Different situations impact the way we make decisions. To illustrate this point, if you’re trying to lose weight, you generally only have to consider your own motivations. For instance you have to work out how to reduce the desires that get in your way, like wanting to eat fatty foods.
In contrast, if you’re marketing and trying to persuade strangers to buy from you, considerations are very different. You’re not in direct control of what others do, you can only encourage and influence, and so there is an extra level of complexity to how you make your own decisions.
The Cynefin framework provides five decision-making contexts;
Simple (has recently changed to obvious),
which helps managers identify how they may perceive situations and make sense of their own and other people’s behaviour.
The Cynefin framework is based on research from systems theory, complexity theory, network theory and learning theories according to Wikipedia.
It has been used by its IBM developers in policy-making, product development, market creation, supply chain management, brand and customer relations. As well as by governments and the military along with health care research by the NHS.
If you don’t know where you are, if you feel lost, you are probably in the domain of disorder. Within the domain of disorder, there is no clarity about which of the other domains apply to your current situation.
You may experience multiple perspectives, that could all equally be valid. “Leaders may argue with one another and cacophony likely rules”, says Snowden and Boone.
To find a way out of this domain, you must break down the situation into its constituent parts and assign each to one of the other four realms.
First gather information, then identify the domain and move on.
Don’t fall into the trap of believing everything is simple and ordered, or that past success makes you invulnerable to future failure. This is a big mistake, because before you know it, the chaotic domain will drag you into a crisis.
When the s**t hits the fan and all hell breaks loose, the first response is instinctive, the freeze, flight or fight response kicks in. It’s our primordial response for self preservation.
In this domain, cause and effect is unclear, and too confusing for knowledge based responses. In fact, previous knowledge and experience is only partially useful in chaotic situations.
Remove yourself from danger, in the first instance, try to regroup and do what you can to move from the chaotic domain into the complex domain, using novel practice if you have to.
ACT really…trust your instinct….get out of the immediate danger zone
SENSE once out of the immediate danger zone, assess the situation and determine your next steps.
RESPOND take action to move your problem to another domain
In this domain, the relationship between cause and effect is only possible through retrospective analysis. It’s a case of the truth being out there somewhere. There are no right answers, as such, we can draw only instructive patterns from them. The best way to navigate in this domain is through trial and error, via experimentation.
We often have to engage in emerging practice, where the path will be created with every step taken. It’s a case of testing as you go and seeing what works and what doesn’t, and learning from your failures.
The complex domain represents the “unknown unknowns”.
I was introduced to the concept of complexity when reading “Brave new work by Aaron Dignan”, where he discusses how companies can become more “adaptive and human” by becoming more “complexity conscious.”
Let’s assume you’re a marketer who wants prospects to buy your product. What do you need to do to get them to act? You can only encourage them to buy from you if you match their buying criteria. You must present your offer in a way that compels them to make a purchase. It’s important to realise that it’s not under your complete control, as with your own actions. If they like what they see, they may buy from you, providing the price is right, they trust you and you’ve given them enough reasons to part with their hard earned money.
RESPOND take action moving the problem into the complicated domain
In the complicated domain, the relationship between cause and effect may consist of a range of right answers, rather than just one. It requires some expertise to navigate in this domain, like you would find with engineers, surgeons and lawyers. It’s the domain of known unknowns.
You’re looking for an expert to show you the best way.
You can make use of a blueprint to get from A to B.
It’s a case of 1 + 1 =2
SENSE the problem
ANALYZE the problem and roadmaps
RESPOND with a plan
In the simple/obvious domain, the relationship between cause and effect is clear cut: if you do X, you can expect Y to happen. It’s the domain of the known knowns.
Snowden and Boone (2007) offer the example of loan-payment processing. An employee identifies the problem, for example, a borrower has paid less than required, the employee categorises it, by reviewing the loan documents, and responds by following the terms of the loan.
It is the domain of the 1 way solution. A simple case of 1 + 1 = 2
SENSE the situation. Establish the facts.
CATEGORISE the situation into a known bucket
RESPOND with a well-known solution, following the rules or applying best practice.
Sometimes you can move through these domains, other times a particular decision lives in just one. The main takeaway is to understand that all problems are not equal and that different approaches are required for different situations.
It’s easy to accuse high profile people of poor decision making, whether they are the government, local council, business leaders, or football managers. Hindsight is a great tool for scrutinising the choices of others, especially when results deviate from intentions.
