In order to avoid decision disasters and defeat cognitive biases, it’s important to develop the 12 critical skills that cognitive neuroscience and behavioral economics show are needed for mental fitness.
That’s the key take-away message of this episode of the Wise Decision Maker Show, which describes the 12 Mental Skills to Defeat Cognitive Biases.
Videocast: “12 Mental Skills to Defeat Cognitive Biases”
Podcast: “12 Mental Skills to Defeat Cognitive Biases”
Links Mentioned in Videocast and Podcast
- Here’s the article about the 12 Mental Skills to Defeat Cognitive Biases
- The book Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters is available here
- You are welcome to register for the free Wise Decision Maker Course
Hello everyone and welcome to another episode of the Wise Decision Maker Show.
Today, we’ll discuss the mental skills you need to defeat dangerous judgment errors that are known as cognitive biases, including the confirmation bias and over 100 other problems that cause us to make pretty bad decisions that lead to disasters in our professional and personal life.
First, let’s start by talking about what cognitive biases are. These are errors, like I said, that come from the fact that our mind is wired in a way that’s really problematic actually. It causes us to take a lot of mental shortcuts that lead to bad decisions. They were useful in the Savanna environment when we used to live in the ancestral tribal environment because our gut intuition – our intuitive reactions are adapted for the Savanna environment, they are not adapted for the modern work and that’s why we make these over 100 judgment errors called cognitive biases.
The confirmation bias is the most well-known of these cognitive biases, it does two things. First, it leads us to look for information that confirms our pre-existing beliefs, Second, it leads us to reject any information that we see whether we look for it or we don’t look for it that conforms to our beliefs.
We fall into the confirmation bias and other cognitive biases when we follow our gut reactions, for example In our everyday modern life we treat every piece of bad news that we get as though it is a terrible, terrible thing, we react disproportionately to how bad it is because our gut reactions are adapted for the ancestral tribal Savannah environment. It was very important to react very strongly to any potential bad news. Because it was better to jump at 100 shadows than to fail to jump one saber-toothed tiger which is why it is known as the saber-tooth response or fight-or-flight response. Either we fight the saber-tooth tiger, or we flee from it whatever it is. That’s the fight or flight response and that’s why we tend to overreact to problems.
Let’s say an email that you get from one of your direct reports telling you that something problematic is going on. I remember getting one such email from one of my employees telling me that a major deal that I was working on was not doing so hotly. So that was bad. I was upset. I was pretty mad when I read that email and of course, my gut reaction was to blame the employee for this bad news. Because the employee brought me the bad news. Now, fortunately, I am aware of the confirmation bias as well as another cognitive bias that’s called the MUM effect or the shoot-the-messenger effect where we blame people for bad news when they bring us bad news, regardless of whether they are implicit in causing the bad news. Not a good thing in organizational settings.
So, I calmed down. I calmed my anger down, took the time to do so using the strategies that we will talk about in a bit and I thought about the situation and I realized somewhere in the back of my mind I had an inkling that there might be a serious problem with the deal that I negotiated, but I wasn’t looking for the information. I was flinching away from those ideas, I didn’t want to disrupt my happy thoughts and everyday experiences by looking into that potentially bad information. Not fun right? So that’s an example of the confirmation bias where we tend not to look for information that would disconfirm our beliefs. The beliefs that are pleasant and comfortable to us. So, we tend to not look for this information. So that’s the confirmation bias and I fell into it as well.
Now we yield to the confirmation bias whenever we fail to look for information that challenges our pleasant beliefs such as I did with the deal or when we get angry at the person sending us the information because we don’t want to hear this information and we reject the information, such as when I got initially angry at the employee who sent the email or when we flinch away from the negative reality and deny. I got angry at the email and that is the fight response. I tend to be the kind of person who has the fight response. There are plenty of other people who have more of the flight response. The flight response would be more of ignoring the email saying blah, blah, blah, I can’t hear you, nothing happened. And so, ignoring the negative reality. I’m more of the fight response type. On the ancestral Savanna I would have been a warrior. I would have reacted with the fight response to the saber-toothed tiger or enemy warriors attacking the tribe. Likely, I wouldn’t have lived that long. But if I did live for a while because I was a successful warrior and you kind of get into the chief war leader position. I probably would have passed on my genes to a lot of people.
For example, the famous war leader Genghis Khan of the Mongols. We know from research that his genes are found in about 5% of the world’s population. Look around you, one out of 20 people is likely to have his genes. So that’s how these warrior fight genes tend to be passed on to the current generation. So, we are the descendants of people who had this fight response as well as some of the people who chose to flee and had the flight response.
That’s the ancestral tribal environment, in the modern environment it doesn’t serve us well. The much more effective response to getting bad news at work is to calm down, analyze the news, talk about it with the subordinate who brought you the bad news and take next steps to solve the problem. Calm next steps, not aggressive, accept the information, internalize it and take the next steps that are necessary to solve the problem. And that’s what I ended up doing So, I didn’t yell and shout at the other party that was not going along with the deal, and instead I talked to the other party we figured out an alternative deal that wasn’t quite a good for me, for my company but still it was better than nothing. It ended up working out well over all even though the deal wasn’t originally as good as it could have been. But plenty of other people who would have had the fight response and reacted to the confirmation bias badly by having the fight response, they would have ended up shouting at the other party and there would have been no deal. Or they would have ignored this information just went on with their day. So there would have been no deal either. By fighting the confirmation bias I was able to secure a deal and I hope you will as well through the strategies that I will describe.
