Pseudocertainty Effect

The Pseudocertainty Effect is a cognitive bias where we perceive a situation as less risky or more certain than it actually is, particularly in multi-stage decision-making. This bias can lead to overconfidence and poor judgment, as we might underestimate the risks involved in subsequent stages of a decision process.

---

This effect was identified within the larger idea of prospect theory by Daniel Kahneman and Amos Tversky. Their groundbreaking work in behavioral economics, especially in the late 1970s and 1980s, challenged traditional notions of rational decision-making. The Pseudocertainty Effect specifically addresses how perceived certainty in one stage of a decision-making process can lead to a distorted assessment of risk in later stages.

---

I want to tell you a story about failure.

But first, let's hear from this week's sponsor...

---

---

Now back to the story ⏬

This is a story about hubris and how the pseudocertainty effect clouded the judgment of me and my entire team.

Several years back I was the UX lead for a big project, designing software to help our shops repair jet engines.

Basically, these giant jet engines were broken down at one shop, and the parts were sent worldwide to various component repair shops to be inspected and eventually repaired. Once that was done the parts were sent back, reassembled, and the engine tested.

All of that so you could fly across the world going 500mph at 36,000 feet.

Safely.

🤯

A year or two in we had several wins.

✅ We had a few successful releases.
✅ We got lots of positive feedback from users.
✅ Leadership loved the value we were delivering.

Nothing could stop us…

Or so we thought.

😬

Because things were going so well for us on the ground, we assumed the business would keep funding this project until we were done.

Turns out things were going on in the background that none of us had insight into.

💥 There was a big corporate restructuring in the works.
💥 The 737 MAX problems were grounding a huge part of customer fleets.
💥 Then COVID killed the travel industry entirely.

→ Engines stopped coming in for regular maintenance.
→ The business wasn’t making money on shop visits.
→ Something had to be cut.

The product was completely defunded.

The entire site was laid off.

Everything completely flipped on its head in a matter of years.

All those wins kept us from seeing the larger picture. It kept us from understanding all of the outside circumstances and issues.

If VUCA has taught me anything it's that you never know what is around the bend.

Even if you've had a string of Ws, you never know when that L is going to hit.

---

🎯 Here are some key takeaways

1️⃣ Avoid overconfidence based on early wins: Early successes should be celebrated sure, but they shouldn't lead to overcommitment or underestimation of future challenges.

2️⃣ Implement flexible planning: Adopting flexible planning methods can help teams adjust to unforeseen challenges and mitigate the impact of the Pseudocertainty Effect. Avoiding waterfall planning will help to adjust as the team progresses.

3️⃣ Learn from past experiences: Regular retrospectives every sprint can help the team reflect on how progress is going in near real-time and pivot as needed, early.

4️⃣ Empower the people on the ground: The team that’s doing the work will see firsthand what is and is not working. Empowering this team to make changes when they see issues will allow the larger team to pivot sooner if needed.

5️⃣ Embrace a culture of psychological safety: Ensure the entire team can speak up without fear of retribution from leaders who may not like what they are hearing.

Learn more about the Pseudocertainty Effect!​

---

---