But hindsight contains the full picture, where the initial decision is made on a best guess basis, relying on past experience as a pointer to future repeatability, and a great deal of hope that luck will work its magic on subsequent variables that could fall for or against a position.
Many critics comment from a position of ignorance, often unaware of the true complexity of a situation, which on the face of it seems obvious, until you dig into the detail sufficiently to actually affect change.
Most people are poor predictors of future outcomes, particularly with regards to their own circumstances. So what makes them experts in things they have less experience dealing with. People are quick to blame others, outside influences and unforeseen events for their own shortcomings when it comes to decision making, but are less willing to extend that courtesy to others.
Next time you feel the need criticise others for making a poor decision, take a pause, and think that maybe, just maybe there is more to it than meets the eye, and realise that maybe subsequent events didn’t fall favourably for the decision maker.
At least they made the decision in the first place, fear of change and uncertainty is often enough to paralyze decision making and subsequent action taking, it’s easier to play safe and do nothing. Give them some credit for trying, by doing so, you give yourself permission to take a chance and make a change through the decisions you make.
If your outcomes are not as predicted, use the power of hindsight to learn lessons about where it went wrong, so that you shorten the odds for unexpected results next time, that’s the best you can really hope for, and so it is for others.
Why is it we are good at giving others advice, but struggle with our own situations.
For instance people advise others about relationships when they themselves are in bad relationships. Maybe we should take our own advice. This isn’t a criticism, it’s just a recommendation.
We know the answers, when it comes to other people, but we can’t see it for ourselves. When we’re caught up in our own emotions, they tend to cloud our judgement. Rational thinking is easier when emotions aren’t present.
When we’re outside the scenario, everything is all too clear to see, but within it, everything is confused. If we imagine a stranger being in our situation, what would we tell them to do? Whatever the answer, is our solution.
I’ve just finished watching “The Choice” on Netflix with Mrs Turner, and I would highly recommend it. But I’m not writing a movie review here, but talking briefly about what it got me thinking about.
I find choice to be an intriguing aspect of life.
Life is all about choice, right or wrong doesn’t matter because life keeps unfolding regardless.
Choices can be big or small, and can change the whole direction of your life in a heartbeat.
We are where we are because of the choices we have made to this point. The decisions about what to think, to do, and who to do it with or not, provide a continuous stream of options, each following the other.
The best or worse thing about it, depending on how you choose to frame it in your mind, is you get to make them, all of them.
I once made a choice to go away on an holiday, I wasn’t particularly looking forward to. I won’t bore you with the detail, but at the end of it all, it resulted in me meeting the love of my life and marrying her. If I hadn’t of gone on that holiday, and I very nearly didn’t, I wouldn’t have been in a position to meet her and experience the subsequent journey we have enjoyed together since. That holiday literally chanced my life, but really all the decisions we make have the potential to do that don’t they?
So let me wish you good luck with your future choices, may they bring you incredible joy.
Having a habit of making bad decisions can severely hamper the quality of your life.
It can be changed by improving your self-awareness and shining a light on what is at the route of why you make your choices.
You may ask yourself “Why did I pick choice X over choice Y?”, by keep asking “why” you can dig deeper, and find the route cause of why you do what you do and don’t do what you don’t do. More about self awareness, here.
There are number of additional things to focus on when looking to improve your decision making…
Don’t be lazy in your decision making, consider your options and weigh them against one another. Remember, doing nothing at all, is an option. Take time out to really think about all the choice open to you.
Bad decisions can also come out of pressured situations. Important irreversible decisions should never be rushed under such circumstances.
Sales people are trained to add scarcity to their offerings in the form of limited volumes of stock or limited time availability, these are designed to encourage impulse, emotionally driven buying decisions. Don’t be fooled by this, better not to buy, than buy and have deep regret later.
Avoid taking decisions when in a strong emotional state. Emotions can severely hamper rational decision making. Psychologically sleeping on decisions is a great strategy for allowing emotions to subside. Come back to the decision later when you can be somewhat more objective.
So, if you find you keep making bad decisions, you owe it to yourself to do something about it.
Don’t be LAZY. Ensure you are taking the time to evaluate all your options
Don’t be PRESSURED into making rash decisions. If a decision is worth taking, make sure you aren’t being rushed into it
Finally, avoid making decisions when in an intense emotional state, good or bad. Rationality and emotions don’t mix well. Take time out and revisit the decision when you feel you can be more objective about it.
For a more in-depth article about Decision Making click here.
The EU referendum has certainly divided the country, with strong opinions on either side of the argument. And it has been an argument, rather than a debate. From a psychological point of view it’s been a rough ride for both sides.
