Six Reasons Why Managers Make Poor Decisions
- Bounded Rationality
- Satisficing
- Double-Loop Learning
- The OODA Loop and Maneuver Warfare
- Politics
- Neuroscience
Bounded Rationality
What we know and understand is often much less than we need to know and understand in order to make a good decision.
- i guess Advice Process can help
Bounded Rationality is the idea that human rationality is limited by:
- the difficulty of the problem that requires a decision
- the cognitive ability of the people making the decision
- the time available to make the decision
These constraints can push us to make sub-optimal decisions, even if we are willing to make the effort to make good decisions, which is by no means a given.
- One way to deal with large, intractable problems, is to break them down, look at the parts, and see if you can fix one of them. Once you have solved a part, you can look at the problem again, and see if you can find more parts you can solve.
- One of the simplest ways to aid decision making, and problem solving (below), is to bring in more people. This can get messy quick, if you do not have a good method to use, but if you do, you can get large groups of people to work together very smoothly.
- Awareness of ones own thought processes, and patterns of thought. For example, a manager may become aware that they are using a deterministic mode of thinking, and switch to a probabilistic mode, if that provides better insight into how to solve a problem. Lack of metacognitive skill can completely block the ability to make good decisions.
Satisficing
Most of the time, people make decisions by searching through available alternatives until they reach an acceptability threshold. At that point the decision is made, even if it does not maximize any specific objective.
Heuristic satisficing
Heuristic satisficing is what people normally use when choosing between different paths of action. It basically works like this:
- Set an aspiration level A.
- Choose the first option that meets or exceeds A.
- If the option has not satisfied A after a time, let’s call it T, then change A by an amount dA.
- Repeat until a satisfactory option is achieved.
While not entirely bad, heuristic satisficing can easily lead to poor decision making.
One of the problems with heuristic satisficing, is that the method has little or no memory. You can get into loops where you make a series of decisions that will never lead you to a good decision.
Gear Acqusition Syndrome is a heuristic satisficing variant where photographers keep buying new gear in order to become better photographers. It does not work, because the problem is lack of skill, not bad gear.
Optimization
Satisficing can lead to a slow downwards trajectory that leads an organization to a slow, painful death. If you want to avoid that, what’s the cure? First of all, set your aspiration levels higher. If you aim for the stars, you may at least hit the treetops. When you have done that, iterate!
- You will suck when you start, and that is okay! Sucking really badly at something, is a prerequisite for getting good at it.
If you want to be optimizing instead of just satisficing: set aspiration levels high; iterate to learn; carefully pick people who you want to emulate, and get new paragons as you grow; learn with others if you can; use a learning model as a mental framework for learning, but do have more than one, to keep from becoming too rigidly attached to a single one.
Double-Loop Learning
Single-Loop Learning, according to Chris Argyris.
- We have a mental model of how something works.
- Based on the mental model, we have a set of decision-making rules.
- We make decisions according to the decision-making rules, and take an action based on the decision.
- The real world responds to our action.
- We get feedback. That is, we observe the response.
- Based on the feedback, we make a new decision.
In Double-Loop Learning, the feedback does not just affect future decisions, it also affects the mental model. when the mental model changes, so does the decision-making rules.
Put simply, because many professionals are almost always successful at what they do, they rarely experience failure. And because they have rarely failed, they have never learned how to learn from failure. So whenever their single-loop learning strategies go wrong, they become defensive, screen out criticism, and put the ‘‘blame’’ on anyone and everyone but themselves. In short, their ability to learn shuts down precisely at the moment they need it the most.
The OODA Loop and Maneuver Warfare
Maneuver Warfare itself is a synthesis of multiple perspectives on strategy and warfare. So is just about any other worthwhile invention, or solution to a complex problem.
Once again: It pays off to have people with many different perspectives available. Most companies are very bad at that. Diversity programs can help a bit, but most diversity programs are not nearly diverse enough.
Politics
A very common bad faith political tactic is to overestimate the benefits of a project, and underestimate the difficulties, in order to get a go decision for a project that should not be executed at all, or turn a low priority project into a high priority project.
If an individual, or in-group, has goals that conflict with and override the goals the larger system they are a part of, and if the individual or in-group has a high degree of political skill, we get bad poltics, that is, decisions that are bad for the system as a whole.
What can we do about it?
In a political environment, you have to counter bad politics with good politics.
Some general recommendations:
- If you want to change something, it is often better to think in terms of a political campaign than a company roll-out. Be wary of one-size fits all change programs.
- Try to understand what the goals of the organization are, or depending on the situation, what they ought to be. Conversations, pen, and paper, are quite powerful tools for this. Somewhat more formally, I also use Goal Maps, from The Logical Thinking Tools. I often combine Goal Maps with Crawford Slip brainstorming, if I work with a group of people.
- Also, pay attention to key people, and various in-groups that can be allies, or enemies. Don’t forget that if you can turn an opposing force into an ally, you have both reduced the friction, and gained power.
Neuroscience
Neuroscience has a lot of interesting things to say about decision-making, but for the purposes of this article, we’ll focus on the following:
- The human brain is basically an enormously sophisticated pattern matching engine. We can think logically, but it is difficult for us to do so. Pattern matching is what we excel at.
- The human brain is designed to save energy as much as possible, and, most of the time, produce very quick results.
The result of these two properties, is that the brain uses a lazy evaluation pattern matching algorithm. This means, when it finds a pattern that matches, it usually stops searching for other patterns that match.
- In the modern world, we have a greater need for evaluating more than one pattern before making a decision. The lazy evaluation pattern matching in our heads causes a lot of problems, from anti-vaccine movements, racism, and authoritarianism, to beliefs in Cost Accounting and OKRs.
The point is that the lazy evaluation pattern matching view of how we think, provides yet another way to understand why we, too often, make poor decisions.
- It also provides some insight into how we can make better decisions:
- We need to encourage divergent, and creative thinking in organizations. To do that, we need people with different backgrounds and experiences, but we also need people with different skill sets, and different ways of processing information.
- We need methods and tools that help us think better! This means we need to learn, and train, to use those methods. Different tools lead us down different paths of thought, and action, so we need a diverse set of tools, that enable us to use different paradigms of thought.
We need more collective decision-making!