Wise Decision-Maker Movement Manifesto

Following our intuitions can lead to terrible decisions in today’s professional environment. For the sake of our bottom lines, we need to avoid following our primitive instincts and instead be civilized about how we address the inherently flawed nature of our minds.

Think about these questions:

• What percentage of projects in your company suffer from cost overruns?
• When was the last time a leader in your company resisted needed changes?
• How often are people in your team overconfident about the quality of their decisions?

All of these and many other problems come from following our gut reactions.

Business Strategic Assessments Are Deeply Flawed

Current business strategic assessments meant to address the weaknesses of human nature through planning are themselves deeply flawed. Take the "SWOT," in which a group of business leaders tries to figure out the Strengths, Weaknesses, Opportunities, and Threats facing their business. SWOT assessments usually fail to account for the dangerous judgment errors we make due to how our brains are wired.

It’s particularly problematic that SWOT is almost always performed in a group setting. Mental blind spots are often exponentially increased in group settings. One particularly large problem is known as groupthink, in which groups tend to coalesce around the opinions of a powerful leader.

Why Do You Always Hear “Follow Your Gut”?

If our intuitions are such a bad match for the modern world, why is the advice to “go with your gut” so widespread? Because trusting our instincts feels naturally comfortable for us.

Sadly, gurus who tell people what they want to hear and what makes them comfortable get paid the big bucks, while experts who speak uncomfortable truths usually get ignored.

But I Make Good Gut Decisions!

At this point, you might be telling yourself that you’ve had a lot of success following your gut in making good decisions.

For example, you might have learned the counterintuitive behaviors of delegating tasks effectively and avoiding micromanaging as a leader. Perhaps you can glance quickly at a department’s profit-and-loss statement and recognize what needs to be addressed.

Your decisions in these areas might be very accurate. However, all of these correct choices come from acquired skills. You had to learn to do the right thing rather than simply trust your instincts, just like you learned to drive a car. You can now do so automatically, making good decisions on the road.

Sadly, our minds can’t tell the difference between our primitive instincts and our civilized and decision-making impulses.

That’s why business leaders should never just go with their gut. Instead, you should evaluate whether this internal impulse comes from a place of extensive experience where you learned to make decisions that turned out to be correct the large majority of the time.

Even in cases in which you think you can rely on your intuition, it’s best to use your instincts as just a warning sign of potential danger and evaluate the situation analytically.

How We Really Think (and Feel)

Researchers have discovered that we have, roughly speaking, two systems that determine our mental processes. These two systems have various names: System 1 and 2, fast thinking and slow thinking. For me, the “autopilot system” and “intentional system” describe them most clearly.

The autopilot system corresponds to our emotions and intuitions. This system evolved to help us survive in the ancestral savanna environment and mostly relies on the amygdala, the older part of the brain. It guides our daily habits and reacts instantly to dangerous life-and-death situations.

However, our modern environment—in business and other life areas—has many elements that are unlike the savanna. With growing technological disruption, the office of the future will look even less like our ancestral environment. The autopilot system will therefore increasingly lead us to make disastrous decisions.

The intentional system, by contrast, reflects analytical thinking. It centers around the prefrontal cortex, the part of the brain that evolved more recently. This thinking system helps us handle more complex mental activities, such as managing individual and group relationships, logical reasoning, and learning new information.

The autopilot system is by far the more powerful of the two systems, determining 80 to 90 percent of what we do, think, feel, and decide. Our emotions often overwhelm our reason. Moreover, our intuition and habits dominate the majority of our lives. We’re usually in autopilot mode.

That’s not a bad thing at all, as it would be mentally exhausting to think through our every action and decision. However, it’s bad when this system makes the same errors, again and again.

While the automatic system requires no conscious effort to function, using the intentional system requires a deliberate effort and is mentally tiring.

Fortunately, with appropriate training, you can learn to turn on the intentional system in situations where the autopilot system is prone to make systematic and predictable errors.

The Art and Science of Avoiding Dangerous Judgment Errors

Studies from behavioral economics, psychology, cognitive neuroscience, and related fields reveal the many types of dangerous judgment errors—what scholars term cognitive biases—that we make in business and other areas.

Many of these systematic and predictable judgment errors come from our evolutionary heritage. They helped us survive in the savanna environment, such as overreacting to the presence of a perceived threat.

Most cognitive biases result from mistakes made by going with our gut reactions, meaning autopilot system errors. More rarely, cognitive biases are associated with intentional system errors.

Why I Care

My deep passion about this topic makes me willing to take on entrenched interests in pushing for a data-driven paradigm shift to improve business health.

This passion is personal. As a kid, my dad told me with utmost conviction and absolutely no reservation to “go with your gut.” I ended up making some really bad decisions in my professional activities.

My conviction that the omnipresent advice to “follow your gut” was hollow grew stronger as I came of age during the dot-com boom and bust and the fraudulent accounting scandals around the turn of the millennium. Seeing prominent business leaders blow through hundreds of millions in online-based businesses without effective revenue streams—Webvan, Boo.com, Pets.com—was sobering, especially as I saw the hype that convinced investors to follow their intuitions and put all that money into dot-coms.

Likewise, it seemed almost unreal to learn at around the same time of how the top executives of Enron, Tyco, and WorldCom used illegal accounting practices to scam investors after their companies lost a lot of money as part of the dot-com bust. Most business leaders behaved ethically and admitted their losses honestly, but these leaders chose the path of lies because of their drive to win and not to be seen as losers.

This drive to win stems from the ancestral savanna instinct to climb to the top of the tribal social hierarchy and remains one of our most potent motivators. It does much good when harnessed to positive social outcomes, but has the potential to cause a great deal of damage, as with the case of the accounting scandals and consequent bankruptcies.

How to Prevent Business Disasters in the Workplace

So how do you defeat these dangerous judgment errors?

First, you need to evaluate where and how they may be harming you, your team, and your organization.

The next easy step is to adapt structured decision-making processes for making quick day-to-day choices, for moderately important ones, and for major and/or complex decisions.

Another technique you’ll need is an effective method of planning your strategy for the next several months or years that doesn’t suffer from the typical problems of SWOT and other planning tools.

You also need to develop mastery in the 12 mental skills of defeating cognitive biases. These abilities will enable you to

• Predict when you or someone else might fall for cognitive biases and prevent that problem from happening;
• Recognize immediately when dangerous judgment errors are undermining the situation at hand, even if you didn’t predict it beforehand; and
• Take effective steps at the moment, even when you don’t have time to use even the briefest structured decision-making process, to protect yourself or others from these biases.

Conclusion: Join the Wise Decision-Maker Movement

If you learn about these judgment errors and address them, you’re in a vastly privileged position compared to business leaders and any other professionals who are not aware of the dangers of typical judgment errors in the workplace.

Additionally, if you and your organization can avoid even a fraction of the dangerous judgment errors that cause us decision disasters because we’re adapted for the ancient savanna and not the modern business environment, you’ve set yourself on the path to success.