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The Great British Brexit Bake-Off.

Tuesday 28th June 2016

Why the UK EU Referendum was designed to produce a bad decision.

How we make decisions

When you make a decision, whether you're buying something, hiring someone, doing something, the same broad logic should apply:

1) First you understand the problem or problems you're trying to address, and identify the outcomes that are required - these are your success criteria.
2) Then you explore solutions that will address the problem you've identified.
3) Next, you'll evaluate how well the solutions address your most important criteria. If there are many options, you might create a shortlist of acceptable solutions.
4) You might even try out viable solutions or have a more detailed "Bake-Off"
5) Before moving forward there is a value-based measurement. Does the the solution give me enough benefit that I'm prepared to invest the money and time into it.

A great decision will be one where you know exactly the outcomes you want to achieve; you have high confidence that your chosen solution will deliver that for you; and that it will do so in a way that satisfies your investment criteria.

Conversely, a bad decision will be one where there is an increased risk that your chosen solution will not deliver the benefit you anticipated, it ends up costing far more than you anticipated, or indeed, it delivers something entirely different. There are many shades of grey between the two extremes.

However, a logical decision making structure is only half the story. There's also something far less rational going on too. We all carry our own perceptions of the world around with us. Our own deep-rooted attitudes, values and desires, combined with experiences which inform what we've come to describe as our gut instinct.

How much you rely on your gut instinct to make decisions really boils down to three things:

1) Your experience of similar situations. Malcolm Gluck argues in his book Blink, that such experience allows your brain to rapidly process a current scenario based on your previous experiences, and subconsciously get to the right decisions without consciously pondering the details. In short, you've developed a short-cut to your thinking. We call it gut instinct, but in truth its brain powered and informed, and Gluck argues its good to learn to trust it.
2) Your deep rooted values and beliefs. In his book Black Box Thinking, Matthew Syed covers the subject of cognitive dissonance (where new facts conflict with a person's deep-held beliefs) succinctly well. He looks at how people cope with facts that challenge their deep-held beliefs. He observes that people will more oftentimes re-frame or discredit such evidence, to ensure their deep held beliefs and values remain intact. So we hold on to the arguments that conform to and reinforce our beliefs, and we dismiss those which conflict. Making decisions using this subjective gut instinct can be a barrier to good, balanced decision making, and also a barrier to our ability to learn from our mistakes.
3) The availability of facts. The absence of facts, or the presence of conflicting data, or indeed factual overload, will all drive decisions to draw more upon intuition. It stands to reason that in the absence of a solid factual ground to make a decision, you'll either defer your decision, or draw more heavily on your experience and previously held instinctive beliefs to inform the decision.


So where was the Great British Brexit Bake-Off?

The UK has just made a decision to leave the European Union. It's a decision taken between 33million voters participating in a referendum, with 52% voting to leave and 48% voting to remain.

I put my own political views aside before I say that this is a bad decision. There are two main reasons that I argue this.

1) Ill-defined outcomes

The alternative outcomes in this referendum were poorly defined at the outset. meaning the decision to leave could only ever be a decision not to rather than a decision to do something.

Whilst the Remain campaign, supported by the UK government offered a relatively clear outcome, with 4 pre-negotiated variations to the existing UK relationship with the EU. The alternative vote to Leave was essentially a rejection of that and nothing more. There are (at least) three alternative relationship models for trading with the EU. They have profoundly different implications for:
a. access to the 500 million consumers in the European free trade zone,
b. the free movement of people (and control of borders and immigration),
c. the amount of effort and time required to negotiate trade deals,
d. the extent to which UK laws and regulations need to conform to EU standards.
e. the implications of all of the above for British employers and British jobs, which rely on all of these things above for prosperity, certainty and longevity.

So has the UK voted for a Norwegian-type model, which retains access to the European Free Trade area? Or something akin to the Swiss model of a bi-lateral trade framework and a series of treaties?, Or a standard default model of trade, governed to the lowest common denominator by the rules of the WTO? No-one knows the answer to this, and it will take time (years even) for that to unfold.

We have effectively compared a slice of Remain Cake, with a half written Brexit recipe book it may have contained some delicious descriptions, but there was definitely no cake. And definitely no Bake-Off.