Politicians and the media have been guilty of constructing their campaigns in such a way as to play to the fears and insecurities of both sides, by using very emotive and divisive language rather than just presenting the facts. Why have they done this? Well because there are no facts, no one really knows if it would be best in or out of the EU. There are opinions about pros and cons on either side of the debate, but not many facts.
It is a gross understatement to say that the general public have been manipulated during this referendum. Politicians and the media recognised the fear of both sides and played heavily on these to influence voter’s decision-making.
Both sides have their own expectations and preferences about the future, which are in opposition. The leavers want to maintain democracy and see the EU as anti-democracy and a symbol of anti sovereign control. Remain campaigners want to remain part of a EU that promises being part of something bigger, making the UK something bigger than they see it as being outside the EU.
The current reality as perceived is also different for each side of the argument. Leavers feel they are having a bad deal, influenced by decision makers that are not directly accountable, see the UK with an elected government that lacks any real power to influence its own economic, immigration and law-making requirements. Remainers’ believe while the current situation isn’t ideal change is better influenced from within the EU rather than being isolated outside it.
The views are certainly in opposition, but you will never get a consensus. In fact it is good that we question each other’s beliefs. In fact both sides want the same thing, to have an improved quality of life, they just disagree on how best to achieve this.
What is not good, is the way politicians and the media have used emotive and divisive language to intensify the fears of both sides, and position the other side in such a way that they become perceived as the “enemy”
Let’s have look at how it works…..
If you look at how emotion is created, it becomes obvious how politicians and media have been playing us and why we have reacted so aggressively to the opposition, and it has been aggressive, and we do see the other side as “the opposition”, even “enemy”. In fact we are both victims of the same process of emotional and unscrupulous manipulation.
Lets look at the equation of emotion and how it shapes your emotional reactions. The equation of emotion is…
Expectation/Preference (EP) compared to Reality as Perceived (EP) = Emotional Reaction (ER)
When your Expectations and preferences don’t match your perception of reality you will experience a negative emotion. This is a fact.
If the source of this imbalance is not something we are attached to, we will become angry towards it. If we feel the threat to be greater, more real, and imminent, we feel even more angry towards the source. (Find out more about the Equation of Emotion by following this link.)
Let me explain…
Remain campaigners have a strong belief that:
We are better in EU than out because we are part of a bigger trading block rather than being alone, this comes from the belief we are too small to make our way in the world alone
We are an open society that welcomes diversity and is outward looking rather than being against immigration and having racist tendencies
We are more secure sharing security information within the EU, than being out on our own.
We can affect change better within the EU rather than being powerless outside it
The theme for these beliefs is that we are better together rather than alone. The fear of remain campaigners includes, fear of isolation, fear of not being part of the decision making process, but still being subject to the EU rules of trade, the underlying fear is a fear of being worse off, having less money, having less prospects, having less of an open society. It’s a fear of loss.
Remain politicians have played on these fears by using very emotive language and attacking opposing views as beings racist, xenophobic, anti-establishment fuelled, and of being an isolation mentality.
These are so against remain campaigners views that it positions opponents as the “ENEMY”. There is no greater “other” than an enemy.
So let’s go back to our equation from earlier.
Remain campaigners have an expectation/preference that the UK is open, inclusive, part of something bigger, part of the decision making process within the EU,
Their reality as perceived is, we are no longer that kind of country with over half of the nation having racist, xenophobic, anti-establishment tendencies. Seeing themselves as now being materially and prospectively worse off out of EU than they would have been within the EU.
The emotion they feel as a result of this, is anger. Anger directed at leave voters who have been painted implicitly and explicitly as the “enemy” because of their opposing views. The more remainers’ feel this to be true, the stronger their anger towards leavers. The more they believe they will be worse off, the more they believe leavers to be everything they are not, the more of an enemy they see leavers, the more the anger and hate they direct at them.
Leavers have a strong belief that:
We are better as a sovereign country rather than giving control to an un-elected EU
Want to control UK border rather than having no say in numbers and choice of migrants coming into country
Ability to make and enforce our own laws, rather than EU making blanket laws that don’t fit our particular national circumstances
Want elected politicians to be accountable and able to be sacked if not doing what the populations wants/needs
Don’t want to be pushed into ever closer union with a United States of Europe with un-elected officials making decisions for us, without accountability.
The theme for these beliefs are centred around control and democracy.
Leavers see remainers’ as not standing up for their democratic rights and laying down and letting the establishment take advantage. They feel the quality of life is being eroded by a lack of control and accountability of the politicians that have been elected.
