 2011), part 3.

Al McCabe
Sep 8 2019 at 2:41am

Most CEOs do not pretend to be the “expert” to make all the decisions.  On most tough decisions, they decide on a process to make the decision — people, resources, information to be compiled, timelines, etc.

The justice system has by far the oldest and most extensive writings and analysis of evidence-based decision making with imperfect evidence and huge stakes.  The justice system has many rules of evidence, many layers of procedures and protections, many formal appeals and reviews of highly educated and experience people subject to openness of process and reasoning.

But the main decision in the justice system is left to a “jury of one’s peers”.   Not experts, but peers.

 

Patrick R Jones
Sep 25 2019 at 2:33pm

The only thing I took away from this interview is that in my humble opinion people in leadership need to tell the truth even if its not what those under them want to hear. People deserve the right to make decisions based on the facts, even if they hate it, are unhappy, insecure, and lose confidence in their leader. Leaders that tell lies and have positive outcomes should attribute that to luck and not leadership … period.

Andrew Hughes
Oct 12 2019 at 12:09pm

I found this episode to be quite relevant and thought-provoking. I am a graduate student interested in similar questions to help guide leadership decision-making. One resource that I reference a lot recently that provides well-thought out and practical guidance is Ron Hefietz’s Leadership Without Easy Answers. I would recommend this to anyone facing the same questions David and Russ discuss in this episode.

Todd Nief
Oct 17 2019 at 7:10pm

I think the key distinction here in terms of how to present certainty is a leader is understanding why folks may be uncertain.

As a leader, you are often uncertain because you have a high-resolution view of your situation. You know the threats in the marketplace, you know the layers of your organization, you have an awareness that any number of long-tail events could completely change the course of your business,etc.

However, employees are often uncertain because they have a low-resolution view of the situation. They don’t really understand the strategy, they don’t really understand the threats to the business, etc. For these folks, complicated, nuanced answers are unhelpful because they don’t have the framework with which to understand those details.

You can give information that will improve the confidence and buy-in of someone who is “low-resolution uncertain” without having to violate anything you know as someone who is “high-resolution uncertain.”

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DELVE DEEPER

This week's guest:

This week's focus:

Additional ideas and people mentioned in this podcast episode:

A few more readings and background resources:

A few more EconTalk podcast episodes:


AUDIO HIGHLIGHTS
TimePodcast Episode Highlights
0:33

Intro. [Recording date: July 25, 2019.]

Russ Roberts: Today's episode is going to be a little bit different. My guest is David Deppner, who is the CEO (Chief Executive Officer) of Psyberware. That's Psyberware starting with the letters 'p-s-y,' not starting with 'c-y'.... Now, I met David at the recent EconTalk get-together we did in San Francisco at Stripe headquarters. It was an amazing event. It was incredibly touching to me to have between 150 and 200 people turn out, to hang out, say hello, meet each other. And besides the socializing that we did, I gave a brief talk on what I've been thinking about that's grown out of recent EconTalk episodes. And, in particular, I spoke on my growing interest in the idea that as human beings we need to know things. This grew out of the episode with Robert Burton, on his book, On Being Certain. And I've been thinking about how comforting it is to know something. Not just as part of confirmation bias, but just our need to know something. Our desire to put things in the box called, 'Now I don't have to think about that any more, because I know it's true.' And, what are the implications for that on how we make decisions, and the tendency we all have to be over-confident? Of course, there's a theme on this program--I talk about it a lot--that this overconfidence is a great danger. That, we have this natural tendency to cherry-pick facts that confirm our views, our ideology, our religion, our politics; and that that's really a bad thing. And we stress on this program, a lot, the importance of humility, the value of being humble intellectually, and the importance of conceding that there are many things that we don't know the answer to. I've said many times: Learn to enjoy saying 'I don't know.' So, that's been a theme for a while. And I will say that careful listeners will know I occasionally had some unease about that level of humility; and we'll get to that later. But, it generally would be the case that on this program, humility is a virtue. So, at the end of this talk about certainty and the dangers of being certain and the importance of being aware that we have an urge for certainty, and the importance of humility, I took questions. And at the very end I took a question from David, our guest today; and we were almost out of time, and he had to ask it kind of quickly; and I gave a quick answer. And, it turns out it was a deep and important question; I didn't appreciate it at the time. And, David noticed I didn't; and he followed up with an email. A fairly lengthy email. And I realized two things: I didn't fully understand his question; and I realized he was asking me something that was deeply jarring and disturbing to my worldview.

3:27

Russ Roberts: So, I thought it would be interesting to have David as a guest, talk about the issues that he raised, and see if he and I in talking about them could learn something. So, David, I want to start with your email. And you're going to read a version of it. You are free to annotate it as you need to as you read it rather than just reading it literally. But, go ahead.

David Deppner: All right. Thank you, Russ. So:

I've been a long-time listener of EconTalk. I found you in the first two to three years; and I went back to the beginning and listened to every episode. You've talked before about how listeners feel they know you but you don't know them. And that's so true. It's probably a weird place for you to be. It's a bit weird from this side, as well. Like, you feel that we could just sit down and start talking like old friends. But you don't know me.--I guess we're getting to know each other today.

Russ Roberts: Yeah. That's right.

David Deppner:

But you did say last week at Stripe that you like to hear from people. So I'm going to take that at face value, say a few things, and ask a question that I wanted to go into during your Q&A.

First of all, thank you for putting in this work over the past decade, and then some. The discussions you've had with people have truly enriched my life. And I think they've helped polish off some of my rough edges, as well. You've talked about how EconTalk has changed you over the years. It's changed a lot of us. I'm less certain than I used to be about a lot of things: more humble. I'm not always so great at that. I question a lot more. And I question a lot more of my own sacred cows. Listening to you engage in meaningful conversations around topics about what we know, what we can know, how we interpret data: it's been good.

I was the last person at Stripe to ask a question. It was rapid fire. I tried to boil it down to a quick snippet about how people look up to those in authority, wanting them to know all the answers; what we should do about it. You answered the question quickly, talking about how we simply shouldn't ask the questions, and elaborated on that. We only had a few seconds. But the question I was trying to ask was just slightly different. I wanted to follow up and try to ask it again.

You've talked a lot about how you're grappling with people's need for certainty; and the nuance that I'm trying to grapple with is people's need for those they look up to to have certainty, when you're the person everyone thinks should know the answers.

Maybe a brief example will help. I've been in leadership positions my whole life. It's not something I've really sought after. It just kind of happened. I'm pretty shy and introverted, but I step up. And I like to challenge myself to do things that are hard. I learn so much from that.

I started my first business when I was a teenager in the '90s. I started it on [?]. I've spent most of my life self-employed, but I've worked for others here and there. Because I started a business so young and had to hire people to grow it, I was thrust into this world of leadership. There's so much pop culture BS around leadership. But the thing is: When you are the one calling the shots, hiring and firing, teaching and mentoring, setting up processes, figuring out how to build an organization, people interact with you in a certain way. And, early on I had to grapple with that. People want you to know the answers when they look up to you as some kind of leader or person in authority.

