Book review: 'Left Brain, Right Stuff,' by Phil Rosenzweig
Economics professors might accuse a CEO of excessive risk-taking. But in the real world, some industries truly are winner-take-all.

Decades of elegantly constructed experiments have helped us to understand just how we think and decide—quite imperfectly, it would appear. We are convinced that we know more, control more and make better predictions than we have any right to believe.

Decision research has revealed a litany of cognitive biases and inspired a library of books to explain what they mean. One of the best, Phil Rosenzweig's "The Halo Effect" (2007), demonstrated how these biases find their way into studies of business performance, leading us to lionize the most successful companies. The result: tidy narratives—"feel-good fables," in the words of the author—that offer little guidance.

Mr. Rosenzweig's latest effort, "Left Brain, Right Stuff," starts by acknowledging the enormous influence of decision research in domains from finance to public policy. Britain even has an official "Nudge Unit" tasked with using behavioral science to steer citizens toward better choices.

But corporate leaders, Mr. Rosenzweig observed, haven't rushed to embrace the lessons of decision research, and he wondered why. The answer came to him as he talked to seasoned leaders in an executive-education program and realized that, while decision research "experiments have been very effective to isolate the processes of judgment and choice," they occur in a context far removed from "the realities that strategic decision makers face," leading to advice that can be difficult to apply.

For instance, executives are frequently counseled to avoid overconfidence, one of the most pervasive cognitive biases detected by behavioral researchers. But Mr. Rosenzweig, a professor at Switzerland's IMD business school, discovers that the term is almost always invoked after the fact to explain a failure; in the context of success, the same quality is described differently. Entering a fight, boxer Manny Pacquiao's face is "filled with confidence," but after he loses he says "I just got overconfident." A distinction defined by outcome offers little help to executives seeking to calibrate their enthusiasm.

Besides, Mr. Rosenzweig says, are we sure that overconfidence is all that bad? Golfers, for instance, sink nearly twice as many putts in a hole surrounded by an optical illusion that makes is appear bigger. Accurate critical appraisal makes sense when we are deliberating, he notes, "but when it's up to us to make something happen—such as knocking a ball into a hole—the story changes." Leaders must somehow balance dispassionate analysis (traditionally if imprecisely associated with the left side of the brain) and inspirational execution involving risk and a competitive spirit—the "right stuff." The optimal amount of confidence depends on the task at hand.

Others lessons from behavioral science can be equally difficult for executives to apply. Think of deliberate practice—the idea that through a process of action, feedback and adjustment, skills will dramatically improve. This technique works well for free-throw shooting, memory games and playing a musical instrument, but in the business world? Once again, it depends.

Kaizen—a system of continual improvement common in manufacturing—is a clear application of the principles of deliberate practice and can be very successful, as it has been at Toyota. Presentation skills, too, can be honed through repetition and critique. Like free throws, these tasks tend to be discrete, the feedback immediate.

But "executive decisions aren't like shooting baskets," Mr. Rosenzweig writes. It can take years to see the impact of a major decision, and by that time it can be hard to connect cause and effect. "The more important the decision, the less opportunity there is for deliberate practice," concludes Mr. Rosenzweig.

Most business decisions are also complicated by the dynamics of competition, which can lead to just the sort of behavior that decision researchers warn against—extreme risk taking, for example. Consider a winner-take-all scenario like a college stock-market competition (a neat microcosm of certain business contests). To win, Mr. Rosenzweig notes, you need to take on a lot of risk; a conservative strategy that keeps you in the middle of the pack nets you nothing. "In a competitive game with skewed payoffs," he writes—the semiconductor industry comes to mind—"only those who are willing to defy the odds will be in a position to win." Under such conditions, the irrational becomes rational and essential.

As Mr. Rosenzweig steps through example after example, reminding us of changing variables and unquantifiable unknowns, he reveals the complexity of business decisions. He also shows why executives might look at decision research skeptically: Their lived experience is messier than the conditions of experimental science.

After spending 11 chapters convincing us that strategic decisions can be unfathomably complicated, it's a bit unsettling when in his final chapter Mr. Rosenzweig wheels around and offers guidance to executives, suggesting the questions they should ask themselves: e.g., "Am I making a decision as an individual or as a leader in a social situation?" The attempt seems halfhearted and unlikely to take a busy CEO very far.

While "Left Brain, Right Stuff" may be framed as an advice book, it reads like a call to action for social-science researchers, imploring them to expand their scope and refine their methodology so that their conclusions will be more pertinent to the thorny choices faced by corporate leaders. Surely Mr. Rosenzweig is onto something here: Researchers need to venture outside the lab and observe the real-world expression of the phenomena they are dissecting.

Dr. Shaywitz is co-author, with Lisa Suennen, of "Tech Tonics: Can Passionate Entrepreneurs Heal Healthcare With Technology?" and is a strategist at a San Francisco-based biopharmaceutical company.

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