Politicians and media have played on immigration fears, and lack of democracy to strengthen the resistance to these issues. Again they have strengthened their argument with emotive language designed to stir up and intensify these fears.
Leavers expectation and preference is to have accountable government who have control of the important aspects of society, like the economy, border control and law making and enforcement.
Their reality as perceived is that, this is now the case, having won the referendum, but let’s assume they had lost the vote, for illustration purposes. Had they lost they would feel that they had lost control of democracy. That the political elite had been given a mandate to take further power from the sovereign countries. They would be blaming the remain voters for allowing this to happen. They would likely see remainers’ as being gullible, spineless people who have foolishly given democracy away without a fight.
The emotional reaction would have likely also been anger. This anger would be directed at those seen as responsible for this unacceptable situation, the remain campaigners.
The truth is, that the exact same internal process is going on in the remain voters as is in the leave voters. Both sides have opposing views but both are doing it because they feel it is right for them and the wider community. They are both doing it from a position of “good will”. Both feel passionately about their views and see opposing views as misguided, ill informed, and the victim of propaganda. The emotion has been intensified by manipulative politicians and the media, who are trying to influence voters’ decision-making, by preying on voters fears and insecurities and over-blowing the consequences of either decision.
The truth is, staying or leaving isn’t as bad as either side believes it to be, and that the politicians and media have been stirring up emotion to serve their own agendas, and voters have been caught up in the intense emotion of it all. We would have survived had we stayed in, we will survive now that we are out.
Try to stop feeling angry and realise that love and caring is driving both sides of the debate. Now is the time to put our differences aside and focus on creating a new and improved Great Britain for the good of us all.
We make decision’s every day of our lives, from the simplest decision about what to eat for breakfast or what to wear when we go out, to more complex problem solving decisions such as how to overcome an particular obstacle that is preventing us achieving a particular goal, or which choice of investment will provide the best return.
What is decision making?
Decision making refers to making choices between alternative courses of action. This involves a comparative assessment of the costs and benefits of different courses of action, however the future value of a choice is not always fixed or known before it is made. This means we can only make most decisions based on a “best guess” basis. So there is a level of risk associated with most of the decisions we make, particularly the important ones.
There are many factors that play into our decision making process, and the subsequent choices we opt for. Here is a breakdown of those factors.
Risk taking refers to decision making when the outcomes of particular choices are not guaranteed, and the consequent uncertainty means that an assessment of the probability (chance) of a positive or negative outcome has to occur. Given that human thinking about probability is prone to many errors and biases, there are many important practical implications for risk taking behaviour. We will discuss many of these errors later.
We are constantly assessing the risks against the rewards of taking any particular course of action, especially if it’s an important decision. We have a tendency, as human beings, to prefer safety over risk and will often favour the status quo over action that has the potential of opening us up to risk, danger and uncertainty.
To overcome this bias we have to find the NEED, or WANT within us, to motivate us enough to take the risk, effectively swinging the balance in favour of action over settling for the status quo.
Choice architecture is the design of different ways in which choices can be presented to consumers, and the impact of that presentation on consumer decision-making. It’s the fact people are more likely to op-in to something rather than opt-out, if the default value is already the opt-in option and vise versa.
How things are presented to us has a greater impact on our choices than we realise. Big businesses have long since known this and set things up for their advantage, making the most of our natural tendencies and dispositions.
It’s important to realise that the creators of the modern world, are not necessarily designing things with our best interests at heart, and we should, at least, be aware of the possibility of manipulation from other parties.
For example, social media is designed to keep us hooked and coming back for more, red notification bubbles tap into our innate sense of curiosity, knowing we won’t be able to resist finding out what’s waiting for us on the other side of that click.
Inner conflict between WANT and SHOULD
This is the inner conflict between;
What do I want?
What should I choose? what we ought to choose
If you’ve ever struggled with your weight, this scenario will be very familiar to you. You want that delicious looking chocolate cake, rather than the salad, but you know you should, for the good of your health, choose the salad.
Facing these kinds of choices, uses up your willpower, which will eventually run out and you’ll succumb to the temptations. So remove the temptations or remove yourself from them.
This approach also goes for distractions. If you’re productivity is being adversely affected by your Facebook activities, lock your phone away or lock yourself in a room free of social media connectivity, until your work is done.
Influence of beliefs and values
This is a biggie and I’m not going to go too deep into beliefs and values here, other than highlight their importance.
