Business

Steps to be a better decision maker

Whether you are a business leader, a team leader or even on the ground floor of your company, it is important to return to the fundamental pillars that drive decision-making and improve our understanding of them.

The opinions expressed by collaborators are personal.

Making smart and rational decisions is not an innate gift, on the contrary, it is an art, a process that must take into account factors such as data and risks in one hand and emotions such as fear and insecurity in the other. When we don't consciously decide, circumstances make the decision for us.

Steps to be a better decision maker
Steps to be a better decision maker

Regardless of whether you are the leader of your business , the leader of a team or you are at the base of the organization chart, it is important to return to the basic pillars of our decision-making process and refine our understanding of them. Here are 3 pillars worth checking out:

1. Think about the 'focus'

Psychologists Daniel Kahneman and Amos Tversky wrote a very illuminating article on this topic entitled The Framing of Decisions and the Psychology of Choice, in which they share an example of how our minds frame a problem and how this approach dictates what we do.

For the first problem, participants were asked to imagine a mental illness that will kill 600 people. There are 2 programs created to fight the disease. Assuming that the scientific consequences of these programs are similar, they asked participants to choose one of the alternatives. The percentages reflect the number of people who chose each of the options in the study:

-If program X is implemented, 200 people will be saved (72%)

-If program Y is implemented, there is 1/3 chance that 600 people will be saved and 2/3 chance that no one will be saved (28%)

-What program would you support?

The most popular option is the one that focuses on mitigating risk. Of course, the guarantee of saving 200 lives is much more promising than having a statistical probability of saving 1 of 3.

But Kahneman and Tversky gave a second group of participants a different formulation of this program:

-If program X is implemented 400 people will die. (22%)

-If program Y is implemented there is 1/3 probability that nobody will die and 2/3 probability that 600 people will die. (78%)

-What program would you support?

Kahneman and Tversky explain the reasoning behind the elections taking into account the given frame of reference:

The majority choice in Problem 2 has to do with risk taking: the safe death of 400 people is less acceptable than the probability (2 out of 3) of 600 people dying. The preferences in Problems 1 and 2 show a common pattern: choices that involve gains are often risk-averse and choices that involve losses bear the risks. However, it is easy to see that the problems are indeed identical. The only difference is that the results in problem 1 are described in terms of lives saved and in problem 2 in terms of lives lost. The change is accompanied by a sharp turn from risk aversion to risk taking. We have observed this setback in many groups of participants, including physicists and university students. Inconsistent responses to Problems 1 and 2 arise from the combination of the conceptual effect with contradictory attitudes towards risks involving profit and loss.

There are two important lessons here: the first, that it is in human nature to view the prospect of loss as more powerful than the promise of profit … We do not treat profit and loss in the same way. Second, that it is in human nature to create focuses around a problem and operate within those frameworks like a pinball ball trapped in space.

This approach is everything.

When we tell people to think beyond their comfort zone, what we are really saying is to reorder the approaches around the problem. These approaches allow us to focus on the options that we have given ourselves, with the consequence of only considering these options instead of thinking about other alternatives.

For an idea to have a chance to develop it needs space to breathe and that may require a different approach and that we break the molds that were originally put into it.

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2. Be aware of comparisons

As much as we tell everyone, ourselves included, not to do it, we are condemned to do it: we compare everything. The need to compare is primitive and determines the value of what we are looking for.

Dan Ariely, a professor of psychology and behavioral economics at Duke University, explains to the beginning of his book Predictably Irrational (Predictably Irrational):

Let me start with a fundamental observation: Most people don't know what they want until they see it in context. We don't know what type of racing bike we want until we see the Tour de France champion adjusting the speeds of a specific model. We don't know what kind of speakers we want until we hear ones that sound better than the ones we have. We don't even know what we want to do with our lives until we find a family member or friend doing exactly what we think we should be doing. Everything is relative and that's the point. Like a pilot landing in the dark, we want a runway with lights on each side guiding us to where we should put our tires.

To show the power of comparison, Ariely, who was a professor at MIT from 1998 to 2008, gave his students 3 options to subscribe to The Economist , resulting in the total fragmentation of his group:

-Online subscription – $ 59 (16 students)

-Printed subscription – $ 125 (0 students)

-Print and online subscription – $ 125 (84 students)

It is not surprising that no one has chosen the printed option if there is another option with double value at the same price. Afterward, the teacher did the study again, but removed the print option.

-68 students chose the online subscription option (compared to the previous 16)

-32 students chose the print and online package for $ 125 (compared to the previous 84)

Ariely sums it up by warning us that relativity is the lens through which we see the world, and it is everywhere. However, there is one aspect that stands out from the rest. “Not only do we compare things to each other but we tend to focus on comparing easy things and avoiding difficult things.”

The challenge is to use comparisons wisely, being aware of the type of comparisons we make and highlighting the specific value that we seek to obtain from each one.

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3. Learn when you should trust your instinct

Let's say you are going to interview a candidate for a vacancy. As you watch him settle into the chair you feel that something is not right. His resume is excellent and the rest of your team has already given you positive feedback. You know you have to be objective, so you try to forget it. You smile and keep asking questions, trying to silence what you thought at the beginning. But you feel it in your stomach: he is not the right person for the job. You share your feedback with the team and everyone decides that, even taking into account their experience and intelligence, it is not a good option for the job. You knew that all along, but you are glad that others agree with you.

If you have a habit of making decisions based on your intuition and it has worked for you, you are definitely lucky and have a unique predisposition. It is useful for individuals and teams who challenge their intuitive decisions.

Psychologist Daniel Kahneman, in his book Thinking, Fast and Slow (Thinking, Fast and Slow) beautifully explains what is intuition:

Expert intuition seems almost magical to us, but it is not. In fact, each of us experiences feats of intuitive experience multiple times a day. Most of us are experts in detecting when someone is angry from the first word in a call, we recognize if they have been talking about us when we enter somewhere and we react quickly to the subtle signals that let us know that the driver we bring next it is dangerous … The psychology of correct intuition is not magic at all. Perhaps the best definition of this has been given by the great Herbert Simon, who studied chess geniuses and showed that after many hours of practice they end up seeing the pieces on the board differently from us. We can feel Simon's impatience about mythologizing expert intuition when he writes: 'The situation has given us a clue; the clue has given the expert access to information stored in his memory, and the information gives the answer. Intuition is nothing more and nothing less than recognition. '

On the other hand, it is difficult to doubt the intuition of someone we consider an expert. All those years and all that experience influence the recognition of the tracks that are sent all the time. There are very few people with a truly sharp intuition, but that does not make them immune to being wrong.

If you're in a city and you have a bad feeling about the person you're talking to, you don't need a second opinion to turn around and leave. In these situations, intuition helps and usually does not need another perspective. But when it comes to hiring someone or making high-impact decisions for your company, it's worth challenging your intuition, asking about other perspectives, and reaching consensus.

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Organizations can greatly benefit from viewing decision-making processes as if it were a team sport. Polish these 3 steps to equip yourself to make better decisions, but also identify when you need someone to support you or when you need the opinions of others. The change you seek to create for your clients is based on the decisions you make on a day-to-day basis.

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