One of my early employees shocked me one day, a couple of decades ago. She was really concerned about the future. She was anxious, maybe conflicted about some things in her personal life. She really wanted to know the direction of the company: What was happening? how was it going to go in the next few months? what was going to happen? She had this intense desire for certainty about her work future, probably because of things that were really uncertain about her personal life. She needed that stability and foundation. We talked around a lot of things going on. But, I didn't tell her how it was going to go. I told her what the issues were. I didn't tell her how it would turn out. I told her about risks and possible rewards and what we were aiming for. I explained the bets we were making.

I see it as being honest and humble, confident that we navigate things just fine and keep working it all out, making the future even better. But also uncertain about the exact form it would take.

But she gave me some feedback on that: That's not the answer she wanted to hear. She brought up the movie Apollo 13. Remember the guy on Mission Control? The crisis occurs, and Gene Kranz is out in front of everyone telling them what they're going to do, how it's going to go, and the iconic quote from the movie: 'Failure is not an option.'--They are going to bring those guys home. It will happen. They will succeed.

And that was her example to me, what she felt was wrong with me as a leader in that context. That was her example of what she thought I should be. I don't think she wanted intellectual honesty. She didn't want humility. She wanted to be inspired by a vision of future certainty. She wanted to be lied to.

It surprised me that somebody would even think that way and need me to fill that role for them.

That example has stayed with me over the years. I've seen example after example of that. In 2008, I finished my Master's degree. I did some part-time teaching at California State University, Sacramento, the Business Department. In that teaching role, there were countless times when students just wanted answers from me. Certainty. I'd talk around some models and theories, around how the world was changing. Try to get them to grapple with some issues. I thought I was doing a good job with the Socratic Method, trying to ask questions to lead them to think about things in different ways. For some students, that's fascinating; and they learn how to think. For others, it's incredibly unsettling that their professor doesn't know all the answers.--I thought you might have some thoughts on that one.

Russ Roberts: Yeah.

David Deppner:

My sister-in-law is a surgeon. And, you know how people want to talk to their surgeon about outcomes. About probability of success. Doctors are not good at math. She can reassure people in that confident. But that's a lie, sometimes. Maybe it's what people want, though. But I still don't see it as honest.

You've had some episodes lately exploring the placebo effect. So, what if it's not honest? Perhaps a little bit of a lie is actually good for people. And we can prove that in a randomized control trial. I don't know. On the other hand, four years ago a heart surgeon told my father that he needed surgery and the outcomes would be very good: there was nothing to worry about. A few days later, my father was dead. Perhaps a solid, randomized control trial of surgeon certainty[?] would show better outcomes on average, if surgeons convey certainty and patients believe them. Again, I don't know if I'd put much faith in such a result. There's too many variables.--

Russ Roberts: Did your father have that surgery, or not have it?

David Deppner: He had the surgery.

Russ Roberts: Yeah; and it didn't work.

David Deppner: Yep. I remember a discussion about--several times in a year when cardiac surgeons go off to conferences. And during those time periods there are different outcomes from heart attacks. And that was on my mind during that whole episode. It was fascinating.

Russ Roberts: Yeah.

David Deppner:

So, when you are dealing with lives, there's a tremendous downside for those who end up on the wrong side of the average. Taleb has had a lot to say about to say about things like this: That surgeons just don't have the same kind of skin in the game that the patients do. The Democratic debates recently highlighted some of this for me about politicians, once more. So many people just think their favorite candidate has it all figured out. And that's the answer to everything: The candidates convey certainty. And their supporters eat it up. And I don't even have to wonder what would happen if the candidate told the truth about not knowing everything.

This is a perfect picture of what happens to humans in society. We seem to crave certainty from our leaders so much that we'll choose from a field of bad choices who all lie to us and convey a faux expertise. But a better leader who actually didn't know everything--who grappled with human limits to understanding and admitted those human limits--that person couldn't elected. That person wouldn't even make it to the early rounds of debates.

What I've been personally grappling with, is some of these issues that you've been exploring around certainty. From the manager/professor/surgeon/politician side of things. The world would be better if people in positions of leadership could be more humble. What are those people to do when they find themselves in situations where other people desperately need them to convey a certainty that they can't convey with integrity?

I've followed a particular path when people, where people would fault me for being too honest about what I don't know, sometimes. But I still don't have strong opinions; and I'm very willing to make decisions in situations of uncertainty. And deal with the consequences. Other people in the same particular position--particularly in medicine, I think--blatantly lie about how things are going to turn out. Maybe that's even a more ethical choice, if the effect of that on a patient is to support recovery and greater health.

But, is it? As a professor, you can truly argue that portraying intellectual humility to your students is helping them to develop their critical reasoning skills, learn the limits of their knowledge. But that's not the social role of a surgeon. Before surgery is not the time and place to confront the families patients with abstract ideas about the limits of our knowledge.

And perhaps we can wish that our politicians were more realistic in their pronouncements. But, isn't that just a pointless sentiment, if we know that those who require social support to be chosen as leaders face no chance of selection if they are humble about what they know and what they can't know? On either side, what would happen to a candidate who just admitted that the problem of school shootings was a desperately difficult one that we just might not have a solution to?

In all of those situations there's still this dynamic of how most people look up to people who are "leaders," and demand certainty or they ditch them. It's difficult to stay in a social role that other people look up to if you are intellectually honest. Perhaps a professor can, with tenure. But what about someone just starting down that path? Politicians certainly can't. Business leaders who don't put on their inspiring leader hat of less success because some employees lose faith if they are not constantly inspired. Turnover is higher. Surgeons who tell the truth might have poor outcomes as well; and it seems like there's some evidence to suggest that. The young woman who wanted me to be more like Gene Kranz at NASA [National Aeronautics and Space Administration] left her job later to go on to work for a larger bureaucracy, with presumably a manager that had more answers. A couple of years later that company went bust and got acquired by a competitor. But was her life better for the next year or two with more certainty?

So, where's my question in all of this? I guess it's just I'm curious about your thoughts on the ethical side of how people in positions of leadership should handle the burden placed on them by everyone else that says they should have certainty. You are usually talking about these issues from the perspective of everyone else in their interactions with those in positions of authority. What about from the perspective of the manager, the surgeon, the professor, the politician, and so on? I'd like to hear more about your thoughts on that.

I know I've rambled long here, and I certainly don't expect any lengthy reply. I'd simply be happy if you read this and continued to explore these ideas in your future work. That's answer enough. I'll be listening.
14:12

