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Reducing cognitive bias for critical decisions without killing creativity

Updated: Aug 13, 2019

People in business love to think they make rational and logical decisions. However, Behavioral Economists, Psychologist, and other Scientist are discovering that our brains operate in “fast, emotional, intuitive” mode 97% of the time. According to Nobel Prize winning Psychologist, Daniel Kahneman, most of our decisions come from a part of our brains that he calls the System 1 brain.

We often do not stop and think about decisions, but still convince ourselves that we are being logical. However, we do have the capacity to make rational, objective, and deliberate decisions (what Kahneman calls System 2) when we have time, enough information, and are objective. System 1 thinking is fast, while System 2 is slow. Quick decisions are good; they can give you a competitive advantage. However, fast decisions are prone to all sorts of bias, both cognitive and self-induced.

Companies wanting to eliminate bias in decision making will put together a set of controls and procedures to check decisions.  But too much control often has the effect of slowing down decision making, killing creativity, and perhaps necessary risk-taking.

There is a balance, somewhere between facts, bias, diligence, and creativity in decision making.

The secret seems to be to check your confidence in 1) the fact-base of information that you have at hand, and 2) the objectivity of your idea, and 3) understand the question to be decided. 

Steps to take to promote creativity, understand risk, and reduce bias

1. Assess confidence in your fact-base

Your fact-base is a set of rational projections or solid facts that you use in understanding the world. Your fact-base should tell you what reality is or give you an idea of what the future will bring.

You might hear something like, “the market will grow by 21.7% CAGR over the next 7 years.” These are projections, likely based on assumptions of available data. Are they a crystal ball? No.

When developing a fact base, you want to pull together as much objective information as possible in a timely fashion. The information is vital. However, you also need to assess and be critical about it. Turn on your analytical mind, especially when the number provided to you without explanation.

Don't convince yourself that an assumption is a certainty.

As an example, you can ask these questions:

  • Did the information confirm your first impression?

  • How precisely does your fact base need to be for you to be confident?

  • How old is the information?

  • Is the age of the information relevant?

  • Is the source of information reliable? Is there “skin in the game” for the source of information?

  • What are the assumptions used in prediction models?

  • Is there only one data (fact) source? Is the data corroborated?

  • For surveys, how big is the sample size?

  • How geographically distributed?

  • How is the quality of the data?

2. Craft ideas based on the fact-base as a reference point

One of the things that I notice when being critical about the fact base is that it often turns on people’s creative brains.

A well-organized brainstorming can generate some great new ideas. There are dozens of different ways of doing it. However, the keys are keeping it in a simple framework or series of frames, promoting honesty, and maintaining the focus on the question at hand.

During the brainstorming, you should also spot potential biases in the generated ideas.

3. Assess common biases and mitigate or accept them

You cannot avoid self-interests in generated ideas. However, if you stop to think about potential cognitive biases, you can prevent misunderstanding the viability of possible solutions. It is rarely feasible to try to cover the 168 different types of cognitive bias that can develop, but asking yourself the following questions can help you be critical and rational when looking at different ideas.

Are you attracted to the first idea (solution)?Is there an effort to protect an interest?Does the idea confirm your first impression?Can there be other explanations for the situation?Are you in a hurry to decide?Is there a group-think? Is there enough critical thought?Are you relying on a hunch?Are you automatically taking the most straightforward looking solution?Just ask yourself why you would decide in favor or against the idea.

4. Fact/Bias assessment

Based on numbers 1 and 3, you can assess the confidence that you have in making the decision. The Fact/Bias assessment is meant to provide contextual framing on the proposed resolution. The key to its usage is honestly and reflection on the due diligence that ideas have.

Gut Hypothesis: Your fact base is light, and you know that bias or cognitive bias can exist. A gut hypothesis may not be a bad thing because some of the best decisions were made from intuition. Unfortunately, some of the worst decisions were also made from the gut. You may need to make a quick decision and have no other choice but to rely on your gut. If you proceed with the decision, keep an eye out for progress and be prepared to reverse course. You know that you have a risk.

Impartial Hypothesis: You have mitigated your bias but lack adequate information to have confidence in your decision. The suggestion is to test your hypothesis, if possible. Testing or external feedback can help mitigate the lack of objectivity. Try to gather data to support your theory or pay close attention to facts as they occur after the decision.

Supported Hypothesis: You know that you have a bias (it may be your first conclusion or an interpretation of data). However, you also have some confidence in the information that you have. Could you be considering all options? Are there other alternatives to the idea?

Mitigated Confidence: You have confidence in both the facts and objectivity or impartiality. You have given equal consideration to the options and have chosen the optimal, unbiased viewpoint. The ideas created have a great deal of confidence behind them.

5. Develop one or more hypotheses

The hypothesis statement is meant to spell out the decision. It also is intended to provide context on how the hypothesis was formed and the expectations of the impact of the decision. The statement frames the decision to be made.

Hypothesis Statement

6. Decision

By adding on the Fact/Bias assessment, you are honestly framing the decision. For example, if you communicate that you are making a Gut Hypothesis, you know that the decision has some inherent risk. An Impartial Hypothesis could be because there is no data available to support the idea, which is what often happens with innovative ideas. A Supported Hypothesis could also be creative, and the idea is liked. A Mitigated and Confident hypothesis means that the idea is both impartial and comfortably supported by facts.

None of these is necessarily a wrong answer. However, when making a critical decision, using this method will enable you to understand your risk without killing your creativity.