The global economic crisis was created, at least in part, by a tremendous number of bad decisions. Most of these fateful judgments were made by smart, professional people. A few were the result of incredible greed and short-term thinking. But for the most part, the folks making these terrible decisions were intelligent and well-intentioned.
How did this happen, and what can you do to make better decisions?
Know the data and what it really means. If you’re basing your decision on facts, make sure you understand them, and that you also know the limitations of the data. If you’re leaning toward one option, seek out metrics that would contraindicate that path. Beware of glossing over facts and figures in order to justify your decision.
Don’t blindly trust the expert. A recent article summarized research on what happens when we receive expert financial advice. Brain scans showed that when the subjects heard that the person was an “expert,” brain activity in the decision-making areas of the brain virtually turned off. Instead of thinking for themselves, test subjects made bad decisions based on bad advice.
Recognize the role of emotions. A different study shows that emotions do play a role in decision-making, even when we think we’re making rational decisions. Emotion centers in the brain are stimulated when you make decisions. What you think of as gut instinct or intuition may actually be your emotional bias, so thoroughly examine the feelings that may be a factor.
Consider all perspectives. Look at competitors, dissatisfied customers and other points of view that may dramatically differ from your own. This may reveal flaws in your arguments or assumptions.
Making decisions is a complex process, one that is not fully understood. What is clear is that we cannot apply 100% Spock-like logic to decision-making, even if that is what we intend. Examine diverse metrics, differing views and your emotions. Then follow through based on your best, most complete judgment.
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