Too many business leaders, unfortunately, fall for the confirmation bias. There is extensive research. There is a survey of over 1000 Board members who fired CEOs and the study found that 23% of Board members cited denying negative facts about the company, about the market, about the state of things as one of the top five reasons for why the CEO was fired. 23% is a pretty big number showing you the negative impact of the confirmation bias for the current business reality of the CEO of companies where the board members were interviewed.
Tragically, prominent business and self-help gurus, fire walking gurus, they advocate for you to go with your gut intuitions and fall into all of these over 100 cognitive biases. Why is that? Why do they tell you to go with your gut in making decisions and not go with your head? Because going with our gut is very comfortable to us, it’s very intuitive so it feels good. They tell you what feels good and then they get paid. People get paid for telling you what feels good for you to do. Big news right. So that’s how they make their money, It’s unfortunate but it’s true.
I’m not going to tell you the things that feel good necessarily, I am going to tell you the things that are true, accurate, and will actually help your bottom line, help your relationships, help your personal life, help you achieve your goals. Instead of doing the things that are comfortable and intuitive and feel good. So instead of following those primal intuitive instincts and going with your gut, I really recommend that you go with your head, and analyze the situation carefully, before you take steps that cause you to ignore important information, or to look only for information that just confirms you beliefs ( that’s the confirmation bias ) or you fall into one of over 100 cognitive biases and that’s how to obtain your goals.
You might be surprised by my use of the term of primal instinct and the opposite of doing the civilized thing of going with your head. What does civilized mean and what does primal mean? First of all primal means basic, intuitive, primitive, savage, it’s our intuitions, it’s our gut reactions. It’s our authentic selves. It’s what we naturally want to do
What does Civilized mean? Civilized simply means learned behaviors and thought patterns. It means we are not in the primitive, savage state, and that tribal environment, it means that we have learned to do things that don’t go along with our intuitions and we have become civilized. And that’s what civilized means. All of the things I am talking about here are the civilized things to do. Going with your head is the civilized thing to do, going with your gut is the intuitive, natural, Primal thing to do. So, don’t do the primitive thing. Don’t do the primal thing. Do the civilized thing. Do the learned thing. Go with your head. Analyze things correctly. And that’s what civilized people should do, and I hope you would do it as well because it’s really important in a modern business environment to do the civilized things.
Civilized behavior comes from structured methods of thinking and decision making. I talk about structured thinking and decision making extensively in my work, there are extensive decision-making processes that I describe that would both help you make the best decisions and implement them most effectively. However, plenty of times we don’t have the time to do the structured decision-making process or even realize that it’s necessary. So besides the structured decision making processes there will be some links in the show notes to structured decision making processes, you need to develop some mental skills, and that’s what I was talking about in the beginning, the mental skills and habits that you need to develop to address confirmation bias and other biases. So, these mental skills, these habits are things you internalize into your everyday activities, just like you learned to talk, let’s say that’s a civilized learned activity. You learned to brush your teeth. Just like you learned to not interrupt others. Just like you learned to delegate things effectively. Just like you learned to communicate well with your colleagues. The twelve mental skills that I will talk about are similar things that recent research has shown to be very important in fighting the confirmation bias and over 100 other dangerous judgment errors. When you learn these skills and integrate them into your everyday activities, it will take a while, but it’s definitely doable and effective, I’ve seen my coaching and consulting clients do so quite effectively. And also many people I know.
These abilities will enable you to predict when you or someone else is about to fall into one of these cognitive biases and hopefully prevent that problem from happening; It will definitely enable you to be much more likely to predict and then with that knowledge you are much more likely to be able to prevent that problem from happening. It will help you recognize very quickly when dangerous judgment errors are undermining whatever is going on in the situation at hand in your professional life, your personal life or wherever, even if you didn’t predict it beforehand you will be able to notice. “Ah ha, the confirmation bias is happening.” Or “Ah ha, the planning fallacy is happening.” The planning fallacy is our tendency to assume our plans are wonderful and everything will go according to plan. Or “Ah ha, shoot the messenger is happening.” When people are blamed for negative information that they have brought to the situation.
So, they will enable you to see what’s happening in the situation even if you didn’t predict it beforehand. They will also allow you to take effective steps in the moment that you need to take, even when you didn’t have time to predict them, to address these dangerous judgment errors. Whether it’s the confirmation bias or over 100 dangerous judgment errors you will be able to take the steps that you need to address what’s going on. So that’s it even if you didn’t predict it. It’s kind of hard to predict sometimes, sometimes you can. Sometimes it’s kind of hard so you need to react in the moment instantaneously to the presence of one of these dangerous judgment errors. And you will be able to teach others in your professional organization, in your network, all the people you care about, in your personal life of course to be able to spot these mental blind spots and protect themselves from them. Noticing and preventing these dangerous judgment errors. These cognitive biases from impacting them negatively. So, these are the 12 mental skills that will help you, now to talk about the skills themselves.
