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When Weighing Important Decisions, Steer Clear Of Cognitive Traps

19 Aug 2018

By Morey Stettner

Cognitive traps concept

Adopt a learning mindset when tackling big decisions. Learn from positive and negative outcomes to avoid potential wrecking balls.

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When facing a tough decision, you want to clear your head, assess all relevant facts and arrive at a sound conclusion. But you can still make costly mistakes along the way.

Top leaders fight off cognitive traps that can result in faulty decisions. They guard against biases and maintain a keen awareness of how they think and process information.

When grappling with a high-stakes decision, adopt a learning mindset. Extract lessons from the outcome — positive or negative — so that you approach the next decision with more confidence and knowledge. Watch for these potential pitfalls:

Blinded by rightness.

It’s great to exude can-do optimism and self-assuredness. But if you render every big decision with the certainty that you’re right, you’re setting yourself up for a fall.

“The worst habit is making up your mind before you have all the facts,” said Tom Redman, founder of Data Quality Solutions, a consulting firm in Rumson, N.J. “That happens to people who think they already know everything.”

The more experience you have, the more likely you may be wedded to your rightness. That’s why Redman might challenge those who proclaim, “I’ve been doing this for 30 years, and I’ve seen everything that can happen.”

Limited by groupthink. 

Decisions are easy if everyone around you nods and agrees. But surrounding yourself with like-minded minions constrains your ability to hear all sides of a case.

“Bad decision-makers only seek advice from people who think exactly the way they do,” Redman said. “Rather than test your thinking, you’ll just reinforce it.”

Stymied by data.

Rarely do leaders make decisions with every conceivable piece of information at their fingertips. More often, they must make do with some but not all of the data they’d ideally like to see.

“You can reduce uncertainty by getting more data,” Redman said. “But that can lead to analysis paralysis where you delay, delay, delay for fear of being wrong.”

Overwhelmed by too many decisions.

At some point, effective leaders learn to delegate. They assign lower-level tasks to underlings so that they can concentrate on what matters most.

Some poor decision-makers, by contrast, insert themselves into even the least significant issues. Unable to prioritize, they insist on making every decision.

“My job is to focus on six important decisions a year and let others deal with the rest,” a senior executive told Redman. As a result, the executive maximized his productivity while boosting morale among his subordinates who thrived on their own.

Biased by beliefs.

Long-held, deeply rooted opinions can exert more influence than you realize. They may serve as a lens through which you see and interpret the world — and lead you to make misguided decisions through what’s known as confirmation bias.

“It’s when you seek information, data and anecdotes that support what you already believe and what you already want to do,” said Rich Horwath, founder and chief executive of the Strategic Thinking Institute, a Chicago-based leadership development firm. “And you discount any information, data and anecdotes that’s not what you believe and not what you want to do.”

Wise leaders welcome differing perspectives and consider them with an open mind. They seek out diverse views and “treat others as teachers,” Horwath adds.

Ensnared in the status quo.

Botched decisions can flow from the sunk-cost effect, when you’re unwilling to pull the plug after months of committing to the wrong course of action.

“It’s continuing to invest in it only because you’ve invested in the past,” Horwath said. “If you stop, you acknowledge you’ve made a (mistake),” and that can prove too painful to bear.


Read the full article here.
This content was originally published by Investors Business Daily. Original publishers retain all rights. It appears here for a limited time before automated archiving. By Investors Business Daily

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