Decision Making - The human view to success in learning from past mistakes

I had learned something very important about human behavior - Most of the time, if not at every time, people do what they do just because it makes sense to then that that action is correct.

Do you really think that someone is taking a decision just because he/she is looking for hurt you?, If you are pretty sure of that, please report him/her, but do something immediately!!!!

But back to the topic.... for you..... What is a bad decision?.... it is based just in the outcome? or It is needed to check the decision making process in order to classify the decision.

Most of us do not have an predefined strategy, rational or method to take decisions!!!!

Accept it!!!!..... Most decision end up being a shoot blindfolded

We go with our gut most of the time, sometimes We use a basic decision making tool but admite it, if We do that We are freaks...jaja

Do you really understand Why you reach the conclusions you do?

RESULTING (OUTCOME BIAS) - Our way of life to deal with decision making

Let me tell you two simple but opposing stories (any resemblance to reality is mere coincidence):

STORY 1: Last Monday I needed to get to the convention center at 9:00 a.m., I look at the highway, is full, terrible trafic, I decide to open the Waze app to look for the fastest way to take. Waze recommended to take the paid highway, so I proceeded this path but an accident in the road cause I get the convention center at 9:30 a.m.

STORY 2: Last Monday I needed to get to the convention center at 9:00 a.m., I took advantage of my experience in the town and decide to go crossing the neighborhood, the trafic, terrible, sure, but I get the convention center at 8:55 a.m., just 5 minutes before my event

Question for you?

Which was a GOOD decision?

Which was a BAD decision?

Take a good insight: Normally We focus only in the result not in the process that led us to that result... Not?

Focusing solely on results can lead to a misguided assessment of the desicion quality

Psychologists call RESULTING or OUTCOME BIAS when you use just the result to evaluate the quality of a decision making.

The main issue on this is:

• When the outcome is GOOD, normally We believe deeply that this result was because of our good decision making process (We are the one, We are God!!!!)
• When the outcome is BAD, normally We blamed the luck (Bad luck!!!) - Becasue our culture has taught us that "Taking a BAD desicion is BAD, very BAD, We cannot be the cause of that!!!!)

Remember the brutal fact:

Any outcome from a decision making has contribution from both: The desicion making process itself and the luck

So, focusing only in the outcome led us to understimate the role of both factors. Or Do you think I take the paid highway because I was sure that the accident will happen?

Every decision has a range of possible outcomes: Good, Bad, ugly or anything between!!!!

But: Is the Resulting bad?.... again do not focus on the symthoms look for the real problem

Which is the real problem? As you do not understand how you reach the outcome then in the future I expect you repeat the same faulties.

If you think that as you do not crash the car when you driving drunk, then We took a GOOD decision ... my friend.. sincerely... something is wrong with the screws into your brain!!!!

With the previous example you can realize that Resulting affects the way We view the world.. remember the initial main issue We stated:

• Something results bad then "Hey, you suck to take decision"
• Something results good.... "Hey We are God taking decision" (Even if We know that were some factors out of our control that led to that result)

We tend to assign labels over the people based on results of decision taking without deeply understand what really happened

Unless you be masochistic, I do not really believe that We enjoy when other people blame you because something that was not under your control!!!!!

So, Resulting can damage relationships... something that can lead to other bigger problems!!!

HINDSIGHT BIAS - The path of the Mediocre

How many times had you ear something like in the pic?.. People who say phrases like this appear as wise men but your feet on the ground...

It is easy to become retroactively omniscient when We just revise our knowledge of the recent past once We know the outcome

It is a fallacy, misremembering the facts afte the outcome occurs confuse us on how the decision was made and then We cannot learn from that decision in this way.

Hindsight bias (Or Creeping determinism) is as Psychologists named when We convince ourselves that an outcome was obvious or predictible

Don′t be silly!!!... nobody knows everything even during decision making!

But then... Why the hindsight bias occurs? It is very simple....

COGNITION: At any moment We receive stimuli from outside (Light, sounds, textures, odors, ect.) and immediately our brain mix this stimuli with memories and data stored creating a "internal interpretation" of what happend around us

Hindsight bias distorts our "internal view of the world" by inserting the new data we gained after learning the result, reconstructing the narrative that creates and supports the fallacy that makes this single outcome predestined, and all other possible outcomes just "impossible dreams".