Skill 1: Identify and plan
First, we need to identify the various dangerous judgment errors that are happening in the situation in your life, for you personally, in others in your organization, in your relationships, whatever is going on, and then you need to make a plan to address them. Gaining awareness of a problem of the dangerous judgment error, whether it is the confirmation bias or one of the over 100 other biases, is the first step to solving it. Sounds obvious, right? However, debiasing (getting rid of these cognitive biases) is much harder than it seems. Debiasing, by the way, is a term that scholars, cognitive neuroscientists and behavioral economists like myself use for addressing cognitive biases, so you will see this term thrown around in the scholarship. The term is again “debiasing.” —-Wouldn’t it be wonderful if you could just read a book or listen to a speech or show, much like this one and learn about these over 100 cognitive biases and voila, you’re cured! It’s like magic! It doesn’t work that way. I wish it did. Lots of people wish it did but it doesn’t. So, just learning about these cognitive biases according to extensive research doesn’t really help you much. It helps you a little bit, but it doesn’t help you much in addressing these cognitive biases. That’s just the way they work unfortunately. So in order to address these cognitive biases, research shows that just finding out about cognitive biases doesn’t have much impact on addressing the problem. I wish it did, but it does somewhat, it does a little. But it doesn’t have that much impact on it. Now, learning about these mental blind spots is crucial, very important. But then you need to take other steps based on this information in order to really address them to overcome them. Just simply finding out about them is not enough. The first step is really understanding the stakes for you, and for other people in your personal life, whoever you are helping with cognitive biases and of course the first person you’d help with the confirmation bias and other cognitive biases is yourself.
So, the first thing is to identify where in your or their lives is it actually damaging you, hurting you, causing you a lot of pain. Why is that important? Because the gut reactions are emotional and research shows our emotions, our feelings, our gut reactions just intuitively, drive about 80-90% of what we do. It’s not a bad thing, we want to be able to be driven, be motivated, and a lot of things that we do are on autopilot. You know, I am talking to you right now and I’m not thinking about the way I am pronouncing each word, I’m just doing it. It’s automatic. That’s kind of driven by my emotions that I have internalized. And so, you need to internalize into your emotions, the dangers of these cognitive biases. The dangers of the confirmation bias and other dangerous judgment errors. And in order to then be able to effectively get your emotions on board with actually solving them by doing the counter-intuitive behaviors that it takes to solve these problems. It’s very hard to do these counterintuitive things. It’s really difficult.
You might be surprised at me calling it “hard”? when was the last time you tried to do a counter-intuitive thing? It’s about rewiring our instincts. Let’s say you learn to drive a car. You’ve done that, you have learned how to drive a car. Doing that is hard. Remember the time when you started doing it? Maybe this ages me but way back when, on things that were super hard for me to learn because it was counter-intuitive, and that was to not slam on the brake because when we didn’t have anti-lock brakes back then when the car was skidding on ice, or water or snow. Not slam on the brakes but instead pumping the brake. Pumping on the brake is very hard work. It’s very counter-intuitive. It’s very uncomfortable. It’s very intuitive to just slam on the brake so learning to do that took a lot of effort and it’s hard and not comfortable to do, it goes against our intuitions. Let’s say another thing, how easy it is to go out and to exercises. I do exercise every day; I hope you do as well. You know, 30 minutes of light exercise every day, it’s very important, what the doctor ordered for our health right? But it’s hard to do. It’s very uncomfortable to start doing that. And once you get into a habit of doing them, it’s much easier. And once you get in a habit of driving your car and not slamming on the brakes when you are skidding it’s much easier. Eventually as you build up these mental habits, it will become much easier, but for now, as you are learning, it’s going to be just as hard as motivating yourself to do exercises, or just as hard as it is to not take that third cookie the second cookie is a-ok! But a third cookie is no good (chuckling) Anyway, so it’s hard to do those things it’s counter intuitive.
Developing these skills is a form of mental fitness. Just as not taking the third cookie and doing your exercises is a form of physical fitness. You’re doing it so you are physically healthy, and you are addressing these dangerous judgment errors, so you have mental fitness, so you are mentally healthy. It is a form of mental fitness and wellbeing that is just as important as your physical fitness. If you do exercise every day you should be doing this mental fitness, integrating these mental habits
Your mental fitness is so much more important than bingeing on Netflix, scrolling through Facebook or reading yet another depressing political news story. Think about what time you can cut from those things and others to protect your mental fitness and improve your mental fitness. It will help you make the best decisions to avoid disasters in your professional life and your personal life. Choose carefully what you pay attention to because what you focus on is really what you are pulling yourself toward what you are becoming, what your identity is about. The only things in life you can control are your thoughts, your behaviors (what you do), and feelings, your emotions. So, we can change those although it takes some time. And these mental habits, they are about changing your feelings, your emotions, your intuitions to be aligned with civilized, learned behavior which you of course have learned to do in other areas, like driving a car or eating with a fork. That’s a civilized behavior right, eating with a fork and knife, we used to eat with our hands and as babies we ate with our hands. But we learned how to eat with a fork and knife. These are the same kinds of civilized behavior of mental fitness.
Now to develop these skills and the rewirement of habits requires us to really want to do it. To invest our emotions into doing it. And to invest our emotions into doing it we need to understand how the confirmation bias and other cognitive biases are causing us to suffer. We need to understand these things in our lives. So, again simply learning about them doesn’t create such feelings. What we need to do is identify very specifically, very thoroughly and very clearly, points in our lives when these dangerous judgment errors caused us to have a really negative situation, have a really bad experience, really hurt us. So think about past decisions that you’ve made that you regret now, and think about how much they hurt you and how they could have been much better off if you had not fallen into whatever error happened that caused you to make that bad decision.
That’s an example of how you would do it. Fortunately, you don’t have to think through every situation, there is an assessment on the 30 most dangerous judgment errors in the workplace that I developed. There are over 100 cognitive biases. One thing that some people do is read through them and look for it in their lives and see how it hurt them in their lives. That’s a good strategy to do. I narrowed it down to the 30 most dangerous judgment errors and focused on the specific behaviors that you will see in the workplace that you and your team in the workplace can do and take it and see how it impacts your workplace, your organization and that’s a very effective tool to see and identify and specifically get the numbers, dollars on the page of how it hurts you, how it causes you damage and that’s going to be linked in the episode notes.
