J.Edward Russo and Paul J.H. Schoemaker
In Decision Traps, the authors revealed that most decision makers commit some kind of error with pretty much every decision they make. They explore the components of these errors and the steps to rectify common mistakes in decisions making. The authors drill into the key characteristics of decision making that is easily recognisable and learnable from.
They propose that becoming a good decision maker is like becoming a good athlete. It requires dedication and most importantly training. You need to examine the process of decision making systematically and you need to work consistently to eliminate the errors committed in each phase of the process.
The author’s research indicated that every decision-maker must, consciously or unconsciously, go through each phase of decisions making process. The decision-making process can be broken down into four main phases-
- Framing: Structuring the question. Defining what must be decided and determining in a preliminary way what criteria would cause you to prefer one option over another.
- Gathering Intelligence. Seeking both the knowable facts and the reasonable estimates of ‘unknowables’ that you will need to make the decision.
- Coming to conclusions. Sound framing and good intelligence don’t guarantee a good decision. A systematic approach forces you to examine many aspects and often leads to better decisions.
- Learning (or failing to learn) from feedback. Establishing a system for learning from the results of past decisions.
The structure of the book is based on these four ddecision-makingphases, each phase being discussed in its own part.
In the book, Russo and schoemaker listed the ten most common barriers that we often encounter in making good decisions. They are as follows:-
1) Plunging in.
Beginning to gather information and reach conclusion without first taking a few minutes to think about the crux of issue you’re facing or to think through how we believe decisions like this one should be made.
2) Frame blindness.
Setting out to solve the wrong problem because you have created a mental framework
for your decision, with little thought, that causes you to overlook the best options or lose sight of important objectives.
3) Lack of frame control.
Failing to consciously define the problem in more ways than one or being unduly influenced by others.
4) Overconfidence in our judgment.
Failing to collect key factual information because you are too sure of our assumptions and opinions.
5) Shortsighted shortcuts.
Relying inappropriately on “rules of thumb” such as implicitly trusting the most readily available information or anchoring too much on convenient facts.
6) Shooting from the hip.
Believing you can keep straight in our heads all the information you’ve discovered, and therefore “winging it” rather than following a systematic procedure when making the final choice.
7) Group Failure.
Assuming that with many smart people involved, good choices will follow automatically and therefore failing to manage the group decision making process.
8) Fooling ourselves about feedback.
Failing to interpret the evidence from past outcomes for what it really says, either because we are protecting our ego or because you are tricked by hindsight.
9) Not keeping track.
Assuming that experience will make its lessons available automatically, and therefore failing to keep systematic records to track the results of your decisions and failing to analyse these results in ways that reveal their key lessons.
10) Failure to audit our decision process.
Failing to create an organised approach to understanding our own decision making, so we remain constantly exposed to all the above mistakes.
Russo and Schoemaker reviewed each of the four decision making phases in conjunction with the ten barriers and the recommended steps necessary to address them.
Addressing the first barrier, the authors indicated a wise and timely meta-decision based on the four phases above can help to avoid the decision trap one ‘Plunging in’ when we start working on any major issue. Spend some time to think about the large issues you are facing. A Meta-decision involves asking questions like “what’s the crux of this issue”?
In general, how do I believe decisions like this one should be made? How much time should I spend on each phase-as the first guess. So before any major decision process is launched, review the Meta-decision questions.
To address the second barrier, the authors indicated that from the greatest genius to the most ordinary clerks, we have to adopt mental frameworks that simplify and structure the information facing us.
More often than not, people simplify in ways that force them to make the wrong choices and get into the decision trap number two ‘Frame Blindness’. Therefore to avoid it, we should attempt to understand frames. No frame, indeed no way of thinking, can consider all possibilities and no one can completely avoid the dangers of framing.
However, you would pay dearly if you do not even know the problem exists. Here, the authors’ analogy of a window frame nicely illustrates the difficulties. Architects choose where to put windows to give a desired view. But no single window can reveal the entire panorama. When you choose which window to look through, or even if you decide to keep track of what’s happening through three different windows, you can never be sure in advance that you will get the whole picture or even the most useful picture.
Thus the framing of a decision inevitably sets boundaries; it controls what is in and what is out. Moreover, not all elements that are “in” will be treated equally. Our frames tend to focus us on certain things while leaving others obscured. Frames have enormous power. The way people frame a problem greatly influences the solution they will ultimately choose. Furthermore the frames that people or organisations routinely use for their problems control how they react to almost everything they encounter.
Therefore, when we face a new issue, good decision-maker creates a decision frame specifically designed for dealing with that new issue. Decisions makers fall into the decision trap number three, ‘Lack of Frame control’ because they often do not choose frames. They stumble into them and find ourselves using an inadequate frame.
Controlling the frame of a decision can be a source of both power and wisdom. Making decisions through inferior frames, or with no well-organised frames at all, eventually leads to disaster. Frame control demands that every major decision includes at least four steps:-
- Identify the frame you or your organisation would automatically (and often unthinkingly) use.
- Find one or more reasonable alternative frames.
- Analyse where each frame fits and what it distorts or leaves out of bounds.
- Match the frame to the problem, i.e choose from the alternative frames the one (or ones) that you consider most appropriate.
Two decision traps common to most of us are ‘Overconfidence’ in our judgment and the overuse of ‘Shortsighted shortcuts’. These decision traps can cause problems throughout the decision making process, but they particularly affect phase 2 of our decision making process the “gathering of information and intelligence”.
