Steered by Sensitivity

Steered by sensitivity

A plea for more intuition in the boardroom

kpmg.nl 2 | Steered by sensitivity

Contents

Introduction 3

Insights into intuition 5 Ap Dijksterhuis 10 Antony Burgmans 12 Dan Ariely 14 Yves Gijrath 16 Herre Kingma 18 Victor Lamme 20 Ine Voorham 22 Maarten van der Weijden 24 Eric Nordholt 26 Ronald Plasterk 28 Gerrit Zalm 30

Conclusion 32

Contact 36

Introduction

“Let’s sleep on it”

This is a phrase that is commonly used when faced with a tough how to create more room for own decision for which there is no simple, or rational, option available. responsibility. In subsequent meetings and in a new paper, ‘Trust Rules’, we This simple phrase is about much more than just delaying the presented tools to improve the balance decision. It is about facilitating the decision-maker’s intuition. between trust and rules. It is about questions that cannot be solved by rationalisation alone, The theme of this white paper before but those in which intuition plays an important role. you is in line with earlier papers and the methodology is identical. We have interviewed people from various social Does intuition get the attention it make decisions based on intuition and backgrounds to test whether the image deserves in the boardroom? And how this may possibly influence the quality we described earlier, insufficient room for can the power of intuition be optimised? of the decisions that are being made. intuition in the boardroom, is correct and This white paper attempts to answer the possibilities that exist to change it. these questions by considering the If this really is the case, it is a trouble outcomes of interviews. We wrote this some development. Therefore, we think The interviews clearly show that a white paper because we believe that it is important to look into this matter (senior) manager solely acting based ‘rational’ currently holds a dominant and draw attention to it. This publication on rational information no longer place in the decision-making process is a first step in this process which we suffices in this day and age. A good of managers within business and hope will inspire board members and (senior) manager uses both objective government and it seems that only managers. In a later stage we will information and his/her intuition, even decisions that are supported by rational initiate discussions with them on this though this feeling cannot be clearly considerations are accepted in this day subject matter. expressed. Sometimes he/she trusts and age. This probably has a lot to do hard and objective information and with a culture of fear and a conscious This publication is in line with a sometimes it is necessary to use need to cover oneself as the (uninten programme that KPMG initiated in 2008 intuition and go against current opinion. tional) result of laws and legislation with the white paper ‘Hypegiaphobia’ In this case, the decision is based more aimed at improving internal control (the fear of taking responsibility), in on a ‘feeling’ than on facts. Through the and risk management. Within such a which we analysed the imbalance interviews in this white paper we want culture it is extremely difficult to between trust and rules in society and to explore how this works in practice.

Is the decision-making process currently These four factors are a fact of life use intuition to arrive at the right more difficult than in previous decades? for managers and do not make the decision on the other. The interviewees It is without doubt that, currently, decision-making process any easier. provided us with a large number of making decisions is often complex for We often resort to benchmarks and perspectives and insights which we are management. This is due to, amongst numbers to prove a point. It is, however, happy to share. Of course there are no others, the following factors: a question of whether this is the best linear solutions for optimum decision- way to reach a good decision. The need making and there are definitely no • The world is increasingly becoming to avoid as many risks as possible by ready-made recipes. We do, however, more complex and the consequences trying to control everything leads to present you with some headlines from of a decision are hard to grasp for the development of increasingly more our survey on the following pages. an individual because everything control mechanisms. These are often increasingly links together. counterproductive, because these mechanisms further increase our • In today’s society, changes occur fear of losing control. Particularly in with phenomenal speed and volatility, the aftermath of the financial crisis, which puts a great deal of time there is a tendency to make everything pressure on taking decisions. objective, measurable and rational.

• The information available grows Interviews exponentially but, as a consequence How do good managers operate in of the information overload, we are the force field described above? faced with a paradox that we are How do they arrive at good decisions? often less informed. We interviewed eleven people that are involved with decision-making in various • The pressure of accountability for fields, from top athletes to scientists all decisions (also legally) grows and and board members. Central to these this demand for more accountability discussions was the tension field sometimes appears to be more between the increasing need for important than the actual decision rationality and accountability on the itself. one hand and the necessity to also

Insights into intuition

Intuition is a useful quality, but it receives a different reception irrational, but exactly the opposite is true. The subconscious is much in different sectors or professions. A judge or policeman is not better than the conscious, capable of expected to decide based on a feeling, but on hard evidence. processing a great deal of information In science, however, hunches or intuition is followed in order to to weigh up pros and cons and therefore obtain new insights. Think of Joseph Schumpeter1, who explained to arrive at rational decisions. entrepreneurship from his theory on ‘Neue Kombinationen’. The conclusion is: a person who allows the subconscious to play a part in the decision-making process makes better The interviews in this paper strengthen it is important to limit irrationality as decisions. It is particularly important for our conviction that using intuition is, and much as possible, by introducing the managers to be aware of this. remains, essential for managers and right mechanisms. One of these is that there cannot be enough attention to force people to explain how they Headlines interviews given to this subject. have arrived at certain decisions. Four headlines become visible from the interviews: Scientific research shows that humans The Dutch brain researcher Victor act less rationally than they believe Lamme even stated that there is no 1. Do not rationalise everything. they do. We are easily manipulated by such thing as free will. According to him, external factors and have mental limits. we mainly imitate other people and 2. Create an additional information Therefore, our behaviour is, or appears rather unresistingly follow the instincts layer. to be, intuitive and this is also a of our brain while we fool ourselves into significant factor in the boardroom. thinking that there are explanations for 3. Provide a decision-making process The interviews with the scientists our behaviours. According to Lamme, in which intuition is fully utilised. present a number of issues: the reality is that our thoughts follow our actions and not the other way around. 4. Dare to leave the herd. The American psychologist Dan Ariely stated that the boardroom has far less Professor Ap Dijksterhuis largely agrees. control of the execution of the strategy He stated that people often assume that than it thinks it has. According to him, subconscious decisions are also

1 Joseph Schumpeter, Capitalism, Socialism, and Democracy, 1942.

Do not rationalise 01 everything

This aspect was prominent in the discussion with Ine Voorham control everything. However, the reality is that the huge (president of the Salvation Army). She expresses concern: amount of email and other correspondence between people “We want to measure and classify everything. From the quality is like sewer waste that is being used to absolve responsibility. of dumplings to the quality of health centres. This has created It has nothing to do with leadership.” a madness which makes me really angry (...). That mindless rationalisation increasingly pops up in society and pulverises Finally, top swimming athlete Maarten van der Weijden. He many good intentions. Increasingly less people are doing gave up everything to follow his dream and during his training things that are real. I am convinced that huge savings are to for the Olympic Games spent six months, 15 hours a day, in be made in this respect.” a special ‘altitude tent’ to increase his performance: “That seems like irrational behaviour, because although the effects Erik Nordholt, former chief commissioner of the Amsterdam have been scientifically proved, the interpretations of the police, is an advocate of limiting accountability and reporting. effects are ambiguous. My trainer Marcel Woulda, however, When he was chief commissioner he often tore up letters and explained to me that this is hardly relevant for top athletes. policy documents: “My creed was simple: if somebody wants Scientific research is about averages and target groups. But as something from me, they will have to come and see me and a top athlete you are anything but average, so by definition you explain it in person. That works much better. Whether I could cannot rely on research. That convinced me to sleep and eat in do that in this day and age? Of course I could. Even now we that stupid tent, mostly because I have great trust in Marcel can expect a bit more boldness from our leaders. We have and his approach.” taken bureaucracy way too far and we think that we can

