A SHORT VIDEO TO GET US STARTED
HTTP://WWW.YOUTUBE.COM/WATCH?V=BSE_SAVX_2A
WHEN WAS THE LAST TIME YOU HAD TO
MAKE A DECISION?
We start making decisions from the moment we
wake up. These decisions vary in complexity.
Some are relatively simple, some are automatic,
while others demand a higher degree of
reflection and thinking.
Some of those decisions have serious
implications and consequences -
Good/bad/ugly
AS MUCH AS YOU PLAN FOR A DESIRED
OUTCOME
The outcome will depend on the decisions you make and every
subsequent decision that follows.
WE ARE CONSTANTLY EVALUATED ON OUR
JUDGEMENT & DECISION MAKING ABILITIES
BY OUR EMPLOYER & COLLEAGUES
FAMILY,
WIFE OR HUSBAND
COGNITIVE BIAS
Is a mental error caused by our simplified information
processing.
HEURISTICS
Psychological tendencies that cause the human brain to draw incorrect conclusions.
Mental shortcuts, rules of thumb, or gut-feeling that assist us to make quick
decisions without formal analysis.
Driving
Attacked by a bear/animal
About to get hit by a car
WHY ARE THEY CRUCIAL & CAN BE
DANGEROUS?
We are not even aware we are committing them
THE FUNCTION YOU OCCUPY OR THE ROLE
YOU PLAY DETERMINES THE IMPACT OF YOUR
DECISION
Just like our physiological system. You need every organ to function properly and optimally.
From Janitor to CEO
We cannot disregard anyone.
EVERY FUNCTION/ROLE MATTERS
Home/Family Community
Work Sport
EVERY ONE OF US IS PART OF AN ORGANIZATION IN
ONE WAY OR ANOTHER
CIRCLE OF INFLUENCE
DON’T UNDERESTIMATE INFLUENCE
COMPLEXITY THEORY & SYSTEM THINKING
Automatic Associations Social &
Environmental influences
Relative comparisons
Mindset defense
Oversimplifications
Habits & Personality
Confirmation
Anchoring
Framing
Sunk Costs
Overconfidence
Recency Effect
MOUNT EVEREST 1996 DISASTER
MENTAL MODELS & THE CONFIRMATION BIAS
VISUAL SYSTEM & ASSOCIATIVE MEMORY
VISUAL ILLUSIONS
NEARBY COMPARISON AND CHOICE
First group could have either $10 or a
nice pen Second group could have $10, a nice pen, or an uglier pen
LET’S EXPERIMENT
A bat and a ball cost $1.10. The bat is $1 more than the ball. How much is the ball?
READ THE COLOR
John is a quiet man, with a retiring personality. Is he more likely to be:
A librarian
A Salesman
HERE IS ONE THAT SHOULD HELP YOU IN
NEGOTIATION
Is the height of the tallest redwood more or less than 1200 feet?
What is your best guess about the height of the tallest redwood?
A study of a Campbell’s soup sales promotion was conducted when the product was
on sale for about 10% less than regular price. On some days a sign on the shelf said
“Limit of 12 per person” and on other days the sign said, “No limit per
person.” Shoppers purchased an average of 7 cans of soup when the limit was in
effect, double the amount that they purchased with no limit.
WHAT IS THIS PARAGRAPH TALKING ABOUT?
System 1
Intuitive
System 2
Reflective
THINKING FAST AND SLOW
TWO SYSTEMS
Reasoning
Argument
Claims
Premises
Fallacies
Assumptions
Conclusion
CRITICAL THINKING
It is a skill you can practice in order to master.
Once you master it, watch how you perceive others. Don’t make it affect you negatively by thinking less of others.
BECOME A CRITICAL THINKER
RECOGNIZE QUALITY DECISIONS
A Decision framed within a context
Creative and well-thought of alternatives
Relevant & reliable information which to base the
decision upon, while incorporating inherent
uncertainty
Logical Reasoning & analysis that help draw
meaningful conclusions
DECISION QUALITY QUESTIONS
Is there any reason to suspect motivated errors, or errors driven by the self-interest of the
recommending team?
Have the people making the recommendation fallen in love with it?
Were there dissenting opinions within the recommending team?
Could the diagnosis of the situation be overly influenced by salient analogies?
Have credible alternatives been considered?
If you had to make this decision again in a year, what information would you want, and can you get
more of it now?
Do you know where the numbers came from?
Can you see a halo effect?
Are the people making the recommendation overly attached to past decisions?
Is the base case overly optimistic?
Is the worst case bad enough?
Is the recommending team overly cautious?
We are great at recognizing our physical limitations and we tend to do something about it. Are
willing to do the same with our Cognitive limitations?
CREDIT GOES TO DR DAN ARIELY & STANDFORD UNIVERSITY – STRATEGIC DECISIONS GROUP
Thank you
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