IN THIS SECTION, YOU WILL: Learn the basic human factors influencing decision-making.
- Decision-making is a human activity subject to human biases and limitations.
- Fundamental biases influencing decision-making include outcome, hindsight, and confirmation biases.
- Human intuition plays a vital role in decision-making.
- Group decision-making offers significant advantages but increases complexity as it requires higher decision-making skills from each member.
In her posts and online lessons on design intelligence, Cassie Kozyrkov frequently emphasis that decision-making is a human activity subject to human ingenuity, as well as biases and limitations. Similarly, having good data and tools in IT architecture will not automatically lead to good decisions. Architects must be aware of all human factors that influence individual and group decision-making.
Biases and Limitations
Fundamental biases influencing decision-making include outcome, hindsight, and confirmation biases.
The risk in decision-making is developing an outcome bias, where you focus too much on the results rather than the quality of the decision-making process. You’re learning the wrong lesson if you experience an unlucky result and mistakenly conclude that you chose a bad option. Such wrong interpretation could lead you to make wrong choices in the future.
As mentioned earlier, an outcome is distinct from a decision; the result follows a decision. It’s entirely possible to make a sound decision but still end up with an unfavorable outcome. It’s important to remember that the decision-making process, randomness, or luck influence outcomes. Luck is beyond our control and often a significant factor in complex situations.
If you only consider the outcome without understanding the context and information available when the decision was made, it can lead to misjudging people’s abilities. You might end up rewarding or punishing people based on a mix of luck and skill without knowing how much luck contributed to their success. Therefore, it’s crucial to assess whether people’s successes are due to good decision-making or merely luck and not to overemphasize the outcome when evaluating decisions.
Understanding decisions retrospectively can be misleading due to hindsight bias, where things seem obvious after the fact, even though they weren’t known at the time. Again, the accurate way to evaluate a decision is by examining the information and context available when the decision was made.
Consider what factors the decision-maker took into account, how they gathered information, and the sources they used. It’s also important to assess whether the amount of information collected was appropriate for the decision’s stakes.
Without recording this process, it’s challenging to judge the quality of decisions made by yourself or others, hindering personal growth in decision-making skills. The key takeaway is the importance of documenting the decision-making process. This documentation helps distinguish between the influences of luck and skill in outcomes, ensuring you learn the correct lessons from your experiences. Putting more effort into recording decision processes is vital for this analysis.
Confirmation bias is a psychological phenomenon where your pre-existing beliefs influence how you interpret new information. This phenomenon means that when you encounter a fact, your perception and understanding are not entirely objective. Your interpretation, memory, and attention to this information are shaped by your beliefs, even before you encounter them.
Awareness of this bias is crucial because it means your brain may unconsciously interpret new data in a way that reinforces your pre-existing beliefs, even when you think you’re being objective. This subconscious inclination can skew your understanding and decision-making without realizing it.
Businesses are increasingly hiring data scientists to make what they believe are unbiased, data-driven decisions. However, these decisions often aren’t genuinely driven by data. For a decision to be truly data-driven, it should be the data itself guiding the choice, not preconceived notions or biases, a concept that sounds straightforward but is seldom practiced.
The tendency to selectively interpret data to confirm pre-existing beliefs is a typical example of a confirmation bias. Complex mathematical analysis doesn’t solve this bias; it can even obscure it. Often, even if meticulously done, extensive data analysis ends up being overlooked or misinterpreted through confirmation bias. This results in decisions that are no different than if the data were never analyzed. The critical problem is the tendency to adjust interpretations after seeing the data.
The solution to counter confirmation bias involves setting clear objectives before examining the data. Think about what the data means to you before seeing it. This approach helps make truly data-driven decisions, as it counters inherent biases in human thinking.
To use data effectively for generating questions and finding answers, separate your dataset into two parts: one for analytics and the other for statistics, and never mix them. This separation is crucial in preventing goalpost shifting after seeing the data.
Other Human Limitations
In a well-known behavioral economics study, researchers presented decision-makers with identical facts but used different wording. Despite the same underlying information, the decisions varied. Merely changing the phrasing or adding unrelated details can significantly alter people’s choices. Our minds are susceptible to cognitive biases and illusions, even in the face of factual data.
This finding implies that interacting with data is not purely an objective process. How we cognitively engage with data matters. While we can use data to enhance objectivity, it can reinforce pre-existing beliefs if not approached critically. This tendency can strengthen our existing convictions instead of providing new insights, counteracting the goal of objectivity and learning.
Your decision-making ability is not always at its peak, especially when you’re sleep-deprived, hungry, emotionally stressed, or under significant pressure. These biological and emotional states can impact your ability to make optimal decisions. It’s a misconception to believe that sheer willpower or extensive knowledge about decision-making can always lead to the best outcomes.