Create an additional 02 information layer

If you want to make good decisions, you need to inform have a very strong focus on rational issues. I notice that in yourself based on more than just facts and figures. In parti my contact with young people or students that they are often cular, personal contact leads to a good decision because it very strong theoretically and analytically but lack a feeling for provides an additional ‘information layer’ which is relevant what is right and wrong. Further on in your career you have when making complex decisions. more experience and you develop a feeling for ‘the truth behind the truth’.” Gerrit Zalm, CEO of ABN AMRO, explained how issues such as intuition and empathy play an important role in the According to Herre Kingma, chairman of the Board of recruitment of staff: “Here at ABN AMRO I had the enormous Directors of Medisch Spectrum Twente, the best leader is luxury of selecting my own Board of Directors. I have had someone who follows his subconscious. Intuition is a part of discussions with people who had amazing resumes, however, that: “I believe in this respect in something like predestination, I did not have a good feeling about them. For me there was however, without the Biblical associations. We think that we no doubt – if it doesn’t feel right, you shouldn’t do it.” control everything, but there is an unavoidable direction. As a manager you have to be something like a mini-prophet Antony Burgmans, former CEO of Unilever, finds personal in order to recognise the patterns, to translate them and to contact essential and it is his experience that his antenna for explain them to your organisation. Intuition does play a part, highlighting issues in a relationship becomes better with but you have to use that intuition only at a time when a practice: “Not everyone has strong intuition, it develops decision cannot be rationalised.” through experience. At the start of your career you often

Provide a decision- 03 making process in which intuition is fully utilised

When you want to make good decisions, you have to fully And external pressure: a manager that is responsible for good utilise the subconscious force. You can achieve much in this results will take his job more seriously and will make more respect by setting up (the sequence of) decision-making objective decisions. Although this should not end up in typical processes in a certain way. American claim behaviour.”

Intuition cannot be mastered through a few handy tips or a According to Dan, one of the biggest dangers is that convenient five step plan. However, we can make some managers are looking for rational data in order to justify their practical suggestions on how to allow intuition to have a own ‘gut feeling’: “You can of course find data that will justify more prominent place in decision-making. For example, think any decision. Therefore, you have to define your selection about the selection process in recruitment. According to criteria before you have seen the data.” Ap Dijksterhuis: “Don’t evaluate a candidate with your colleague right after the interview, but arrange the selection Ap Dijksterhuis mentioned another important issue: such that all parties involved collect information objectively, “More group diversity allows for more intuitive group without influencing each other, and weigh that information up decisions. In this respect, it is a fact that women are more afterwards. In the meantime, the subconscious can process capable of allowing their subconscious influence. That has to the information and weigh up the pros and cons. When all the do with a difference in upbringing: most men are trained not candidates have been interviewed, you come together to to use their intuition when they are kids.” Self-reflection on make a decision. When the least senior colleague can express intuition is also useful says politician Ronald Plasterk: his or her opinion first, this will improve the objectivity of the “Intuition is foremost a question of accumulated experience. decision-making even more. This is about facilitating objective Self-reflection in this respect is very useful so that you can information gathering and arriving at the right choices based prevent mistakes. Personally I have a tendency of trusting on those pros and cons. That is not always easy, but by everyone until there is a reason to think that a person is an thinking the right phasing in the decision-making processes idiot. When that moment arrives, I radiate that feeling from through, improvement is often possible.” my pores. I label people too easily and since I became aware of that aspect of myself, I can act upon it. Before writing Dan Ariely also has some concrete advice for managers: someone off, I take a step back and now I use more of a “A fixed maximum term of office helps. Training to gliding scale than just two labels.” understand your own psyche maybe also help a bit.

Dare to leave 04 the herd

When you want to make good decisions, you have to have the vision. Even if that vision goes against mainstream.” strength to leave the herd and to go against current opinion. However, there is another side to this warns Gerrit Zalm, CEO of ABN AMRO: “Allowing intuition a large role in Entrepreneur Yves Gijrath, founder of the Millionaire Fair, decision-making incurs a risk: too often you overestimate spoke bluntly: “In my life I have made many decisions that are yourself, especially if you do not have sufficient resistance not rational or initially do not seem to be rational.” According around you.” to top athlete Maarten van der Weijden, top athletes almost always show obstinate behaviour: “It was far from rational to Organising resistance is therefore very important and believe that I would ever become Olympic champion because managers need to be alert for ‘herd behaviour’, so that no at large competitions I would achieve no higher than a one will take a dominant position and healthy discussions seventh or eighth place.” CEO Antony Burgmans also valued will take place, which will balance conflicting interests and the road less travelled: “A wise leader is capable of not blindly better decisions will be made. following the mainstream visions but developing his own

“How to utilise the power of the subconscious through phasing the decision-making process”

Ap Dijksterhuis is a professor of Psychology of the Subconscious at Radboud University in Nijmegen. He also advises organisations on how they can harness the power of the subconscious in decision-making processes. According to him, the subconscious has a bigger capacity to process information and weigh up the pros and cons than the consciousness. The subconscious is also much more rational than people often think.