Russ Roberts: And now your listening in a way you didn't anticipate. So, again, I credibly appreciate the question. Which I've been thinking about--it's tempting to say 'nonstop'--that would be dishonest. But I've been thinking about it a lot since I got it about a week ago. And I'm going to sharpen it a little bit with another essay that I stumbled on after receiving your email. It was from an essay by another CEO, who was a big fan of Brené Brown, who has carved out quite a niche for herself advocating for vulnerability. And, she has a fabulous TED talk--it's the kind of TED talk that if you'd told me 10 years ago, I [wouldn't?] have listened to it or laughed at you; I would have mocked you mercilessly for even suggesting it. But, it struck a chord with me when I watched it--maybe because I'm older, maybe because it was such a good talk. She's a really superb presenter. And in that vulnerability talk, she makes a case for the power of vulnerability and how much of her life--and I would say this is true of myself as well: 'Vulnerability is a weakness. That's a horrible thing. Vulnerability? That's a mistake.' And she sells the idea, and she sells it quite well. So, this CEO, Craig Litster, went and tried to apply that. And, he found that vulnerability in a CEO is a really horrible strategy. Your reports[?] don't want vulnerability. He talks about how he tried to step back and be less of a dictator. I think the issue is even again sharper than that: They don't want to hear you express your deepest emotions. They don't want to hear you--your spouse does. Your friends do. Your intimates do. But your reports--your employees--are not your intimates, though they sometimes feel like they are. And they don't want to hear your fears. They don't want to hear your weaknesses; they don't want to hear your emotional challenges. And, I've known[?] organizations where people have done that. And people walk away--they don't say, 'Wow. That was so beautiful.' They walk away saying--they're bewildered. A little bit like your employee, the story you told, the woman who was anxious about the future. She didn't want to hear about, 'Gee, I've got a lot of doubts. I don't know how it's going to turn out. We'll do the best we can.' She wants reassurance. Okay? So, I think, to take your challenge directly, it's easy for a host of a podcast to be humble. It does keep my ratings down, by the way, David: I think I'd have more ratings if I were angrier or louder and more certain--maybe. But, in general, I think it's relatively cost-free for a podcast host, or a professor, or an academic, or a scholar, or a thinker to be--umm, thinking: 'I don't know.' And it--your point is that saying 'I don't know' is great for that person; but for somebody in a leadership position, not only is it a deal-killer--not only are you going to struggle to become the CEO, to be the head of Mission Control, to get elected as president, to be a successful surgeon--it's not what is consistent with doing your job well. Your job in those settings is to exude confidence, certainty, vision, a path to that vision. Is that a good summary of what you are asking?

David Deppner: I think that's a very insightful summary. Except, I would also--there's nuance there. There's definitely a lot of nuance. Perhaps in my small organization that's my business, I can make a decision to be a certain way. But if I was the CEO of Pepsi who had been rising through the ranks my entire life, I've got a real obligation to the organization to do not what is maybe--maybe not be what I'd normally be, but to maximize shareholder value, to keep employee turnover low, to make sure we are delivering on next quarter's results, and I might have to subvert what I'd really like to do there about being intellectually honest in the name of--yeah--putting on that confident leader hat. Inspiring the troops. And trying to move the organization forward.

Russ Roberts: So, one answer I could give--it's not the answer I like, but it is an answer, is--and it came to me when I was interviewing Andrew Roberts, an episode that hasn't been released yet, so you have not heard it. But, since receiving your email I interviewed Andrew Roberts about Churchill. And, of course, Churchill is credibly overconfident. I talked to him a little bit about it, partly influenced by your email and thinking about these issues. And, one view--which is not my view, but I think it's worth considering--is that, to rise to that level, to be a Churchill, to be a CEO of a Fortune 50- or 500-company, requires a level of arrogance that really isn't maybe not so healthy. It requires a level of overconfidence and self-assurance. I made the point in the Andrew Roberts interview, that, it's easy to say ex post that Churchill was a visionary. A genius. He saw the dangers from Hitler. Well, history turned out that way. There were many times in his career when he could have turned out to be a crank. A crazy, bellicose, paranoid, one-issue guy, who was a--a strange human being, for those reasons as well as for that overconfidence. You know, Andrew Roberts tells the joke that Churchill wasn't a religious person. He did believe in the Almighty, although he thought that the Almighty's main job was to keep Winston Churchill safe. And to take care of him. And I think--leaders have that level of arrogance. To give it a name. Self-confidence, to give it a positive name. Self-esteem, a semi-positive spin. And one view says that a thoughtful, honest person who is worried about their soul--I don't mean that in a religious sense but in the sort of secular/spiritual sense of one's wellbeing, emotional health--shouldn't strive for that. Shouldn't aspire--and, to those tasks. And I have a number of friends who would say that the people who become successful politicians are psychopaths. And that's the word they use, by the way. They are in desperate need of adulation. They are in desperate need of power. We've talked on the program before about Robert Caro's biography of LBJ [Lyndon Baines Johnson]. It's the portrait--in the first part of the book, it's the portrait of a psychopath. A very unhealthy individual dealing with damaged, a damaged psyche from his youth, who craves power and will do anything to get it; and will lie--and not just lie in the way we think of politicians lying. But, it's also probably to see himself as somebody he really wasn't. As dauntless. As impossibly--who is always going to succeed. And those are emotions which really are incredibly important in a leader of a nation, or a leader of an organization at the size you are talking about. That's what it demands. And I think one way to spin your question, and the answer you just gave, is to say, 'Well, maybe that's not a really healthy thing.' What are your thoughts on that? That's not my answer. I have a different answer coming up. But I want to hear your response to that.

David Deppner: So, Churchill is definitely an interesting case. Um, you know, a different time, in a different place, a different set of circumstances, we wouldn't know who he was. And I think there's a lot of--there's a lot of connecting the dots that we do when we look back on history. And we think that outcomes turned out a particular way because of particular people. And, I'm not sure I buy into that very much. Churchill--Churchill is interesting to me. I've read some books on him over my life. I've watched some movies and some documentaries. But, yeah: Would he have been anyone if he, you know, just the right things hadn't happened, to vote[?] had been slightly just a couple of percentage of people did something different because of what happened last week? It's not certain at all.

Russ Roberts: If Hitler had lost his nerve after, say, the partition of Czechoslovakia, then we'd say, 'Boy, that Chamberlain, he understood how important it was to not respond so violently right away, and to give them a chance to pull back.'

David Deppner: I think, again, if we are being intellectually honest, perhaps no real kind of leadership is truly appropriate in every kind of situation--

Russ Roberts: Agreed--

David Deppner: And that's something that I think is important. When it comes to the whole idea of, the notion of, say, a hubris or an arrogance of the part of leaders who rise to top positions, I do kind of wonder about the selective pressures that let certain people rise and keep other people down. And that's part of the subtext to what I was saying about those democratic candidates at the debates. I found myself watching that. Without getting into politics here. I found myself watching the program and wondering which ones truly believe what they are saying. And whether some of them just are giving the confidence they need to give to get elected; but they would actually maybe be more humble about problem-solving once they were elected. It's hard to tell.

Russ Roberts: Not clear which is worse. You want somebody who is actually that self-confident. And there's a placebo effect there. There's a feeling you have that leaders who are overconfident are going to overcome obstacles that less confident leaders are going to just give up and struggle. So, is it important to have somebody who is actually a psychopathic, overly confident narcissist? Or do you want someone who pretends to be one, so that they can get elected? They are both horrible.

David Deppner: Yeah, that goes back to the question of whether we want to depend a great deal on the individual in the role. And instead it's mostly about the institutions surrounding that role and all of the other checks and balances involved. I do get a little nervous about psychopaths with too much power.

Russ Roberts: Yeah.

25:10

Russ Roberts: So, you raised three different areas: business, medicine, and politics. And, my first serious answer, besides the first point that maybe this is not one should aspire to--I think we are probably glad there are some people who aspire to leadership, right? So, you wouldn't want to say that no one should be a leader. That's not a good answer. Yeah.

