Are You Making Bad Decisions?
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Each year, 85 to 95 percent of new products fail. Most companies regularly consider industry data, market intelligence, and relevant expertise in the decision-making process before launching these new products. So these high failure rates are not likely due to a lack of data, but rather they are due to defects in our internal mental processes—flaws in the way we gather and process information that often go unnoticed and unaddressed. When a new product or strategy fails, we’re left wondering, “What was I thinking when I made that decision?”
Bugs in Our Thinking
The problem stems from the fact that, just like computers can have bugs, all humans have bugs in the way we think and make decisions that we may not realize we have. And, today’s quick-paced, resource-constrained, stressful business environment reinforces the problem. “Mind-bugs” can affect fact gathering, analysis, insight, judgment, and decisions, and increase business risk accordingly. Here are four bugs that can create a virtual minefield of risk.
1. Informed Leader Fallacy:
A belief by a leader that he or she is better informed and has better instincts than others, simply because he or she is the leader.
Whether it is a lower-level supervisor or the owner of a small company, employees deeply want to be led by people who know what they’re doing and who don’t have to think about it too much. By the time we achieve a leadership position ourselves, we are good at making others feel positive about our judgment, even if there’s no strong basis for our decisions. But the amount of success it takes for leaders to become overconfident isn’t terribly large. Some achieve a reputation for successes, when in fact all they have done is take chances that happened to work out. The fierce personal confidence that characterizes many business owners serves as a breeding ground for this mind-bug. Most decision makers will trust their own intuition because they think they see the situation clearly.
Accordingly, they can fall into a trap of believing they are better informed than they really are.
2. Shooting the Critics: The tendency to marginalize people who disagree with us.
Any decision a leader makes is subject to being questioned. And whether they’re fully aware of it or not, many business owners really do not want to have their decisions, beliefs, and choices questioned. Whether it is you as the owner, or an employee in a supervisory role, people subconsciously develop the tendency to marginalize people who disagree with them. When this happens, subordinates and colleagues stop telling the truth. They avoid rocking the boat and just quietly stay out of the line of fire. This mind-bug causes intolerance for challenge and acceptance of our beliefs as sufficient, leaving huge gaps in judgment.
3. Outcome Attachment: Being so attached to outcomes that serve our interest that we fail to look for problems in our thinking and decisions.
Unconsciously, all people are attached to outcomes that serve our interests, helping us get what we want or what we believe others expect of us. When this mind-bug strikes, the attachment is so strong that you may be willing declare work completed when in fact it isn’t. It seriously affects how you gather information so that you search in a way that supports the outcome to which you are attached. It is a debilitating problem when it affects how decisions are made. In general, feelings and emotional reactions tend to validate our thinking while we seek to justify our thoughts, desires, and decisions. We are confident in the truth of our own belief system, however flawed.
4. Closed Mind: The inability to hold and examine two opposing views at the same time and to be closed to other perspectives than ours.
Business owners afflicted with this mind-bug subconsciously shut down the very thing that can help examine their own beliefs: evaluation of a diversity of opinions. Leaders are sometimes not aware they are doing this. Other times they may even be proud of it. We make the self-serving assumption that we have figured out the way things are and anything that challenges our point of view becomes “unthinkable.” It is not that leaders with this bug fail to listen. On the contrary, they may spend time demonstrating listening skills to others to prove they are good listeners, but afflicted as they are, they just don’t hear them. We simply are not aware that we don’t allow ourselves to hold and mindfully examine two opposing views at the same time. We give lots of lip service to others, but true diversity of thought is shut down. We feel pretty good until the day of reckoning, when we ask ourselves: “What was I thinking when I made that decision?”
Challenging Our Own Thoughts
The solution to the mind-bug problem requires the courage to challenge our own thoughts. When mind-bugs are deeply entrenched, companies are at significant risk of being displaced by new technology and novel business models. The business landscape is littered with the bankrupt remains of those companies. By pausing to look for these cognitive defects, leaders can make better decisions, avoid problems, reduce risk, and improve outcomes.
Larry J. Bloom is the author of The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions, private advisor to several business leaders, a board member, and an owner of a start-up media and software company that promotes better thinking.