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Decision-Making Myths – Debunked

Decision-making is not fortune-telling, and good decisions do not always result in predictable outcomes.

Can you imagine life without your smartphone? So many of us can’t. We depend upon them for everything from directions to telling us the temperature outside to tracking our daily steps and heart rate. Our “Hey, Siri” culture has conditioned us to equate speed with efficiency and efficacy — and it’s changing how we process information. Our brains have become conditioned to respond with pleasure to the bings, pings, and dings our phones and computers provide.

While Siri and Alexa and Google are great when we’re jonesing for Italian food and want help finding a restaurant, they’re not great, or even desirable, when it comes to complex decision-making. In fact, they help enable a series of counterproductive ideas and reactive behaviors that actually impair your ability to make informed decisions. For example, let’s say you want to buy a car. Maybe you’re weighing a Prius versus a Crosstrek. Siri and Google can give you all sorts of information, such as fuel efficiency or the current interest rate on your loan. But a search engine won’t know why you’re buying the car, how you intend to use it, or what impact the purchase will have on your budget. Ultimately your decision needs to come from a clear understanding of your needs, values, and goals — information that’s outside the reach of their algorithms.

The most important things you need to learn often aren’t formally taught when you’re young. For example, many lament that teenagers aren’t educated on how to manage money. It’s a fair criticism. Evidence suggests a severe lack of knowledge around basic personal finance; a 2018 survey found that less than 50 percent of respondents could correctly define what interest is, the concept of bankruptcy, or how inflation works. In the absence of knowledge, myths creep in. One example that gets attention this time of year is the “benefit” of receiving a tax refund. This is a myth. In almost all cases, receiving a substantial refund isn’t a good thing. After all, you lent the government money—interest-free— throughout the year. 

Another myth: All college degrees are a sound financial decision. Data suggests that some people spend way too much money on a degree that won’t land them a job with a salary sufficient enough to make the investment worthwhile. It’s part of the reason why there’s a student debt crisis. Like personal finance, management isn’t something most people study formally—although HBS Online offers a Management Essentials course. Most people learn management “on the job,” and in fits and starts. As with personal finance, myths often develop for those who’ve never received management training.

On January 15th 2009 the world witnessed an unusual incident. The press called it ‘Miracle on the Hudson’. On that unforgetable day, an Airbus A320 aircraft with 150 passengers and crew members on board, encountered multiple bird strikes. They damaged the turbofan engines to the extent that both the engines of the aircraft became immobile.

In that situation, Captain Chesley B. Sullenberger took a bold decision to land the unpowered aircraft on the Hudson River. Fortunately, it was a safe landing and the lives of all 150 passengers and crew members were saved. This was truly unprecedented. Such events allow us to appreciate the criticality of making the right choices in times of crisis. It proves that a decision can be a life changing one and that too not just for an individual, but for an entire nation. Though decision making is a critical survival skill, research shows that it is prone to biases. Hence, it is worthy of deep study.

Myths About Decision-Making

1. I like to be efficient

So many of us think efficiency means jumping right in and making a decision. But to be truly effective, we need to be clear on what we are solving for. Rushing can lead you to make a decision based on the wrong factors, which ultimately will lead to regret. For example, walking into a car dealership and buying the first car you see may feel efficient, but may mean you end up with the car the salesperson wants to get rid of, not the car that best fits your needs and budget.

2. I just need to solve this problem at this moment

This is the classic example of “losing the forest for the trees.” Our problems sit in a context. A narrow focus may solve the wrong problem, or only partially solve the problem. If your car breaks down unexpectedly and you rush out to buy a new one, are you considering your needs beyond the present?

3. This is my decision alone; I don’t need to involve others 

Our important decisions do involve other stakeholders. Avoiding this bigger picture of who else is affected by a decision can, at best, only partially solve the problem, and may exacerbate it. For example, if your spouse or child can’t drive a stick-shift, do you really want to buy a manual transmission car that no one else in the family can get out of the driveway in an emergency?

4. I know I’m right; I just want data or an opinion to confirm my own thinking

Also known as “confirmation bias,” this decision-making flaw has been behind notorious failures from the Bay of Pigs to the subprime loan market implosion to the NASA Challenger explosion to the Deepwater Horizon environmental catastrophe. In each case, disconfirming data was available and should have raised concerns, but groupthink set in, and no one wanted to raise the red flag. To better understand and define the limitations of what you think you know, look for contrary examples and evaluate rival explanations. These techniques can prevent “frame blindness” to keep you from seeing what you want to see rather than what may be present. For example, maybe you’ve settled on the Crosstrek in your car search, but you decide to look around anyway. Could your preference for the Crosstrek influence how you evaluate the other cars? Could you be looking to confirm your inclination rather than buy the best car for your needs? To pry open cognitive space, first consider your needs and then look for cars that fit those parameters.

