12.04.2019

Decision Time!! Avoiding Cognitive Bias

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Decision Time!! Avoiding Cognitive Bias

 Show Interest
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
  • Busines Development
  • Decision Making
  • Business strategy
  • Business start up
  • Training & Development

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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