David Deppner: So, one of the things I pointed out at the beginning of that email is, I never aspired to a leadership position. I started a business on accident. I didn't really even intend to. Just right place, right time: started a little computer bulletin board just before the Internet boom. And then all of a sudden, random strangers are calling me up at home wanting Internet access, because there's no Internet access in that part of Northern California in 1994. And, so, I found myself hiring employees. It was not my intent. And that just started a life off of being in various leadership position. But, yeah--it's not everybody who finds themselves thrust into various roles, seeks them out. Not everybody has the same personalities. There's so many different styles of being and ways of thinking. And I think we often just see the leaders at the very large organizations or in politics, and the ones that steal the limelight. And there's a real selection bias there. The average leader is not like that, I think. There are a lot of leaders and a lot of companies throughout this country that never heard of him[?], nobody but the employees of that company will. And they are great people.

Russ Roberts: Yeah. And they are respected. And, uh, appreciated by their employees. But they don't get movies made about them. So, we don't know them. They don't get profiled in magazines, and so on.

26:52

Russ Roberts: But, the point I was going to make is that: We could imagine there are very different ways to think about leadership and the challenges of honesty and humility in business versus medicine versus politics. And I, so I'm just going to say that up front, because as you very thoughtfully pointed out a minute ago, one of the lessons of all of this is that the style of leadership that works is going to depend on the time, it's going to depend on the organization; it's going to depend on the leadership, the leaders alongside the main leader--the other executives. And I think it's incredibly important in any kind of relationship, not just leadership, to be aware that the people in the room you are interacting with are not the same as you. What would be good for you--what you need to hear from a leader is not necessarily what other people in the room need to hear. I think that's so unnatural for most of us to remember that. We tend to give the answers that we think would comfort us without thinking sometimes that that person we're interacting with is not like us--in fact, needs the opposite. So, I want, from the surgeon--I really love it when the surgeon says, 'I don't know.' And I recently dealt with some interesting--I may come back to this later, but I had to make a decision about surgery in a family situation; and I asked the surgeon the odds of certain things happening, pro and con. And a number of times the surgeon said, 'I don't know. We don't have good information about that.' And, of course, for me, that was like, 'Wow, this is fantastic! An honest surgeon.' But other people would go, like you are talking about--was it your sister, your sister-in-law?

David Deppner: [?]

Russ Roberts: Sister-in-law--might go, like, 'Well, I've got to find a different surgeon. I don't want one who doesn't know. I want one who does know. And who lies about it? But I'll just pretend it's not a lie.' At any rate, so I want to start with that: There are different settings. And I don't--the one I want to focus on is not at the national level, where I think most of us listening, most of you out there listening are not going to be confronted with the challenge of running for President and trying to decide how honest to be. But, all of us have different roles that have a leadership component in day-to-day life, beside CEOs. CEOs do, for sure. But so do managers, in different levels of the business. But certainly family members. As a dad and as a husband and as a son of aging parents, I'm constantly dealing with the issues that you've raised. Which is: How honest should I be? And I have some members in those circles who don't like it that I'm always saying, 'I'm not so sure we know the answer to that.' They don't want to hear that, some of my friends and family members. They find that level of honesty uncomfortable. And so you have to learn. So, one answer, of course, is that when you are in a situation of uncertainty--which is most of life--how much humility you have inside you and how much you voice are two different things. There's a difference between dishonest and nuanced. There's a difference between dishonest and--I don't have to reveal every single uncertainty I have about this process--because people are sick of hearing about that, and my family sometimes; and also because it's just not relevant. It's not what that person wants to hear. It's not dishonest to ignore it. And, if pressed, maybe I would tell more honestly how I felt about it. But, I think the first point to make is that all of us have to deal with this, and not just CEOs. And I want our conversation going forward to deal with those kind of settings, where, grappling with this issue that sometimes people crave overconfidence. And how should a person as a leader, as a husband, as a son, as a father, responding to a decision that has to be made: How do we deal with that?

David Deppner: The things you bring up about family life are actually, I think, incredibly important here. We think about how we raise children: We start them out, they are at least chaotic little creatures, uncivilized. We give them a lot of structure. And as they move through getting older, they look up to the parents. And the parents have all the answers. And that's that sort of initial imprint of somebody who has the answer, has the certainty. They are, you know, their word is law. And, the transition to adulthood--a lot of people are going through those teenage years I think is incredibly challenging. You know, when they are grappling with those issues of their parents not knowing everything. And they are grappling with those issues of, 'Wow. Up until this point I've known what to do next. I've known the next step to take. I go from 3rd grade into 4th grade. And every step of the way, I know what's going to happen next year. And, children are sheltered from a lot of the uncertainties of life.

Russ Roberts: And we'd like them, constantly, in ways that we justify--usually as being as for their own good, or often as because it makes us uncomfortable, or we don't know what to say. We'll put up a link to an essay from Paul Graham. Paul created the Y-Combinator, the incubator for startups that's--And he's written a bunch of essays that have on EconTalk. His essay on how we lie to children is deeply disturbing and thought-provoking and true, I think--that, if you are listening out there as a parent as well, you don't think, 'I don't lie to my kids!' and the answer is 'Yes, you do.' And most of the time, it's for the best. And it's not literally telling, misleading, them. It's giving them a structure of certainty that we are talking about today, that is crucial to go forward in life. To be able to thrive, and to have comfort with how complicated the world is. And at certain ages and certain settings, that's the right thing to do.

David Deppner: So, taking it maybe just a little bit beyond children, I wonder about that as just a fundamental human need. So, here we are talking about not being certain all the time, and that's a virtue. And yet, at the same time, it seems like we all have some anxieties. We all have some level of neuroticism. We all have things that we worry about. And that can be debilitating for some people. And we're somewhere on a spectrum of not caring that much. Which might be a little psychopathic. All the way over to caring a lot about everything--

Russ Roberts: obsessed--

David Deppner: Yeah. And, having certainty about some things. Maybe particularly things that don't actually matter. That's a great coping mechanism to maybe not just be paralyzed by the anxieties that come up in life.

33:50

Russ Roberts: Well, I'm writing an essay on this: It might turn into a book on these questions of our need for certainty, our desire to know things. And one of the examples, one of the themes of this opening part is that: An enormous part of our life is total certainty about a huge amount of stuff, that if we didn't have, we'd be debilitated. As you say. So, the example I give is: 'Wake up in the morning. Who is sleeping next to me? Well, it appears to be my wife. But am I sure?' The answer is, 'Yes I am.' I don't think about it about it for a second. I don't say, 'Well, she's got the same hair color as my wife. It looks about her. I better look more closely.' It's my wife. I go to take my shower. I don't say 'I wonder if in the middle of the night somebody switched the hot and the cold water. I should be open to that possibility.' So much of our life like that is just on autopilot. And it has to be. Because otherwise we would be paralyzed. And I think this is this trade-off between uncertainty or humility and certainty and overconfidence--that we have to face. That, it's inevitable. So, no matter how long I talk about or how much I ramble or plead for the importance of humility, there are numerous parts of my life there's no humility. I'm totally certain. And it has to be that way. And it has to be that way with my family, in many of the things that I tell them. When they say, 'What are we going to do about x, y, or z?' And when they were younger it was even worse. As you say--I was even more certain.

David Deppner: You know, the issues you've sort of brought up about lying, versus telling the truth: My parents brought me up to never lie. And that's just such an ingrained thing: I don't want to lie. And then, you know, the actual reality is we all lie all the time. And it's a kind of interesting thing, that we have such a--we have such a social value on integrity and honesty, in that sense. And yet, the little white lies are everywhere. You have to shorthand things. You have to leave out parts of the story. You can't function with giving full details of everything. You have to give a trial, the simple explanation that's close enough for their understanding at the age they are.

