Digital Marketing
The world is full of disagreements. However, one thing that everyone can agree upon is that at some point in our lives we’ve all made a decision we regret. If someone tells you that they’ve never made a bad decision, most likely they’re either lying or have convinced themselves that their bad decision was good.
Life would be easier if we intrinsically knew how to make good decisions. We would find more success in our careers and personal lives. However, history is filled with bad decision-making. When doctors said they were “completely certain” about a patient’s diagnosis, 40% of the time they were wrong, a study found.
In 1975, the Eastman Kodak company held the majority share of the US film market. Kodak decided to hold off on sharing its development of the world’s first digital camera because they feared that it would destroy their film business. Then, in the 1980s, Kodak decided not to be the 1984 Olympics official film. Fuji received the honor, and from there became a major player in the US marketplace. In 2012, Kodak filed for bankruptcy.
It’s not that people aren’t capable of making good decisions, but that they don’t use the correct decision-making methodology. Having sound gut instincts is great, but that’s only a start. Taking the time to define the problem, recognize how emotions affect decisions, learn how to utilize emotions for better decision making, and know when enough is enough are all parts of making good decisions.
Define the Problem
It used to be difficult to find information. There wasn’t the Internet, a 24/7 news media cycle, cellphones, or social media. You couldn’t just go online to research databases from your couch to find what you needed.
In today’s world, there’s a glut of information. It’s easy to become lost in that information. It’s easy to make mistakes, because all that extra information gets in the way of you seeing the real issue.
The book, Blink: The Power of Thinking Without Thinking, shows how too much information can harm people. It makes the case that when doctors are attempting to diagnose patients, “extra information is more than useless. It’s harmful.” Doctors need to know the pertinent information for that patient, not every piece of data that exists on a particular diagnosis. Knowing too much information overcomplicates and confuses an issue.
When making good decisions, it’s not about knowing as much information as you can; it’s about knowing the right information. Knowing the correct information helps you to identify the root problem, and solve it.
A quality of a good CEO is the ability to weed through the massive amount of information in the world and identify the pertinent information in a timely manner. This ability takes objectivity. A CEO cannot be so swayed by his emotions, his opinions, and his beliefs that he ignores the facts. However, all CEOs are human, and since all humans experience emotions, all decisions humans make are to some extent affected by emotions.
Recognize Emotions
Emotions are an intrinsic part of being human. This means that no matter how hard we try to keep subjectivity out of decision-making, we will not succeed. What we can do is learn how to recognize emotions and use them to our advantage.
One of the major pitfalls of emotions is that we aren’t all that great at controlling our gut reactions. We’ve all regretted doing something in the heat of the moment. Our rational self vanished and we did or said something that was detrimental. This immediate and overpowering emotional response to some stimulus is known as an amygdala hijack.
In the professional world, an amygdala hijack could destroy a person’s career.
Take a look at Eliot Spitzer. He was the governor of New York, until he resigned because of involvement in a prostitution ring. Spitzer had graduated from Princeton and Harvard law school. Before becoming mayor, he’d been an aggressive and successful corporate fraud and organized crime prosecutor. But his emotions—his need for pleasure—overwhelmed his rational thinking. He was hijacked by his amygdala—the emotional center of the brain—made poor decisions, and lost everything.
An amygdala hijack doesn’t just affect the person experiencing the uncontrolled gut reaction. Emotions are contagious. They spread from person to person. If the CEO of a company is hijacked, his emotional outburst may influence his co-workers and subordinates. The company’s ability to make good decisions may decrease, as collaboration among employees deteriorates.
A person’s ability to control his emotions is principal to making good decisions. However, focusing solely on logic—only paying attention to flow charts, market movement, risk versus reward, and statistical trends—can lead to horrendous flaws in logic and poor decision making.
The Great Depression resulted from a variety of factors, including the 1929 stock market crash, over 9,000 banks failing in the 1930s, a vast reduction in product purchasing, high import taxes for foreign countries, and the 1930 Mississippi Valley drought that left the area with the nickname, “The Dust Bowl.”
Similarly, the rapid decline of household consumption and housing construction contributed to the Great Recession. In the 1980s, a massive, unsustainable boom in consumer spending occurred, while income growth largely decreased. People borrowed more and more money, indebting themselves through novel mortgage lending plans, until in 2006, when interest rates rose, refinancing opportunities fell, lender credit dried up, and homeowners defaulted on their mortgages. Consumption seeking stalled and the American society greatly cut back spending. The result was a sharp decline in demand, and the Great Recession.
