5 Biases That Can Derail Your Plans

These Biases can derail your plansHave you ever found yourself near work and realize that it is Saturday and out of habit you were mindlessly headed there? Or have you “been on a roll” when everything just seems to be going right say, in Vegas or with your favorite team or winning all those deals? Or your significant other or a friend starts telling about an problem they have and you immediately “know” the solution since that “same thing” happened to you?

In each of these situations you are making biased decisions.

5 Biases That Can Derail Your Plans

Here are 5 biases that creep into decision making…and that includes decisions made by successful leaders in successful companies.

1. Overconfidence. Senior leaders are more apt than others to be overconfident regarding their own judgment and capabilities. It makes sense. They needed to be confident in themselves and take charge in order to get to this position. However, that overconfidence can lead to poor decisions and results if contrary or alternative information is ignored or downplayed. Turbulence and crisis will exacerbate this bias. Watch out. Ask for contrary input.
2. Anchoring. There is a strong tendency to base a future decision on past or recent results. This frequently happens with budgets and sales forecasts. The previous numbers tend to act as an “anchoring” point that influences the forecast. In a study, students were asked the last 3 digits of their phone number. For example “851”. Then they were asked if Attila the Hun was defeated before or after 851 AD? The correct year is 451. And then asked, “What specific year?” It was found that their unrelated telephone number biased the year they chose. The lower the telephone number, the lower the estimate. It acted as an anchor. Whether it be pricing, sales estimates or even salary increases try coming at it from a totally different perspective. It may give you a better decision. At a minimum it will test your assumptions.
3. Comparing, analogies and metaphors. A common bias happens when we compare a current situation, problem or opportunity with one from our past. From that point we tend to notice all the things that are similar and we subconsciously ignore or down play anything that contradicts that belief. It is similar if we use an analogy, metaphor or model. There is a tendency to justify any deviations we encounter and to look for similarities. Those who point out non conformances are ignored or worse, called “naysayers” or “pessimists”. Typically no situation is truly like another. Typically it is only when something significant goes wrong that we step back and re-evaluate the situation. Make sure you or some one else look for the inconsistencies.
4. Sunk cost. Have you ever thought or said, “We’ve spent all this money and time we need to make this work” and keep following the same path? This is the bias of “sunk cost”, or some call it “throwing good money after bad”. It happens particularly when it is your “baby”. It is tough to admit you may have been wrong and have “wasted” money on a project. However great leaders recognize the wisdom of recognizing when it is time to redirect a project. Think of it this way. If you had just inherited this job what would you do? Just think, if you don’t do it, your replacement will.
5. Group think. This happens particularly when a group has worked together for a while. Unwritten and unspoken rules get adopted. “That’s how we do things around here.” There is a tendency to start thinking alike and not really challenging the common view. It is your role to make sure ideas are challenged, discussed and evaluated, and it is acceptable to have a different perspective. Of course once the decision is made then everyone must commit to it.

One of the best ways of not committing any of these biases is to be aware of their potential and make sure when decisions are being evaluated that you encourage alternative views.

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