Mount Everest Expedition and Organizational Decision-Making

Debrief of Monday's Class

• Mount Everest expedition in 1996:

  • This was a significant event involving multiple groups and individuals, highlighting the inherent risks and decision-making challenges in high-altitude mountaineering.

• Two major expeditions led by Rob Hall and Scott Fisher:

  • These were commercial expeditions, where experienced guides led paying clients to the summit.

  • Rob Hall's Adventure Consultants and Scott Fisher's Mountain Madness were among the prominent guiding services.

• Included head guys, Sherpas, paying clients (e.g., Doug Hansen, brothers), and a Taiwanese expedition:

  • Head guys: Experienced leaders responsible for the overall expedition.

  • Sherpas: Local Nepalese guides and porters essential for carrying loads and setting up routes.

  • Paying clients: Individuals who paid to join the expedition, often with varying levels of mountaineering experience.

  • Taiwanese expedition: Added to the diverse group of climbers attempting to summit Everest.

• Some expeditions had business or reputational motives:

  • Expeditions were not always purely for the love of climbing but also for business promotion or enhancing the reputation of the guiding companies.

• Overconfidence is a pervasive issue, especially in organizations:

• Two major expeditions led by Rob Hall and Scott Fisher.

• Included head guys, Sherpas, paying clients (e.g., Doug Hansen, brothers), and a Taiwanese expedition.

• Some expeditions had business or reputational motives.

• Overconfidence is a pervasive issue, especially in organizations.

Inside View vs. Outside View

• Important framework for understanding decision-making and potential biases.

• Inside View: Jon Krakauer's wife's quote: "If you get killed, it's not just you who will pay the price, I'll have to pay it too for the rest of my life." Krakauer replies with certainty and a lack of empathy.

• Outside View: Rob Hall's statement: "With so many incompetent people on the mountain, I think it's pretty unlikely that we'll get through this season without something bad happening."

• Hall knew that 20% of people who summit Everest don't make it back down.

Sunk Cost Fallacy

• Narrow lines of accounts lead people to push further than they should because they've already invested a lot.

• Goran Kropp: Swede who biked 8,000 miles to climb Everest alone.

• Kropp turned around at 2 PM just below the summit; Hall praised his judgment, saying, "With enough determination, any bloody idiot can get on this hill. The trick is to get back down."

Prospect Theory

• The summit of Mount Everest becomes the reference point; anything below it is perceived as a loss.

• The feeling of loss intensifies closer to the summit.

• Yoron (Goran Kropp) ignored the sunk cost fallacy.

• Beck Weathers: Focused on summiting after failing the previous year and was determined not to be denied again.

• Doug Hansen was determined to keep climbing to the top as long as he could breathe.

Regret Aversion

• A perspective version of prospect theory.

• Missing a bus by one minute feels worse than missing it by ten minutes.

• Getting so close to a goal feels like a strong loss.

Base Rate Neglect

• People tend to take the inside view when evaluating situations.

• Outside view: Use the base rate (average success rate).

• At the time, one out of every four successful summits resulted in death.

• Compared to other causes of death:

  • Voluntarily climbing Everest has a significant risk (3%).

  • Fireworks, bees, dog bites are more common but much lower risk.

Leadership Effectiveness

• Rob Hall: Rated 4.8 out of 10.

  • Three rules:

    1. Go up as a group.

    2. Sherpas fix ropes at the front.

    3. Turnaround time at 1 PM.

  • Hall broke all three rules, making it difficult for followers.

• Scott Fisher: Rated 3.7 out of 7 (slightly below average).

  • Less experienced in expedition leadership.

  • Climbed on his own, supporting others.

  • Saved a member by taking him down the mountain at night.

  • His entire group summited and returned alive, contrasting with ratings.

  • Potentially avoiding alpha biases by recognizing luck may have been involved.

Important Decisions on the Mountain

• Acclimatization: Spending two months going up and down to build red blood cells.

• New technology: Xenon gas to stimulate red blood cell production (controversial).

• Turnaround plan: 1 PM turnaround time.

• Experienced climbers turned around earlier when they realized they couldn't make it.

• Vishka: Turned around due to past failures and realizing the turnaround time was impossible.

• Failures: Insisting two groups go up on the same day, failing to stick to the turnaround time, lack of backup plans.

• Elizabeth Holmes (Theranos): "If you have a backup plan, you've admitted you're not going to succeed" - Nonsense!

• Need for backup plans in a fast-changing environment. Chain of command is necessary for unforeseen situations.

Leadership Experience in Class

• Almost everyone has some leadership experience (managers, club presidents, group leaders).

