[Yoo Hyo-sang's Leadership Misjudgment] The Fox and the Hedgehog

Gary Klein, a professor of psychology at the University of Michigan, conducted research on how much we can trust experts' intuitive judgments in various fields. He concluded that intuitive judgment is meaningful only for a very small number of professions that have been trained for a long time in highly repetitive situations. For example, it is limited to firefighters, emergency room doctors, airplane pilots, athletes, Go players, and professional gamers. These jobs have the characteristic of repeating routine tasks for a long time, and above all, 'rational' intuition is strengthened by quick feedback on results, allowing them to find effective solutions very quickly in similar situations. However, he emphasized that even in these fields, the reliability of long-term predictions is almost non-existent.

Burton Malkiel, a professor of economics at Princeton University, publicly conducted an extreme experiment called the 'stock picking contest' between monkeys and investment experts. The results were very surprising. There was no significant difference in the returns of stocks picked by monkeys and those picked by investment experts. The experiment was conducted to prove that predictions based on experts' intuition in business, investment, and stocks are not very meaningful because almost everything in the world does not move according to regular patterns. The results of this experiment were detailed in the world-famous bestseller 'A Random Walk Down Wall Street'.

Philip Tetlock, a professor of psychology at UC Berkeley, researched why scholars, critics, and other experts failed to predict major global events in the 1980s and 1990s, such as the collapse of the Soviet Union, the Japanese real estate bubble, and the Gulf War. After a long period of empirical research, he published a book titled 'Expert Political Judgment'. The conclusion was that experts' predictions are not much different from coin flipping. He noted that the predictions of 'the most knowledgeable' experts who frequently appear in the media were often wrong.

Despite much evidence that experts' intuition cannot be trusted, people's belief in intuition remains strong. This is because the world is becoming increasingly complex. In a rapidly changing technological and social environment, where even the near future is uncertain, people need faster judgments and more frequently rely on intuition. This tendency occurs in almost all organizations, and even in the era of AI, most leaders still make judgments and choices based on intuition.

Warnings about intuition do not ignore the experience and expertise of leaders. It emphasizes the risks of decision-making when leaders are overconfident in their intuition. In a reality where the time given to leaders is getting shorter, a pause is necessary to reduce the risk of misjudgment. Leaders must remember the nature of intuition that intervenes in hurried judgments and give themselves the leeway to switch to a rational perspective. Many business success stories still highlight leaders' intuition, creating plausible hero stories, but in reality, the outstanding intuition of leaders is not found in actual success and innovation.

Isaiah Berlin, who was a professor at Oxford University, classified humans into hedgehog types and fox types in his essay 'The Hedgehog and the Fox'. Hedgehog types believe in an unchanging 'one' principle and walk a narrow path, while fox types are willing to change their opinions 'according to the situation'. However, the world tends to trust hedgehogs more than foxes because they mistake the confident attitude of hedgehog-type humans for skill and expertise.

Leaders exist to solve the problems of the company and its members. The starting point is the discovery of the problem. What is needed in this process is the fox's spirit of gathering various opinions and information. The eyes to identify problems must be clear, and the policies to solve them must be bold. Leaders must be cautious, strict with themselves, and manage the organization based on deep contemplation. This is the dignity of a leader.

Yoo Hyo-sang, Director of Unicorn Management and Economics Research Institute