4 Really Dumb Ways to Make Decisions That Derail Your Success
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Whether in business or in life, we all tend to have different perceptions of, or biases about, the people and circumstances around us.
1. Associative bias.
This is a fancy term for linking unrelated events, patterns or outcomes together. While many innovators and entrepreneurs thrive and build successful enterprises making connections that other people don't see, that's a different type of mental leap than an associative bias.
An example of associative bias is throwing out the garbage, then realizing you can't find your keys. The obvious reaction of many people in that situation is, "Oh my God, I threw my keys away!" They start pawing through the trash, when in fact they actually left their keys on the counter.
This is a time-wasting bias that causes unnecessary delays and rework.
2. Confirmation bias
This simply means that we tend to gravitate towards data, information and results that confirm our existing beliefs, while ignoring inputs that contradict those beliefs.
This leads to "group think" where teams cave to a toxic bunker mentality that feeds off circular logic. It fed into the fall of Enron and the Nixon administration, as well as dozens of other organizations.
This might be the most dangerous bias of them all given the fact that it excludes so much information and insight. This is a clear instance where diversity of opinion matters and another example of how teams make better decisions than individuals.
3. Overconfidence bias.
One of the greatest pieces of wisdom every uttered by a human was the famous quote attributed to Socrates, "Know thyself."
This specific bias is the opposite of that quote. It's a distorted, hyper-inflated sense of your ability, knowledge or skill that can afflict a single individual or an entire organization.
Knowing your personal or organizational weaknesses is a good way to avoid this particular bias trap.
4. Sunk-cost bias.
In short, this is where an individual or organization throws good money after bad in an effort to recoup an initial investment.
The thinking behind this bias is, "Well, we've come this far, we can't give up now." This behavior is reflected in the gambler who keeps betting because his luck is "bound to change," but it's also seen in corporate acquisitions such as Microsoft's purchase of Nokia.
It's a good practice to get a second opinion from a trusted third party on major decisions.
In most instances, we don't even know these biases exist within us at the micro level because we're biologically hard wired for them and socially conditioned for them by the external culture. That holds true at the macro level for organizations and companies since they are merely aggregations of human biases and behaviors.
The best way to start tackling each of these biases is awareness. Make yourself aware that they exist and that they probably exist within you and your organization.