Wise decision makers avoid them and work to assure high quality intelligence. Many people suffer from overconfidence in what they believe, even if their belief entails a negative view of their own worth and abilities. To address this, the authors indicated that we should size up what we know – that is, collecting information and using it systematically will reduce the dangers from overconfidence, availability bias, and anchoring.
The authors also indicated that overconfidence is related to another problem called Confirmation bias, where people’s fondness for evidence that will confirm, rather than challenge, their current beliefs, will lead them to search more for confirming information than disconfirming information. In short confirming feels good and disconfirming feels painful.
Avoiding overconfidence means developing good secondary knowledge, having a good understanding of what you know and what you don’t know, whereas primary knowledge consist of facts and principles you believe are true.
In additional to overconfidence, you must also watch out for decisions making shortcuts. Also known as cognitive heuristics. These are misleading shortcuts that give people false intelligence, and can derail the entire decision process. Decision Trap “Shooting from the hip” is when we rely on intuition to make a decision, our mind processes part or all of the information you possesses automatically, quickly and without awareness of any details. But it seldom takes proper account of all the information available.
The authors believes that initiative decisions are affected not only by the evidence that should affect our choice, but also by factors such as fatigue, boredom, distractions and recollection of a fight with your spouse at breakfast. But on other hand, initiative decisions making does have at least one advantage. It takes less time than making a decision with the systematic methods.
However, the disadvantages of intuitive decisions making are more profound than most use realise. People who make decision intuitively achieve much less consistency than they generally suspect.The authors indicated that to maximise our chances of making the best choice if we find a systematic way to evaluate all evidence favorable to each possible choice, compare the strength of evidence on each side rigorously, then pick the choice that your system indicates the evidence favors.
The decision theorists call this kind of choice system a subjective linear model. It is subjective because the importance assigned to each ‘pro’ and ‘con’ is based on human decisions and not from direct calculations based on the real world.
The Decision Trap ‘Group failure’ is where supposedly groups of smart, well-motivated people are mismanaged. Members agree prematurely on the wrong solution. Then they give each other feedback that makes the group as a whole feel certain that it is making the right choice.
Members discourage each other from looking at the flaws in their thought process. The groups may become polarised, with members shifting unreasonably to more extreme position or clinging to opposite sides of an issue. Therefore, progresses toward a rational decision becomes impossible.
The authors indicated that to make better group decisions you should use the following process:-
1) Intelligent, well-motivated people make superior decisions in groups only if they are managed with skill.
2) The heart of good group management is encouraging the right kind of conflict within the group, and resolving it fully and fairly through further debate and intelligence gathering.
3) Leaders must decide where in the four phases of a decision (framing, intelligent-gathering, coming to conclusions and learning from past cases) the group can make its greatest contributions.
4) Leaders should rarely state their own opinions early in group’s deliberations, because many group members will fear to offer their own ideas if they contradict the leader’s.
5) Generally, leaders should encourage disagreement in early stages of any group process. Then as more facts and insights are gained, the leaders should guide the group toward convergence on a final choice.
6) If a decision process really deadlocks, you can often narrow the gap by separating factual issues from value issues.
Through their research, the authors believe that groups can make better decisions than individuals, but only if they are helped along by a skillful leader. There is little excuse for using costly group meetings to make inferior decisions.
The authors indicated that we fall into decision trap number 8, ‘Fooling yourself About feedback’, because our natural biases make learning much more difficult than we realise.
When events come out well, we tend to see the success as a result of our own genius. But when events turn out badly, we rationalise an explanation that preserves our positive self-image. In addition to these biases produced by our desires, we suffer from hindsight effects caused largely by the way our minds work.
Therefore, only by attempting to understand our biases, and interpreting feedback realistically, we can consistently turn our experiences into reliable knowledge.
The authors also indicated that learning from experience is not automatic. Experience, after all, provides only data, not knowledge. It offers the raw ingredients for learning and we can turn it into knowledge only when they know how to evaluate the data for what they really say.
They suggested that people often do not learn as easily from experience as you might expect, even intelligent, highly motivated people.
The authors indicated that most people’s experience is afflicted with decision trap number 9 “Not keeping track” by:-
- Missing feedback – lack of information on the key question
- Entwined feedback – evidence is affected by actions taken by the decision maker and associates after making the initial judgment, these factors are called treatment effects.
- Confused feedback – uncontrollable, unpredictable factors, “random noise” that affect decision outcomes.
- Ignoring feedback – incomplete use of information on outcomes they already possess.
Learning from experience is especially difficult when you face an uncooperative environment like missing feedback or ambiguity due to random noise or treatment effects. To improve with experience, therefore, we need to:-
- Regularly analyse what you are learned recently and how you could be learn more.
- Conduct experiments to obtain feedback you could get in no other way and,
- Learn not just from the outcomes of past decisions but also by studying the processes that produced them.
The 10th decision trap is ‘Failure to audit your decision process’. Here, you should analyse your own decision making and identify a few key steps we ought to take to improve our own decisions. Once you have located the few crucial errors, you will find that your decision making can be improved.
Often than not, the authors indicated that this is the most neglected or misunderstood barrier of the ten decision traps.
Final Word.
And there you have it. This is a basic overview of “Decision Traps”. I would heartily recommend buying a copy of this book and studying it. Poor decision making is at the heart of most poor businesses, if you want to improve your business and start to build a better business, then improving your decision-making ability is one of the first steps you need to take.
The book did an excellent job in explaining the traps and the steps that we can take to improve our decision making. This is an easy read and well worth the time and effort. Buy on Amazon.
Why not take our Decision-Making Audit, find out how good you are at making decisions.
Twelve intensive half-day meetings.