But that is not enough. Even identifying the problems is not enough. Why? Because if you identify the problems it’s kind of like really disliking your weight lets go with that. We are talking about cookies and we are talking about exercise. It’s like you really don’t like how you look and your current weight and you want to lose weight and you want to become more fit and you want to not take that 3rd cookie and you want to do a lot more exercise. Good thing to do right? But if you don’t know how to do it and you don’t make a concrete plan to do it, it’s very unlikely that you will do it. You will just become sad and depressed and you will eat more cookies to feel better. Not that I ever did that of course. It happens. (I never did that never)
So, what you need to do is develop a specific and concrete plan for how you will address these dangerous judgment errors, so how you will increase your mental fitness just as you are increasing your physical fitness. And to help yourself and your team improve your mental fitness and avoid these dangerous judgment errors, make better decisions, avoid business disasters that follow, you can integrate the 12 mental skills that I am talking about here, and this is just the first of those 12 skills, as well the structured decision making processes into your everyday organizational policy. Those are linked in the episode notes.
Skill 2: Delay Decision-Making
A great deal of debiasing, a great deal of the techniques to solve cognitive biases involves delaying our decision making, slowing it down, delaying it. Taking the time to address these judgment errors through thinking about them calmly. So, like I reacted with the email, I didn’t just immediately blast my subordinate or do the other party of the deal and start yelling. I delayed, I took the time to think about what was really going on, address the subordinate calmly, and address the other party calmly. A really good technique here is for relatively minor things, like when you’re stressed out about an email, to just count to ten. Your mother was right just counting to ten will help you to be calmer and help you to react calmly and more intentionally. It will be helpful really, it’s a research-based strategy, that something that really works to address dangerous judgment errors that cause us to make really bad responses in the moment. That works for somewhat minor things.
When you have a stronger emotional arousal, it takes more time. It doesn’t take ten seconds to address it, it takes more time. To switch from the gut analysis to the head analysis, the sympathetic nervous system and the parasympathetic nervous system the sympathetic nervous system is the system of our mind that is activated when we have the fight or flight response. The parasympathetic nervous system takes about 20 or 30 minutes to activate after the sympathetic nervous system shoots adrenalin, cortisol, these are stress hormones, through our body getting our body ready for fight or flight in response to some really bad news at work. You don’t want to respond by fighting or fleeing, you want to take twenty to thirty minutes to calm down and respond calmly. That’s where you would take the time to delay, sit in a quiet calm place. Take the time to address the problem, think about it calmly, that’s when the parasympathetic nervous system also called the rest and digest system turns on. That’s really helpful in turning off that system and also in greatly increasing your ability to focus on your responses and to be aware of your responses which is very important in addressing these dangerous judgment errors is mindfulness meditation.
Skill 3: Mindfulness Meditation
You might be surprised by my talking about mindfulness meditation in this research-based context. But Mindfulness Meditation has been researched for a while and there are a number of forms of it that I can strongly recommend that have been shown to have been highly effective in addressing dangerous judgment errors. Why does it help? It helps partially from delay, so when you are doing meditation you are sitting and focusing on your breathing, for example, that’s one of the forms of meditation that has been most studied and shown to be effective. You are just sitting down, focusing your breathing, being calm. You are delaying yourself from responding immediately, and you are learning how to focus. If you are just focusing on your breathing. It’s kind of hard to focus on your breathing because it’s tempting to think about other things. Worries at work, worries at home, worries at church, worries in your civic community, it’s tempting. But if you learn how to keep bringing your mind back from these stray thoughts to your breathing that’s a very useful skill that helps you notice and address dangerous judgment errors. So that’s mindfulness meditation, that’s the third skill
Skill 4: Probabilistic Thinking
This is a big one. Our autopilot system, the gut reactions, doesn’t do well with numbers- abstract analysis. it’s a “yes” or “no” system, black and white, binary thinking. So, using probabilistic thinking, which is called Bayesian reasoning after the creator of the Bayesian theorem, Rev. Thomas Bayes. It basically involves evaluating the probability of various outcomes by putting numbers on them. Not saying yes or no but saying there is a 33% change of this happening and there is a 55% chance of this happening and there is an 80% chance of this happening. Using this more rational assessment where you apply various numbers to your evaluations of reality, you can update your beliefs about the world as more information becomes available. So, let’s say about this deal, when the employee sent the email I had a pretty low estimate of the deal’s going to happen, you know 10% and as I talked to the other party in the deal and we figured out that if we renegotiated some things in their favor, we could actually make the deal, my estimate of the deals likelihood kept rising and rising. So that’s an example of how you would use probabilistic thinking.
