Are you often surprised at how hard it can be to make some decisions and easy to make others? And it’s not always the significant decisions that are the hardest right? Unable to decide what to have for dinner, but found it a piece of cake earlier (not a good dinner choice by the way) to decide which candidate you’re going to offer the job to?
Neuroscience proposes that decision making use multiple regions of our brain and, that there are decision making networks within our brains that compete with each other. Daniel Kahneman, a Nobel Prize winning psychologist, defined two decision making systems. System 1 thinking is automatic, fast and intuitive. What you might call a “gut reaction” or a “snap decision” and relies on non-conscious processes (mental shortcuts), which means it takes up less of our brain’s energy than System 2. System 2 is slow, controlled and effortful, requiring deeper thinking. Switching between these two systems we can come to different conclusions on what we should do.
For example, imagine every morning on your way to work you pass the same café and stop to order a flat white and avocado on multi-grain toast to go. System 1 decision making – automatic, unconscious and requires little energy. However, one morning you decide to stop in and eat breakfast at the café with a colleague. Should you sit near the window, or away from the door? You look at the menu; so many options, maybe you’ll have an omelette, or should you go for the healthy bircher muesli instead? Those pancakes look delicious, but you’re trying to avoid sugar. Will you have your coffee before, after or with your meal? What’s your colleague having? Now the decision making process is no longer automatic and unconscious, you’re switching to System 2, thinking more deeply about it. When the server arrives you automatically order “avocado on multi-grain toast with a flat white thanks”. System 1 kicked in.
System 1 is helpful as we don’t have the capacity to make unlimited System 2 decisions. Eating the same breakfast every day means one less decision to be made each morning. Relying on non-conscious processes – past experiences, emotions and filters, System 1 is less taxing on our brains and allows us to automate much of our thinking (such as buying the same brand of milk or getting the same bus home every day)*. However non-conscious processes can be a disadvantage when making significant decisions that require deeper consideration.
Being aware of the factors that can impact thinking is helpful, not only in understanding our own decision making processes, but also in understanding how, or why, our employees, colleagues, prospects and clients make decisions.
To start with, to make good decisions our brain needs to be at its optimum, with the pre-frontal cortex functioning well. There is truth in the saying that you shouldn’t make decisions on an empty stomach (or when thirsty or tired). Scheduling a meeting with your team where an important decision needs to be considered? Don’t scheduled it to run through the team’s usual lunchtime and expect everyone in the room to be fully focused and contributing.
Next, we’re naturally inclined to move away from negatives faster than we move towards positives. This is evolutionary; knowing immediately that the tiger was dangerous kept you alive, knowing that following bees would lead to honey wasn’t as imperative. Negative information (threats) tend to be more motivating than positive information (rewards) when it comes to making decisions. For instance, a business owner may be more motivated to implement a new product that will mitigate the loss of $100,000 from their business, than they would be to implement a product that will deliver an additional $100,000 in revenue. Losing $100,000 feels more painful than gaining $100,000 feels good. Loss aversion impacts decision making.
Likewise, letting go of something is painful. We don’t like to let go of an investment, an employee, a friendship or those jeans we’ll never fit into, because we’ve already invested a lot of time, money or effort. For example, “We’ve spent 2 years trying to get this process to work, we’ve invested too much to switch to a new (better) process now”. This is the “sunk cost fallacy”, feelings of regret or loss, that hold people back from making a change for the better.
Whilst Warren Buffett advises “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”, our brains need convincing that the gain of change is greater than the pain of loss.
And when it comes to rewards, our brains prefer those that are more immediate. Imagine two companies are bidding for a piece of business with both offering a solution that will cost the client the same amount. Company A’s solution will deliver $50,000 in productivity savings over 12 months, Company B’s will deliver $80,000 over the same period. Company A offers a sign on bonus of $20,000. The client selects Company A. Why, when Company B is offering more savings? Things that are closer are more attractive. If you cannot make the reward more immediate, you may need to work harder convincing the client of the more distant reward.
The way we see the world, and therefore the (mostly unconscious) filters through which we make decisions, is formed based on our past experiences. No two brains, and therefore no two world views, are exactly the same. Neuroscientists refer to these filters as biases with more than 150 types of biases identified to date.
Here are just two examples of biases that can unconsciously influence decisions:
- Confirmation bias – when we look for evidence that supports our viewpoint and ignore evidence that doesn’t. Such as only reading news sources that align with our views or validating ideas with colleagues that think like us, rather than seeking out someone with a different perspective.
- In-group bias – preferring people who are similar to us. Like unconsciously hiring a person with a similar background and personality to us, or our existing team, because it feels comfortable, rather than looking for a person with a different background who will bring alternative thinking and viewpoints. Or instinctively preferring the pitch from the sales person who went to the same school as you.
As well as biases, when making major decisions there can be multiple, often hidden, agendas to consider – agendas held by those making the decisions as well as the people impacted by these decisions. If you’re helping others to make decisions, take time to build an understanding of their drivers – what they will gain from certain decisions, to determine how you can help them to make clearer ones.
Likewise, do you have agendas yourself, that you’re not aware of, that are influencing your decisions? Imagine you’re making the decision for someone else, does that change your perspective?
Finally, if you are wanting others to make decisions, remember our brain can only handle a limited number of them. If you’re a sales person – more is less; more choices, can mean less ability to decide. Providing a client with an overwhelming number of options translates to an overwhelming number of decisions to make. Sometimes the response to too many decisions is to make no decision at all.
* There are numerous articles to be found on successful people automating day to day decisions to leave more mental capacity for creative thinking. For example, wearing the same outfit each day; think Steve Jobs’ black turtleneck, jeans and sneakers, Mark Zuckerberg’s grey t-shirts or President Obama’s dark suit and white dress shirt.
Would you like help understanding your clients better, building stronger relationships, delivering greater value and/or building on your team’s account management skills? Or, looking for coaching to facilitate positive change through improved thinking? If so, contact me for a confidential conversation about how I can help.
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