Russ Roberts: Yeah. We've talked numerous times on the program about, 'How are you?' 'Hey, how are you?' 'Fine.' That's a lie, most of the time. A lot of the time. Right? But, for this person, I don't need to--they are not interested--I'm just going to say, 'Fine.' But, of course, that's what I would call a 'white lie.' I think the lie that we--and I want to just add that parents who push 'never lie,' which I probably did for my kids also, it's a corrective to the natural impulse to lie. Right? The--it's so easy to lie, and it's so comforting to lie, and it is often so in your self-interest to lie, that we as parents know that those kind of people have many challenges in life--the dishonest people, the liars. And so, a lot of civilizing is about pushing back against that natural self-interest. Deception is a common, seductive urge. And, as parents, and as religious traditions in popular culture, we often go way in the other direction: 'Don't lie, ever. It's never justified.' We know, though, there are many situations where, as we get older we realize not only is it okay to lie: it's imperative to lie. I think the interesting challenge--I don't want to go into this in detail, but I just want to put it on the table because I think it's relevant to what you raise about medicine; I said we are going to focus on the leadership stuff and not politics; and I don't think we have a lot to say about medicine. But one of the issues that comes up, you know, is: Should you tell a patient that they are at risk of death or that death is imminent? And, for much of human history--well, it's a short window, when we actually understood when people were probably going to die--that took a long time to understand medicine. But, for a long time, once we got to that point, the answer was: You don't tell them. You lie to them. 'How are you doing?' 'Oh, you look great. You are going to do fine. You are going to recover.' Part of that, I think, was a placebo effect. Part of it was justified on compassion--that it's, it's--at least make their last few days happy, give them months or whatever it is. Give them hope. And yet, today, I think we've gone much in the other direction, which is: You should be honest. Let me them prepare. You know, we had a guest talking about hospice. And how important that is, to let people face their death honestly, and be as comfortable as possible and know about it, and to do the things they might want to do, if they knew they weren't going to make it. So, I think--[?] iron out is a little complicated.

David Deppner: Yeah, I agree with that. That is definitely complicated. I find myself that sometimes I'm just conflicted. What do I leave out here? Because, I feel like I should just say it all. But then the other part of me says no, I shouldn't. And there--you know, you can't do that. You know, talking about surgeons, one of the things that I wonder about, with the lies and the [?] is how much of that actually might be motivated by some of the incentives involved in medical malpractice suits--

Russ Roberts: Oh, yeah--

David Deppner: So, if a surgeon conveys certainty to you about: This is the right surgery for you; this is--like, in tech we talk about best practices; in medicine they talk about what the standard of care--

Russ Roberts: [?]

David Deppner: Mmmhmm. This is the standard--

Russ Roberts: [?]

David Deppner: So, this is the thing and this is what we need to do. And it's going to turn out--it usually turns out okay, and we don't know if that means 1% of people die or 49% of people die, but it usually turns out okay. But, regardless, if they give that level of certainty, maybe it dissuades some people from suing later on, after the fact. Because they feel like that was a very competent doctor doing things very well. And so things didn't turn out, but you know, that's how it goes, sometimes. And so, some of that, I wonder if it's a facade to steer people away from lawsuits.

40:09

Russ Roberts: Yeah; in fact, the other thing that--when I get an issue of--I think we all do this to some extent: When something is at the front of your brain, all of a sudden everything you see tends to remind you of it. So, I've been thinking about this issue of certainty that you raised. And so, a number of things have come along in my Twitter feed or my daily life where I've been confronted with this question of how honest to be, or whether it's honest to myself, as well. But the issue that you just raised is one I've been reading about in the last couple of weeks, which is: Should a surgeon or doctor ever say that they're sorry for a bad outcome? So, the issue that was given, and the thing I saw, was a surgeon made a mistake. They slipped. Their hand didn't go to where they wanted it to go. They nicked something. And the patient died as a result. So now they confront the family. One view says, 'Lie. Don't tell them. Just say it didn't turn out well.' Of course, sometimes I think we have evidence--the system is designed to avoid that opportunity for the surgeon. I don't think surgeons can lie about those things the way they used. So, in this case, the surgeon said, 'I'm sorry.' Now, the article--I don't know if I can find it--but, the article was about debating: Should the surgeon have said that? And one of the issues was exactly what you just said. Which is: By saying you're sorry, you deter a lawsuit. Now, stepping outside of that for a moment, I believe that the right response in that setting is to tell the truth--that you made a mistake. That you deeply regret it. And to be vulnerable--going back to our earlier point. I think as a human being, that's the right thing to do; and I don't care whether it raises or lowers the choice, the odds, of a lawsuit. And I think a lot of medicine is messed up today because of those kinds of strategic issues. You know, I think a person confronting a death in that situation wants to hear the truth. If they don't, I'm not even sure it matters. Same thing happens in the military. Somebody dies from friendly fire--from their own side. And I think, we want to believe, that people die heroically. We want to be told that, you know, they saved somebody's life. That they died, but, from the hand of their own soldier colleague, friend, is unbearably tragic. And--but I think, yet, in those situations, I think there's a level of honesty that's required. But that's just--I don't know. That's my thought.

David Deppner: Yeah, the--opening things honestly, as we're dealing with. Those military issues. So, just a brief digression. The other podcast I listen to quite a bit is the Jocko Podcast that started a couple of years ago. And this is an ex-Navy-seal, leadership positions. He's talked about, a lot about those blue-on-blue situations: how they come about, how common they really are. That's sort of amazing to think about. That's a real issue. And that's something that--in a military context, they can engage in an awful lot of training to try to prevent scenarios like that. How you deal with it during and after--obviously preparation is a big deal there--but how you deal with it afterwards when something goes wrong: Your example about surgery, that's a big issue. I'm trying to think about examples, just myself. Sometimes I've made some big decisions that have involved a lot of money: 'Oops--we didn't notice that for 3 weeks. Well, $30,000 got spent and mostly wasted.' That's come up. And, again, in most situations where things like that happen in a business world, dealing with e-commerce systems and all these--the data is there. Everybody can see what went wrong after it's noticed. You can't really sweep it under the carpet. These are not the days where, you know, the accounting system is just on paper and you can fill out a new sheet and throw the old one away and just make it disappear. So, a lot of that data is preserved forever. It's still going to be there 20 years from now, when somebody goes in and looks at one of these systems and says, 'What went on back then?'

44:22

Russ Roberts: Yeah, I want to come back to Churchill for a second, because one of the themes of Andrew Roberts was how many mistakes he [Churchill] made. How many failures he had. And, I think Andrew Roberts's viewpoint was he learned from them. I don't know if he learned from it all, exactly. He gave an example where, you know, that he never overruled his Chiefs of Staff in World War II. I don't know if that was a good decision or not. Something, he did learn from his mistakes in World War I, perhaps. But, you know, it's the same point--That's it's not obvious: You should learn from your mistakes but you shouldn't take them to heart; and then how do you do that is not so straightforward, right? Shouldn't lots of mistakes lead to lots of humility? Heh, heh. In the leader, right? And, it should change your behavior. I think one of the points that will survive this conversation is that, being aware of your failings does not mean you should give up. It may mean you shouldn't be a leader. It may mean you are not good at it. There are situations where a lesson learned is that you should stop doing something. But I think--I'm going to try to square this circle in a minute--but I think there is a way to deal with the reality that we're not perfect. We make mistakes. We lose money. We have surgeries that don't go well. Some of them are our fault. They are not just random. There's a huge random component on top of it. But on top of that, there's our own imperfection. And, I don't think--I think you should confront your imperfection in life. And I don't think that should paralyze you. So, I think one of the answers I'm going to give you is that I don't think humility means that you give up. It doesn't mean you have nothing to contribute. It doesn't mean you're flawed and therefore you should stay quiet. You should grow. You should understand what you needed to learn from a situation, and ideally you should get better at it. I don't think you should be foolish about how better at it you are. That it will never happen again. Whatever. But I think you can grow and get better. And I think that it does not mean you should just give up.