Ap Dijksterhuis

“There is much confusion with regard processes, improvement is often This has made the tax authorities to rationality and how the subconscious possible. For instance, during difficult much more efficient. The beneficial works. Often people assume that decision-making, you should take effect of intuition – and therefore the subconscious decisions are also enough time to gather information power of the subconscious – is particu- irrational, however, that is not the case. without thinking about the decision larly present within people who have a The subconscious is better equipped itself. Don’t evaluate a candidate with large amount of experience in a certain than the conscious to process a large your colleague right after the interview, field. This does not only apply to an amount of information, to weigh up but arrange the selection such that all experienced tax inspector, but also to pros and cons and to arrive at rational parties involved collect information medical specialists that immediately decisions. A lot of the research that we objectively, without influencing each know intuitively whether someone have conducted here at the university other, and weigh that information up needs emergency help or not. supports that. A person who allows afterwards. In the meantime, the the subconscious to influence decision- subconscious can process the informa- Are there are other ways to improve making processes therefore makes tion and weigh up the pros and cons. decision-making? One of the things better decisions. When all the candidates have been you have to be aware of is that a interviewed, you come together to person’s subconscious opinions differ When I tell top managers how the make a decision. When the least senior from his conscious opinions. Our subconscious can help them in making colleague can express his or her opinion research clearly shows this. People say good decisions, many often agree. first, this will improve the objectivity of that they want to shop in areas with Many have a habit of absorbing a lot the decision-making even more. This is many small boutiques and specialised of information in the evening, sleeping about facilitating objective information shops, however, subconsciously they on it for a night and making important gathering and arriving at the right favour shopping areas with large chain decisions in the morning. This allows the choices based on those pros and cons. stores and they find it important that subconscious to work while sleeping. That is not always easy, but by thinking the people they meet on the street are the right phasing in the decision-making ‘their own kind’. However, many more organisations processes through, improvement is should pay attention to incorporate the often possible. Finally, it is also important to realise how subconscious, in particular with regard group processes relate to the workings to complex problems where emotional A good example of how a good set-up of the subconscious. The subconscious factors also play a part. Think, for of processes can contribute to a better plays a much smaller role in a group example, of the selection procedure utilisation of the subconscious is found because you can only communicate in recruitment or of the judicial system. at the tax authorities. Previously, when issues that can be described with words. In both cases it is important not to have reviewing tax returns on fraud and The inner workings of the subconscious the first impression be the dominant irregularities, an inexperienced employee cannot be described in words. More one and to avoid tunnel vision. The made the first assessment. Only in a group diversity allows for more intuitive process should allow sufficient room to later stage were more experienced group decisions. In this respect, it is a absorb all relevant information objec- employees, people who knew where to fact that women are more capable of tively and only then, based on these find the risks, involved. Currently, the allowing their subconscious influence. considerations, make the right decision. sequence is the other way around and That has to do with a difference in the result is that experienced employees upbringing: most men are trained not This is not always easy, but by consider- are more capable of filtering cases to use their intuition when they are ing the right phasing in decision-making where critical attention is required. kids.”

Antony Burgmans

Further on in a career, people are more capable of intuitively knowing which factors play a role in the management and decision-making of organisations. According to Antony Burgmans, former CEO of Unilever and currently a board member of various companies, an essential skill for good decision-making is: “You have to learn to listen to the signals. By increasing legislation in business it becomes, however, increasingly difficult to create sufficient space for intuition in the boardroom.”

“When I was CEO of Unilever, we intuitive antennas were not well- ing media exposure: a wise leader is acquired the American company developed. capable of not only blindly following the Bestfoods for €25 billion. That was an mainstream visions, but of developing unprecedented situation in the history Not everyone has strong intuition, it his own vision even though that vision of Unilever and in the decision-making develops through experience. At the goes against the mainstream. process – with such big decisions there start of your career you often have a are of course people who think it is a very strong focus on rational issues. Intuition has always played an important bad idea. In the end, intuition plays an I notice that in my contact with young role in the boardroom. It does, however, important role in such decisions. At this people or students that they are often become more difficult because the time you are surrounded by a team of very strong theoretically and analytically conscious need to cover oneself dozens of advisors that can present the but lack a feeling for what is right and becomes stronger. Legislation in the rationale, but as a CEO it is especially wrong. Further on in your career you US, in particular, is a very strong trend important that it feels right. At the have more experience and you develop and this legislation forces management same time you should not allow your a feeling for ‘the truth behind the truth’. to support and rationalise its decisions. enthusiasm to run away with you, If you cannot do that, you may have therefore paying a too high price. The ability to see through something is, problems later on in a legal procedure. of course, essential for all managers and That development is potentially a Intuition also plays an important role in board members. You have to look at the threat to good decision-making. my current position as board member. scenarios that are not all that obvious I have developed a strong antenna for and dare to look from a very different How can we give intuition even more issues that are not documented but perspective. If everyone says that it is space in decision-making? It is of course play an essential role in the background. impossible that the entire interbanking not an exact science with ready-made For example, when I was a board traffic comes to a halt, as a banker you solutions. Diversity in the boardroom member at ABN AMRO I was having a should think about what it would mean helps, as through the diversity of people bad feeling for a while. I had multiple if the impossible were to happen. When there is also the diversity of intuitive insistent discussions about it, but in you take over a business that seems to antennas. The role of the chairman is my opinion it was not dealt with suffi- fit perfectly within your strategy and also important – the chairman should ciently. Therefore, I retired early as a has a great deal of potential, you have to hold back in discussions and foremost board member in 2007. At that time ask yourself what would happen if that be a process guide. Someone who is the media and analysts did not perceive potential is not realised. That forces you unsatisfied should feel free to say so. that as a signal that there was some- to think critically and to ask the right Even if it is uncomfortable and even if thing going on. You could say that their questions. That is also the case regard- there is insufficient time to do so.”

“The antenna for what is really happening, gets stronger with time”

“Managers have less control than they think”

The American behavioural economist Dan Ariely has shown in numerous experiments that human nature is less rational than we think: an expensive aspirin works better than a cheap aspirin; when a subject in an experiment is reminded of the ten commandments, he or she will be less prone to lie; we still cannot see through a visual illusion of colours or shapes after it is exposed. In short, our judgement has some strong limitations and we have to use that knowledge in our decision-making processes.

Dan Ariely

“Humans have mental limits. We think Therefore, you should not rely too opinion very rationally, but also takes into that we take conscious decisions, but much on trust, but force informed and account that he/she wants to remain a many experiments show that this supported decision-making using the board member. Self preservation in the is often not the case. We know our right mechanisms. Compare it with boardroom can therefore gain more preferences a lot less well than we grocery shopping. If you enter a super- weight than the interests of the share- think and we are very easily influenced market with a shopping list, you are holders, even though it is not perceived or manipulated by external factors. less prone to impulse buying. as such. Status is important, also to Behaviour is, in simple terms, predictably people who say they do not care about irrational and when shaping the world Another aspect is that there are limits status. It would be a great experiment around us we have to factor this in. to teamwork and bonding in a manage- to see what the effect would be on the ment team. Of course it is important behaviour of board members if they Irrationality in the boardroom is therefore that people work well together and were not allowed to tell anyone that a relevant issue. In my vision, the Board have a good mutual relationship, but they are board members. has far less control over the execution the other side of too intense bonding is of a strategy than it thinks. A number that the subjectivity of decision-making Are there other mechanisms to limit of factors play a part. One is that when increases, or that it leads to group irrationality as much as possible? you make a decision you always take thinking even when the manager thinks A fixed maximum term of office helps. into account how much you like some- that this is not the case. This increases Training to understand your own psyche one. Friendship is a factor in important the risk of unwanted irrational decisions. maybe also help a bit. And external decisions that is almost impossible to pressure: a manager that is responsible avoid. Therefore, it is simply impossible One way or another, friendship in the for good results will take his/her job to make completely objective decisions. boardroom has risks. More important more seriously and will make more That is not a value judgement, that is than friendship is mutual respect, so objective decisions. Although this a fact. that you can fully disagree with each should not end up in typical American other and you can say things without claim behaviour. Irrationality should be limited as much being afraid for your future – like a as possible, by the introduction of the professor at a university who can give Finally, one of the biggest dangers is right mechanisms. One is to force people his/her independent vision. that managers are looking for rational to explain how they arrived at certain data in order to justify their own ‘gut decisions. That accountability forces the People cannot determine the difference feeling’. You can of course find data that manager to go against the irrationality of between rational and irrational behaviour will justify any decision. Therefore, you his/her human nature, as they should, themselves. A board member believes have to define your selection criteria since there are large interests at stake. that he/she has expressed his/her before you have seen the data.”