5. Decision-making is linear

In fact, good decision-making is circular; it needs a feedback loop as we gather information and analyze it and our thinking. At times we need to go back to find information we’ve glossed over, or to gather new information or conduct a different kind of analysis. When buying a car, for example, you might think that doing your research first and then going to a dealer and negotiating a price is enough. But there are many dealers, and they each have leeway to negotiate a price, so circling around and comparing offers may get you a better price.

6. There’s just one way to do this

Whether it’s how the bed should be made, which diet to follow, or how to divide up your retirement account, there’s always more than one way to get to “yes.” We’ve been conditioned out of listening to other voices, siloed in our information, environment, and social (media) circles. But getting outside your routines and patterns leads you to seeing things differently. You may always have gone into the dealership to buy cars, but more and more, people are negotiating car purchases online and through texting and email.

7. I have all the information I need

 While we may want to forge ahead, we can improve our decisions — and our satisfaction — by investing in a little bit of research and confronting assumptions with evidence. Your best friend might love her car, but that doesn’t mean it’s the car for you, particularly if it won’t fit your daughter’s hockey equipment. Looking to the experts, such as Consumer Reports, which does substantive research, can help you make an educated decision that’s also right for you.

8. I can make a rational decision

Psychologists far and wide, such as Amos Tversky and Daniel Kahneman, have demonstrated that as much as we’d like to believe it, none of us are rational. We all operate through a dirty windshield of bias based on past experiences and feelings. You might think you won’t get taken in by a car dealer, but they are professional salespeople who know how to evoke an emotional response.

For all our talk about the importance of management, it seems to be one of the most mysterious business disciplines. As with any realm shrouded in mystery, myths develop to help individuals understand what they know little about. But beware of believing them. While some myths point to the truth, many don’t. The best anecdote for knowing which myths are helpful shorthand and which are falsehoods? Education.

Given our current situation knowing that your colleagues or employees are best suited for this new scenario we find ourselves in. Finding the right talent, the best fit for the job and your organisation can be a very challenging task. It is now important to find out whether your managers or your team is well-equipped of working together from various locations. It requires deep knowledge of their personalities, strengths, weaknesses, interests, work style and other characteristics. Our technology and solutions will do the work for you, helping you discover if your people are resilient during times of hardship, if they are autonomous, if they are team players, without actual human contact. Given that our platform is cloud-based, everyone can use it from home as well. Humanity finds itself at a crossroad for various reasons now, why not help people discover and develop themselves from the comfort of their own homes?

Request a free demo:

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Sources:

https://www.johnolivant.com/2020/07/16/the-myths-surrounding-decision-making/
https://www.greenbook.org/mr/market-research-news/4-common-myths-about-human-decision-making/
https://eugenie.ai/3-myths-about-decision-making-busted/

Improving Decision-Making and Group Performance

Running a business is nothing more than making a series of important decisions. For a business owner or manager, each day is filled with decision-making, with some of those decisions likely meaning the difference between profit and loss. It can become stressful to make such important decisions day after day, especially if you are trying to make them all on your own.

In many cases, it will be better to make decisions as part of a group. When a group comes together to make an important choice, the company as a whole will enjoy several advantages. For one thing, the knowledge of all of the various people in the group will be used to make the choice, not just the knowledge of one individual. There are sure to be many different backgrounds and types of experiences within the group, which means great things for the quality of the final decision. Also, bad ideas tend to get filtered out in the group setting, meaning the eventual choice is less likely to be a dud.

With all of that said, group decision-making is not perfect. It can be tough to get everyone on the same page, meaning it may take quite a bit of time to make an eventual decision, even if that decision does wind up being a good one. To make the group decision making process run as smoothly as possible, you may wish to employ one of the methods outlined in the content below. We have identified a few methods for group decision making, so there is a good chance that one of these options will be right for your needs.

The Hoy-Tarter Model of Decision-Making

Originally created for use within a school system, the Hoy-Tarter Decision-Making Model can actually be applied in a number of different settings. If you are the owner or manager of any kind of organisation, you already know just how difficult it can be to make decisions. Specifically, it can be hard to decide how to make those decisions, in terms of who you should include, what you should consider in the process, and more. Making good decisions is a key to success in business, but you can only make good decisions if you have an appropriate process in place.

