In uncertain times we rely on our judgement to make ‘good’ decisions for ourselves, our organisations and our stakeholders. Very few of the decisions we make are binary. Navigating ambiguity comes more easily to those who tolerate uncertainty. For everyone, the activity requires energy.
Individually, our habits and experiences impact what we notice and how we decide. To audit the quality of our decision making, we are advised to consider our behaviour and associated biases. This simple health check could be your starting point:
What information do we use to inform our decisions?
We create effective board intelligence processes but find that establishing what is good data and what is noise can be challenging. Common habits such as the tendency to ignore statistical evidence (Base rate neglect) and the mechanistic default to focus on easily obtained data (Availability bias) impact the quality of our decision making. A failure to ask probing questions to enable consideration of a range of options can result in partial, filtered board intelligence.
Boards are advised to ensure that they think carefully about the nature and scope of the questions they need the business to answer.
Whose opinions and perceptions influence our thinking?
An invisible board habit of deferring to the most powerful person in the room and attributing weight to their words in the absence of evidence, is often present during board decision making (Anchoring and Authority bias). Our challenge is to check whether undue influence is being exerted by individual(s) with more authority/ power than us. We must be prepared to challenge statements to establish the intelligence on which others have based their opinions.
Other habits which draw us towards specific sources include our desire to create certainty where none exists and the inclination to filter out sources that disagree with our hypothesis (Confirmation bias). We like to belong to tribes and may want to fit in with the majority view, joining the bandwagon (Social Proof). However, most popular is not better or best and viral news can be false.
Boards are advised to create cognitive diversity in their decision-making forums. When participants are encouraged to constructively challenge and express their alternative views, the quality of decision making improves.
How much does our experience hardwire our choices?
Our intuition may lead us to advocate or defend decisions and actions despite the absence of evidence. Just because it worked for us before, does not mean it will this time. Our belief that because we have already invested resources we must continue with an initiative, may be flawed (Sunk cost fallacy). We believe we are adept at predicting the future and our arrogance can cause us to take uncalculated risks (Hindsight bias). If the experts we have invited to contribute have provided what we want to hear, then they reinforce our own views of what we think we know (Overconfidence effect).
Board members are advised to make a record of their experience and predictions in order to have a basis for reviewing their accuracy.