Yves Gijrath

“Money is one of man’s strongest “I will see” and I think that a lot of I should have skipped a year because motives and I think that when you are successful businesses have been built deep down I did not trust it. It is, how- successful you should be heavily on that approach. ever, more difficult to stop something rewarded. But money is also a very than to start. When you start something dangerous motive, because too strong It is all about being open to possibilities you consider it well, even if it is irrational. an emphasis on money can result in and using your intuition when making In order to stop something you have to chaos or the misuse of power. Just important decisions. The most intuitive cross a bigger threshold. You are afraid saying the word out loud: money. decision I have ever taken is starting the to lose face when you discontinue a It sounds horrible. Cold and damp. Millionaire Fair, an annual event based on magazine when it has no future. The the luxury lifestyle. I took that decision fear of losing face is also very irrational, I am often wrongly seen as the talking against all the advice from other people. because, in practice, you easily shake head of Dutch millionaires. When Hardly anyone believed that the concept off that negative publicity. To stop someone driving a Ferrari does some- would work, especially due to the name something in time may be the best thing wrong, the media sometimes – no one would want to advertise being a decision you make in your career. calls me to ask me what I think. That millionaire in the Netherlands (while of is of course silly because I am just an course the Millionaire Fair is not only for Fifty people work here and it is a good entrepreneur trying to be successful, millionaires). I followed my intuition and thing that not all of them are irrational. just like any other entrepreneur. It is just I have not regretted it for one moment. We would go bankrupt in a couple of that I am doing this in the luxury lifestyle months. I do, however, expect that segment. The Netherlands is, in any Two years ago, there was an instance my people bring crazy ideas. This year, case, leading when it comes to thinking when I did not follow my intuition. We Onno Aerden, a publisher at GMG, in labels. Someone in a Bentley is, by had had four successful years with the pitched the idea of having the tenth definition, anti-social. That is, of course, Millionaire Fair in Russia when the crisis publication of Miljonair be 500 pages also completely stupid. there hit really hard. Nevertheless, my – over 300 pages more than usual and in Russian director claimed that it looked difficult economic times. That idea really Do I show irrational behaviour as an promising for 2009 and that contracts surprised me and I had a positive feeling entrepreneur? My life’s creed is ‘never with important partners had already about it. Onno then needed to work follow the crowd’. In my life I have been signed. My ‘gut feeling’ said that really hard to show the feasibility of his made many decisions that are irrational this was incorrect and afterwards I was idea, to rationalise his crazy idea, and it or seem irrational at first glance. proven right. That was an expensive became a big success.” I started my business in an attic without lesson, which I have received more too many targets. My strategy was than once in my business existence.

“Intuition is my biggest talent”

Yves Gijrath is CEO of Gijrath Media Group (GMG), the company behind the magazines Jackie, Green.2 and Miljonair and the annual Millionaire Fair. He is a passionate entrepreneur who gives intuition an important role in decision-making.

“Intuition is like slippery soap”

Herre Kingma is chairman of the Board of Directors of Medisch Spectrum Twente and former Inspector-General of the Dutch Health Care Inspectorate (VWS). He addresses the role of intuition in the decisions of a healthcare professional and that of a manager and advocates that we should view a checklist in healthcare not as a bureaucratic monster, but as a means to keep a healthy distrust in yourself.

Herre Kingma

“My most intuitive decision was General, I have introduced ‘patient my retirement I will know if we have probably the transfer from being an safety’ in the Netherlands, inspired by made the right decision. Such a independent cardiologist to Inspector- international experience. Using check- decision-making process cannot be General at the Dutch Health Care lists with medical procedures is crucial. captured by a checklist, although we Inspectorate. When you look at it from a The thought behind it is that the checklist as the Board have thought about how distance it is a weird switch that cannot is not a bureaucratic tool, but a means we could maintain the rationality of the be reasoned. Your pay is heavily de- to challenge yourself and to ensure that process. We have to keep asking our creased and you become a civil servant. you keep a healthy distrust in your own selves if we have considered the pros, I think that everyone takes a decision dealings. This is customary in aviation, cons and perspectives well enough. like that at a certain time in his or her in healthcare it was less obvious and it life. You walk a rational path, but then took a great deal of time and energy to The best leader in my opinion is a leader you arrive at a crossroads. convince surgeons to embrace this tool. that shows his people the path that That probably has a lot to do with our they were already following without Intuition is a useful quality, but it differs human need for autonomy and a kind of knowing. I believe in this respect in from case to case if you can apply that hero worship – a hero is brave, all-know- something like predestination, how- quality. In science, not much happens ing, and does not need a checklist. ever, without the Biblical associations. without following a hunch or intuition The new hero, however, is brave enough We think that we control everything, and possibly gaining new insights. to recognise that medical science is so but there is an unavoidable direction. However, luckily that is different for a complex and specialised that it is difficult As a manager you have to be something policeman. Before a policeman enters to overlook as an individual. You are only like a mini-prophet in order to recognise a house he has to have a reasonable a real hero if you have the discipline to, the patterns, to translate them and “Intuition is like slippery soap” suspicion that it is necessary. A ‘gut together with your team, challenge to explain them to your organisation. feeling’ is not enough. yourself through a checklist in order to Intuition does play a part, but you have avoid mistakes. to use that intuition only at a time Intuition also plays a role for specialists when a decision cannot be rationalised. in medical care but this has changed In my position as manager, the role of Where do intuitive ideas arise? over the history of medicine. Technique intuition is different. For example, we Hardly ever behind your desk, more has received an increasingly more are now designing construction plans. often when you are mowing the lawn important role, the complexity has This concerns colossal amounts of or when you are sailing and those ideas grown exponentially and it is essential between €400-€500 million and we are are like slippery soap. Before you know for a medical specialist to apply its dealing with many future uncertainties. it they are gone. I think that the brilliant knowledge correctly and in the right We do not know what the political policy minds from history, such as Mozart, order. In such a modern and complex will be in the next ten years and the had such an excellent memory that world there is not much room for complexity is enormous. This is a they could hold their thoughts and intuition. Therefore, as Inspector- long-term decision, of which only after write them down later.”

Victor Lamme

What people say hardly predicts what they are going to do. Actual behaviour has little to do with conscious intention but everything to do with how our brain develops through experience in time. In other words: there is no such thing as free will. This is the title of a book by Victor Lamme, brain researcher at the Psychology Department of the University of Amsterdam. He can support this with numerous experiments and neurological research. He believes that neurological research will radically change the way we think about humans and also has advice for the management of companies: “Do not try to change behaviour based on rational considerations, but use smart mechanisms to influence instincts such as fear, greed or social pressure.”

