The villains of decision-making – Canadian Government Executive

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Bookshelf with Harvey Schachter
June 28, 2013

The villains of decision-making

Decisive
Chip Heath and Dan Heath
Crown Business, 316 pages, $29.95
Our days are a series of decisions, some minor, some medium, some major – and the occasional one humungous. It might seem daunting to think of your day in that fashion, since it’s obviously hard to get every decision right. It’s even scarier to think that there are four villains out to trip you up on your key decisions.

But the term villain is what Chip Heath and Dan Heath employ for the four major ways we go wrong in decision-making. The brothers – Chip is a professor at the Graduate School of Business at Stanford University and Dan is a senior fellow at Duke University’s Center for the Advancement of Social Entrepreneurship – have collaborated on two best-selling and insightful books, Switch and Made To Stick, and recently added a third, Decisive, focusing on decision-making.

Their interest is not on the instantaneous decisions we must make – like a football quarterback scanning the receivers to decide who to throw to – where intuition must be relied on and can be reasonably effective. They are preoccupied with the kind of decision that takes longer than five minutes to make, requires some analysis, and can have a disproportionate influence on our lives.

The four villains they identify are:

• Narrow framing – unduly limiting the options we consider;
• The confirmation bias, in which we seek out information in our analysis that bolsters our beliefs;
• Short-term emotion sways us, even though those feelings will fade relatively quickly; and
• Overconfidence in our predictions and how the future will unfold after the decision is taken.

To counter those villains, you must use what they call the WRAP process, an acronym drawn from the four steps they advocate, each of which, in turn, responds to the villains:

• Widen your options;
• Reality-test your assumptions;
• Attain distance before deciding; and
• Prepare to be wrong.

The first challenge we face in decision-making is leaping on the first decent idea that surfaces or viewing a problem in binary terms, yes or no. It simplifies, and we crave simplicity in the frenzy of the day. But it narrows our thinking, while in decision-making we actually must widen our options at the outset.

The brothers share a study by business professor Paul Nutt who, after analyzing 168 corporate decisions, found in only 29 percent of the cases was more than one alternative considered. Ironically, that compared closely to a study by Carnegie Mellon Professor Baruch Fischhoff, who found for teenagers 30 percent of the time the decision was binary, whether or not to attend a party or break up with a boyfriend, rather than other options being considered, like attending a movie and then dropping in at the party. “Most organizations seem to be using the same decision process as a hormone-crazed teenager,” the brothers assert.

One antidote is to consider opportunity cost, what options the impending decision that looks so luminous and easy would close off to you. They cite a study where consumers were told they could buy a new video by a favourite actor or actress in their favourite type of film for the special price of $14.99. Seventy-five percent of respondents said they would buy it, while 25 percent declined. But the researchers then asked a different sample of people whether they would “buy this entertaining video” or “not buy this entertaining video and keep the $14.99 for other purchase.” Now the number of non-purchasers nearly doubled, to 45 percent. “This study presents very good news for all of us. It suggests that being exposed to even a weak hint of another alternative – you could buy something else with this money if you want – is sufficient to improve our purchasing decisions,” the brothers observe. So consider opportunity cost of the option you are inclined to pursue.

Another antidote is what they call the Vanishing Options Test. What if all your current options disappeared? That forces you to move your gaze to alternate possibilities, some of which may be preferable when you give them attention.

In organizations, options can be widened by multitracking, setting up several teams to consider options at the same time. It may seem wasteful, but that’s how Lexicon came up with popular product names such as BlackBerry, Dasani, Febreze, OnStar and Pentium. Alternatively, you could find someone else who has solved your problem, as legendary Walmart founder Sam Walton did by incessantly studying other retail operations. “I’ll bet I’ve been in more Kmarts than anybody,” he once said.

To combat the tendency to just confirm your biases with self-serving information you must get outside your head and collect information you can trust that tests your ideas against reality. Here the brothers applaud Rotman School of Management Dean Roger Martin’s technique: for each alternative, consider what would have to be true for this option to be the right answer. It clarifies thinking, almost magically separating people from their biases as they analyze the factors more carefully against the criteria they have set out which need to be true.

You can also consider the opposite to the path you are inclined to take, setting up Devil’s Advocates. The Heaths wonder what would have happened if Quaker’s CEO had assigned a team to make a case against the seemingly irresistible, but ultimately foolhardy acquisition of Snapple. “It puts the team members in the role of ‘protecting the organization’ and it licenses their skepticism,” the brothers write. They also urge you to get an outside view of your organization, as Anne Mulcahy did when she took the helm at troubled Xerox and announced that executives, on a rotating basis, would serve as the customer officer of the day, handling every complaint that came into head office that day.

The solution to being carried away by short-term emotions is to try to distance yourself from the decision. A simple way to do that is to ask what you would tell your best friend to do in the same situation. Nothing has changed in terms of the alternatives and the facts, but your perspective has changed dramatically. It’s no longer about you, your emotions are beaten back if not eliminated, and suddenly the best choice may be quite different.

Business writer Suzy Welch offers another helpful technique the brothers celebrate. It’s called 10/10/10: consider how you might feel about the decision you are intending to take 10 minutes from now, 10 months from now, and 10 years from now. “The three time frames provide an elegant way of forcing us to get some distance on our decisions,” they state.

The final element of the brothers’ approach is to stretch our sense of what the future might bring so we are better prepared as we make and begin to implement our decision. They recommend you “bookmark the future,” as an investment analyst does by imagining the best and worst possible outcomes from a possible monetary choice. “When we think of the extremes, we stretch our sense of what’s possible, and that expanded range better reflects reality,” they say.

You may also want to consider a pre-mortem or a post-parade. In a pre-mortem, you imagine yourself in the future and the decision has flopped. Why? From that perspective – accepting you were wrong – you will look at the decision through new eyes, and see the flaws that can trip you up. An opposite approach would be a pre-parade: imagine you are wildly successful, and how would you prepare for that? Maybe you need to plan in advance for how you would quickly come up with more phone lines to receive calls on that program you are initiating should it be a huge success.

As you can see, Chip and Dan Heath are offering a simple framework based on the four ways decision-making can go wrong, and offering you many practical ways to protect yourself. Better yet, it comes in a highly-readable package, jammed with story-telling and research findings.

About this author

Harvey Schachter

Harvey Schachter

Harvey Schachter is a writer, specializing in management and business issues. He writes three weekly columns for the Globe and Mail and The Leader’s Bookshelf column for Canadian Government Executive, and a regular column and features for Kingston Life magazine. Harvey was editor of the 2004 book Memos to the Prime Minister: What Canada Can Be in the 21st Century. He was the ghostwriter on The Three Pillars of Public Management by Ole Ingstrup and Paul Crookall, and editor of Getting Clients, Keeping Clients by Dan Richards. A McGill commerce graduate, Harvey spent more than 15 years in a variety of positions at The Kingston Whig-Standard, including editor and planning and promotions manager. He won two National Newspaper Awards for his writing and a national Owl Award for a marketing program he created at the newspaper.

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