How do people deceive themselves? Don't ignore weak signals to gain insight and change the future.

Editor's Note: Today's environment is full of changes and uncertainties, and all walks of life are moving towards unknown waters. The two authors of Black Swan and Barking Dog, from the study of 20,000 managers, found that managers who can shape the future in uncertainty have strategic leadership, can interpret seemingly unrelated external changes and gain insight into threats, needs and opportunities in advance.

What we expect to see usually determines what we are most concerned about. Psychologists call it "selective perception". If something or a phenomenon doesn't meet our expectations, we will distort the facts and make it conform to our mental model instead of questioning the mental model itself.

At that time, there was a weak signal that digital photography would soon become the mainstream, but the leaders of Kodak Company failed to effectively amplify and interpret this signal and take action accordingly. This misunderstanding reflects: first, middle managers think that digital technology is worse than film; Second, executives believe that the needs of Kodak shareholders are more important than the needs of consumers and engineers.

Our cognitive and emotional filters may further block the data, and countless investment managers are hurt by this blockade. Their filters filter out the signal data that makes people feel harsh and unsightly in the subprime mortgage market, so as to continue to grab short-term profits.

Similarly, mortgage brokers distort, obstruct or simply ignore the fact that many mortgage applicants will be unable to repay their loans. They distort the signs and point out that everyone does it, thus rationalizing their behavior.

We often see such prejudice that leaders try to cover up, downplay or euphemistically state bad news and bad results. In the oil and gas industry and other commodity industries, leaders often blame external factors, such as economic depression, for bad results. Market volatility may indeed have a great impact, but strategic leaders should explore deeper questions: Are we doing a good job in interpreting signals, predicting recession and making plans to fight it? Are we doing better than our competitors in these aspects? Or, are we doing better than the last recession?

The business director of a high-tech company has been raising his annual revenue forecast because he thinks his business plan will be as he wishes, and he also wants to be braver and compare with other less enterprising peers.

During the Internet boom in the late 1990s, it was successful because there was a downwind behind it. However, when the market deteriorated in 200 1 year, he did not adjust his usual practice. In the first year, the company let him go, so he continued his previous practice and made an overly optimistic annual revenue forecast. Unfortunately, the market boom has not improved. He lost his job and damaged his reputation.

In addition to filtering out harsh and abrupt information, we tend to look for evidence to confirm our previous views, which is called "confirmation bias"

In the early 1960s, an executive of Decca RecordingCompany was so confident that "the era of guitar bands is over", so the company refused the exclusive opportunity to sign a contract with the Beatles.

For a long time, Encyclopedia Britannica has been the first brand in its industry, occupying a dominant market share. 1989, Encyclopedia Britannica sold more than100000 complete works, setting a revenue record of $627 million.

Later, a young man with a little longer hair suggested to Peter Norton, the CEO of the company, that we record all the contents of Encyclopedia Britannica on CD at a price of 100 or less. The young man persuaded Norton that CD-ROM can make consumers find the information they want to refer to faster and easier than the whole set of printed books. With its world-class content, Encyclopedia Britannica will become a pioneer in providing images and interactive performances in the inevitable trend of digital media development.

But Norton is puzzled: why did he change from a set of printed books with a price of 1300 to a CD with a price of less than 100? Moreover, it also means that most of the company's large-scale sales team will be laid off, and the company's huge text library will be reused in new ways to produce new multimedia content, which will be sold through new channels, even in supermarkets! In addition, Norton shuddered to think that several companies tried the idea of digital encyclopedia, but they were all shot dead by arrows. He didn't want to rest in the graveyard of losers, but devoted himself to the cause of bold action but unfortunate failure.

Other Norton executives feel the same way. They rejected the proposal of this hippie-looking young man, who is Bill Gates. Although rejected, it can't stop this young entrepreneur with vision and perseverance.

Soon, Gates found another partner. Grolier is one of the largest encyclopedia publishers in the United States. As early as 1986, it launched its own electronic encyclopedia, and the company also developed various electronic game products using Microsoft operating system.

Gates invited this cooperative company to assist in the production of Encarta, a Microsoft electronic encyclopedia, and launched a CD-ROM in 1993, which changed the encyclopedia industry forever. By 1994, the performance of Encyclopedia Britannica had dropped by five to three percent. A few years later, the company filed for bankruptcy.

How does intuition get judgment? Intuition obviously affects the process of reasoning and meaning construction, especially when leaders deal with complex data and weak signals.

Leaders need years of experience and frequent and timely feedback to cultivate reliable intuition. When we drive or enter many people's rooms, our brains will automatically react, quickly identify patterns and make correct inferences. But when we encounter new situations, we must think more consciously, because in this case, our usual pattern recognition operation may not be feasible.