All behaviours are a reflection of our thoughts, and thoughts that are repetitive, fixed, and invested with a sense of ourselves, are what we call BELIEFS, they are our beliefs. Conditions and rules that are attached to these beliefs become our VALUES.
Beliefs in particular shape how we behaviour, how we interact with other people and the world around us. They affect our affiliations, or passions, what we pay attention to, what we buy, and how we live our lives.
Much of our beliefs come from social conditioning, they are largely built form assumptions, and inferences, rather than facts and evidence. They are stories we tell ourselves to make sense of the world around us.
We look to confirm our beliefs, ignoring or rejecting counter-argument, rather than trying to disprove them, which is the scientific approach. This is what is described as confirmation bias, if you want to find out more about it.
The best way to deal with beliefs and values is to question their origin, their basis and accuracy. It’s much more productive to consider beliefs as hypotheses, which you look to disprove rather than prove, like science does.
If you can’t prove something, consider it a best guess, until more evidence is discovered.
Avoid throwing your opinions and views around, until you know for sure what you’re talking about.
If someone tells you something ask “how do you know?”, and “where is the evidence?”
Unknown consequences and outcomes
Many decisions are made with knowing what the consequences or outcomes will be. Sometimes we just can’t know whether choice A is going to be better than choice B.
We should instead weigh the facts, as we know them at the time, and commit to whatever choice we make and make the best of it, living with the consequences.
We are not passive recipients of the decisions we make, we interact and influence them as time progresses. So by committing to them and stopping questioning and second guessing ourselves, we give ourselves the best chance of getting the results we are looking for.
Choice overload, too many choices
Too many choices can be paralyzing, and results in nothing being chosen, so be wary of thinking more options are better.
Difficulty in evaluating and comparing choices
It can often be difficult to pick one choice over another because they offer different advantages and disadvantages.
It helps to have a goal that you’re working towards, and decide which is most likely to get you closer to it. That way you have a direction you’re heading towards. But even then some things might just not comparable so what do you do in such circumstances?
Well you decide on one based on the facts, and commit to it.
Errors in THINKING
Dealt with below.
How to too make better decisions
We would all like to know how to do exactly the right thing at all possible times, making good decisions in all circumstances. Some help was given to us back in 1738 by Daniel Bernoulli. The equation he came up with has been translated as:
The goodness we can count on getting from a decision we make, which is based on:
The odds of gain
The value of that gain
Expected value = (odds of gain) x (value of gain)
In itself this equation offers an effective decision making framework, but we must be wary of miscalculating the odds of gain, and be mindful about how we value that gain when using it. As long as we sidestep the many errors and biases in our thinking (which we”ll discuss below), we should be good to go.
Much of our decision making, depends on us using memory and comparison in our assessment of PROBABILITY (when we’re working out the odds of gain) and likewise when trying to establish the VALUE of that gain.
For example, if I asked you, would you consider buying a burger for £10. You would likely make an assessment about what else could be purchased for the £10, along with checking your memory to see what you had paid for a similar burger in the past. If you considered the burger to be overpriced, you would likely not purchase, if you believed there to be other things more worthy to spend the money on, you may opt for them instead. What you’re doing here is you’re making use of comparison and memory to determine the burgers value.
Other factors also come into play, for instance, if you’re hungry you’re more likely to opt to buy the burger. How I frame the question, might also impact your answer. If all your friends were buying a burger, you might decide to buy, just to fit in. If you knew you weren’t going to get the chance to eat for a prolonged time afterwards you might again, opt to buy.
So while this is a pretty straight forward decision, to buy or not, there are still a lot of potential factors that come into play. Decision making is not always so clear cut, particularly if there are a number of choices available.
Let’s look at some of the pitfalls that can befall us if we’re not careful, they consist of errors in judgement and personal biases.
Let’s look at a couple potential errors in memory…
If I asked you “What is most common, dogs on leashes or pigs on leashes?”. You would most likely say dogs, largely because you have seen and remember seeing more dogs on leashes than pigs on leashes and because of this, memory is relied upon as more representative of fact. You are likely to be correct in your assessment, but unless you’re an authority about the world of pigs, and pig owners, you could easily be wrong.
If I asked you “Which is more common in the English language, words containing the letter “R” in first place or in third place?” You would probably be able to remember more words with the letter “R” in first place and would likely choose this as a result, when in fact there are more words with the letter “R” in third place. Because these are harder to recall we have a tendency to think there is less of them. These are examples of “Availability heuristic”.
