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12.04.2019
Decision Time!! Avoiding Cognitive Bias
We are living in interesting times. With content consumption at an all-time high, and critical thinking seemingly at record lows, its easier than ever to fool yourself.
In business, that can be an expensive mistake.
Cognitive bias is when we create a subjective version of reality, its a systematic, self-imposed deviation from your normal rationale. It's searching for all information which supports your opinion, and ignoring any that does not.
We make 4 mistakes in our thinking:
1. Anchor Effect
Assumption: We have considered all factors before making decisions
Reality: Usually we trust the first 'strong' source of information whether that is about somebody we have never met, a new movie or a new 'can't lose' revenue stream: 'First impressions last'
Solution: DON'T TRUST YOUR FIRST IMPRESSIONS!
2. Confirmation Error
Assumption: We believe we have been objective in our assessment before making a decision
Reality: We are actually interpreting information in such a way that it confirms our assumption or, we are blocking out information in opposition to our conviction.
Solution: ALWAYS ASSUME YOU ARE WRONG
3. The Availability Error
Assumption: When we believe we have good arguments for making / approving a key decision.
Reality: This is almost always due to having a poor sample size. We are making decisions based on simple, easily availble infomation that's often autobiographical ( based on personal experience). We are hiring a Polish software engineer who turns out to be proficient, and later oursourcing all software projects to Poland because 'they have great software engineers'.
Solution: DO NOT TRUST ANECDOTAL EVIDENCE
4. The Fast / Slow Error
Assumption: We have relied on intuition and believe in our decision based solely on that
Reality: Although intuitive impulse can be a great decision making tool, there are obviously times when it is not appropriate. Daniel Kahnman identifies 2 main thinking methods: (quick / intuitive) Vs (Slow / careful).
Example: A coffee and cookie together cost £1.10 and the coffee is £1 more than the cookie. How much is the cookie? If you answer quickly, most people would say £0.10 ( quick / intuitive). If you take the time though, the real answer becomes obvious: £0.05 ( slow / careful)
Solution: READ EVERYTHING YOU SEND / RECEIVE AT LEAST TWICE
Solutions of Candour is a London-based business consultancy offering strategic advice, project management, sourcing and training services.
If we can help you or your oganistation please get in touch
info@solocan.co.uk
In business, that can be an expensive mistake.
Cognitive bias is when we create a subjective version of reality, its a systematic, self-imposed deviation from your normal rationale. It's searching for all information which supports your opinion, and ignoring any that does not.
We make 4 mistakes in our thinking:
1. Anchor Effect
Assumption: We have considered all factors before making decisions
Reality: Usually we trust the first 'strong' source of information whether that is about somebody we have never met, a new movie or a new 'can't lose' revenue stream: 'First impressions last'
Solution: DON'T TRUST YOUR FIRST IMPRESSIONS!
2. Confirmation Error
Assumption: We believe we have been objective in our assessment before making a decision
Reality: We are actually interpreting information in such a way that it confirms our assumption or, we are blocking out information in opposition to our conviction.
Solution: ALWAYS ASSUME YOU ARE WRONG
3. The Availability Error
Assumption: When we believe we have good arguments for making / approving a key decision.
Reality: This is almost always due to having a poor sample size. We are making decisions based on simple, easily availble infomation that's often autobiographical ( based on personal experience). We are hiring a Polish software engineer who turns out to be proficient, and later oursourcing all software projects to Poland because 'they have great software engineers'.
Solution: DO NOT TRUST ANECDOTAL EVIDENCE
4. The Fast / Slow Error
Assumption: We have relied on intuition and believe in our decision based solely on that
Reality: Although intuitive impulse can be a great decision making tool, there are obviously times when it is not appropriate. Daniel Kahnman identifies 2 main thinking methods: (quick / intuitive) Vs (Slow / careful).
Example: A coffee and cookie together cost £1.10 and the coffee is £1 more than the cookie. How much is the cookie? If you answer quickly, most people would say £0.10 ( quick / intuitive). If you take the time though, the real answer becomes obvious: £0.05 ( slow / careful)
Solution: READ EVERYTHING YOU SEND / RECEIVE AT LEAST TWICE
Solutions of Candour is a London-based business consultancy offering strategic advice, project management, sourcing and training services.
If we can help you or your oganistation please get in touch
info@solocan.co.uk
I draw my experience from over 19 years of senior level project management, leading logistics for a world class FMCG manfacturer.
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