It’s not what we know that matters, but how we react to what we don’t know
The way people think, as individuals and collectively, affects the decisions they make in ways that are far from obvious and rarely understood. John Hammond, Ralph Keeney and Howard Raiffa provide intriguing insights in this area.
Thinking flaws cause problems. Evaluate your vulnerability and find ways to counter each trap.
The traps of thinking flaws
• The anchoring trap leads us to give disproportionate weight to the first information that we receive. Solution: be sure about what is happening and ensure that you have all the information.
• The status quo trap biases us towards maintaining the current situation – even when better alternatives exist (caused by inertia or potential loss of face). Solutions: be open, honest and courageous.
• The sunk-cost trap inclines us to perpetuate past mistakes – we have invested so much in this we cannot alter course: Solution: if it’s spent, it’s spent – worry about the present and future, not the past.
• The confirming-evidence trap results in seeking information to support the current situation and to ignore opposing information. Solution: avoid!
• The framing trap, when we incorrectly state a problem, undermines the decision-making process. Solution: see issues for what they are.
• The over-confidence trap makes us overestimate the accuracy of our forecasts. Solution: be self-critical.
• The prudence trap leads us to be over-cautious when estimating uncertain factors. Solution: be realistic.
• The recent-event trap leads us to give undue weight to recent or dramatic events. Solution: be aware of the trap and counter the danger it poses.
Fragmentation and groupthink
As well as thinking flaws, there are two pitfalls of organizational culture – fragmentation and groupthink:
• Fragmentation – people disagree, either with peers or superiors.
• Groupthink – people suppress ideas and support the group.
Overcoming thinking flaws
• Be bold and don’t fear consequences – we over-estimate consequences and tend to discount our ability to make the right choice because of ‘loss aversion’, where we fear loss hurts more than gain.
• Trust instincts and emotions – we have evolved to make good decisions and manage their implementation.
• Play devil’s advocate – searching for flaws and failings strengthens decisions and illuminates factors and biases affecting decisions.
• Avoid irrelevancies – be ready to question the information and its context.
• Reframe the decision – view issues from new perspectives.
• Don’t let the past hold you back – regardless of past investments, look for better alternatives.
• Challenge groupthink – people are often afraid to comment because of social pressure. Find out what people really think.
• Limit your options – the more options we have, the harder decisions are. Ruthlessly cut through the options and choose the most promising.