Lets look at couple of examples of errors when we try to compare things,…
A £2000 Hawaiian vacation package is on sale for £700. You think it over for a week, but by the time you get to the ticket agency, the best fares are gone and the package will now cost you £1500. Would you buy it? Most people would say no. because they would not want to pay for something that was cheaper just a week before, even though the vacation is still well priced at £1500. If the price had just gone from £2000 directly to £1600 (without the drop to £700 in between) would you feel any differently even though the holiday is in fact £100 dearer in the second scenario? Many people would be inclined to opt for this situation given the choice.
Another example for you to consider. You are on your way to the theatre. In your wallet you have a ticket for which you paid £20, along with a £20 pound note. When you arrive at the theatre you discover that you’ve somehow lost the ticket. Would you spend your remaining £20 on a new ticket? Most people answer no. Let’s change the scenario and replace the ticket with another £20 note instead, so you now have two £20 pound notes, and this time you lose one of the £20 pound notes. In this circumstance people often change their answer to yes. Why is this? Well in the first scenario they say they do not want to pay twice for the same ticket, in the second scenario they take the opinion that just because they have lost £20, what difference does it make, they came to see the show and still want to see it.
In our last example, imagine you went to your local cinema and saw a small portion of popcorn for £3 and a large for £7, which would you choose? If a medium portion was then added for £6.50, which would you go for now? In tests, when the medium option was added, more people opted for the large portion than before, why? Because in comparison to the medium the large looked better value than it did before.
So you can see from these examples how easily errors can occur when relying on memory and comparison.
Poor assessment of Probability
Lets look at how our assessment of probability can result in bad decision making. There are two methods we use to assess probability these are:
“Representativeness heuristic” refers to estimating the probability of a particular sample of events based on their similarity to characteristics we feel are typical of the whole category population of those events. This may result in thinking some events are more likely than others, and that certain trends can be predicted. But if people fail to follow the true principles of representativeness, such as ignoring information on probability base rates or forgetting that small samples are less likely to be representative, then this can lead to false estimates as is seen with use of stereotyping. For example if we toss a coin, a sequence of HTTHTH is thought to be more probable than a sequence of HHHHH, even through they are equally likely
and secondly “Availability heuristic” (examples given previously) is based on estimating the probability of an event based on how easy it is to remember. This may lead to familiar, recent or popularised events being more available in memory and subsequently seen as more probable. For example murder might be thought to be more likely than other crimes because of its greater media coverage.
Faulty decision making
Rational decision making would involve taking account only of the odds of an expected outcome and expected value gain of each option. In fact, this is rarely the case, and is often influenced by some of these biases and errors in thinking:
Framing effects – how the problem is presented to us. This is particularly so with marketing messages and political messages which are aimed at getting us to react in a particular way. The way the information is presented often intensifies certain facts and downplays others, in the hope of pushing us towards a certain course of action. (check out our post on Hugh Rank’s Persuasion model)
Loss aversion – as humans we are wired through evolution to be more sensitive to loss than gain. As a result we want to protect what we have over reaching for more.
Elimination-by-aspects theory – this involves eliminating options by considering one relevant attribute after another.
Satisficing theory – choosing an option that has satisfactory attributes when it becomes available. Most commonly found when dating, we pick the first suitable mate that comes along, often rejecting others that come later, but that might be a better suit.
Conforming evidence trap – which involves seeking out evidence that justifies our choices and subconsciously ignoring contradictory evidence rather than looking at the whole picture.
The status quo trap – shifting deck chairs on the Titanic rather than jumping over while it’s sinking
The sunk cost trap – which involves throwing good money after bad in the hope of recovering losses rather than simply cutting losses, as evidenced by many gamblers and stock market investors.
Trial and error – where no decision can be considered correct unless it has been subjected to testing and scrutiny in order to accept or reject it. Which appears to be a rational approach, but is prone to subjectivity and influenced by the persons own values.
A few more to consider:
Compensatory rule – “we selected the security system that came out best when we balance the good ratings against the bad ratings”
Conjunctive rule – “we picked the security system that had no bad features”
Disjunctive rule – “we selected the security system that excelled in at least one attribute”
Lexicographic rule – “we looked at the feature that was most important to us and chose the security system that ranked highest on that attribute”
Affect referral rule – “everything they do is outstanding, so we decided to have them install our security system.”
Biases with Time
Time also plays a part in our decision making:
If I offered you £60 now or £50 now, you would likely go for £60 now.
2.If I offered you £60 now or £60 in a month most would go for the £60 now.