This leads me to conclude that whichever way the UK voted last week, it was always going to be a bad decision. We can't know whether leaving is better or worse, because, ahead of asking the question of UK citizens, we did not define what the alternative outcome would be, let alone calculate what it means to any depth.

The UK Government stacked the question in its favour, by attaching significant risk to the Leave option, and then pinned its hopes on a risk-averse electorate. What they had not banked on was a public prepared to accept that risk of the unknown and vote using its gut instincts.

2) Relying on gut instincts.

With no detailed evaluation or pre-selection of alternative Leave options, and no common consensus of what Leave actually meant beyond the headlines of "Leave and take back control", it was impossible for a fully-fledged, unequivocal, and fact-based alternative to Remain to develop.

The successful Leave campaign attracted a broad church of voters, all of whom voted for change. They are uncomfortable with the way their country has changed around them and concerned about how EU economic instability, and global political instability will further impact their lives.

But there is still no common consensus of exactly what the future will look like, and what a newly negotiated deal serving the best interests of Britain interest could be.

The decision to leave then, has necessarily been taken in large part on gut instinct, formed from deep-rooted beliefs and personal interpretation of how things might unfold, rather than being based on experience or facts.

Consequently, there is no guarantee that the desires of Leave voters are best served by the vote they've just made. Most alarmingly, many Leave voters might find that the option to remain which they have just rejected, to be far more palatable to them than the eventual model the UK now adopts.

For example, a large proportion of Leave voters have cited immigration (and consequently the free movement of people) to be their number 1 issue. Their expectation is that the decision to leave will stop uncontrolled immigration. Yet if UK leaves, and then adopts the model of Norway to retain full access to the the free trade zone for its businesses (and those non UK-owned businesses that currently choose UK to base themselves and access the single market under established trade passporting arrangements) then the UK must accept free movement of people as central tenet of its trading relationship with the EU.

Not only would this not represent what they voted for, but they might actually prefer the very option they just rejected.

It is a very large gamble, taken largely on gut instinct, and regardless of whether it transpires to produce a good or bad outcome for the UK, it remains a badly produced decision.

Had the British Government taken its time to get its own referendum question right in the first place, and provided a clear choice of the preferred alternative target models, it could have driven a more factual debate and a more inclusive decision process. It may also have avoided a lot of the chaos, panic and disaffection caused by a highly uncertain future.

But what does a good decision look like?


New Zealand - Flying the flag for good decision making

Let's contrast the process of the UK referendum decision with a recent decision in New Zealand.

In March 2016 they concluded a decision on whether to change their flag.

Many Kiwis, felt their flag (and specifically the presence of the UK union flag in it) no longer properly reflected the modern, self-determining, outward-looking, nation that New Zealanders identified themselves with.

So New Zealand created a Flag Consideration Panel, whose starting point was to identify New Zealanders commonly-held values. Through a public consultation process they asked what it meant to be a Kiwi, and received direct feedback from over 43,000 people.

With this consultation to guide them, they agreed that a potential new flag should unmistakably represent New Zealand, and celebrate New Zealand as a progressive, inclusive nation that is connected to its environment, and has a sense of its past, and a vision for its future.

The Panel then invited designs for a new flag, and received 10,292 entries.

An initial long-list of 40 viable flag designs was selected. The Panel then assessed the flags against the values identified in their public consultation process to create a short-list of 5 alternative flag designs.

The designs were published together with a narrative that described the significance of the different elements of the flag. The public were then invited to vote for their favourite design in a postal referendum.

Having selected the preferred alternative design, a second referendum was then held. In effect a straightforward Bake-Off between the current flag, and the most preferred alternative.
The people of New Zealand participated in large numbers and unequivocally got what they voted for. They voted by 56% to 43% to retain their existing flag.

The point of all this is that the New Zealand Flag commission took the time to fully explore alternatives and then select the best alternative before choosing whether to replace their flag.

New Zealanders weren't simply asked the question should we have a new flag or not?
Instead, they had an active role in selecting the best alternative, and they then made a positive and certain choice between 2 known outcomes.

I'm flying the flag for New Zealand decision-making. Surely the British people deserved a process that had as much rigour and balance?


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