David Deppner: So, the failures that we have in life really shape the places and opportunities we have next. I think. And there's--again, you look at somebody's career like Churchill's, there's probably multiple points of failure that pushed him off in this direction; and then that set up for something that came later. And then that something that came later, another failure. In every one of those cases, though, it's easy to look back and see something where maybe there was some path to greatness. But, in reality, it was stumbling along through one closed door after another. And, again, it's just like, it's almost like there's some selective filters and you almost made it some and you didn't make it through others. There's not necessarily a cosmic path you're following that's been dictated from on high. When you talk about the issue of fault--whose fault it was, whether you own that, whether you give up--I increasingly think that it's always my fault when I'm in a leadership situation. Um, and, it's a powerful concept, I think, to grapple with whatever goes wrong. However things turned out. I had some influence, over how it turned out. And I can't control other people. And that's so true in human organizations. Like, I can help some people, I can train, I can mentor, I can structure some things. But ultimately, you know, they are not puppets. I don't control them, really. I just control me. That old stoic idea of you only control your own thoughts and deeds. So, if you can find a way to just own all the problems that pop up in life, that's actually the path to figuring out what to do about them. That you can do. To be able to take the actions that you can take.

48:26

Russ Roberts: Dick Mahoney is the former CEO of Monsanto. And he told me the following story, which is an interesting illustration of what you are talking about--at least a partial illustration. When he was CEO, Monsanto had plans, factories, all around the world. If anybody died, on the factory floor, in a Monsanto facility, anywhere in the world, Dick Mahoney required the manager of that plant to be in his office within 24 hours, in person. And when that person walked in the door, Dick Mahoney confronted him and said, 'Why did you kill that person?' Which was a horrible thing to say to someone who I'm sure was deeply upset, and probably had many regrets, thought about a lot of things. But when confronted with question, he said, they'd often answer, 'Whoa, whoa, whoa, whoa. What are you talking about?' And he would say, 'There was something you could have done.' Now, Dick wasn't dispensing cosmic justice. He was trying to create a safer organization. And, unlike economists who would say that the optimal number of deaths isn't 0 because there are tradeoffs to have a perfectly safe facility--in fact, 'If you don't want anyone to die, close the facility' would be the economist's answer; I've given answers like that before. But Dick's answer, Dick's point--which is correct, of course, in the real world--is that your culture, you want your culture to bend toward safety rather than toward recklessness. And that's it's not stable, necessarily. And you want this to be front and center going forward: That there is some system of breaks that should have been taken, or on-the-job downtime or something that in the process that could have been made more effective. Of course, what the guy could have responded--I never thought about this until just now, David, but what he could have said was: 'What about you? You killed him. You let me run this facility and you weren't on top of it.' So, there is a--there is a chain of command that is inevitably imperfect. But I think the right question, he was asking, was, 'This is a time for a little bit of soul-searching. What might you do going forward to make this less likely?' And I think that's--that's a good thing to think about. But, mistakes are inevitable.

David Deppner: When you raised that story, I was thinking about that. Why--was he looking in the mirror and asking the same question of himself? But the thing is, I think he probably was.

Russ Roberts: Well, that's why he has the guy come in. Because that's his way of trying to reduce[?] in the future. Right? So, fair enough.

David Deppner: I think the two of them need to have that connection, heart to heart, and co-accept that and find a path to a better future. Think to a military example--The captain loses the ship: the captain loses the commission. Right? That's the standard from way back in the day. And that does create one of the skin-in-the-game mechanisms, right?

Russ Roberts: Well, that's a classic example, right? You build a house that collapses and the builder--and it kills some of the builder--and I think it's in the Hammurabi Code--the builder gets killed, executed, for that failure. It means two things: Not many builders; and they tend to build really safe houses.

David Deppner: In those scenarios, with those ship captains: That means you are going to lose some good captains, for something that was just a mistake.

Russ Roberts: Yeah.

David Deppner: But that also means that there's a very high standard, and people are going to try a whole lot harder than if you didn't have that level of punishment, really. And, again, that goes back to the things about the sort of selective pressures on organizations. Even if you look at the example of the manager where somebody dies. If some people lose their jobs over that, maybe that makes the organization better, even when it truly was some freak of nature, just because that maintains that standard, that really high standard, on the value of human life.

Russ Roberts: That's a great point. The way I like to think about it is: Sometimes justice is too expensive. So, justice means making sure that you made the right decision about how to cope with this accident--you know, whether the person deserved to be fired. Whether the captain should have done something different. The amount of effort it would take to dispense that level of justice is infinite. It's a level of information that almost never will be acquired. And so, a rule of thumb--your ship goes down, you lose your commission, you are out--is unfair. It's unjust. Because there are going to be times when it wasn't the person's fault. But, the alternative--which seems attainable--of justice: 'Oh, well, each case, we'll look and see whether it was their fault or not'--there's such a gray area, there. And there's such an effort that would be put into ascertaining that, that it might be better to be unjust. I just to--I probably mentioned this before, but I used to have a rule on my homeworks that they would never be regraded. When I was teaching in the classroom, I would say, 'The homework's 15% of the grade. If you don't do the homework, you probably won't do well on the exams.' So 'The only reason I make it 15% is to incentivize you a little bit to spend time on it. If you don't, you could get an A anyway. You could do just fine. It's possible. It's unlikely, in my experience, but it's possible. So I'm giving you a little bit of paternalism here, making it 15%.' So, I did that. And then people would come in and say, 'This was misgraded. You gave me a 3 out of 5. I think it's a 4.' And I'd look at, and sometimes I would say, 'You're right. I was a little harsh with that 3. It should have been a 4.' And then I'd sit there and they'd look at me and they'd say, 'Are you going to change it?' And I'd say, 'I'm not going to change it.' 'What do you mean?' 'I'm not going to change it.' 'But you said it's a 4.' Well, here's the problem: If I say I'm going to change grades that are unfair, people only come in when they are too low. People who got over-graded, who I gave them a 4 and they deserved a 2, they are never going to come in. And then, if I really wanted to be fair I'd look at the other questions I graded. So, given that it's 15% of the grade, I'm kind of assuming it's going to even out over the course of the semester--we're going to have 5 or 6 homeworks. So, the cost of doing that--I really don't want to incentivize you as the student to come begging and pleading, because I hate begging and pleading. Just get smarter. That's the goal. Now, if you miss--I treated exams differently. They were 40%--excuse me, I think the homework was 10%. I think midterm was 40% and the final was 50%. If I misgraded your final, I'd take a look at it. But my rule was: If you submit for a misgrade, I'm going to regrade the entire exam. I don't want to just selectively have people come in who think, on this on this one question--and there's an injustice there. By the way: I got increasingly uncomfortable with it as I got older--I realized how arbitrary a lot of grades were in my class, and the grading process is--there's an inherent ambiguity there that is inherently unjust. And it's--the examples we are giving from human life that are tragic, not just a misgraded homework, but a life lost on a factory floor, of course, very different, or a ship that goes down. But the principle is the same. And I think the same principles applies in sports right now, where the obsession with getting the call right in soccer, in football, and the use of instant replay--there's no end to it. If we really want to know--we're going to see that in the National Football League: they've changed the definitions of interference. And I think they've opened a Pandora's box they are not prepared for. We'll see what happens. But my point is--just to reinforce your point: A rule of thumb can sometimes be incredibly unjust and be the right rule anyway.

