The false dilemma in business

Part of series on Better Decisions For Entrepreneurs

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I once met Professor Yunus , the “banker to the poor” and founder of Grameen Bank, in person and got to chatting.

?That wasn't hard given how active the Nobel Laureate has been in attending events and conferences on social entrepreneurship for many decades. What was special for me was one thing he said that stood out (paraphrazing):

?If you want to be a social entrepreneur, find a social ill that you want to cure, but also find a way to make money. Don’t rely on donations and sponsors, be self-sustainable. Make it work as a business. Be a business person AND a person with a social mission. Be both.

Much like we do about many things in life, we tend to think in a binary way about profitability and social missions. We think it’s either the one or the other. But that’s a false dilemma.

False dilemma (aka binary bias)

?People tend to simplify complex issues by viewing them in binary terms—such as good vs. bad, right vs. wrong, or true vs. false. For example, we may ask,

• ?Is dark cocoa healthy or unhealthy? But there are no healthy vs. unhealthy foods, since foods exist on a spectrum of nutritional value, and individual dietary needs vary based on health conditions, lifestyle, and personal preferences!
• ?Are you a believer or a denier of climate change? But a range of opinions exist regarding the extent of human impact, best mitigation strategies, and adaptation methods.

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So what?

When we think in binary terms we ignore the nuances that characterize a situation in full, and the spectrum of possibilities in between. We oversimplify situations, reducing them to two mutually exclusive categories and thus we fail to consider any intermediate positions.

?Binary bias makes things easier to “understand”. But it takes a toll on the quality of our thinking and our creativity in coming up with effective and innovative solutions to problems. For me, it’s one of the main determinants of success, however you may measure success.

?In entrepreneurship and business, just like there are no healthy vs. unhealthy foods, it’s not about a choice of socially-responsible or profitable. You need to be both simultaneously or else chances are you’ll fail to be either.

?Now, that’s much harder said than done. But it’s not impossible.

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Now what? Being both

?If you’ve ever been to a Barcelonian supermarket, you may have noticed this distinct yoghurt brand.

La Fageda is a dairy cooperative based in Catalonia, Spain. It was founded in 1982 by Cristóbal Colón with the mission of providing meaningful employment to people with intellectual disabilities and severe mental illnesses.

What do they produce? A range of high-quality dairy products, including yogurts, desserts, and ice creams, which are well-regarded in the market.

?How do they do it? La Fageda primarily employs individuals with intellectual disabilities and mental illnesses, integrating them into the workforce and providing them with dignified employment opportunities. Employees are involved in various stages of dairy production, from taking care of the cows to producing and packaging yogurt and other dairy products. To support them in their duties, the cooperative also offers comprehensive support services, including psychological counseling, social services, and occupational therapy. At a community level, they work closely with businesses, schools, and organizations in the Garrotxa region to promote social inclusion and raise awareness about mental health issues.

What can social entrepreneurs learn from them? La Fageda has successfully demonstrated that a business can be profitable while fulfilling a social mission. It provides stable jobs to over 200 people with disabilities and has created a replicable model of social entrepreneurship that balances economic viability with social impact.

What can all entrepreneurs learn from them? Their unique approach to entrepreneurship highlights the potential for businesses to be profitable while driving positive change by prioritizing the well-being of their employees and customers. By making responsible decisions not just for today but also for tomorrow, taking into account the far-reaching impacts of the way they choose to operate.

Responsible decision-making is a central pillar at Center for Behavioral Decisions , as Aram Ghazaryan, founder and CEO of the Center tell us. Read below for the full interview

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Featuring Aram Ghazaryan, PhD

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Please tell us a bit about your professional journey and what got you interested in decision-making in the first place.

My journey into the world of decision and behavioral science has been a fascinating and enriching experience, driven by a lifelong curiosity about human behavior and the intricacies of decision-making processes. From a young age, I was intrigued by the patterns and predictability, or at times the unpredictability, of human actions and decisions. This curiosity led me to delve into the realms of mathematics and economics, where I pursued a bachelor's degree in Math and a master's degree in Economics. 

However, it was the interdisciplinary field of decision theory that truly captivated me, blending mathematics, economics, and psychology to explore and mathematically model the decision-making process. Pursuing my Ph.D. at the University of Turin, Italy, I immersed myself in theoretical research that went beyond the scope of conventional economics. My focus was on axiomatizing and mathematically modeling various types of behaviors, diving deep into the nuances of human decision-making. 

