Talk to any business owner, and they'll share that they make key decisions regularly by necessity. Do we realize though that some of our most important decisions are likely biased in ways that guide us to the wrong choice? In a recent McKinsey study, the process used to identify the right decision created a 53% variance in the result, with only 8% being based on data! We have at least five biases that enter into our planning and decisions, regardless of our experience or intent. The key is to recognize and adjust to these before they lead you down a path that isn't in your best interest. Here's how to be smarter in your decisions, and get better outcomes as a result!
Action Oriented Bias
An action-oriented bias causes us to take action sooner than is ideal, or with less analysis or thought. If your nature is to make rapid decisions with a certain level of risk, this may be your default style of comfort. While it may be fine for many day-to-day decisions, for the big ones, more planning and evaluation will likely help you make more informed decisions. The key is to differentiate which ones can be readily decided and which ones need to hit the pause & review button for the best decision.
Action: Recognize when the decision requires a review of data, with identification of alternative and negative outcomes. A data-driven decision will increase the likelihood of a better outcome.
An interest bias causes us to consider, revise or eliminate choices based on our conflicting interests. In other words, we would eliminate potentially valuable alternatives because we don't like them, or don't like to consider the outcomes. This may inadvertently eliminate our best option in the eyes of our customers or stakeholders. This could occur in strategic planning, or even in routine communication or action planning. This is particularly challenging because we don't see what we don't see.
Action: Have a mentor or member of your senior team who can be honest and transparent ask key questions when you're considering a major decision. Another tactic with this one is to establish criteria at the beginning that help to make sure that the decision challenges "solo thinking" through team participation or leadership.
A pattern-recognition bias causes us to see patterns even when these aren't present, such as a confirmation bias, misleading experiences, champion bias, or through a convincing storytelling bias. What we think was a pattern guides us for or against the decision, even if we falsely consider the actual parallels. The opportunity here is to become aware of the bias before you act on the perception that it's real.
Action: Discuss the facts and how they differ from the story or pattern experience. Often our first impression leads us down a path, whereas if we share this with someone else, we see the differences, or they help us see them.
A stability bias leads us to a lack of action in the midst of uncertainty. This is one of the most damaging biases, in that it can paralyze logical and appropriate forward movement because its new or unproven. Serious entrepreneurs have the inherent power to get over this one quickly. Typical roles who struggle with this one are professions that are heavily analytical, like accountants and data analysts, with a strong desire to not take risks or chances.
Action: Review the results of decisions over time to identify how much of a factor this may be in decision making. Patterns of inertia may be overcome by establishing targets that require some levels of change at times.
Interest in avoiding conflict or interpersonal challenges drives social bias, where we may choose the path of least resistance as the preferred course of action, even when it clearly is not the best option. This can be seen as a 'follower the leader' style of informal group leadership, when the leader may not have a clear plan in the best interests of the organization.
Action: Encourage expression of multiple opinions and healthy debate, to identify unforeseen barriers or challenges in advance. Brainstorming and ideation sessions may help to identify new perspectives and feelings that may impact the final decision.
Avoiding Bias in Your Key Decisions
There are four essential practices to reduce the unfavorable impact of biases in our decisions:
- Recognize the presence of biases. The first step to reducing the impact is to become aware of the bias, personally or in work groups or teams.
- Give cultural permission to identify bias. Leaders need to make it safe to identify and deal with inherent biases. Transparent communication and acceptance should come first from senior leaders.
- Insist on data-driven decisions. When we use information derived from data, we are called to honestly evaluate it beyond our inherent biases. That helps us to become more aware of biases, and to respect the need to decide based upon data over biases.
- Evaluate data during and after decisions. Moving an organization into the practice of reviewing data as part of decision-making, before, during and after makes logical sense, and builds a repeatable pattern of respecting data-driven decisions. Not every decision needs to be based upon a detailed data analysis, but the major ones should have a basis in some data beyond a gut instinct. Practice helps the organization to get better faster.
If you're facing a big decision that may impact the future of your business or your culture, it pays to consider where you may have inherent biases, and choose to review data before making a quick decision. If you need an unbiased business expert to weigh in on your next decision, we can help with data or a strategic interpretation of your situation.
In an emergency, quick judgment is key to the best decisions. Hopefully your business doesn't require too many truly emergency decisions, but if so, some advanced planning might help!
Dawn Garcia is Principal and Founder of Pursuit of Excellence LLC, an independent business management consulting firm specializing in service-based businesses; delivering leadership, strategy and execution expertise. Experience the Excellence Driven® System for your business, and achieve the results you need! Every business needs help at some point; great business leaders actually get help when needed, realizing greater returns. When you need help, consult the experts. Our success is your success!