David Deppner: I think there are a lot of situations where that rule of thumb is unjust to the person who is sitting there in the hot seat. But the broader effects on the organization are amazingly good. And, so, yet, maybe--and that's a tough one from an ethical perspective. How hard do you go on this person, knowing that that actually is the best thing for the organization?

Russ Roberts: Yeah; I'd make a distinction between the Hammurabi Code where you execute the builder who--when the house collapsed, it may not have been his fault--it was a really bad hurricane that season--versus the commissioning, decommissioning of an admiral or a sailor, captain of a ship.

56:46

Russ Roberts: I want to shift gears now and give what I think is a better answer. So, we've been talking about a lot of interesting aspects of this trade-off between honesty and humility in leadership situations, family situations, medical situations. I think there's a deeper point to be made, that you've brought out. And I realized from your email that this question is a really big question: This question of how do you move forward in life, honestly, knowing that there is uncertainty? And yet knowing you have to make decisions. Right? So that's a different way to phrase this leadership question. There's a part of your story with your employee where it wouldn't have been that harmful to be somewhat overly confident in that setting if you had known that she needed that. You wouldn't have felt you'd betrayed your integrity. This gets back to the white lie point, right? There's a way as a leader I think you can be honest without being arrogant. So, that's one--I think there's a deeper answer; that's what I'm going to try to push this toward. And, once--I grapple with these issues because I talk about them so much, because I think they're so important; I don't know; part of them is just fascination with uncertainty. But, I realized after your email, I realized how little I had to say. Even though we'd had a nice conversation for almost an hour. I didn't have a clean answer to your question. So, I want to focus the question; I want to try to give a different kind of answer. So, the focus of the question is: How do you get through life? I'm going to take it away from the leadership/CEO challenge. How do you get through life knowing that you are flawed? The power of your reason is imperfect? In theory you should be uncertain about almost everything. And yet, you can't live that way. So, where do you draw the line? How do you cope with the reality that humility is demanded but sometimes untenable? How do you square that circle? So, I'm going to give an answer that came out--it's interesting--it came out of an episode with Charlan Nemeth. And, when we had this interaction, when Charlan and I had this interaction, I remember it being very comforting to me. I didn't realize at the time I hadn't thought about it enough--I just sort of went, 'Oh. Oh, yeah, yeah, yeah. It's okay what I think. It's fine. It was a form of confirmation bias, actually. But your challenge really reminded me of that interaction with Charlan Nemeth. And then I went back to it, in preparation to this conversation today. And I think there's something there--and I didn't warn you about this; you heard it the first time--

David Deppner: I listen to all of them, but I don't remember this one off the top of my head.

Russ Roberts: So, that's good. So I'm going to give you a--I'm going to sort of--summarize what she said and then maybe riff on it a little better, maybe let you respond and then I'll riff on it. But, her book is called In Defense of Troublemakers. And, in a way, you can think about Churchill as a troublemaker. Right? Here is this obnoxious, arrogant, self-centered narcissist, overconfident about the dangers of the German military buildup. And he won't shut up. They are sick of him. And I mentioned this to Andrew Roberts--that England lost, I think he said, 1.1 million people in World War I of a population that was something around 40 or 50 million. Horrific. And nobody wanted to go back to war again. And here's this lunatic, this one-note guy, just won't stop. And so, troublemakers are really important. People who are obsessively overconfident. And it's part of what we've been saying for the last hour, is that in different situations of leadership, humility is a weakness. And maybe a mistake. And so, I was talking to you about that; and I raised a question, that is a version of your question, which is--of course I've forgotten. I've heard all the episodes, too, by the way. But it's remarkable how listeners remember more than I do; and the transcripts are even more memorable, of course. So, I raised the following question I said: Somebody like Jordan Peterson, somebody like Milton Friedman, somebody like Aleksandr Solzhenitsyn--these were people who were extremely confident that they were right about certain things. And they exuded that confidence. And that confidence, as a consumer of it, is extremely seductive and exciting. So, the downside of the seduction is, you listen to your political candidate and you think they know everything; they are going to make everything perfect. That's obviously a horrible thing. But the troublemaker--not just the leader, but the troublemaker--or the person who stands athwart history, stand athwart intellectual trends, groupthink, and says, 'You know, wait, whoa, whoa, whoa.' And, that person, to be heard, has to be really competent, understand, usually; or incredibly articulate. Or incredibly eloquent. And you combine those and you start to get somewhere. So, I said to Charlan Nemeth--I said, 'You know, these people'--and I don't want to put--they are not all the same; obviously Jordan Peterson, Milton Friedman, and Aleksandr Solzhenitsyn, there are a lot of differences, folks; I'm very aware of it. But I'm talking about how, when someone calmly asserts certainty, they force you to listen. That's a human--that's part of what you are saying, is that people in your organization want that. We want that. We crave it. We desire it. And so, there's something fantastic about it. There's something important in that those people stand up and speak out. And so, I asked her about that. I'm going to read an excerpt from the transcript [the Highlights]; and she said something at the time that, again, I found very comforting, but I realize now that I need to think about it some more. She said--I was talking about myself at that point, and I said 'I wonder whether I'm too humble: I'm constantly saying I don't know. And maybe I am paralyzed to some extent: I'm not going to take sides on a lot of policy issues that maybe I should speak out about, because I'm going to say the evidence is complicated.' So, Charlan said,

[Charlan:] I wouldn't say so much that they are confident. It's not so much that they are confident as they are, they have conviction.
And I said, 'Well said,' because I liked that. Is that--that seems like an important distinction. Is it? And she said
[Charlan:] And, they are stating something that they really have--they've thought about and really believe. But that doesn't mean that they also don't, at a very deep level, know--or in fact are sure that they don't have the full answer. That doesn't mean they haven't considered every possibility or every contrary to what they've come to believe. And so I think you can be both. And, I'm--I think your phrasing of the 'strong opinions, weakly held'--the weakly held part of that is a willingness to know in your heart, and sometimes even to acknowledge that you might be wrong. That have still much to learn. But this is really what you believe, given that you've given a lot of thought and you are quite convinced that this seems to be accurate. I mean, given what you are capable of.
End of quote; and I paraphrased that in a place or two. And I want to continue with Charlan's answer, and then we'll talk, David. Sorry. This is just really, I think, beautiful; and again, I just had totally forgotten about this, so I'm grateful to you for reminding me of it and getting me to think about it.
1:05:07

Russ Roberts: So, Charlan mentions Karl Weick, who is an organizational psychologist; and she says

