Wednesday, December 2, 2009

Decisions, decisions... why we are bad at making them and what we can do to make better ones for our businesses. (Part 2)

Have you ever made a decision that you felt in your gut was right? Has that decision ever ended up being wrong? Have you ever made a decision that went against the evidence? How about that time you made a decision because all the alternative decisions someone else put together just weren’t good enough? If you answered yes to any (and all) of these, you have fallen victim to your own cognitive shortcomings. In a more scholarly sense, the things that made you be you tend to all come together to give you biases in your decision making process. The ability to perceive options, choose between two scenarios and even sifting between good and bad information are all a part of the cognitive process in the larger process of decision making. Unfortunately these same abilities are tainted by past experiences and are enhanced when a “bad” decision ends up being a “good” one.

More than this, the cognitive process gets even more complex than could ever be truly imagined. The whole field of psychology is dedicated to understanding it. To simplify it for this blog, suffice it to say that your cognitive skills are impacted upon by things from your mood to your ethics and all points in between. Essentially all the things that have anecdotally but not empirically been proven to impair or cloud your judgment really do have an impact on decision making. As a result the strategic decisions we make are rarely ever made to the highest effectiveness possible. The idea of fully evaluating information, comparing alternatives, and selecting the best option is nothing we can truly achieve.

That said there are a few tips which can help you make the best of your personal cognitive shortcomings:

•The first thing that can be done is to know that these biases exist. Realizing the strategic decision you are making is more about controlling your cognitive process than it is about accurately evaluating pertinent information is half the battle.

•Secondly, simple cognitive mapping, making a linear sketch of how you arrived at your decision, can mitigate the risk of your biases. It should, when done effectively, be a road map to the decision which anyone could pick up and lead them to the same conclusion given the same information. If the cognitive map is done less than effectively there will be points along the map which you will still be justifying to yourself. If that is the case than somewhere in that gray area is where your biases have taken root. If possible revisit the information later to fix the map and make the best decision. If that isn’t possible and I will concede it often isn’t, know that your strategic decision will hinge on your evaluations in the gray area.

•Finally, make your decision. While cognitive mapping of the decision may take time, it is not meant to lead to paralysis by analysis. If you can eliminate all your biases that is great, but even if you eliminate 25% of your cognitive biases in the decision making process you will increase the chances of achieving a positive result on your strategic decision.

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