Whether sitting across the table from a potential client, or involved with internal strategy sessions, many of us have experienced the frustration of bad decisions. In some cases we’ve even contributed to the outcome. Even when all the gathered evidence and data point to a specific course of action the final decisions often have us taking a different path. Sometimes the wrong choice is immediately evident, while other times it takes years to realize that a bad decision was made. What causes intelligent, experienced, business professionals to make the wrong choice even when all available information suggests a different alternative? The Harvard Business Review published an article written by John Beshears and Francesca Gino that speaks to this phenomenon. From personal experience, what I found the most interesting was the explanation of “cognitive” biases used in the decision making process, specifically the “confirmation” and “status quo” biases. The “confirmation” bias places value on existing personal beliefs to the exclusion of alternatives, while the “status quo” bias predicates doing nothing in the absence of pressure to change. In my 20 years of experience I can’t even count the number of times these two specific biases have come into play with clients and internally. Unfortunately, I’ve not just been the victim of these biases, I’ve also been the perpetrator. Just knowing about these biases is not enough. As the article states, the human brain is wired to act upon these biases. While the article goes on to explain how to build a framework around better decision making, it certainly doesn’t seem like a quick and easy implementation. In a generally resource strapped business environment where so much focus is put on critical daily tasks, who has the time to devote to building a better decision making framework? Along the same lines, who has the time to gather and make sense of the enormous amount of data available for more objective assessments? If, as I believe, two of the primary biases to making better decisions are the “confirmation” and “status quo” bias, wouldn’t it make logical sense to engage with a third party not hampered by these biases? Additionally, if that third party can also assimilate and explain the available data to provide factual evidence to support a decision, the probability of making unbiased decisions should be greatly increased. At the very least, organizations should assess their current decision making processes to determine how these various biases affect the choices they make. Many successful companies eventually fail or are acquired based on bad choices or not making a choice at all. Read the full HBJ Article Can Data analytics help? Let’s find out with one of our data experts.
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