Are Your Decisions Objective?

As a part of an engagement with a client (an insurer), I walked the executive leadership team through a discussion of company strengths and weaknesses, as well as external opportunities and threats. I stood at the white board posting their answers as the discussion migrated to an assessment of the independent insurance agencies that represented them. The chief marketing officer, who is an effervescent, optimistic guy, commented that “our agents love us.” When I asked if I should add that to the list of internal strengths that had already been enumerated, he energetically said, “Yes.” Then, with a somewhat bewildered look on my face, I asked if anyone had any questions or comments to add to his point. Everyone in the room shook his/her head “no,” and we moved on to the next issue. For the next 15 minutes, I kept hoping that someone would request a return to the “our agents love us” comment. No one did. I became impatient, saw the opportunity to make a point, and seized it. Looking at the CEO, I asked, “Can we return to the comment about the esteem in which you are held by your agents?” He said, “Certainly,” but the look on his face implied, “Certainly, but I’d rather not.” I began: “You all agreed with the point that your agents love you. Correct?” The team members shook their heads in agreement. “Can I drill down a bit and ask you a few questions about that assertion?” I continued. The CEO responded tepidly, “Fine.” I took a deep breath and then launched: “Do all of your agents really love you? Do you really care if all of your agents love you? If they don’t all love you, which ones do? The ones that actually do love you, are they the ones making you money? Among those that don’t, what are you doing about it?” I continued with a few more questions, but you get the point? This team had lapsed into two of the primary miscues that undermine effective team decision-making: group-think and rushing to judgment. During our ensuing discussion, they acknowledged that facts not currently in evidence were required before asserting that “our agents love us.” The next week, the team members assembled some very specific data that led them to a different, more quantified conclusion. The bottom line (this is the “why should you give a damn” point): You may believe that you always make objective decisions based solely upon facts, but you don’t. The reason: you are human! We always, always impose subjective assessments on data when we convert it to useful information and from there, to conclusions and decisions. If you do not acknowledge that premise and then construct mechanisms to account for it, you will be in trouble. See if you recognize any of these additional causes of ineffective decision-making: • Hubris. We’re the best. We’re the smartest. We’re the Masters of the Universe (but, of course, we’re humble). • Excessive Optimism. I do believe that optimism is good. There is a difference between optimism and Polyannaism; however, I once knew a CFO I referred to as Dr. No. One time during a meeting break, Dr. No pulled me aside and asked, “You wanna know how I got so pessimistic … by financing optimists.” • Confirmation Bias. That’s when one screens out data that doesn’t support a business case or a preconception. Anyone who’s ever done a sales presentation knows all about this. I’ve also seen it applied in other areas to more chilling effect. To wit: I witnessed a group of scientists at a pharma discount a number that didn’t support a particular conclusion. I can only speculate on how often this happens when a physician has an ego investment in a diagnosis (Read Dr. Jerome Groopman’s book How Doctors Think for more on this subject). • Availability of Data. That’s a reliance on easily accessible information rather than digging deep to prove a point or make a decision. • A natural, automatic, subconscious human assumption that our world-views, beliefs, thinking and emotions are facts. We then subconsciously conclude that world-views, beliefs, thinking and emotions that contradict our own are, by definition, wrong. In Malcolm Gladwell’s book Blink, he detailed instances when intuition either supplemented or replaced analysis in successful decisions. While I believe that intuition is valuable, I recommend using it to supplement a quantified business case rather than alone or the other way around. Regardless, too many “quant-jocks” view intuition as guesswork; too many right-brainers view statistics with suspicion. As a business leader, it’s really vital that you explicitly understand how you and your team make decisions, and that you not delude yourself by ascribing an unjustifiable level of objectivity to a process that is totally human, and therefore, imperfect. The frequency with which you revisit assumptions and decisions ought to be proportional to the magnitude of the risk, the risk of failure, and the balance between intuition and facts. Copyright 2013 Rand Golletz. All rights reserved.