Use the Knowledge tracker to reduce the hindsight bias. It works this way:

• Before finalizing the decision: Write down the knowledge and beliefs (Relevent data and circumstantial information) that support Why We must take that decision.
• Take the decision and get the outcome
• After the outcome has played out, write down all the new information received
• Compare the before-and-after knowledge and identify the missed information, and define how much the outcome was due to actual decision

Remember: Practice makes the master!!! After doing this with many decision We will learn to identify easily the hindsight bias and learn how to deal with it

ELICIT SUFFICIENT DATA

Did you get a bad outcome and then you feel sorry and guilty?... Please, do not think you are special... jajajaj (How cruel I am)... A lot of people do it

Please put into your mind this: It is impossible to change the past... Once it is done, it is done!!!!

But here it is the main point: We need to look to the past in order to learn (We do not learn from thinks that have not happen): If you wanna understand your decision and honny your decision-making skills then you need to turn your head and look to the past!!!

And worst of all: We cannot make the assessment just using one single decision, We need to examine multiple decisions and outcomes...

Some recommendation about how We create a useful feedback from decision assessment?.... yes, sure, this is the intention of this article.... so, there We go:

• Accumulate information from multiple decisions
• Compare this information with related decisions and potential outcomes - real or imagined

Think statistically:

The president made a survey only questioning people from 60- more years old (Who were benefit from goverment bonuses) and conclude that "This is the more compassionate goverment"

Why not believe on this?..... data gathered from field supports that conclusion.. not?

Quality of our data retrieved will influence quality of our assessment... never forget it

But here is a problem!!!!.....Most of our decisions are not repeated in sufficient frequency to reach the critical mass needed for statistical assessment. It is not productive and We do not have enough time to repeat and repeat decisions without sense...so What We can do?

Easy (I think)... use your imagination to think other potential hypothetical what-if scenarios (Counterfactual thinking as psychologists say)

Example story:

You are attending a every-3-months Quality Management Review (QMR) Meeting, where you review the Key Performance Quality indicators. We can reflect on the few previous meetings We have already had and compare them with imagined QMRs, asking for example

• What questions about the metrics would be difficult to answer?
• Is there something We do not want the attendees to discuss?
• If so, how should We respond?

The more answers, questions and scenarios We imagine, the more We can pull from data to prepare the following QMR and the more We are able to put our best foot forward for a better QMR outcome.

DIVIDE AND CONQUER

It is true... If We try to deal with a big and complex problem at one time, this is the announcement of an early death!!!... So, what can you do?.... Divide and conquer!!!!

For major life decision just break it down into six manageable steps to arrive at a choice taht best suits your values and goals.

Example: You need to decide to buy an additional machine, and you have two options:

• Option 1: New machine, with state-of-the-art technology, requiring a new instalation for power supply (220 volts) and intensive training for operators in order to understand the new human-machine interfase (HMI), start-up of the new machine require additional assessment of computerized systems regulations and has a cost of 100,000 USD
• Option 2: Refurbished machine, with technology and human-machine interfase (HMI) equal to those in the current lines, so the need for training / qualification of the operator is minimun, as well as the current power supply do not need to be updated, and computerized systems regulation is not applicable. Cost is 65,000 USD

FIRST STEP: For the decision to be taken, come up with realistic selection of potential oucomes for each consideration from options

• Option 1 - Consideration - Buy the new machine, potential outcomes

1. Defective rate increase because operators do not understand the new HMI
2. Operation′s stops reduce because new machine has not deterioration from use
3. Additional "maintenance" activities (As audit trail periodical review) consuming resources, in order to maintain the compliance level of the machine.

NOTE: All these outcomes are realistic

• Perform the same with the option 2 and all other considerations coming from option 1

SECOND STEP: For each outcome identify the positive (upsides) and negative (downside) payoffs based on your values and goals (Unique to you)

THIRD STEP: Determine the likelihood of each outcome. How frequent are the operators reluctant to new technology?

FOURTH STEP: Compare the probability of each outcome you like with those you dislike

FIFTH STEP: Repeat each previous steps for all other considerations

SIXTH STEP: Compare the preferences, payoffs and probabilities of each option before reaching the final decision.