A striking example of this is found in the legal system, where studies have shown that judges can give different sentences before and after lunch. Even highly experienced and knowledgeable individuals, like judges, who make critical decisions, can be influenced by factors like hunger or the need for a break. This realization should be a cautionary note about the limitations and vulnerabilities of our decision-making processes.
Human intuition plays a vital role in decision-making. Robert Glass provided one of the best definitions of intuitions, describing it as a function of our mind that allows it to access a rich fund of historically gleaned information we are not necessarily aware we possess by a method we do not understand (Glass, 2006; page 125). Our unawareness of such knowledge does not mean we cannot use it.
In the context of decision-making, one of the main advantages of intuition is that accessing it is a rapid process, making intuitive decisions straightforward. Intuition is particularly useful for low-value decisions with low stakes, and a quick resolution is preferable. As we’ll explore in future discussions on prioritization and decisiveness, seeking perfection in every decision is impractical due to limited time and energy. Therefore, it’s essential to choose where to focus your efforts.
Intuition is especially appropriate under certain conditions:
- Time Pressure: When time is limited and a detailed analysis isn’t feasible, intuition can guide you.
- Expertise: If you have experience in a particular area, relying on intuition makes sense, as you’ve likely faced similar decisions before. In contrast, in unfamiliar contexts, intuition may not be reliable.
- Unstructured Decisions: Intuition can be valuable for decisions that lack a clear framework, like judging the quality of art. Expertise in the relevant field enhances the effectiveness of intuitive judgments.
Conversely, you should avoid relying on intuition too much in situations where more effort is warranted, including those with ample time, high importance, lack of expertise, and a structured decision-making process.
Effective decision-making often involves recognizing that you might not be the sole decision-maker. In organizations, it’s crucial to identify the actual decision-makers and understand how decision responsibility is distributed among them. Mastering this skill is essential for navigating organizational decision-making processes. It’s important to question who really has the final say in decisions. In many cases, decision-making is more complex than it appears.
Group decision-making offers significant advantages. While you might believe you have the best solutions, incorporating diverse perspectives can help cover your blind spots. Multiple decision-makers can counterbalance the extreme tendencies of an individual and compensate for human limitations like fatigue.
While group decision-making might sometimes constrain individual creativity, it also provides safeguards against poor decisions and aligns individual motives with the organization’s goals (see the principal-agent problem in the next section). Having several independent decision-makers can align individual incentives with the organization’s needs, addressing this problem.
However, group decision-making isn’t perfect. It increases complexity as it requires higher decision-making skills from each member. True collaboration in decision-making is more challenging than individual decision-making. It also tends to slow down the decision process.
Moreover, the benefits of group decision-making, like balancing individual biases, rely on the independence of the decision-makers. If everyone is in the same room, independence can be compromised by factors like charisma or status, potentially allowing the loudest voice to dominate, rather than the wisest.
Group settings can also devolve into social exercises, where personal ego overshadows open-mindedness to new information. Being aware of these pitfalls allows you to create rules that foster independent perspectives.
The role of the note-taker in group settings is also influential, as is the phenomenon of responsibility diffusion, where unclear responsibilities lead to reduced individual contribution.
In summary, the more people involved in a decision, the higher the skill level required to maximize the benefits and minimize the downsides of group decision-making. It’s vital to structure the process to maintain independence, possibly by limiting decision-makers and increasing advisors. This approach distinguishes between making a decision and advocating for the execution of an already-made decision.
Questions to Consider
- How do your personal biases, such as outcome, hindsight, and confirmation bias, influence your decision-making process? Can you identify a recent decision where these biases might have played a role?
- Reflect on a situation where the outcome was bad, but the quality of your decision-making process was solid. How did you respond to this outcome, and what lessons did you learn?
- In what ways do you think hindsight bias has affected your ability to evaluate past decisions accurately? Can you think of a decision that seemed obvious in retrospect but was unclear at the time?
- Consider a decision you made recently. Did you document the decision-making process? If not, how could documenting this process help you in evaluating your decisions more effectively in the future?
- How does confirmation bias impact your interpretation of new information? Can you recall an instance where you ignored or misinterpreted data to fit your pre-existing beliefs?
- Think about a decision where changing your perspective or how information was presented (e.g., through different wording) might have led you to a different conclusion. How does this realization affect your approach to decision-making?
- Reflect on a time when your physical or emotional state might have influenced a decision. What does this tell you about the importance of being aware of your condition when making decisions?
- Consider a decision where intuition played a significant role. Was the decision effective, and would you rely on intuition under similar circumstances in the future?
- How do you balance the benefits of group decision-making with its challenges, such as social dynamics and the diffusion of responsibility?