Bad business decisions can cost your company thousands of dollars. Unfortunately, they aren’t always easy to spot before the damage has been done. Here are five questions you should ask to help yourself make good business decisions.
Have you ever noticed a bad decision being made and asked, “What the heck are they thinking?” Perhaps you even thought to yourself, “That’s a stupid idea!” but didn’t tell anyone who could have influence. Or, maybe you looked back at a bad decision of your own and justified it by saying, “Well, it seemed like a good idea at the time.” If you have, then you may have the sense that some of our decisions have bugs we simply are not aware of in real time.
You see, many problems of businesses today are not the result of software bugs or other factors that occur outside our thinking, but rather they are “self-inflicted” as a result of mind-bugs™—bugs in the critical internal processes that occur in the five inches between our ears. The pervasiveness of mind-bugs in corporate decisions is because they are a product of human nature, hard-wired and highly resistant to feedback. They are a function of habitual and compulsive mental processes and our attachment to them. Mind-bugs can affect fact gathering, analysis, insights, judgments, and decisions, and increase risk accordingly. A decision process free of mind-bugs will ferret out poor quality analysis. The reverse is not true as superb analysis is useless if it contains mind-bugs. Here are five questions to ask that will help avoid mind-bugs and reduce risk in any important decision.
1. Have I sufficiently considered how the personal stake or vested interest for each person or group involved influences this evaluation?
Living a human life entails a variety of relationships and membership in an assortment of groups. Both the interaction and the groups influence our thoughts, feelings, desires, and decisions. Every organization consists not only of individuals but a hierarchy of power among those individuals. No matter how noble the group’s goal, there is often a struggle for power beneath the surface. Personal strategies may be obscure and not apparent even to those who are using them. Pausing to objectively consider the influence of the group’s definition of reality, as well as bureaucracy, power structure, and vested interests will improve any decision.
2. Do I adequately understand how my own beliefs and desires color or influence any judgments or inferences I make?
Whenever we reason, we do that within a point of view. Any flaw in that point of view is a possible source of faulty thinking and mind-bugs. Belief mind-bugs may cause us to unknowingly draw conclusions and make decisions based on limited, unfair, and misleading personal interpretations of information. We can get so locked in that we are unable to see the issue from other rational points of view. Belief mind-bugs are so strong that they can cause us to corrupt the noblest virtues and justify it to ourselves. You will not need to look long or deeply at religion, politics, and organizations to find many examples of belief mind-bugs going unchallenged and wreaking havoc. When we pause to consider the influence of our own point of view, desires, values, principles, and emotional connections, the quality of any decision improves.
3. Have I reasonably considered if there are any critical gaps in the sufficiency of the information used to support our arguments?
Mind-bugs in business can cause us to believe that an argument and its support are sufficient when there are actually gaps. This is particularly true if we have a vested interest or personal belief, or there is a group dynamic involved. We may present and/or accept data as sufficient for a decision that does not completely frame the situation in a balanced fashion as long as it supports the decision we subconsciously want to make. When we make decisions based on both relevant and significant information of adequate breadth and depth the quality improves and the risk declines.
4. Am I completely confident that the data we are depending on is accurate?
Accuracy of information is one of the underpinnings of any decision. If inputs are not accurate then decisions will be faulty regardless of the quality of the ensuing decision-making process. We may fail to appreciate the difference between unverified information and fact. Or we may naturally tend to believe our thoughts are accurate because they are ours, and therefore the thoughts of those who disagree are wrong. Some may see and believe in patterns or connections in random or meaningless data when none exist. Others may reject new facts because they contradict entrenched rules and norms or they may favor data because it supports what they strongly desire. Decisions are improved when they are based on clearly defined, reliable, factual, precise, and fair information.
5. Should I continue with this decision if my answer is no to any of the first four questions?
Despite the fact that most decisions involve alternatives and that all decision processes involve problem structuring and evaluation, decisions differ in important ways. Most obviously, decisions differ enormously in difficulty. Most, in fact, are trivial and will not require further attention. But it’s the ones that do that you can’t afford to miss. This “Five Question Scan” will substantially reduce risk for any decision you are about to make and it will cultivate higher quality thinking. It does, however, require regular practice and commitment as mind-bugs will present themselves advising that this is a waste of time.
As humans, we are dreadful at understanding our own patterns of thinking and their effect on decision making. And yet, most corporate projections assume an ideal decision maker, one who is fully informed and completely rational. It is no wonder that we spend more time fixing problems that go wrong than helping them go right. I am not suggesting dialing a psychic hotline, although that is what some companies might as well do when they overlook the potential impact of mind-bugs.
Larry J. Bloom spent 30+ years helping grow a small family business to over $700 million in revenue. He is the author of The Cure for Corporate Stupidity: Avoid the Mind-Bugs that Cause Smart People to Make Bad Decisions, private advisor to several business leaders, a board member, and an owner of a start-up media and software company that promotes better thinking. For more information, please visit.