We do not have control over luck but We control what We know

THE POWER OF UNCERTAINTY AND QUARANTINE YOUR BELIEFS

You are looking for answers, in order to gather more information to take your decision you need to survey some topics. You are thinking in use one out of two approches for the survey:

• You can present yourself as a person who understands the subject, without uncertainty, just asking for feedback about your ideas.
• You can present yourself as a curious person, how has uncertainty about the subject and is looking for more information in order to take the desicion

Do you think in both cases you will get a feedback / elicitation of information with the same quality? (Remember, quality of decision is directly related to quality of the baseline information used to take the decision

The answer, for sure, is not, both approaches will outcome different.

The first option can intimidate the interviewee causing this person only express fact that supports your position or, in the oppositive case, if you are not liking to him/her, only fact that attack your position.... in both escenarios, the information retrieved is not useful.

The secund option, you can reflect your desire to learn and give confidence to the other one that he/she, at least for you, is a reliable source of information. Definitively in this escenario, you will find usable information.

Remenber the gerarchy of questions in order to correctly elicit information:

• Start always with open questions: Let the freedom to the other people to express their thoughts
• If you want to confirm something use closed questions: Be careful, closed questions can redirect the conversation causing bias, you must ensure the direction of the conversation remains open, and closed question just to clarify...i.e. the interviewee refers that possibly the door was open during the problem... you can confirm this point but avoid the conversation goes to the "door as the only root case"
• if you think the conversation must go deeply in a specific topic (Remember, divide and conquer) use the estrategy of "questioning until the end" but maintaining the openess of the conversation.

The main point is that how you present your information plays a critical role in wether a decision is sucessful or not.

If your goal is being confident (No matter your uncertainty) and no learn any new information, just confirming the current one, then stick to your confident position and to vague terms that can be easily misinterpreted (I think that.... It could be... more likely than not...)

If, on the other hand, your goal is to elicit helpful feedback and find gaps in your information, show more uncertainty, express this uncertainty in a numerical range (With an upper and lower constraint based in the shock test: If you′d be shocked when the outcome ended up of this range, then the range is correctly seted)

People are more likely to offer helpful information when they detect uncertainty, but are less likely to weigh in if you seem completely sure.

And remember - All us are humans, and for humans an important topics to keep in mind is relationships (We desire to avoid conflict, disagreement, embarrassment forbeing wrong or out of kindness)... but sometimes We weight more the relationships than the criticality of our desicion, so Wwe try to play down our obsessions and opinions to be a little less at odds with our friend′s scathing view

When We ask for someone′s advice but reveal your own stance first, it increases the chances that your opinion will parroted back to you in some form; If you wanna to know what someone else would′ve done in your situation with the same information, please, don′t tell them the outcome. The only information they need to express their opinion is what you knew when you made the decision; nothing more.

Avoid infecting others with your contagious opinion!!!!

This is known as FRAMING EFFECT.... a cognitive bias caused when the order of introduction of information influences the way We, the recipient, interpret and judge that information

But... How can I avoid the framing effect when We are in a multiple people session and We ask to all them to express their opinion infront all the othem attendees?....

Easy... use a anonimity!!!!!....ask each member to write down their thoughts without stating their names and then read them aloud. Remember, you as meeting owner most ensure all thoughts has the same weight at the begining... at this point the intention is gather the more ideas We can, not weight the ideas or take the desición (That will occur later)

MY VIEW (INSIDE) VS YOUR VIEW (OUTSIDE)

Cognition creates our world... Our conception of world is a middle point between the real outside world and our internal world. Never, never believe that your point of viewe is the correct.

Someone is presenting a report for your approval... this report is presented every month, and each month you return the same corrections (Calculation errors, use of ambiguous wording, etc.)...you ask your colleague "Why you fall again and again in the same issues"... She/he only says that is time pressure, multitasking,etc., for sure you, the boss, are sure that there is more in her/his control than she/he appreciate.

Does this mean that you know everithing and she/he knows nothing?

Please, answer not!!!.... from outside the perspective of others, it is easier to see patterns they are missing

That does not mean than you be more intelligent or wise, just you are not blocked by the same cognition or under the same pressure. Be compassionate.

but, it is impossible for us to avoid the "inside bias"? No... We can improve our pattern recognition skills.... just become familiar with two perspectives: The outside and inside view

• Inside: World according with your perspective, intuition and beliefs, the world of our own eyes
• Outside: It is everything out of inside view, I mean "The world as others perceive it.

