Think back on a decision you made in the past that cost you dearly or
caused you considerable pain. Then consider some smaller decision where, in
retrospect, you realize a different choice would have saved you time and
avoided aggravation. Looking back on the momentous times in our lives, some
of our biggest regrets come from faulty decision-making.
What if you found out your mind played tricks on you? That you could have
thought things out better and made a wiser choice? Perhaps you were relying
on your "gut instincts" but were fooled by the unconscious decision-making
traps we fall into when trying to figure out what we should do. According
to one of my all-time heroes, negotiations guru Howard Raiffa, we are
destined to repeat the same faulty decision-making process and face more
grief from the poor results if we don't gain insights into some of these
traps.
According to Raiffa, the fault often lies, not in the decision-making
process but in the mind of the decision-maker. The way the human brain
works can sabotage our decisions. Here are some insights into the most well
documented traps we set for ourselves in making decisions.
The Routines of Decision-Making
We use unconscious routines, called heuristics, to cope with the complexity
inherent in decision-making. These routines serve us well in most
situations. For example, in judging distances, we equate clarity with
proximity. The clearer an object appears, the closer we judge it to be. The
fuzzier, the farther away we think it is. Like most heuristics, this one is
not foolproof. If the day is hazier than usual, our eyes tend to trick our
minds into thinking things are more distant than they actually are. For
airplane pilots, such a distortion could be catastrophic if they weren't
trained to use other truly objective measures and instruments. This
decision-making flaw is based on sensory perception, but others are based
on biases or on irrational anomalies in our thinking. These anomalies are
potentially dangerous because they are invisible to us. They are hardwired
into our thinking, so we fail to even recognize we are using them.
In this and the next column, I will describe the most common
decision-making traps and what you can do to overcome them.
Anchoring
How would you answer these two questions?
1. Is the population of Turkey greater than 35 million?
2. What's your best estimate of Turkey's population?
If you are like most people, the figure of 35 million in the first question
(which researchers chose arbitrarily) influenced your answer to the second
question. I've watched the behavioral scientists ask variations of these
questions to groups of people many times over the past decade. In half the
cases, 35 million was used in the first question; in the other half, 100
million. Without fail, the answers to the second question increase by
millions when the larger figure is used as an "anchor" in the first question.
When considering a decision, the mind gives disproportionate weight to the
first information it receives. Initial impressions, estimates, or other
data anchor subsequent thoughts and judgments. The implications for
influencing another's perceptions are mind-boggling and can take many
guises. A colleague's comment or a statistic in the morning paper can
influence your later decision-making on the same topic. Other guises are as
insidious as a stereotype about a person's skin color, clothing, or accent.
In business, one of the most frequent "anchors" is a past event or trend.
In attempting to project sales of a product for the coming year, a marketer
often begins by looking at the sales volumes for past years. This approach
tends to put too much weight on past history and not enough weight on other
factors.
Because such anchors can establish the terms on which a decision is made,
they can be used as a bargaining tactic by savvy negotiators.
Reduce the impact of the effects of anchoring in these ways:
1. Be open minded. Seek information and opinions from a variety of people
to widen your frame of reference, without dwelling disproportionately on
what you heard first.
2. Offer objective information. In seeking advice from someone else, offer
just the facts, without your opinion, so you don't inadvertently anchor the
person with your thoughts. Then you can benefit from hearing diverse views
on the situation without those views being colored or anchored by yours.
3. Remember this. Whoever most vividly characterizes the situation usually
anchors the other's perception of it. That's an immensely powerful ability.
Others literally see and discuss the situation while anchored from that
most memorably stated perspective. The vivid communicator has literally
created the playing field on which the game will be played. Be especially
wary of anchors in negotiations. Think through your position before any
negotiation begins, so you can avoid being anchored by someone else's
proposal or position.
The Status Quo Trap
We instinctively stay with what seems familiar. Thus we look for decisions
that involve the least change. For example, when a radically new product is
introduced, it is made to look like an existing and familiar product. The
first cars looked like horseless carriages. The first online newspapers and
magazines had formats much like their print counterparts.
To protect our egos from damage, we avoid changing the status quo, even in
the face of early predictions that change will be safer. We look for
reasons to do nothing. For example, in one experiment, a group of people
were randomly given one of two gifts of approximately the same value --
half received a mug, the other half a large Swiss-chocolate bar. They were
told they could easily exchange the gift they received for the other gift.
Although you might expect about half to want the exchange, only one in ten
actually did. The power of status quo kicked in within minutes of receiving
an object. Other experiments have shown that the more choices someone is
given, the more pull the status quo has. Why? Because more choices involve
more effort, and selecting the status quo avoids that effort.
In business, sins of commission (doing something) tend to be punished much
more severely than sins of omission (doing nothing). In all parts of life,
people want to avoid rocking the boat.
What can you do? Think first of your goals when preparing to make a
decision. Then review how these goals are served by the status quo as
compared to a change. Look at each possible change, one at a time, so as
not to overwhelm yourself and instinctively want to stay "safe" and unchanged.
Never think of the status quo as your only alternative. Ask yourself
whether you would choose the status quo if, in fact, it weren't the status
quo.
Avoid the natural tendency to exaggerate the effort or cost or emotional
reaction of yourself or others if you change from the status quo.
Remember that the desirability of the status quo might change over time.
When considering a change, look at possible future situations. If several
alternatives are superior to the status quo, avoid the natural tendency to
fall back on the status quo because you are having a hard time choosing
among the other alternatives.
The Justify- Past-Actions Trap
The more actions you have already taken on behalf of a choice or direction,
the more difficult you will find it to change direction or make a different
choice. Whenever you invest time, money, or other resources, or whenever
your personal reputation is at stake, you will find it more difficult to
change your decision or course of action. Suppose you pour a great deal of
time and effort into offering a product to a new niche market. Because you
have already used resources to be successful in that market, you will find
it difficult to withdraw, even when the market clearly is not interested in
your product. If you have a once-close childhood friend who has not been
supportive of you for years, you'll be reluctant to acknowledge that change
and will likely act as if you are still close. Banks used to continue to
lend to businesses that had fallen back on payments, thus throwing good
money after bad.
For all decisions with a history, make a conscious effort to set aside your
"past actions" -- investments of emotion, money or other resources -- as
you consider whether to change direction. Seek out and listen to people who
were uninvolved with the earlier decisions. Examine why admitting an
earlier mistake distresses you. If the problem lies in your wounded ego,
deal with it straight-away. As Warren Buffet once said, "When you find
yourself in a hole, the best thing you can do is stop digging."
Don't cultivate a failure-fearing culture in the people around you at home
or at work. In such an atmosphere, others will perpetuate mistakes rather
than admitting them to you and changing course. When you set an example of
admitting mistakes in your choices and self-correcting, others will believe
they can do likewise without penalties from you.
In the next issue, I'll describe some other decision-making traps. Although
we hope to learn from every mistake, we can't help but long for a faster
learning curve so we might continue in a wiser, smoother path through the
process of making decisions. I hope your awareness of these traps can help
you avoid them in your future decision-making.
Getting What You Want : How to Reach Agreement and Resolve Conflict Every Time
Gut instincts expert, author, and speaker Kare Anderson is an upbeat conference opener or closing keynoter.
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Fast," dry wit, and frequent references to the situations of
hottest interest to attendees, cause people to leave laughing
and talking about what they've heard.
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