3.If I offered you £50 now or £60 in a month most would go for £50 now – because they don’t want to delay gratification.
4.If I offered you £50 in 12 months or £60 in 13 months many would elect to go for the £60 in 13 months because they think to themselves, what’s the difference between 12 or 13 months, I might as well hang on for another month and pocket an extra £10. But in reality the only thing that has changed between our third example and this one, is the time frame, and the fact that it is further away from the present moment. When we actually get to month 12 we will probably change our minds and wonder why we didn’t settle for the £50 in 12 months rather than wait and extra month for the extra £10.
What else plays a part in poor decision making outcomes
Decisions are made with our best interests at heart, and with positive intent, however we don’t always get them right as discussed. This is partly due to the “faulty thinking” we have talked about above but also other things play a part
External influences and pressure forcing our hand or influencing our decision making, such as time limit, peer pressure, salesmanship, fraudsters, threat
Luck plays a part in the final outcomes and we shouldn’t underestimate its role.
Unforeseen events and circumstances outside our knowledge at the time of the decision or after a decision is made. Unless we have a magic wand, there is little we can do about this. “With hindsight I would have….”
Deductive and Inductive Reasoning
We have included reasoning as part of this discussion on decision making, to highlight how we can easily stray away from accurate thinking, which can later impact our decision making effectiveness.
“Reason sits firm and holds the reins, and she will not let the feelings burst away and hurry her to wild chasms. The passions may rage furiously, like true heathens, as they are; and the desires may imagine all sorts of vain things: but judgement shall still have the last word in every argument, and the casting vote in every decision.”
— Charlotte Brontë
Reasoning or accurate thinking, as it is sometimes described, most commonly comes in the form of Deductive and Inductive reasoning and is often used in the search to find logical explanations for things around us. Why does this happen? How can I make this happen?
Inductive reasoning – is an hypothesis or idea about things we don’t know. It is built on arguments that do not have categorical support for the conclusion. We make many observations, discern a pattern, make a generalization, and infer an explanation or a theory. An example of inductive reasoning is:
Lots of people are interested in internet marketing, Mr Turner is a person, so Mr Turner likes internet marketing
The premise that “lots of people are interested in internet marketing” is true, as is “Mr Turner is a person”. The conclusion that follows “Mr Turner likes internet marketing” is logically correct, but may not be true. The reason for this is that while we have stated that lots of people are interested in internet marketing, Mr Turner may not be one of them.
Because inductive reasoning is based upon probabilities, conclusions are considered to be cogent, rather than true. This is because the probability exists that the two accepted premises may not truly lead to the acceptable conclusion.
Deductive reasoning on the other hand is when we have the facts or appear to have the facts and the arguments provide absolute support for the conclusion.
Deductive reasoning makes the strong assertion that the conclusion must follow the premises out of strict necessity. Denying the conclusion means that at least one of the premises is self-contradictory and thus not true. For example:
All human beings need oxygen to survive. Mike is a human being, therefore, Mike needs oxygen to survive.
For deductive reasoning to be effective the original premise needs to be true, as with the example used above. However check out the example below. Although the conclusion follows on logically from the premise, there is possible doubt over the validity of the original premise that “Every website that has an opt-in form on it, is collecting subscribers”. If this premise is invalid, the conclusion will also be invalid.
Every website that has an opt-in form on it is collecting subscribers, if I put an opt-in form on my website, I will get subscribers.
So the key to a creditable conclusion lies in the premise. If this is valid then so will the conclusion, if not, then neither will be the conclusion.
Another form of deductive reasoning is the Syllogism. A Syllogism consists of a minor premise and major premise and a conclusion and are of the form If A=B; and B=C; then A=C.
A=B (minor premise/specific instance) i.e. Patch is a dog
B=C (major premise/generalisation) i.e. All dogs can bark
A=C (conclusion) i.e. Patch can bark
There are a number of Syllogism fallacies that can producing faulty conclusions these include;
undistributed middle – some dogs (rather than all)
illicit major – last part (C) of the conclusion is broader than premise allows
illicit minor – first part (A) of the conclusion is broader than premise allows
Check out this article for a more in-depth analysis of Reasoning.
So as you can see, it is easy for poor reasoning techniques to impact our decision making effectiveness, and we should always be mindful of ensuring we are using accurate thinking in our decision making.
So as you can see there are many ways of making bad decisions. Below are more tactics designed at improving decision making.