It is much more easy to pick at someone else′s faults that admit our own

Our identity is a depended variable "Y" linked to many other independent or interdependent variables "Xs", one of then is the beliefs. Then not surprise that We avoid to questioning our beliefs, anything that question them might undermine our sense of self.... then We try to reject the outside view.

Use the perspective tracker to get the ouside view into your consideration and harmonizing the differences between inside and outside views

After this tool... did your perspective change? Do you find the intersectation between outside and inside views? Why or Why not?

The more you practice the more you will able to recognize that patterns that you share with others and which come from inside you. Use this information to broad your perspective and change your beliefs.

TIME VAMPIRES AND HOW AVOID THEM

Some statistical data that will surprise you about average people:

• 150 minutes / week: Deciding what to eat
• 50 minutes / week: Deciding what to watch in Netflix
• 115 minutes / week: Deciding what to wear

In summary, between 250 and 275 hours/year making repetitive, somewhat inconsequential decision - This is analysis paralysis: A lot of choices leading to unnecessarily tedious decision-making. They are vampires of our time

But remember, at the end, the time never will back to you, what is done is done!!!!...and the problem is that in this situation the time for real critical decisions is reduced causing stresss... and stress is not good

By design stress is a baseline reaction from ancient times that animals use to focus resources in survival.... It stop using energy in non critical functions (i.e. tissue recovery, immune defense, etc.) to focus on those used for survival (i.e. run, fight, etc.)

How can We use our decision time more effectively?

Step one: Determine if the decision is high-impact (long-term effects, positive or negative, on your happiness one year later). If YES, continue using the six-steps break down method described previouslu. If NOT, do not spend time in this decision, just do it.

Can I do something with the low-impact desicions in order to be more rewarding?... Yes, you do!!!!

For sure most of the time is not possible to avoid that low-impact decisions but what happend if you explore the different options and outcomes from these decisions? (i.e. choosing different items in the menu)... bringing variety to our lives can be rewarding, but not spend large time in making the choise.

Some of these low-impact decisions have few drawbacks but plentiful benefits (They are freerolls): Nothing to lose

Remember: taking decision is a wait to learn what works and what does not. Try and tray again and again, you will learn more and more. This information coming from low-impact fast desicion is going to narture the quality for high-impact decision.

POSITIVE THINKING VS NEGATIVE THINKING - Mental Contrasting

If you can imagine success, you will find it more easily.... mmmm.... is rewarding for the soul but the oppositive is closer to the thruth.. negative thinking can help us too to reach the results....

Imagining hypothetical reasons for failure (mental contrasting) allow us to understand the barriers We can find in our road, and if We use this information to set mitigation actions this will increase the likelihood of success (more than if We visualize themselves having no issues reaching our goals)

Use prospective hindsight: Imagine your self at some point in the future (i.e. two months in the future, or just enough time for your decision to generate effects) - look at the hypethetical experience and comtemplate why it suceeded or failed, and use the information gained to take the decision at this time.

But the other side of the timeline is useful too....generate reasons for why a particular goal fails before it even begins (Premorten assessment), this allow you to sidestep anticipated pitfalls the first time you address the decision (And no wait from first experience to take action).

THE ONLY-OPTION TEST

Next time you are scrolling in several options, up to your neck in a pool of indecision, ask your sell:

If this option were the only coice available, would I be allright with that?

This is useful for those low-impact decisions, because by narrowing down endless options into a single question, We can beat the dilly-dallying and move on to the next decision

SUMMARY

If you wanna make great quality decision, regardless the possitive or negative outcome, then remeber:

• Behavior 1: Remove your reliance on resulting
• Behavior 2: Practice the knowledge tracker in all decisions
• Behavior 3: Practice counterfactual thinking in order to get critical mass for enough data to assess the decision making.
• Behavior 4: Use the six-steps break down method to take the final decision.
• Behavior 5: Use your uncertainty to get more useful information and quarantine your beliefs to avoid the framing effect
• Behavior 6: Use the perspective tracker to harmonize the inside and outside view
• Behavior 7: Embrace the negative thinking
• Behavior 8: Practice Mental contrasting and prospective hindsight and premortem assessment

BIBLIOGRAPHY

For more details look for the book "HOW TO DECIDE: Simple Tools for Making Better Choices" from Annie Duke