• Leadership preferences:

  • Management by exception.

  • Idealized influence.

  • Low rating for laissez-faire leadership.

Improving Success Rates on Everest

• Better weather forecasting.

• Designated person to enforce turnaround times.

• Contracts with penalties for breaking rules (deposit system).

• Training for failure (simulations).

• Rewards for following rules.

• Earlier turnaround times.

• More rules.

• Accountability through a buddy system.

• Concrete plans for anticipated problems (hypoxia).

• Designated decision-maker at a lower altitude.

• Limit the number of climbers.

Debrief of the 1996 Everest Disaster

• Casualties:

  • Scott Fisher: Died from Mountain Madness.

  • Andy Harris: Disappeared.

  • Doug Hansen and Rob Hall: Froze to death.

  • Yasuko Namba: Froze to death.

• Beck Weathers: Miraculously survived after being left for dead.

Lessons Learned

• Outside view doesn't feel right; requires stepping back and identifying essential features.

• Humans are bad at determining essential features; regression analysis is often needed.

• Need to ignore information that we want to pay attention to, which feels bad.

• Selection Effects: People who take risks are more likely to climb Everest, start businesses, etc.

• Consistency can be dangerous if it leads to overcommitment.

Mount Everest Today

• People still climb Everest.

• 2014 and 2015: More deaths than 1996.

• Mountain Madness and Adventure Consultants still exist.

• Price to climb is around 77,000.

• Overcrowding on summit days leads to more deaths.

• Nepal now has new rules to limit permits and require fitness tests.

Improving Organizational Decisions

• Repair biases at the institutional level (cognitive repair).

• Cognitive repair vs. Motivational repair (incentives).

• Employees are generally motivated to do well, but the situation may hinder success.

Biases in Organizations

• Self-serving Attribution:

  • Success attributed to skill and effort.

  • Failure attributed to external factors.

  • Failure in others attributed to their flaws.

• Fix: Question why and rule out luck.

• If unable to explain the success, there is a good chance that they were just lucky.

Dragonflies vs. Flatfish

• Dragonfly: Compound eyes, sees in all directions, fierce hunter.

• Flatfish: Eyes migrate to one side, single perspective, passive.

• Be a dragonfly, not a flatfish.

  • Benchmarking: Figure out for competitors.

  • High watch.

  • Brainstorm separately.

  • Toyota's "5 Whys": Keep asking why get the root

Availability Heuristic

• Pay attention to the superficial. The superficial doesn't lead to direct fixes, focusing instead on easily recalled or immediately noticeable information.

  • Repairs: Actively inquire about alternative factors or possibilities to broaden understanding and avoid superficial conclusions.

  • Include perspectives from individuals who typically remain quiet in discussions. This can reveal significantly different viewpoints.

    • Checklists: These are highly beneficial in high-pressure environments, ensuring that crucial steps aren't missed.

    • Example from ER Doctors: Prioritize actions using the ABCs—Airways, Breathing, Circulation—to address critical issues rapidly and systematically.

• Repairs: Ask what else could be going on.

• Include people who don't normally speak to be heard. 3. They could have very different perspectives.
  *Checklists: Useful in high-pressure situations to ensure that critical steps are not overlooked.
  *ER Doctors: Airways (A), Breathing (B), Circulation (C).

Overconfidence in Organizations

• Entrepreneurs are often overconfident, estimating their chances of success far higher than reality (e.g., perceiving a 90% likelihood when the actual rate is closer to 50%).

• Optimistic self-delusion can be beneficial, as it drives initiative and resilience despite potential setbacks.

• However, overconfidence in organizations can lead to groupthink, where dissenting opinions are suppressed, resulting in poor decision-making and increased risk of failure.

• Optimistic self-delusion can be beneficial.

• However, overconfidence in organizations can lead to groupthink.

Fyre Festival

• Example of organizational overconfidence and lack of critical feedback.

• People who raised concerns were kicked out.

• CEO Disease: Managers surround themselves with yes-men.
  *Fire Festival 2: After jail, the original person running the fry festival wanted to do a festival again with out the permission of Playa Del Carmen

Base Rate

• Paul is finishing his MBA. Is he more likely to find a job in: A. Management of arts. B. Management consulting.

• Is likely for A than B.

  • Industry - art and entertainment, most is whom you know.

  • Likelihood of success is so small b/c management of arts.

  • Consulting easier to get especially when having a high rated MBA program compared to entertainment.

  • In the same idea, less jobs available.

  • Not has that demand for high arts.
    The number of job:
    *Management of the Arts = approximately,14,000 jobs.
    *Approximately 800,000 in the entire US.