Common Decision Making Methodology
There are often 3 levels of decision making that are generally employed:
The simplest THE REFLEX ACTION (knee jerk reaction. Unconscious, without considering the alternatives i.e. profits down – costs need to be reduced, or sales are slipping – prices too high. Here is a great example. A racket and ball together cost £1.10, Racket costs £1 more than ball, how much is the Racket? work this out for yourself, most people say £1, the answer is actually £1.05.
ALGORITHM or checklist. i.e. You come face to face with a tiger, You instantly go into flight or fight mode. You’re mind within a nano second asks itself, is it a big one? If the answer is yes, you run, if no, you ask yourself, do I have spear with me? If yes you might fight, if no, you run.
Using more sophisticated methods like, Cost Benefit Analysis and The decision matrix approach. Which involves listing alternatives and weighing the pros and cons of each, scoring them against each other and choosing the winner (see worksheet at bottom of post).
As individuals we usually make decisions using the first 2 of these. The first (Reflex action) is not recommended in most cases other than were you have no choice such as flight or fight/life or death situations. The second (Algorithm or checklist) takes the hastiness out of the situation and can help you to be more logical in your thought process. Most of the time we make decisions using our emotions and feelings and this can cause us all sorts of problems, it’s best to give yourself some space to remove the emotion from the situation and consider rationally the best course of action to take.The third option (decision matrix) discussed above is much more considered and allows analysis of the alternatives, but is likely to be biased by subjective preferences. You can ask for a second opinion as a type of check and balance, to help correct this.
More decision making tactics
Identify all factors that affect a decision (weight them against one another) for instance Cost versus Comfort plus emotional factors such as attractiveness felt by having/wearing etc. avoid letting emotions affect decisions. Write down the options and canvas opinion from trusted others.
Be aware of your perception of loss or gain. For instance offering people £20 or giving them £50, taking back £30 and offering a bet to win back the other £30. This framing effect will result in more people taking the latter option even though they would be getting the same thing. People will make bolder decisions to avoid loss (loss aversion)
We tend to post-rationalise decisions after the event. Avoid dressing up bad decisions.
Be aware of Priming – images/words/temperature/smells can colour peoples decisions later on. For example getting people to hold a hot drink can illicit warmer feelings towards someone soon after. So be aware of others trying to manipulate us.
Use a two-tiered approach with a small group of core people who set the standards that a larger group can implement with autonomy but within those standards
Tap into as much knowledge as possible (mentors and mastermind groups)
Ensure those carrying out the decisions are involved in the decision making process.
Harvard Business Review blog recommends using the Trick acronym to aid decision making.
Two – tiered approach (detailed above)
Rapport with strategic team and implementers
Involve all – from management to customer in the decision making process
Cause and effect reversals – to remove self limiting beliefs that are effecting how you approach strategy. i.e. Is your strategy impacting your success, or is you success impacting your strategy?
Kahneman perspective – 12 question checklist to identify and reduce bias
In his book “Think and Grow Rich” by Napoleon Hill he describes the using accurate thinking as being the foundation of all successful achievements.
He advises to separate important facts from unimportant facts. An important fact is one that aids you in the achievement of your goal, if it doesn’t do this consider it unimportant.
Be wary of opinions prejudice and biases that come with them. Look for proof of hard facts. Ask “How do you know?” and stand firm until they have answered to your satisfaction.
If someone has a negative attitude about someone or something, be wary of what they say because it is sure to be negatively framed.
Free advice is usually worth what it costs
Never accept anything as fact until proven
Negative attitude = negative framing
Don’t give away what you want the answer to be when you ask a question, cause people want to give people what they think they want to hear
Ask “how do you know” when you can’t identify if something is true
Check out his book on Amazon by clicking on the image below.
Personally I like to use the “Decision Making Matrix” template below and get other people involved to get some perspective and offset some of my biases. while it has served me well, I would suggest finding what works best for you, however if you check out my post on problem solving you will find a large list of tools and techniques to help in your decision making.
I suspect the biggest takeaway from this post will be in identifying the biases and errors in thinking that may affect many of the day to day decisions that you make. Hopefully by being more aware of these you will look more critically at the decisions you make and what might be motivating them. Decision’s are mainly made on a best guess basis and are sometimes influenced by factors outside our control and span of knowledge at the time we make them. We can only control the actions we take and by examining our biases and errors in thinking, try to improve our decision making strategies.
When we think about things in the distance future we have a view of them, but as we move closer to them we change our minds. Our brains have evolved from a very different world, where we needed immediate gratification to survive. We need to be more aware of these old habits which are no longer relevant to our modern way of living, and be more willing or open to, delaying gratification.
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