Let me give you another example from my life. say your business partner said something that you find hurtful, so, for example “Wow, our electric bill is so high this month.” They say that and you know that you are the person who has the thermostat set high because you’d like it to be warmer, and your partner likes it to be cooler, but they went with you and they set the thermostat high. You intuitively want to respond to that, a fight response would be saying something like, well let’s say that your business partner didn’t bring it as much business this month as they usually do so you could say something hurtful like “Well we wouldn’t have to worry about the electric bill if you bought in more business” Drama Follows right? You don’t want that situation to happen. By contrast probabilistic thinking will lead you to access the probability that your partner wanted to hurt you with that statement and look for evidence that they are trying to hurt you. For example you can ask “Did you mean to say the electric bill is so high because I leave the thermostat on high, is that what you meant to say?” and then your business partner can say “Last month you left the thermostat on high just as you did this month, and the electric bill was a third of what it is now. It’s probably something with the electric company, they probably screwed up something, Let me just call them and figure out what’s going on.” And then you find out, to your surprise, that your business partner didn’t mean to hurt you. It was a completely different sort of situation and you avoid the drama. So that’s a way that you avoid problems in your relationships by addressing the dangerous judgment errors that come from lacking the skill of probabilistic thinking. That’s a version of a discussion that I had with my wife and business partner Agnes Vishnevkin during the winter, so I am talking from my personal experience. I was tempted to say the thing about not bringing in the business, but I instead responded with What did you mean to say by that? Are you talking about the Thermostat and she responded with the electric company and power crisis averted. So that was really effective.
My question to Agnes reflects a really important part of probabilistic thinking, where you launch experiments where you gain additional information because our gut reactions tend to be vastly, vastly overconfident about what reality actually looks like. There is a cognitive bias and overconfidence effect one of the over 100 cognitive biases, where we tend to be very overconfident about our estimates of reality. In order to fight the overconfidence effect, what you want to do is launch experiments to see whether your estimates of reality are going to be right or not. Look for ways you can test your theories, especially look for ways you can disprove them rather than confirm them. Remember the confirmation bias will cause us to test in a way that only confirms our beliefs. What you want to do is try to test your beliefs in a way that disproves them. If you can disprove your beliefs, that’s great, it means you are much more likely to be accurate and you should go ahead with that business deal or whatnot.
A key aspect of probabilistic thinking consists of using your prior estimates of reality to form your future assumptions about what’s going on in the situation. It’s called the base rate probability, also called the outside view. You take the outside view on the situation. Let’s say you are thinking about doing a merger and acquisition. Or an acquisition. You might have an inside view; I am very certain this will be great because you are looking at the situation and you like the other company that you are looking at to acquire but what’s the base rate? According to extensive research about 70 – 90 % of mergers end up destroying value, hurting the company rather than helping. So, your outside view, the base rate should be that the large majority – more than 2 out of 3 acquisitions, that you initially think are good, are likely to be bad. Because nobody is going to launch an acquisition that they think will hurt the company. So everyone, all the business leaders who launched and acquisitions thought that they were doing a good thing, they were thinking just like you, hey, this is a great buy for us and in more that 2 out of 3 situations, it was a bad buy. Not good, So you want to have an assumption say that this may be a great buy, this may be a bad buy, but it’s likely that to be the case that in 2 out of 3 situations, I am going to assume that it is going to be a good buy when it’s actually a bad buy. So, have that as your base rate and evaluate the situation after you make that assumption and investigate it much more thoroughly than you would otherwise intuitively to see whether it’s a good buy or not.
So, for example, you can launch an experiment, you can have a partnership with that company and do a small project together. See how it works out. In mergers and acquisitions, we tend to look at the externals of a company. What kind of patents do they have? What are their finances. What is their material wealth like? How many factories do they have or something like that? What do the external resumes of their people like, if we want to do an acqui-hire (an acquisition to hire the people in that company)? We don’t tend to look at the internals. Which is the internal culture? What’s their culture like? How similar is it to yours? We don’t tend to look at that and culture clashes are one of the biggest causes of failure of acquisition and mergers. And that’s one of the biggest causes of destroying value, the other huge cause is systems and processes. One of the things companies tend to vastly under-estimate is the unique nature of their internal system and processes. Other companies are organized in a very different way. They often are organized in a very different way than you are. It takes much more effort than you would Imagine to combine your systems and processes with their systems and processes, if you are quite incompatible to start with. By random chance, you might be compatible (chuckle) but don’t take that chance look at their internal systems and processes, look at how well you collaborate, evaluate their internal system and culture before you decide to go forward with an acquisition or merger.
Skill 5: Making Predictions
This is related probabilistic thinking but somewhat distinct from probabilistic thinking. What you want to do with this skill is be able to make predictions about the future of what’s going on. Let’s say you think your customers will be pleased if you send them a holiday card. So, that’s your assumption you are a small business owner and you want to send them Holiday cards and they will be pleased. Get a batch of Thanksgiving cards and separate your customers into 2 different piles with similar demographics. Say one of your customer bases you work with is financial advisors separate out all of the financial advisors in similar demographics into 2 batches, an A batch and a B batch. To the A batch you want to send out the Thanksgiving cards to the B Batch you don’t send them. You want to make a prediction in advance, with yourself, you don’t need to do it with anyone else, what you think will be the impact of sending out the Thanksgiving card. Will you get more referrals from the A batch than the B batch, will you get more referrals of new business from the A batch than the B batch? How much more business, How much more referrals? Let’s say you predict 10 percent more referrals and 15% more repeat business. Make a time estimate as well. Let’s say within 6 months. Make that estimate. Send out the Thanksgiving cards and see what happens in 6 months. Easy experiment. Doesn’t cost you too much except sending out some Thanksgiving cards and tracking the responses. And then you’ll know whether you should do the thanksgiving cards or whether you shouldn’t. You don’t have to hit those numbers 10 % and 15% say you get 7 percent more referrals and 7 percent more repeat business. That might be sufficient for you. so, you might want to decide that’s enough, and you keep doing Thanksgiving cards or whatnot, that’s great that’s fine. But you want to make a prediction in advance and see how well you match that prediction and based on the prediction you get you might want to revise your activities, maybe send a New Year’s card or birthday cards if you know the birthdays (that might be a little bit harder) so send out some other cards. If there is a financial advisor day you might want to send them a card then or April 15th tax day send a card out to all your accountant clients.