[Charlan:] everybody quotes this, but many people don't attribute it to him--which is, by the way, [Russ: I think she said that's unfortunate]. But, you know, his phrase is: Argue as though you are right, but listen as though you are wrong. And that, to some extent [says Charlan], captures doing both of those--I think is getting close to what you were sort of suggesting: Is that you are arguing as though you are right, because like the strong opinions. But you listen as though you are wrong. And that's because you know they are weakly held and there's still much to learn.
And I went on to--do I want to read any of this? I went on to talk about a quote from her book:
[Russ:] It says "Group Decisions Often in Error, Never in Doubt." I think that's just a great line. And, when we leave a meeting having made that decision, we are all high. "We did a great job. We did the right thing. We came to the right conclusion".... And, being aware of the possibility that you are wrong is a great thing to be reminded of, and I think that's one of the things your book does.
So, the point she's making is that life is uncertain. We're never sure if we're right. But, if we grapple with something and we do the best we can, inevitably there comes a point where you have to come down and make a decision. You've got to act. You can't say--you can--you can be a hermit and sit in a cave and never do anything in the world besides eat and sleep, I guess; you can't make much of a living. But, in general, in the reality of the world you have to make decisions under uncertainty and so you do the best you can. The more you grapple with it, often, the more confident you are that you've done what I think you call best practices: there's imperfect information, you can't decide exactly what the right thing is but you do the best you can. And, is it possible--so here's my question, and then you can say whatever you want; you don't have to answer this question but I'm throwing it out there: Is it possible to be confident that you've made the right decision knowing that you've made the wrong decision? And I think that's the way to square this circle, is that: You do the best you can, knowing that there is never enough information to make a perfect decision or a just decision or the decision where you know how it's going to turn out because you know that's the way life was made to be--it isn't that way. But you are allowed to have confidence that the process is the best it could be, and that you--you may even be confident that it will turn out well, knowing that it might not.

David Deppner: I think that's a really good way to summarize it. A lot of what I think I've learned over the years, that, I think early on when I was a young manager I didn't really understand the social roles of what I needed to be. I appreciate that more, now. But this really does come down to business, and really everything in life, is making decisions when you just don't know everything. You are making a set of bad decisions that hopefully are the least bad they can be. And you roll with it. Maybe that's a little pessimistic view of it: maybe it's not really the least bad. But that's kind of one way to look at it: you are trying to maybe mitigate some risks here and look for areas that are probably going to have better outcomes than others. And you have to roll with it; and you have to see what's going to happen. I think that, as I've gotten older, I've gotten far more confident that even if I made the wrong decision, it's still going to turn out okay. Life will find a way. We'll bumble through it. A door will close; another will open. A relationship will end; another one will show up. Every decision doesn't have to be perfect. This comes up all the time. I think that something that helps is also to have a history of making decisions that are good enough and seeing them move the ball forward. And seeing the results that you get out of that, knowing that we don't have to make an absolute perfect decision. We have to make decisions that are mostly right, most of the time. And that will move the needle. That will get us the results that we are trying to accomplish, or, you know, achieve the goals we have personally in life. We are moving towards that longer-term vision of what we want to be. So, I think that just leads to a scenario where, maybe I can't be certain about the decision being perfect, but I can be confident that I've done this before. I can be confident that this is the best we can do with the information available. And, when we have to convey something to other people that we are working with, that that's something we can convey with confidence, rather than certainty. 'We've encountered problems like this before, and this is how we solved them, and this is how it turned out.'

Russ Roberts: So, I want to think about that employee who was anxious about the future of the company and wanted you to reassure her. There are things I think you could have said that were honest but comforting; that were--so, I think the, I think the Gene Kranz level--he's the Apollo 13 guy--that level of overconfidence, that failure is not an option--and that's the Churchill level of confidence--that's crucial in a life-threatening situation. You've got to have and exude that level of confidence. You can't show insecurity. You cannot show uncertainty. But that's not most of life. And that's really what I take from this last point you actually had, I think was beautifully said. You know: Things work out okay, a lot better than we thought. You do the best you can. You learn from your mistakes. You go forward with confidence that you've done best practices or you've looked at what you can look at. And you realize and recognize that you might make a mistake. And that there's nothing wrong with that. Because it's not the end of the world. You are going to recover. Another door will open because of their decision that will help you deal with it, etc., etc. And I think the other issue we haven't talked about, and we don't have time to go into in depth, but I think it's very relevant to what we've been talking about, is the desire for control. And the desire to be confident--it's a form of misleading yourself. That, you're in charge. It's true your employee wanted to know you were in charge. But, if you are not careful you actually delude yourself into thinking you are in charge. And that, that, there's a lot of reasons that's a bad idea. There's probably some benefits to it. It leads to, you know, maximum effort in a lot of situations. The drawback is that: You are not in charge. And you are going to be confronted with that over and over and over again. And for me, just at a personal, psychological level, a lot of my growing up in the last decade or so, I feel as a human being, is coming to try to cope with that--with, my need for control, my need to be in charge. And I would just say on this episode, I had no idea how this was going to turn out. I was telling my wife this morning, 'You know, I don't know if we have more than 20 minutes to talk about, 30 minutes. If it only goes for half an hour, we'll just issue it as an extra [an EconTalk bonus episode].' But, you know, at one point I just said, 'Well, let's see how it goes.' You know: It's okay. I don't have to script the conversation. I didn't script it. I just said: Here's some mileposts I think we'll hit. But, I think it will be okay. So, any other thoughts?

David Deppner: Well, as we're talking about these issues, one of the things that popped into my head driving here today was thinking about that--that old story about, I think it's Michelangelo chipping away at the David statue, 'How do you find David in the middle of that marble block?' And it's: 'I chip away everything that's not David.' And I think that, with many of these issues, we haven't found David yet. We're sort of just chipping away at the block. But the closer we get, the more we know that it's not David. And, for me, I think that's also just something that's comforting, and that is interesting to think about. That, it's not always about being certain, about being right. It's sometimes just understanding more ways that we used to be wrong and we're not that wrong in that way any more. Don't have all the answers. But we're moving in the right direction.

Russ Roberts: And, I, I, I'm tempted at this point to try to summarize--that's a nice summary. But there's so much more we came up with today. And I want--I'm sure I'll come back to these issues. And I'm also sure that I'm not ready to summarize how I feel about it yet. You opened a challenge to me that I didn't realize--I'd thought about before in that Charlan Nemeth episode and whatever else was on my mind in those times. And I think part of is living--I've talked about this on the program. Part of it is living in a time when there's so much certainty on the part of people yelling and the outrage is so self-righteous that my natural impulse is to be less self-righteous. And that that comes with a cost, though. That there could be some dangerous self-righteous people out there; and I better be self-righteous on the other side. And this academic, former professor sitting around saying, 'I don't know. I don't know,' is possibly the wrong response at this moment in history. So, these are issues that I don't have an answer to. And I love your idea that there are things that are not David, there are things we know are not the way to go. Lying to oneself constantly, overconfidence all the time, overselling of data and research that's not reliable, and so on and so on. So, it's not like we haven't made progress. And I know that I need to continue to think about these issues. And I thank you, David, for bringing them to the forefront of my mind.

David Deppner: Thanks a lot for having me on EconTalk today. I didn't expect this when I sent you that email. When I got your reply, I was just floored. So, hey, one more thing crossed off the bucket list.


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