As we go through the decision making process, many biases affect the quality of our decisions. As a result, bad decisions can easily be made, even after analyzing a multitude of factors and investing time, money and resources.
Where do we start?
Here are some techniques, courtesy of Stanford University’s Center for Professional Development.
Most biases fall into six categories:
- protecting our mindset due to overconfidence, selective attention and hindsight;
- conforming to social influences;
- individual habits and personality;
- faulty reasoning when dealing with uncertainty and complexity;
- relative thinking; and
- automatic associations.
The Top Three “MegaBiases” in Decision-Making
There are three “megabiases” that can invade a company’s culture, becoming organizational biases that ultimately undermine performance.
1. ILLUSION OF DECISION QUALITY
As humans we have a tendency to believe we are making good decisions, when in fact we are not. Why does the quality of our decisions matter? Because a good decision is more likely to lead to a good outcome.
2. COMFORT ZONE
From an individual perspective, our personality dictates how we approach a problem and make decisions. We work within our comfort zone, the realm of our knowledge and experience. For example, when faced with the problem of reversing declining sales, a marketing professional would see it as a marketing problem, when in fact it could be a distribution issue.
3. AGREEMENT TRAP
When solving problems in groups, agreement is sought on decisions. It is assumed that when a consensus is reached, a good decision has been made. In reality, the quality of a decision is not related to achieving consensus. In a group dynamic, the pressure is on to take action and get the job done; add to that the common desire to be liked, by agreeing with our peers.
How to Overcome the Top Three MegaBiases
- Be aware of the biases and conscious of your mindset and habits when making decisions.
- Spread the word to other decision makers and develop a shared purpose.
- Review the factors affecting decision quality (see graphic).
- Understand the true nature of the problem and the primary drivers.
- Follow a deliberate process that is analytical, rational, reflective and abstract, as opposed to fast, instinctive and using short cuts. Resist the WYSIATI (what you see is all there is) mindset;
- Reach out for tools, data and other perspectives that are relevant to the problem.
- Make it a mental habit to question agreement. Encourage disagreement that leads to discussion and active debate. Conflict is fuel.
Next time you encounter a challenge, apply these tactics to improve the quality of your decisions, because better decisions make a better business.
Check out these free online seminars from Stanford University’s Strategic Decision and Risk Management Certificate Program.
As a packaged foods consultant specializing in strategy, brand and packaging development, Birgit makes food brands more saleable. Her experience includes 17 years with Loblaw Companies and President’s Choice®.
© Birgit Blain & Associates Inc.