Also make these bets when you are trying to decide things with others. Let’s say you are the co-founder of a tech start-up, the other co-founder, you have a disagreement about something. You have a disagreement about what will be the funding in the next round of angel investing. And based on that disagreement let’s say he thinks that the company will have 3 million in funding and you think it will have 5 million in funding. Cool. That’s a clear disagreement. Right now, you want to make a decision based on that assessment and who you bring on and in your budget plan for going forward and you want to integrate this information. So, what I would advise you to do is make a bet of some of your own money. Say for $1,000 bet from him and $1000 bet from you and – and he says 3 million and you say 5 million and whoever’s number is closest to the final number you actually go forward and you say that person won the bet and we’ll trust that person estimates more from now on.
So, if the final numbers from the angel investors come in at 4.5 Million you are going to be closer to reality and you will trust your assessments more going forward. As for the budget I suggest you average the two and do four Million but then in the future adjust based on who’s assessments tend to be better. The same sort of betting can be used for lower stakes in smaller businesses or lower levels of the organization.
Skill 6: Considering Alternatives
So, you want to consider alternative explanations and options, this is especially helpful with the confirmation bias. Let’s say your boss is curt with you at work and usually she is not curt with you at work but this time she is curt with you. Is she pissed at you? Should you try getting your resume and polishing it? What’s going on? I have had coaching clients who fall into catastrophizing thinking who think “Oh the boss is curt with me at work, what did I do wrong? They think about everything they do wrong. “Oh this thing, this thing, this thing, maybe they are pissed because of this..” and they tend to drive themselves up the wall. That’s one of the things we work on. So what you want to do is consider alternative explanations and options, maybe her lunch burrito didn’t agree with her, Maybe she’s very busy, rushing to fulfill a customer order or something like that and she’s just being curt like that. So combined you are considering alternative explanations and options and then you are working to also combine it with probabilistic thinking of launching and experimentation. So, you launch an experiment by approaching your boss later when she doesn’t have anything going on. When it is a quiet moment and she doesn’t have to worry about anything and you see how she behaves and then you update your beliefs based on this new information. If she is nice and friendly toward you, nothing to worry about, no need to polish your resume. It was just a situation so no need to worry about it
In general, try to find alternative evidence that would disconfirm your initial assumptions to fight the confirmation bias and many other biases that have to do with us giving into initial assumptions. Paying attention to what is right in front of us rather than something that’s more important that we can’t originally see and that’s called attentional bias and many other cognitive biases. So, it is crucial to decide in advance what kind of information would change your mind. So, if you approach her later and you assume that if she’s nice to you and talks to you as she usually does that would change your mind. For a team decision making it is especially important what would change your mind in advance because what evidence counts as good enough. You don’t want to go into a team decision making situation without having that evidence made in advance so that other people are not shifting the goal post. Decide what would change your mind, what would change their mind and consider these alternatives and then launch experiments to determine what actually is the case.
Let’s say you might be hesitant to hire someone, you as part of the decision-making committee might be hesitant to hire someone because you’re not sure she will be a great fit for this role. Take her on in a 3-month internship and decide in advance what kind of goals you would like to have to hit for her to be brought on full time. So that’s an example where you consider alternative explanations and options and that’s an alternative option the previous one was an alternative explanation and that way you succeed effectively by seeing whether she works out or not. That’s a very effective strategy, what I mentioned before about doing the merger and acquisition, launching the experiment of having a short-term collaborative project is the alternative option. That’s an alternative option to the option of immediate merger and that tends to be more effective than if you just do the merger. That initial information, that alternative option, when you get that information it will help you make a much more effective decision going forward.
One thing to keep in mind concerning alternative options is that we tend to generate many less options than we should in making decisions. This happens in all sorts of places, all sorts of problems. We tend to generate many less options then we should even in really important decisions. When you look in the news and you see the CEO has been fired and he has been at the company for less than a year. That means that the board likely did not consider nearly enough options when they were considering that CEO hire and that had one groomed CEO that they just brought on as opposed to considering alternative CEOs and that CEO didn’t work out and partially because they didn’t think about all the options, The CEO was arrogant and thought that she was the be all and end all and wouldn’t get fire and did get fired.
Skill 7: Considering Past Experiences
It really helps as a debiasing strategy, especially for the planning fallacy, when we tend to assume everything will go according to plan. Do you know a person or are you a person who tends to leave for a meeting that is 15 minutes away exactly 15 minutes in advance? Not thinking about problems like forgetting your car keys or forgetting your phone, or there being traffic, or something like that causes you to be delayed. Not great. An easy way to think about that is to think about your past experiences and see whether leaving 15 minutes in advance for a meeting that is 15 minutes away has been always effective. It’s going to be much less stressful for you if you leave 25 minutes in advance, you give yourself that room and let’s say you arrive 5 minutes early because you were delayed 5 minutes because you needed to get some gas. And that’s going to be much more effective going forward. And that works for everything. For example there was a company that I was working with that was constantly underestimating the time it would cost to do building projects. It was a building company, they were underestimating the time the previous projects took and especially at the end of the project. And so we had them work on estimating the previous construction projects and building that into new bids and new evaluations of how long a certain construction project would take and that resulted in them having much more realistic assessments. Much more realistic internal assessments of how much time a construction project would take. So that’s another example on a much bigger scale than being late.