“Everyone has seen the cards in hotel guided by greed. Not everyone, how manage organisations? Many compa- bathrooms, which ask the guest to hang ever, is willing to believe that. It is nies, especially in the financial sector, towels that are not dirty on the hook human nature to explain decisions are looking for ways to gain back the and to only leave the dirty towels on the afterwards and to fool ourselves that trust from their environment. They do bathroom floor. Experiments show that these explanations preceded the this rather rationally, by betting on when these cards inform the guest decisions. The truth is, however, that awareness and transparency. I don’t about the percentage of hotel guests our thoughts follow our acts, not the believe that this will work. It is important that follow that instruction, more people other way around. to realise, that from the brain’s perspec- are willing to cooperate. Man is a herd tive, trust is a kind of default: it is just animal that makes decisions subcon- The following question is, of course, there. Trust is useful because by trusting sciously, as many other experiments what should we do with this know- each other, the group becomes better. show, such as the famous Milgram ledge? It tells us a lot about the useful- experiments which test if a person is ness of market research and opinion Gaming experiments showed the same: willing to give painful electric shocks to polls. When a trial consumer says he people who do not know each other other people and act against his or her or she is willing to purchase an item, it give each other a level of trust in finan- own conscious. Man’s herd behaviour does not mean anything as the actual cial experiments. A trust that is based stretches very far and is even visible in decision about the purchase cannot be on nothing. A financial institution that the ultimate act – when there are many reasoned rationally. Instead of market wants to gain more trust should surpris- reports about suicide in the media, the research it is therefore much more ingly do the same thing they did earlier number of suicides increases. useful to conduct a research into brain – acting on man’s greed. That feels activity when seeing certain brands, unnatural but it is the way to appeal to Therefore, I state in my book that there people or products. Measuring brain the default of trust. More transparency is no such thing as free will. We mainly activity has much more predictive value and accountability, as is currently often imitate other people and, accordingly and we started offering this service to advocated, is no solution to regain trust. and rather unresistingly, follow the companies last year. People who explain a lot are subcon- instincts of our brain. Like a group of sciously perceived as someone who dogs throws itself on a bone, senior Can we draw conclusions from this cannot be trusted.” management in the financial sector is knowledge about how managers should

“Let managers take a brain scan”

“Awareness hardly helps when changing Managers should look more for Can brain research contribute in prevent- behaviour. Only when you show frequent possibilities to manipulate when they ing large incidents in business or taking images of how it should be done the manage an organisation. That sounds too large risks? I am convinced that it brain will act upon it. A fascinating negative, but it is not. People within can make a significant contribution, for experiment shows that when a person the organisation should be stimulated example because managers will provide sees a black man they often have more in their primal instincts such as fear insight into their motives, fears and of an association with violence than or greed and the tendency to follow desires. Neuro research can better with an image of a white man. This is other people. These are strong motives predict their behaviour than they can the same for black people, although and not always negative ones. themselves. You can, for example, see slightly less. This is because in films and The structure in the brain that makes a how sensitive someone is to rewards on television we constantly see images person greedy is also the structure that or how much his/her brain enjoys or of a black guy with a gun. Our brain is allows trust, ambition and risk taking avoids taking risks.” slowly programmed by these images. when looking for new solutions.

“I am concerned about mindless rationality in society”

Ine Voorham

Ine Voorham is president of the Foundation Salvation Army Wellbeing and Healthcare (W&G). She thinks that the contrast between feelings and rationality is far smaller than many people think and is angered by the societal tendency to measure everything.

“What has been the most irrational be a straight line to the target. If you downgraded on the list of healthcare decision in my life? That was the take three left turns, you also take a institutions because that medication decision to become an officer in the right. I almost always see possibilities is seen as ‘bad’. The comparison with Salvation Army. To achieve that religious to do it differently and I believe that other institutions is ill-placed because status included giving up my right to creativity is one of my strongest assets. we get confused drug addicts at the self-determination and my job as a I try to look at things differently all the door holding two plastic bags. If you medical analyst. You cannot reason time. Not from above or below, but do not give them sedatives you cannot that rationally. But now I find it a great from the side so that you can see the help them. A comparison is therefore privilege that I can do what I do. cross-section. I cannot do it differently, useless, but that is a too complex story it is my second nature. to capture in a ranking list. Mindless Together with my vice president I have rationalisation is increasingly popping been involved at W&G from 1990, the When I have strong convictions about up in society and is pulverizing many start of the Salvation Army’s current legal something, you have to be very well- good intentions. Increasingly less structure, and therefore we know the equipped to talk me out of them. people are doing things that are real. system very well. You cannot separate That does not say that I cannot be I am convinced that huge savings are that from the manner in which we arrive influenced by other people. Of course to be made in this respect. at decisions. I strongly manage from my it happens that we do not agree. What fundamental knowledge, but that does do we do in such cases? We give each Ideology is important when managing not say that I don’t act upon my instincts. other more time and then we will finally this organisation. That is, of course, in One does not cancel the other out and agree. I think that is fine as long as we the Salvation Army’s genes. Our goal is therefore I do not believe in the contrast try to convince each other with reasons. that everyone in society is part of it and between rationality and feelings. It is not about who gets it right, it is everything that we do is aimed towards I manage depending on the situation about achieving good. And it is not at that goal. However, I am convinced that “I am concerned about and so does our entire organisation. all interesting who wins the argument. every other organisation is also best In a certain sense this is also applicable managed from an ideology. If I was a to the ideology: an empty stomach does I am concerned about mindless rationa director of a cookie factory, it would be mindless rationality in society” not have ears (for the word of God), as lisation in society. We want to measure my goal to make the best possible said by William Booth, founder of the and classify everything. From the cookie. I would be less concerned with Salvation Army. Another combination quality of dumplings to the quality of cost price calculations or profit figures, of rational – the hunger that needs to health centres. This has created a but striving to achieve that ideal cookie be nourished – and the feelings – the madness which makes me really angry. would lead to optimalisation of the ideology. We are confronted with that because profit.” when caring for our clients we some- The manner in which we achieve the times have to provide them with goals of our ideology does not have to sedatives. As a result, we have been

Maarten van der Weijden

In 2008, Maarten van der Weijden became the Olympic champion in 10 km open water swimming. When he stepped out of the water he contributed his performance to the doctors that had cured him of acute lymphatic leukaemia in 2001/2002. Van der Weijden is a rational human being, but is also tempted into making irrational decisions.

