Michael Roberto, a professor of management at Bryant University, focuses his research on strategic decision-making processes. We spoke recently about his decision-making tips -- and why sometimes the best choices defy all the rules.
What's the biggest mistake we make in the decision-making process?
We don't get enough divergent thinking in the decision-making process. There is a natural tendency for us to converge pretty quickly on either one option or a small set of fairly similar options. We don't often canvas a wide range of alternatives or perspectives. Often it happens because we frame a problem in a certain way and once it's framed that way we can't break out of that frame. For example, in a business context if a company was losing market share, we might get hung up on framing it as a problem of price. The discussion narrowly becomes focused on issues of pricing, as opposed to broadening it to think of all the factors that could be affecting market share.
What's your advice for steering clear of common mistakes in decision making?
I call it "deciding how to decide." Rather than just diving in to solve a problem, the leader needs to step back, look at the landscape and say, "Who do I really need around the table? What kind of climate do I want to create? What kind of ground rules do I want to have for how we're going to interact? Am I going to use some techniques to force divergent thinking on the group?" Thinking about how we're going to decide is really important.
One example is how John F. Kennedy led during the Cuban Missile Crisis. They learned from the Bay of Pigs, where he made a terrible decision early in his administration. It was a classic example of "groupthink" because the group did not canvas a wide range of options as to how to deal with Cuba. In the missile crisis, by contrast, they used some great techniques. They broke into sub-groups to look at two different options and then they debated one another. They had someone playing the role of devil's advocate to critique ideas. That really raised the quality of the decision making that was going on in the room.
How can we make better decisions on a personal level?
We have to be careful of what psychologists call "cognitive biases." These are traps we all fall into when we make decisions. One of them is the "sumsunk-cost trap." We've committed a lot of time and money and energy to something and we don't want to waste that up-front cost, so we keep going and often escalate our commitment. We see this in baseball. You sign the player to a big, guaranteed contract and then they don't perform well. If somebody else is performing better, the other player should play. But because you've paid him all that money, you feel compelled to keep playing the player. You exacerbate your error by doing that, but you feel compelled.
Another trap is "confirmation bias." When we look for information, we often gather data to confirm what we already believe. We allow our preexisting beliefs to slant the way we gather information and therefore we don't get a good assessment of what to do. Another trap is the "recency effect." Instead of thinking about the whole range of past experience, we allow a very vivid recent event to color our perception of the future.
Can just recognizing these biases help us make better decisions?
Recognition alone doesn't prevent the errors. It helps if the people around you -- whether they're in your personal life or in business or in the public sector -- are also aware of them, so they can serve as a check and balance. You need your sounding board, the person who can tell you the way it is.
How has the way we make decisions evolved?
What's changed is the amount of information you can gather very rapidly has gone up dramatically with the advent of technology and social media. That's good and that's bad. On one hand, we can collaborate with others. The danger is information overload. We can get ourselves in this sort of paralysis when we're trying to make decisions.
What's the best decision you've ever made?
The best decision I've made is getting married to my wife. And it's not like I looked at a wide range of options. It sort of goes against what I'm suggesting because I fell in love when I was a teenager and that was 20 years ago. That's the other piece of decision making. Some decisions you make on a very intuitive basis and hopefully your intuition works out.
Photo: Courtesy of Michael Roberto
This post was originally published on Smartplanet.com