In this model, the main goal is to figure out exactly who should be included in the decision-making process. Different decisions are going to require different inputs from various people, so determining who should be included in making the decision (and who should be left out) is a key step not to be overlooked. Including the wrong people, or failing to include the right people, is a mistake that can have serious consequences.

If you decide to take a closer look at how to use this model, you will find that it requires you to create a matrix which will be filled with evaluations of expertise and whether or not an individual has a personal stake in the decision. It can take a bit of time to understand exactly how this model works, but it’s worth the effort because of its effectiveness.

Multi-Voting

If you would like to use voting to help make important organisational decisions from time to time, you may wish to employ the popular Multi-Voting Decision Making method. With this method, you can select the most popular options from a list in order to get an idea about the consensus of the group. Multi-voting is not always the right solution when trying to make a decision, but it can be perfect in specific circumstances.

If you would like to use the Multi-voting method, the first thing you need to do is develop a list of ideas that are going to be the subject of your vote. Ask the team that is working on this project to collaborate on a list. At first, you can put any idea that is presented onto the list, but you will want to slightly narrow down and ‘clean up’ that list before it goes to the vote. Before taking the vote, you will want to decide on exactly how many votes each individual is going to be given. Generally speaking, each person should be allowed to vote for roughly 1/3rd of the ideas on the list. So, given a list of 15 items, each person would be allowed to place five votes (thus the name ‘Multi-voting’). Of course, you are free to alter the number of votes allotted as you see fit, but the 1/3rd rule is a good place to start.

With all votes cast and collected, all you’ll need to do is count up the totals and determine the winning ideas. If you would like, you can narrow down the list of contenders and do the vote again, further concentrating your list to just a few of the strongest options. Multi-voting is the perfect way to gauge the opinion of a large group when several ideas are on the table.

Hartnett’s CODM Model

In this application, CODM stands for ‘consensus-oriented decision-making’, and that title tells you just about everything you need to know regarding the goal of this model. The idea here is to bring your group to a consensus as far as the best decision for the situation at hand. Once you have a group assembled that you are going to use to help make this important decision, Hartnett’s CODM Model calls for following through with a seven-step process. The seven steps are as follows:

  • Framing the problem
  • Having an open discussion
  • Identifying Underlying Concerns
  • Developing Proposals
  • Choosing a direction
  • Developing a preferred solution
  • Closing

Regardless of the decision that needs to be made, this is a solid framework that you can use to walk through the process from start to finish. Of course, it may be necessary to tweak the model slightly in order to have it fit nicely with the needs of your organisation.

Delphi Technique

When a team truly struggles to reach a consensus for a major decision, you may need to step in and narrow down the options for them. The Delphi Technique takes all the ideas and compiles them for the manager of the group to break down into a smaller amount of possibilities. He or she then takes the remaining options back to the group for their consideration.

If the team continues to grapple over the resolution, the manager will condense the choices even further until they can make a decision. It gets easier for groups to reach an agreement when there are fewer outcomes available.

Rank the Possibilities

Rankings work for determining who is the best within sport leagues like the British Premier League and NFL, so why wouldn’t they work for a business as well? Whether you decide on an idea’s ranking by using a voting system or working as a team to prioritize them, it can be a great group decision making process for issues or questions that have many potential outcomes.

This technique can be organised through email, an online communication tool, or in a brief meeting. One specific way to determine how the possible scenarios should be ranked is by having everyone make a personal list of how they would rank them. Then, combine the lists and do some basic math to determine the average spot where each possibility should be represented.

By using one or more of these strategies in your business, you will see a dramatic increase in productivity and resolving issues among your team. Take a look at some of the upcoming choices your team will need to make soon and determine which of these tactics will be the most effective.

There are also numerous team-building activities you can do with your group to boost your team’s collaboration even further. Give these ideas a try and see if it makes your group decision making processes easier than ever before.

Given our current situation knowing that your colleagues or employees are best suited for this new scenario we find ourselves in. Finding the right talent, the best fit for the job and your organisation can be a very challenging task. It is now important to find out whether your managers or your team is well-equipped of working together from various locations. It requires deep knowledge of their personalities, strengths, weaknesses, interests, work style and other characteristics. Our technology and solutions will do the work for you, helping you discover if your people are resilient during times of hardship, if they are autonomous, if they are team players, without actual human contact. Given that our platform is cloud-based, everyone can use it from home as well. Humanity finds itself at a crossroad for various reasons now, why not help people discover and develop themselves from the comfort of their own homes?

Request a free demo:

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Sources:

https://hbr.org/2020/09/7-strategies-for-better-group-decision-making
https://upraise.io/blog/group-decision-making-techniques/
https://airfocus.com/blog/guide-to-group-decision-making-techniques-tools/