“Everyone that makes the choice to although the effects have been scien careful that you don’t sell people short fully focus on top-level sport essentially tifically proved, the interpretations of who do not make it – as if everyone makes an irrational decision. When the effects are ambiguous. My trainer who had cancer and died because they you make a list of the advantages and Marcel Woulda, however, explained did not have enough willpower. disadvantages, a fully-rational thinking to me that this is hardly relevant for top That is just not true. human being would never consider athletes. Scientific research is about striving to get to the highest level. averages and target groups. But as Was it a rational decision to quit You have to give up so much and the a top athlete you are anything but swimming? People often think that chance that you will actually succeed average, so by definition you cannot I had to think about that for a long time, at the highest level and/or that you can rely on research. That convinced me but in reality it only took me two days. make money doing that is very small. to sleep and eat in that stupid tent, After achieving Olympic gold I had a I consider myself to be a rational mostly because I have great trust in different outlook towards my sport. person, however, I decided to give up Marcel and his approach. I asked myself if I really liked it enough everything for top-level sport. When to train six hours a day and to spend I look back on that, I think that I had As people we are always looking for 15 hours a day in a little tent. The dream something of a superstition or a certainties to get from A to B, but the of reaching the top had been achieved fairytale in my head. It was far from reality is that those certainties often and was no longer relevant and that is rational to think that I could become don’t exist. When I was confronted why I would consider it a rational an Olympic champion, as in most big with leukaemia in 2001, I responded decision. competitions I would achieve no very rationally. I put my faith completely higher than a seventh or eighth place. in the hands of the medical specialist I am a true beta man, but I love to and luckily that resulted in recovery, work with alpha people – as I do in my I have given up everything for my although at the time it looked very current position at Unilever. The core dream. For many years I trained six bad for me. I know that other people of my job is advising marketing people hours a day and during my training for with similar stories, such as Lance on financial choices when they place the Olympic Games I spent six months, Armstrong, have had much more faith new products in the market. Marketeers 15 hours a day, in a special ‘altitude in their own willpower to contribute often operate from a feeling or convic- tent’ to increase my performance by to recovery. I think it is excellent that tion – you could call that irrational – imitating the level of oxygen at an people find strength in that. There and it is my role to find the rationality altitude of 2,500 meters. That seems is nothing wrong with believing in that goes along with that. I find it a like irrational behaviour, because fairytales, but I think you have to be fantastic job!”

“There is nothing wrong with believing in fairytales”

“A good leader is not afraid to be irrational and is not afraid to be the only one”

Eric Nordholt is the former chief commissioner of the Amsterdam Police and during that time was faced with the Bijlmer disaster, the IRT case and the 1997 Eurotop. During that period he showed that he was not afraid to go against the tide. Currently, his business card states ‘advisor’ and as an advisor he advocates for leaders that are daring, slightly obstinate and reason using their intuition: “There is a great deal of fear in organisations, that is often increased by rational leadership.”

Eric Nordholt

“Years ago a colleague asked me how could do. Unfortunately, I see many a minister’s drawer because it did not I did it, leading the Amsterdam police organisations in which the leader does align with the ruling opinion. Finally, force. When my primary reaction not do that at all. In many cases fear we succeeded and that was not only was “I just do something”, he became rules and they are trying to control because of the report, but more so angry because he had asked a serious everything, almost compulsively, with because of our endurance and our question. But my answer was also policy documents, memos, reports belief in our vision. seriously meant. I don’t believe in and guidelines. In times of crisis this standard recipes from management is counterproductive. To rationalise Leadership is therefore not very rational. books on to how be an effective everything is a bad reflex which will It is about being driven to strive for an leader. As soon as you try to rationalise result in irrational behaviour within the organisation’s goals. Currently, we have leadership like that, you ignore the organisation. At such a time, as a leader, words for that such as ‘mission’ and essential parts of good leadership. you have to act upon wishes and ‘core values’. Years ago you never heard Also, those management theories dreams, you have to show perspective such words, but the challenge was no always assume straight lines to go and radiate that you believe in it and different from now. from A to B. But in the real world you that everything will be alright. Be full hardly ever go in a straight line to your of conviction, even though rationally I believe that in this day and age there goal, you almost always meander. that perspective may look as though is much to be gained by leading through it cannot be fully achieved. You cannot personal contact and less written “I just do something” was of course believe a little, you have to be a con- communication. As soon as you write not entirely true, because I acted based vinced evangelist of your own goals. something down you make it rational on a vision. Everything I did came from and inspiration leaves. During my time a kind of possession, a ‘dream’ to make A good leader can also handle criticism in Amsterdam I even often tore up the force more meaningful to the city of and adversity and does not always feel letters and policy documents. My creed Amsterdam and to make the city more the need to rationalise criticism. You was simple: if somebody wants some safe. I had many examples of how the have to take it as a man. If you go to thing from me, they will have to come force should function and was continu- battle against the lack of rationalisation and see me and explain it in person. ously busy with landing these images in your environment you will end up That works much better. Whether in the hearts of my staff. I changed the drowning in it – it is better to just let go. I could do that in this day and age? force – not with a big and well thought- Of course I could. Even now we can out phased approach – but by continu- When you dare to do that as a leader, expect a bit more boldness from our ously planting little seeds. It is likely that you can also act against current opin- leaders. We have taken bureaucracy this was not perceived as being very ions. I have done this often, for example way too far and we think that we can rational, while I could feel the rationali- when I wrote a report with some other control everything. However, the reality sation in everything I did. If you really people on how the police force should is that the huge amount of email and have a vision, you can simply check change into an organisation that was other correspondence between people everything you do against that vision. actually standing side-by-side with the is like sewer waste that is being used citizens (‘Changing Police, 1977’). We to absolve responsibility. It has nothing A good leader is capable of having wrote a dangerous vision for that time to do with leadership.” people do things they did not think they and the report disappeared for a year in

Ronald Plasterk

Ronald Plasterk is PvdA politician and former minister of Education, Culture and Science. He has personally experienced that intuition is important and warns of a too primitive linear vision in decision-making,

