Avoiding Outcome Bias

Blog #299

If I were to ask you the best decisions you made over the past two years, you are likely to respond with those that held the best outcomes. Yes, some of these outcomes were results of great decisions, but there were probably outside influences that also had an impact.

In her book, How to Decide, neuroscientist and professional gambler, Annie Duke talks about the decision-making process and the biases – both good and bad – that often arise as a result of our decisions.

I see the decision-making bias on a regular basis with clients. When this bias is combined with the unconscious groupthink of a leadership team (or even a couple), it can have extremely detrimental impacts on possible growth, missed opportunities, and the overall results.

The reality is that our world is changing faster than ever, so your decisions may be a bit topsy-turvy. What was a great idea before COVID may be a terrible idea now and vice versa.

Many times, I have heard people say, “Oh, we tried that before and it was a terrible decision.” Interestingly, they are almost always talking about the outcome, not the decision. As smart people, I figured they assessed their options and made a good decision based on the data they had at the time. If, for example, you were considering opening a healthy dining restaurant located between a university and hospital in an area without any healthy meal options, this sounds like a smart decision. However, if you did this going $250,000 in debt, opened the doors in March 2020 (at the beginning of the pandemic), and went broke, you would probably say that was a terrible decision. On the flipside, let’s say there was no pandemic, demand was huge for this type of dining, you were able to pay off your debt within a year, and had plans to expand to 10 locations, you may regard this as a brilliant decision.

In either case, the decision did not change – the outside influences did, and as result, the outcomes changed.

I frequently observe this misguided thinking in people looking to try different ways of hiring, training, selling, expanding, acquiring, etc. Consequently, this has majorly impacted my thinking. It is important to make decisions by considering past outcomes, outside influences, the current climate, etc. – but never to let past outcomes drive your decisions.

My challenge for you this week is to present this idea to your leadership team, maybe even your partner. Ask them about the biggest challenges they are facing today, then have an open and honest dialogue about the past outcomes related to this topic. Review these with an unbiased view and challenge the team to openly discuss whether it was a good decision with a bad outcome, or if it was a bad decision with a bad outcome.

I’m curious to see how it goes.

Keep Smiling,

Kris

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