This is a guest post by Oliver Raw – a former journalist, now working as a business consultant and blogger at Edusson. He’s also a freelance writer interested in society, culture, management and psychology.
All of us are only people. And no matter how hard we try to be rational and flawless when making decisions, we still make mistakes.
The main reason is that our brain uses heuristics – certain methods to optimize the problem solving process, which often interferes with the logical process.
Here are the main ways our brain misleads us when it comes to decision making:
1. Last seen version.
Imagine we need a designer to make a production catalogue. Most often we will give the task to someone we have already worked with or at least heard of from our friends.
Of course, this doesn’t guarantee that the work will be done in the best way, on time and at a good price. But for some reason we don’t consider other options.
We often optimize our selection process this way. Starting with buying food at the grocery store (we simply take goods of a famous brand or what we have tried before) and ending with the selection of a supplier.
Such way of making decisions helps us save time and – in the minor cases – can be completely reasonable.
Solution: If the issue price is high, better expand the list of alternatives.
2. Dive into the problem.
Let’s say that – as a business owner or manager – we enter a new region with our products /services and look for a sales partner.
After the initial negotiations with the most interesting company, we discuss the partnership conditions, payments, etc. But suddenly we face a huge number of difficulties.
Our potential partner is not satisfied with our workflow process, rises questions on minor issues and makes every possible delay.
And we spend time, effort and money trying to solve all these. But by that time, we already could have seen results from working with someone else.
Persistence is an important quality of a leader. But sometimes it should make way for prudence.
Solution: Always bear in mind the final result and when the problem occurs. Think if there are any ways to solve the issue in a simpler way.
3. To be or not to be.
These are the moments when there is only one option to choose from. Or at least that’s what we think.
Sometimes we face an unpleasant choice where the point is to choose one out of all unfavorable alternatives. Examples of that are “Give us 10% discount or we will find other suppliers” or “The conference can be set only at 9 am”.
Such mechanism is good for making quick, but not the best decisions.
Solution: There are always more options. Don’t let others put you in uncomfortable conditions. The key to successful business is a search for alternatives and compromises.
4. Raising rates.
Let’s say we have a big office printer. Once we have payed a pretty penny for it, and now it is broken. Again.
The master suggests we pay another good sum for repair or to buy a new one. Sure, the standard thinking would be “We have invested a lot in it and it is a pity to throw it away…”.
We think that previous investments increase the value of the item and keep investing, even though buying a new one could be way cheaper.
Same could be applied to:
- our team mates (“we spent so much efforts on their training, we gotta give them a chance”);
- customers (“the team has spent lots of time to get this order, even though it will not bring much profit”);
- projects (“yes, we have problems here, but we can not give up here…”)
This trap is even similar to the one of gambling.
Solution: Switch from past investments to present profits. The value is not always in money and efforts put, but in what kind of return we can get today.
5. Imaginary urgency.
Sometimes we think that the decision should be made right now or we’ll miss the boat.
This trick is often used by manipulators in different professions, prompting us to take hasty decisions.
When in a hurry, we take them way less efficiently because our brain uses heuristics to help us decide, yet increasing the chance to make the wrong choice.
Solution: Make sure it is a real emergency and figure out all the possible consequences of the wrong choice. If someone is actively trying to rush us, we should think about his motives too.
6. Putting off making decisions.
Some decisions are very unpleasant, so we put them aside as if it is a visit to the dentist. And, unfortunately, the problem is only growing.
This psychological defense is intended to protect us from unpleasant situations in life. However, a leader’s duty is to act on behalf of the company’s interests, not personal desires.
Solution: Be honest with yourself and be aware of the consequences of a delay in solving the problem.
7. I like it!
Sometimes we like something so much that we make the choice without considering other options or calculating the consequences.
Solution: Analyze all options before taking the decision.
A Decision Algorithm to Help You Avoid All These
These reference points will help when there are doubts about the objectivity of the current decision-making process:
Situation: What are the initial facts? How important is the issue?
Goal: What should be a positive result of the decision?
Options: What are the ways to achieve the goal? What are the alternatives? How can we find more options?
Choice: How much will each option cost? What are the chances to achieve the goal with each option? What are the pros and cons of each option?
Heuristic methods might mislead us sometimes. However, it is hardly necessary to get rid of them at all. They are the basis of our intuition and “managerial flair”.
We need to learn the mechanisms of decision making so that we can be protected from manipulations and achieve synergy between intuition and rationalism.
What do you think? What other way do you know in which our brain deceives us?