“After my promotion I started working at and since I became aware of that aspect the decision and it is often important the California Institute of Technology in of myself, I can act upon it. Before writing not to have a too fixed position before- Pasadena and started two experiments. someone off, I take a step back and now hand. When you operate within a panel I started the second experiment before I use more of a gliding scale than just two of advisors, you can get away with the first was finished, because I thought labels. keeping your opinion until the end. that I knew what the result of the first But once you have responsibility you would be. My American professor said Another issue that also has to do with sometimes have to chose B, while ‘I love the way you use your intuition’ intuition is the question whether you your integrity prefers A. and with those words expressed what have to have the guts to go against the I find self-evident in everything that I current opinion in order to make good Therefore, having measurable targets do. I have always been engaged with decisions. That question cannot be and assessing people on output is a exact science, but I have made all my answered in a general manner. For many childish game of playing at a company, important decisions based on intuition. people it is a good idea not to drift too if only because output cannot be clearly An example is that after my promotion far from the herd. But for many other determined. You cannot hold a school research I opted for a totally different people it is a good idea to go against accountable for its students’ IQ. One direction, because I had a feeling that current opinion more often. of the problems is that as soon as otherwise I would have to compete too primitive management based on output much with my old professor. Most of We should not address that question is introduced, it is difficult to return to my colleagues thought it was a bit odd too simplistically and in a wider sense the original situation. Years ago, a teacher when I started to research little worms, that is also the case for decision-making. had autonomy and a great deal of because no one was working on that The question whether a decision is good responsibility. Later on, management subject. I thought that was an advantage should often not be answered afterwards layers were introduced that took away and afterwards it proved to be a good because then you can approach it from part of that autonomy. When you take decision because that research area various sides. What I experience person- away those management layers now, blossomed greatly dozens of years later. ally, is that when you make a decision it is not self-evident that the teacher will you are always caught between two retakes his autonomous professional At the same time, we should not mystify extremes, integrity and loyalty. In terms attitude: ‘You can’t unscramble an egg’. intuition or build a primitive Freudian of your integrity it is important to clearly What can you do? Stop introducing model for it. Intuition is foremost a state what you really think about a perverse stimuli and build a professional question of accumulated experience. certain issue. But what should you do if organisation using role models and the Self-reflection in this respect is very it becomes clear that the majority of the charisma of leadership to achieve a useful so that you can prevent mistakes. group thinks differently? Do you keep on positive attitude and increase ethical Personally I have a tendency of trusting yelling that you do not agree so that it is behaviour. This requires a lot from everyone until there is a reason to think noted and later on you can refer to those leadership and it also requires rules so that a person is an idiot. When that notes? That is not very wise, because that culture-based and rule-based do moment arrives, I radiate that feeling you hollow out loyalty. In such cases it is not contradict each other. You need clear from my pores. I label people too easily very important that everyone internalises rules to build a culture.”

“Decision-making should do justice to both integrity and loyalty”

“You can achieve much with humour and self-mockery”

Gerrit Zalm is CEO of ABN AMRO. His leadership is personal through the use of humour and a daily blog for all staff.

Gerrit Zalm

“When it concerns important business amazing resumes, however, I did not change management tool. You can decisions such as acquisitions or invest- have a good feeling about them. For me show implicitly how we want to do ments, intuition does not play a big part. there was no doubt – if it doesn’t feel business within ABN AMRO. But such It would be crazy if it was, because the right, you shouldn’t do it. a tool only works when it remains basis for such decisions is made by personal and spontaneous. I write about rational and objective considerations. Of course intuition does play a big something different every day and I However, feelings do play a part and role with real entrepreneurs. They are often add humour and self-mockery, can sometimes make the difference. successful because they follow their because they can help you to achieve I remember from my time as minister instinct and go against ruling opinions. a great deal. It has to be authentic, of Finance that we, as shareholders But real entrepreneurs do business for however, although I do keep in mind of the telecom business KPN, were their own risk and with their own money that I cannot write everything, because negotiating a merger. The rational and an ABN AMRO employee does not. there is a chance that it will end up in considerations for the merger were A bank manages other people’s money. the media. not very convincing, but the scale was You have to do that sensibly. However, slightly positive. The feeling I had about we have to develop an antenna for all Within the Board of Directors, the manner in which the negotiations relevant signals and developments atmosphere and humour are also were conducted was, however, bad. that may not always be very clear. In very important in order to maintain We finally decided not to continue the addition, trusting the customer behind perspective and reach the right negotiations. the business plan remains important. decisions. As chairman I try to be last when important items on the agenda In a certain sense, life will become ABN AMRO is going through some are discussed. That does not always easier if you use rational and objective major changes. Previously it was a rather succeed. frameworks when managing an centralistic organisation and we are organisation. As minister of Finance now growing more towards autonomy. How can we regain our customers’ you can easily place each decision on The head office should not be a burden trust? It is very important that we keep expenditure within a framework of clear for the local organisations but help them doing the ordinary stuff extraordinary agreements on budget policy. Allowing to realise their objectives. What is the well, because people will remember intuition a large role in decision-making effect on the people on the shop floor? that. Furthermore, we will only pursue incurs a risk – too often you overestimate Too small. But we are on the right track long-term relationships and will not yourself, especially if you do not have and I assert my liberal principles through pursue one-off deals, even if they are sufficient resistance around you. my position. I give people autonomy very lucrative. We will not take a and trust. However, it is clear who is stubborn position because we think Issues such as feelings and intuition the boss, because I do not believe in we know better than the market. do play an important role in the recruit- workers’ self-management. Perhaps the most important matter ment of staff. Here at ABN AMRO I is that we want to get to know our had the enormous luxury of selecting Every day I update my blog that is customer and his environment very my own Board of Directors. I have internally available to all ABN AMRO well. In the end, that will make the had discussions with people who had employees. That is, in fact, also a customer trust us.”

Conclusion

Correctly value information and biases, we can decrease their or images, selected aspects are For every position it is essential to impact. The example of the tables emphasised. avoid (unconscious) biased or tunnel shows that by taking a directed action vision. For good decision-making it – measuring, or putting objects in a Therefore, a frame only offers one is very important to avoid such bias. different context – we can defeat perspective. We are often unaware We cannot deny that it is human bias. Research performed in recent that we are being framed and, in nature to be biased. To illustrate this decades shows that additional addition, our own frame can make we present the adjacent image (figure knowledge on communal threats us blind to other perspectives. It is, 2). At first glance the table tops look to good decision-making, together however, very important that we different in shape and size. The left with tools and processes, contributes realise that there are more perspec table looks longer and less of a square to a better professional judgement of tives. Therefore, it is necessary to than the right table. This is what our both junior professionals and senior continuously try to look with a ‘fresh eyes are telling us. However, if you managers. eye’, to see if other frames perhaps measure the tables – or if you visually give an entirely different picture which separate one table from the other Various issues play a key role: may lead to a different consideration. elements – you will find that human perception is incorrect and that both Be aware of framing This sounds simple, but in reality it is table tops are identical. Our eyes The Dutch organ donation system very difficult. For a start, you have to have made a shortcut. In many cases is based on the ‘opt-in’ concept. Data be very disciplined and make a reversal these shortcuts are convenient, shows that countries with an ‘opt-out’ at every problem and consideration – because they help us to simplify a system have relatively more donors. you have to change all your basic complex world and to make fast In a sense this is remarkable since it assumptions to see which perspective decisions. The disadvantage is that regards an identical consideration. will arise. Consultation will surely these shortcuts can lead to a systematic However, due to the difference in help when making complex decisions. bias. Research shows that even the ‘framing’ we are far less willing to A person who consults colleagues smartest and most experienced people become an organ donor with an opt-in or friends that often have different have bias. Even more so, when system. Frames are mental structures opinions, will find that their vision it concerns these pitfalls and biases, that we use, often subconsciously, to provides surprisingly new insights. experience is not the best teacher. organise and understand a situation. However, the good news is that as Framing is a very strong way to Of course it is essential that we truly soon as we are aware of these pitfalls convince – by choosing certain words open ourselves to new frames.

