Straight Talk

Dec. 21, 2004
Rely on science, not your gut
"Gentlemen, I take it we are all in compete agreement on the decision here. . . . Then I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about." -- Alfred P. Sloan Jr., credited with creating the multidivisional manufacturing corporation. Every day, executives in business are rated on their ability to make good decisions. It is one of their most important business skills. About 10 years ago I discovered a book that helped me improve my decision-making batting average substantially. The book was Decision Traps (1989, Doubleday/Currency), written by J. Edward Russo, professor of marketing and behavioral science in the Graduate School of Management at Cornell University, and Paul J.H. Shoemaker, professor of decision sciences and policy in the Graduate School of Business at the University of Chicago. In the book Russo and Shoemaker list 10 reasons why most of us err when making decisions. They are: 1. Plunging in -- Gathering information and reaching conclusions without taking time to think about the crux of the issue we're facing. 2. Frame blindness -- Setting out to solve the wrong problem because we have created a mental framework for our decision, with little thought. 3. Lack of control -- Failing to consciously define the problem in a variety of ways rather than just one. 4. Overconfidence in judgment -- Failing to collect key factual information because we are too sure of our assumptions and opinions. 5. Shortsighted shortcuts -- Relying on "rules of thumb" inappropriately. Trusting only readily available information. Relying on convenient facts. 6. Shooting from the hip -- Believing we can keep straight all the information we've discovered, "winging it" rather than following systematic procedures before making the final choice. 7. Group failure -- Assuming that with many smart people involved, good choices will follow. Failing to manage the group decision-making process. 8. Fooling ourselves about feedback -- Failing to interpret the evidence of past outcomes for what it says, either because we are protecting our egos or because we are tricked by hindsight. 9. Not keeping track -- Assuming that experience will make its lessons available automatically, thus failing to keep systematic records to track our results. Failing to analyze the results in ways that reveal their key lessons. 10. Failing to audit our decision process -- Failing to create an organized approach to understanding our decision-making. This exposes us to all the already-mentioned mistakes. Feeling right about a decision may be good for your psyche, but being right about it is better for your reputation. Intuition and gut feeling are costly substitutes for logical, systematic, and informed thinking. Russo and Shoemaker offer this astounding example: The New England Journal of Medicine reported that when boys were examined for a possible tonsillectomy, doctors showed no consistency in their diagnoses. A panel of physicians examined 389 boys and judged that 45% of them needed a tonsillectomy. A second panel examined only the boys judged to be healthy by the first panel. They concluded that 46% of them needed a tonsillectomy. Finally, a third panel examined only the 116 boys who had been judged healthy by the first two groups. It found that 44% needed a tonsillectomy. Few of us realize how flawed our intuitive judgments often are. And how poor our decision-making can be. Sal F. Marino is chairman emeritus of Penton Media Inc., anIWcontributing editor, and the author of the recently published bookManagement Rhymes and Reason. His e-mail address is [email protected].

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