Skill 8: Considering Future
Think about the long-term future and repeating scenarios, so this is what it leads to. Think about the long term of whatever is going on and think about repeating scenarios if this were to happen over and over. whether it is one big decision or a series of repeating scenarios.
What happened the last time you asked your colleague to help you with a report by Monday? If he agreed, did he carry out his commitment, or just avoid you for the next couple of days and then pretend that nothing happened? Did this happen more than once? Why are you asking him again? You can have a frank conversation with your colleague and say, what’s going on? I know this is a pattern, this is a problem. Let’s talk about it. If you don’t want to have that conversation, because you don’t want to have the emotional labor or having this conversation, you can just ask other colleagues and not work with this person anymore and let it slide.
This kind of evaluation of repeating scenarios can greatly improve your business relationships. Your ways of going forward into the future. A really helpful approach for long-term scenarios: what will happen in this situation in a day from now? A month from now? A year from now?
Let’s say you’re anxious about making a sales call. It’s natural to be anxious about making a sales call, most of us are anxious about making a sales call. So, you think about what will happen a day from now? You might still have some anxiety from that call, but you will have made the call, you will have succeeded. Let’s say you are making 10 sales calls and on average two of your calls get returned. So, if two of your calls are returned you get two hits out of ten calls. You are still feeling some stress the next day. What will happen a month from now? I guarantee you the stress from making the sales calls a month ago will have completely disappeared and maybe one of those people will have turned into an actual sale. What will happen a year from now. Who knows maybe that person will turn out to be one of your best clients. That’s how you think about the Day from now, month from now year from now.
Skill 9: Considering Other Viewpoints
You probably heard the saying “before you judge someone, walk a mile in their shoes.” That’s a very good saying. What you need to do is understand other people’s mental models and situational context. We tend to underestimate the extent to which other people disagree with us. We tend to think they agree with us more than they actually do. That’s called the false consensus effect. We have a false idea of a consensus between us and them. So one way to address that is the Golden Rule, treat others as you would like them to treat you. But that is not the best way of addressing it, because the way you want to be treated may not be the way that others want to be treated. For example., my wife and business partner Agnes doesn’t like surprises, I really like surprises, so at the beginning of our relationship I was surprising her a lot and she was upset and I didn’t realize why she was upset until we sat down and talked about it. It took me a while to stop trying to surprise her. It still happens occasionally when I forget that she is so different from me.
You want to try to do things that people are different from you and you want to treat them not with the golden rule but the Platinum Rule. The Platinum rule says you should treat other people the way that they want to be treated. So, figure out how other people want to be treated and treat them that way. You will get much better relationships and have much less relationship disasters in your professional life and your personal life.
Skill 10: External Perspective
When was the last time you saw two of your colleagues arguing over something minor and nonsensical perhaps lubricated by some alcohol in the evening after a post-event at a bar? It happened to me a couple of days ago. It’s a pretty common thing. Why does that happen and tend to argue about something kind of nonsensical or minor. Why does that happen? It’s because they have the inside view. They don’t look at the argument from the outside and see the argument is kind of stupid, not helpful, will cause more resentments, and will cause more frustrations. You don’t want to be that colleague. The inside view of the situation blinds us to the broader context of what is going on. What you want to do is take an external perspective. Look at the situation from the outside, the external perspective. Talk out the outside view in the context of the base rate probability, this is different sort of outside view, where you look at the external perspective on the situation and you think about what would a person who is using good judgment in this situation do? Think about it that way. This is the quickest and least reliable method; you step outside of yourself and think about what would a person with good judgment do in this situation? Another way of asking that is what would I recommend a friend do in this situation? What would you recommend a friend to do when they got an email from a subordinate telling them that a major deal would not happen? You probably would not recommend the friend to yell at the subordinate, or shout at the other party.
However, it’s usually more effective to get an external perspective from somebody else, not from yourself, if at all possible. Especially if they have the opposite tendencies that you do. So, if you have the fight response, look at someone with the flight response. If you have the optimism bias which means you think that everything will go just fine hunky dory, look for someone with the pessimism bias who is risk-averse, and things will not go well. Fortunately, my business partner Agnes fills that function for me. I tend to be very optimistic, I think everything will go well and always need to fight that so I try to when Agnes is not around or it’s something really minor, I take the external perspective on myself and I say to myself, I decrease my optimism and decrease my expectations. Probably not going to go as well as I think. But when Agnes is around or especially if it is more significant, I make sure to run it by her. Try to run it by someone you trust and who has your back and has some of the opposite tendencies that you have.
Now if this is an important question where expertise is relevant, a legal question or any other sort of question where there are specific people who have that specific expertise. Run it by that person. Have them give you their input. Very important it could be a culture consultant or a lawyer or an accountant for something like that. That external perspective really helps you fight the confirmation bias where you tend to only look for information and confirms your beliefs rather than correct information.
Skill 11: Setting a Policy
One of the easiest ways to address cognitive biases is to set a policy for yourself as an individual, a private policy or for your organization, an internal policy to address problems in various specific ways. So, take certain steps, let’s say for your organization to make sure before any significant decision to have a structured decision-making process as part of that decision. And there are going to be links linked into the episode notes to the structured decision-making process that you can make as part of this.
There are a number of structured decision-making processes that you can make whenever you start a new project whenever you want to implement a decision. You want to prepare for a product launch, you want to do an internal product evaluation, strategic plan, have a structured decision-making process as part of that, now that’s for major decisions.