Figure 2 was sourced from ‘Elevating professional judgement in auditing. The KPMG Professional Judgement Framework, 2011’. For similar images, search on the internet for ‘Shephard tables’.

The danger of naming time pressure One of the largest pitfalls when making good decisions is haste. When there is time pressure, the tendency is to make a decision fast without taking the necessary steps first. This may result in solving the wrong problem – because we have not thoroughly reviewed the problem – or making less optimum decisions, because we do not have a complete picture of all the alternatives. Experience often plays an important pitfalls and prejudices and is an Using certain techniques – structuring role in this pitfall and is often not a very important step in the optimalisation meetings and allowing room for good teacher. In particular, experienced of decision-making. deviating opinions – this can be people can draw from their wide avoided. experience and make certain choices It is also important that during these without thoroughly considering the processes we not only focus on the Finally alternatives or looking at a problem from amount of information available, but on In addition to the suggestions made various perspectives. Unfortunately, the reliability of the information. Having earlier, we are tempted to provide we often don’t even realise that we are too much information may provide a further advice as to how the power of in a hurry when making decisions. false sense of security which can lead the subconscious can be used most to bias. This can also be considered effectively in the decision-making Setting up a good process when defining processes. process. However, we want to avoid There is no linear recipe to ensure that that pitfall, because we would then objective considerations are made in Group processes also require attention. try to solve the problem in a linear the decision-making process. However, In the majority of cases, the decisions manner. There are no recipes for many pitfalls can be avoided when a made by a group are better than those success or step plans. Only one thing process’s set-up has been well thought made by an individual. However, the is certain – it is good to stimulate out. This starts with an awareness of same pitfalls and prejudices apply to discussions on the theme. That is our vulnerability to bias. This awareness a group. In addition, groups tend to why we would like to discuss this allows the recognition of potential avoid conflict and strive for consensus. topic further with you.

About KPMG

KPMG provides audit, tax and advisory services. We work for a wide group of clients – large (inter)national corporations, mid-sized companies, non-profit organisations and governments. Our clients’ complex problems require a multidisciplinary approach that helps to create order in the complexity. Our professionals excel in their specialism, but at the same time work closely together to offer added value that help our clients excel. We utilise our rich source of knowledge and experience, obtained in a wide range of organisations and markets.

About Trust Rules

Society requires a better balance between rules and trust. That does not mean that we want to abolish laws and regulations. But we should have more room for trust and own responsibility. KPMG has seen this development in practice. Together with a number of socially-involved people, we initiated the ‘Thought Leadership’ programme ‘Trust Rules’ in 2008, searching for a better balance between trust and rules (please refer to www.trustrules.nl). KPMG the Netherlands developed three white papers within the programme. This white paper is the fourth publication and follows the previously published titles:

SERVICE OR INDUSTRY NAME

Title:Trust UniversRules 45 Light >20pt <30pt; +2ptNegen uitgangspunten leading voor een betere balans tussen regels en vertrouwen Subtitle (optional): Univers 45 Light >12pt <18pt; +2pt leading

AUDIT OR TAX OR ADVISORY OR GLOBAL OR NATIONAL LOB NAME

Intro para: Univers 45 Light 13pt; 18pt leading

Colofon

HypegiaphobiaRealisatie: KPMGThe Marketing, new Trust Rules Salesentrepreneurship & Communicatie

The search for a betterTekst: balance Nart Wielaard,The importance of trust for the future Nine principles for a better balance between rules and trust (2008) Haarlemorganisation (2009) between rules and trust (2009)

This whitepaper describesFotografie: the De Beeldredaktie,To commemorate the 40 year Guts and vision are required to take philosophies of and interviews with Haarlemanniversary of Stichting Maatschappij a path in which trust rules in these times prominent people from various en Onderneming (Foundation Society of increasing legalisation. Case studies, backgrounds. It calls Vormgeving:for societal IN10,and Rotterdam Organisation (SMO)), KPMG interviews and meetings with people parties to allow more space for own conducted a review into the and organisations, show that there is a responsibility and wasDruk: the preamble Reijnenimportance Offset, of trust for the future significant overlap in success factors of various meetings on this subject. Amstelveenorganisation. In autumn 2009, KPMG to create more space for trust and presented this publication together own responsibility. This white paper with SMO. describes the nine principles for a better balance between rules and trust.

Contact

Philip Wallage T: +31 0(20) 656 7094 [email protected]

“Complex decisions are difficult by nature. This is also due to the increasing amount of information available which is also available increasingly faster. There is a strong tendency to use all the information to prevent making a wrong decision. We say that people can and may make mistakes, but in reality we find it hard to put this into practice. In order to avoid mistakes there are increasingly more rules, checklists and tools to help us make decisions. They provide no guarantee at all, because a wise decision is not based on simply weighing up all the facts. Matters such as intuition, experience, being aware of the limits of rationality and a self-critical attitude are also essential ingredients in solving complex problems satisfactorily.”

Prof. dr. Philip Wallage RA joined KPMG in 1990. He has been a partner in the Department of Profes sional Practice since 1996. He is also a professor of Accountancy & Control at the University of Amsterdam. He has a number of board positions, both within and outside the accountancy profession. He is a member of the Committee ’Eindtermen Accountancyopleidingen’, member of the Supervisory Board of AMS BV and member of the Dutch Institute for Corporate Governance.

Muel Kaptein Edo Roos Lindgreen T: +31 0(20) 656 7794 T: +31 0(20) 656 7429 [email protected] [email protected]

“Managing is balancing between rationalisation “When you consider leadership as a purely and intuition. Within government and businesses, rational process, you miss an important aspect. rationalisation appears to be dominant. A leader does not only manage an organisation The reasoning is: ‘what we cannot document, through facts and figures, but more so with does not exist and what we cannot support until intuition and feeling. Irrational factors play an the last comma and dot, also does not exist’. important role. Leaders face emotions and The result is that feeling – intuition – is neglected motivations such as fear, curiosity, power and which damages the quality of decision-making. the need to be noticed, but also more subtle Therefore, I find it important for managers to influences that are recognised in psychology, allow their intuition and that of others to play a such as group behaviour, ‘anchoring’ and part, without of course, in turn, having feelings ‘salience bias’. Leaders need to be aware of dominate the process. Whether or not this these factors and shape their leadership so that succeeds, strongly depends on giving and they not only master the irrational powers, but earning trust.” have them work to their advantage.”

Prof. dr. Muel Kaptein has been working as an Prof. dr. Edo Roos Lindgreen RE joined KPMG in organisational advisor in the field of integrity and 1996 and has been partner in KPMG IT Advisory since compliance since 1991. He is a partner at KPMG 2002. He advises government and businesses on Forensic & Integrity, a unit that provides its the optimum use of IT and control and the security customers with factual research into the integrity of of automated systems. He is also a professor of decision-making and supports the improvement and IT & Auditing at the University of Amsterdam. securing thereof. He is also a professor of Business Administration at the Erasmus University in Rotterdam.

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