With both the Great Depression and Great Recession, the aftermaths led to realizations about widespread denial, greed, and lack of awareness. People, whether a bank or consumer, were busy wanting more, and therefore were blinded to the long-term implications of their theoretically logical solutions and to unrealized underlying emotions for making and having more. By understanding and embracing emotion, you can make better decisions.
Utilize Emotions
Remaining calm is essential for good decision making. Once you realize what emotions are wrapped up in the problem you’re facing, you cannot let them overpower a well thought-out decision.
In 2009, over 61,000 tattoos were removed in the United States. Many of those tattoos had been the result of an emotional reaction. People didn’t think about whether or not they should get a tattoo. They let their short-term emotions take the reigns and lost the ability to think clearly, instead of using their emotions to bolster their logical reasoning.
Some of the most successful decision makers are samurais and Special Forces. Why? Because they know how to stay calm and in control.
Samurais train as much mentally as they do physically because they believe that people should exhibit calmness both in battle and everyday life. Situations should be approached with awareness and alertness, as well as an unbiased attitude.
Special Forces are extremely selective. They look for individuals who are not only skilled and determined, but who are also emotionally stable. Navy Seals use four techniques to increase recruits’ chances of passing their program and of making good decisions in the field:
Self-awareness is “having a clear perception of your personality, including strengths, weaknesses, thoughts, beliefs, motivation, and emotions.” Without self-awareness, you cannot empathize and without empathy, you cannot understand other people. Without understanding other people, you can’t identify what motivates them, how they’ll respond, and what opportunities exist. Without these things, you cannot make good decisions.
One very important emotion is empathy. Empathy is “the ability to sense other people’s emotions, coupled with the ability to imagine what someone else might be thinking or feeling.” To empathize, you must know yourself. You must possess self-awareness.
As the Harvard Business Review stated, “Executives who fail to develop self-awareness risk falling into an emotionally deadening routine that threatens their true selves. Indeed a reluctance to explore your inner landscape not only weakens your own motivation but can also corrode your ability to inspire others.”
Nobel Prize winner Daniel Kahneman developed a theory explaining why people don’t make 100% rational economic decisions. Kahneman stated that there are two overarching thought processes:
“System 1” is the “automatic, intuitive mind.” It carries out the majority of people’s everyday activities. It’s the “going with your gut,” and what you perceive to be correct. System 1 is efficient, but not always accurate.
“System 2” is the “controlled, deliberative, analytical mind.” It performs the functions that System 1 cannot. System 2 requires a great deal of focus, but can sometimes make up for System 1’s inaccuracy.
While System 1 doesn’t involve actively thinking about what you’re doing—you already know how to walk and make toast, so you don’t have to deliberately focus on those activities—System 2 requires you to produce certain thoughts that enable you to perform a particular function.
However, System 1 causes people to form snap judgments about others, because System 1 contains emotions and biases. When you meet someone, you form an opinion of them within the first few seconds. Say you shake someone’s hand and the handshake is strong, so you believe that the person you’re meeting is confident. This opinion may be correct, but oftentimes it isn’t. You need more information before forming an accurate opinion. This is where System 2 comes in. System 2 forces you to step back, slow down, and analyze the situation, so that you’re less likely to make a rash decision.
Follow this link to take a quiz from Kahneman’s book, Thinking, Fast and Slow, to see if you’re immune to logical inaccuracies: Thinking, fast or slow: can you do it?
Know When Enough Is Enough
After identifying the problem, recognizing emotions, and utilizing emotions, you have to know when to make a decision. In life, instances where decisions don’t need to be made are few and far between, and when a decision must be determined, there’s usually a timeline attached.
Striving to make the perfect decision will lead to stress and the feeling of being overwhelmed, and if you’re overwhelmed, your ability to make good decisions decreases drastically.
As James Waters, once The White House’s Deputy Director of Scheduling, stated: “Being able to make decisions when you know you have imperfect data is so critical.”
Waters was instructed that “A good decision now is better than a perfect decision in two days.” It’s a lesson he’s carried with him, and one that many analysts can’t believe.
In the business world, analysts play a huge role. Their job is to collect and analyze as much data as possible to produce the best result for a particular company. However, Waters encourages “people to make a decision with imperfect information.” He believes that the ability to make decisions with incomplete data is “really important for leaders to incorporate. It’s something that the White House has to do all the time. It’s great to analyze things but at some stage you’re just spinning your wheels.”90% of all information transmitted to our brains is visual.
View at the original source
No comments:
Post a Comment