For more minor decisions, something that I recommend to all my coaching and consulting clients, to just have this 5-question guide, 5-question checklist on your desk. It’s a very quick and easy effective checklist. The first question is what important information haven’t I yet considered about this question. Second questions is what dangerous judgment errors haven’t I yet addressed, the third question is What would a trusted objective external advisor suggest I do, the fourth question is How have I addressed all the ways this could fail and fifth question is what kind of information would have me change my mind.
You can have an internal policy for your organization of always having this on your desk. Or having it on a poster and/or having it on a poster in officer to make sure that people ask these questions and for yourself in your personal life. I have this in my office, my personal office, not simply my organization office, and I just use this whenever I have a decision, everyday small minor decision in front of me, like an e-mail or a project or a published article and I am thinking about things or where to submit it. Or when I am working with a client and I’m about to make a recommendation and I just use that to think about things and prevent serious problems going forward when I use that strategy. The link to get this checklist and the blog to get the checklist will be in the episode notes.
Skill 12: Making a Precommitment
A related skill involves making a precommitment, this is specifically a kind of policy but what you are doing is You are making it public. You are making a public and external policy that is something that the broader public knows or telling other people about a precommitment that you have made. So, as an example, let’s say you as a business have joined the Better Business Bureau. That means that you are precommiting to their standard code of ethics, their twenty ethics that are part of the Better Business Bureau. Or let’s say you as an individual professional are taking the pro-truth pledge at pro-truth.org. that means that you are committing to that set of 12 truth-oriented behaviors. That gives you credibility in the same way that Better Business Bureau gives you credibility for ethical business behaviors to a business. Both of those involve a public statement and with an accountability mechanism and that is a very effective strategy to make sure that you stick to that statement as opposed to going with your gut and intuitions which often cause you to take shortcuts in your ethics and morals. That’s how it happens. Ethics and morals were created because that is not the natural way we would behave if we go with our gut. Or for example you make a precommitment in a Facebook post saying I precommit to losing 20 pounds by 3 months from now or I will make a donation of $100 to the democratic party if you are republican or to the republican party If you are a democrat for example. So that’s a public statement where you are making a precommitment and you are backing it by money.
So that is another way of making a precommitment that is quite effective. So that is a really effective strategy to address any problems that you are likely to fall into when you want to engage in a short of praise-worthy behavior, but you are struggling to make sure that you commit to that behavior.
So, this is the set of 12 behaviors that I wanted to talk about. I hope that they have been helpful for you and they will be helpful for you as you integrate them into your behaviors to address the confirmation bias and over 100 other cognitive biases that cause us to make really bad decisions that result in disasters for our businesses, our relationships and our personal life, our health and so one
My goal is always to provide you with outstanding value in making good decisions and, I hope this episode did so. I hope you have gotten that value and that learning about these 12 mental skills will indeed provide you what you are looking for.
I want to hear from you. in the comments share whether it does, or it will provide you with that value What do you think about these 12 mental skills? Where might they help you at work? Where might they help you in your relationships? What about in your personal life? Share your thoughts in the comments section. Remember there will be a blog with all this information linked in the episode notes. The blog will have much further information and will go much further in depth on these 12 mental skills. This is kind of more of an overview video even though it is quite long because it is 12 skills.
Now I want you to take a look at the other blogs linked in the show notes, the five key questions, the structured decision making processes and the 30 cognitive biases that I mentioned. Click “like” if you liked this episode. Share this episode with others, people you care about, to help them avoid disasters in their personal lives, in their professional lives, their businesses. Share with others in your businesses in your organization to help the organization as a whole avoid business disasters. Make sure to click “subscribe” to avoid missing Wise Decision Maker Show episodes and follow me on social media to make sure you get not only Wise Decision Maker Show content updates, but all other content on defeating dangerous judgment errors, such as the confirmation bias and making the best decisions both my content and content I curate from others
You can learn much more in my book on defeating dangerous judgment errors and maximizing success “Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters” The best free resource I can offer is for you to sign up for my Wise Decision Maker Course which is linked in the notes.
See you on the next episode of the Wise Decision Maker Show. Until then, I wish you the wisest decisions, my friends.
Bio: An internationally-recognized thought leader known as the Disaster Avoidance Expert, Dr. Gleb Tsipursky is on a mission to protect leaders from dangerous judgment errors known as cognitive biases by developing the most effective decision-making strategies. A best-selling author, he is best known for Never Go With Your Gut: How Pioneering Leaders Make the Best Decisions and Avoid Business Disasters (Career Press, 2019), The Blindspots Between Us: How to Overcome Unconscious Cognitive Bias and Build Better Relationships (New Harbinger, 2020), and Resilience: Adapt and Plan for the New Abnormal of the COVID-19 Coronavirus Pandemic (Changemakers Books, 2020). He published over 550 articles and gave more than 450 interviews to prominent venues such as Inc. Magazine, Entrepreneur, CBS News, Time, Business Insider, Government Executive, The Chronicle of Philanthropy, Fast Company, and elsewhere. His expertise comes from over 20 years of consulting, coaching, and speaking and training as the CEO of Disaster Avoidance Experts. It also stems from over 15 years in academia as a behavioral economist and cognitive neuroscientist. Contact him at Gleb[at]DisasterAvoidanceExperts[dot]com, Twitter @gleb_tsipursky, Instagram @dr_gleb_tsipursky, LinkedIn, and register for his free Wise Decision Maker Course.