This theoretical journey was not just an academic pursuit; it was the foundation upon which I established the Center for Behavioral Decisions. This research and consulting company is a manifestation of my ambition to bridge theoretical knowledge with practical applications. At the Center, we are dedicated to applying behavioral scientific methodologies to unravel and address the complex business challenges of our clients. Our mission is to translate the intricate theories of decision-making into tangible, effective strategies that empower organizations to navigate the dynamic landscape of business with insight and foresight. 

Thus, my professional journey is a testament to the power of curiosity and the drive to understand the depths of human behavior and decision-making, and to apply these insights in a way that fosters growth, innovation, and success in the business world and not only.        

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How would you describe “behavioral decision-making” and how important do you think it is?

?The concept of "behavioral decision-making" is indeed a captivating one, especially considering its evolution and increasing significance in various fields. When I established the Center for Behavioral Decisions, the term "behavioral decision-making" wasn't as widely recognized or utilized as the more traditional concepts of rational or irrational decision-making. However, its relevance and application have grown remarkably over time. 

Behavioral decision-making encompasses the entire spectrum of decisions that we, as humans, make. It's a broad and inclusive term that covers not just what we typically perceive as rational or irrational decisions, but all kinds of decision-making processes and behaviors. In this context, even rational decisions are a subset of behavioral decisions, where the decision-maker's behavior adheres to certain assumptions of rationality. 

Understanding behavioral decision-making is crucial for the development of any product, service, or strategy that involves human interaction. This is because it allows us to consider a wide range of human behaviors and decision-making  processes. By studying how people make decisions, what influences these decisions, and the patterns that emerge, we can design more effective, intuitive, and user-friendly solutions that align closely with human behavior and preferences. 

Therefore, the importance of behavioral decision-making lies in its comprehensive approach to understanding human actions. It bridges the gap between theoretical economic models of decision-making and the real-world scenarios where decisions are rarely made in a vacuum but are influenced by a multitude of factors, including emotions, biases, social influences, and environmental contexts. In essence, embracing the study of behavioral decision-making equips us with the tools and insights to create more impactful, human-centric strategies and solutions in a wide array of domains.        

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In your experience, if there was one thing you would change about how decisions are made in organizations today, what would that be?

If I were to pinpoint one area for improvement in how decisions are made in organizations, it would be to enhance the level of responsibility with which these decisions are approached. Many organizations lack a comprehensive understanding of the far-reaching impacts of their choices. Elevating the sense of responsibility in decision-making processes is crucial to ensure that every decision, big or small, aligns with ethical standards and long-term organizational goals.        

Are there some character qualities that, in your opinion, are more common for good decision-makers?

Analytical mindset!        

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What are some of the tools/ processes that you (or your team) use to help get at good decisions?

To make good decisions, it's crucial to gather as much relevant information as possible and to have strong analytical skills for choosing the best option among alternatives. One of the key processes we use is brainstorming, which proves to be highly effective. However, the success of brainstorming significantly depends on selecting the right mix of people, ensuring a diverse and capable group that can contribute effectively to the decision-making process.        

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Do you think there is value in people learning more about how to make good decisions as students or in the very early stages of their career?

Absolutely, there is immense value in individuals learning about effective decision-making early in their education and career. These formative stages are critical for developing foundational skills that shape future professional and personal paths. Acquiring decision-making skills during these early phases empowers young individuals to navigate complex situations, assess options critically, and make informed choices.        

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What advice would you give to young professionals for becoming better decision-makers?

Embrace the power of decision-making with a sense of ownership and courage. Recognize that decision-making is an art refined through experience, a skill not always fully acquired through formal education. It's essential to dive into the process of making significant decisions, embracing each as a valuable learning opportunity. Crucially, own these decisions with confidence. Understand that each choice you make, and the responsibility you accept for its outcomes, is a fundamental step in your journey towards becoming a seasoned decisionmaker. 

This approach not only builds your skill set but also fortifies your professional character, preparing you for the complex challenges of the modern workplace. So, step forward boldly, make those pivotal decisions, learn from them, and watch as your decision-making abilities flourish with time and practice.        

Question for you

What’s a binary thought that's keeping you behind?

Thanks for reading!

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