Post No.: 0887
Fluffystealthkitten says:
Our instinctive emotional responses are fast, which aids our survival when we have no time to conduct a deep analysis of our options, like when sensing a potential hungry fuzzy beast lurking in the bushes. This helped our ancestors to survive and thus pass their genetic instincts eventually onto us. The problem is, our emotions can sometimes lead us astray before we’re even fully consciously aware of it. Also, most modern threats aren’t immediate, we do have the time for conducting deeper analyses, and so we could be more rational when assessing our options.
When our brains store a memory of a past event or action, they also store any associated emotions with it (‘emotional tagging’). Most of the time, we emotionally react and decide what to do based on what’s presently brought to mind in conjunction with our own past experiences. We’re thus inclined to make one plan at a time, rather than (as the textbooks say we should) identify the problem/opportunity, analyse it, generate our options, weigh out all of these alternatives, then decide on the best route. These fast decisions can be okay if we’re equally as fast to pivot when we realise our plan is going downhill, but too often we stick with our initial path for too long (although it’s tricky because sometimes some plans can only work if you go all in rather than retreat when the going gets tough).
We are products of our history, our past. We need this kind of understanding and empathy for others in all kinds of contexts, from personal to business relationships, too. We need empathy for our customers in order to know how to solve their problems and design them a better product, user experience and overall customer experience. Great product designers have deep empathy for their users.
Based on our own prior experiences of odious bosses at work, we can meet our new boss and treat them as if they’re going to be like those previous bosses – but this wouldn’t be fair on them. We shouldn’t presume them. We should treat them as their own individual. Sometimes the lessons from our past are incomplete, misleading or irrelevant to our present situation, yet we’ll emotionally apply them anyway.
Often all we have to rely on in the heat of the moment is our past experience, and our past experience does often help us – but how often does our past experience of situations fit perfectly with the situation presented in front of us right now? This new situation is likely to be a tad different, yet we’ll still typically rely on the same past experience that therefore isn’t valid today, hence we’ll end up making a mistake. We tend to over-generalise from small sample sizes – of often just 1! In other words, we form crude stereotypes from limited experiences, and we’ll feel confident in those beliefs too. For example, we might believe that 20-something-year-old college dropouts make for excellent tech entrepreneurs because of a few examples of such we can think of. Or we might assume that people who look unkempt, have tattoos or just don’t look like ‘typical businesspeople in suits’ cannot be serious businesspeople.
The statistics say we usually need a sample size of ~30 before we can be reasonably confident in a pattern, if there is one. That first experience of something may have exhibited certain idiosyncrasies that won’t be identical the next time around? In fact in business, the more senior in a company you are, the more original the problems are going to be if they get passed onto you because other people couldn’t solve them.
The failure rate of mergers and acquisitions is actually quite high. They’re not easy. Strangely, on average, those who do well with their first M&A will do worse with their second and even third, until a point when they’ll start to do better again. Perhaps the explanation is that the first time you do something important, you’ll put in plenty of research and due diligence on it, but then you get overconfident and thus lazy the next time, until you eventually learn that each M&A is unique due to the different people, cultures, industries, political and economic climates, etc. and our past experience means little. What worked before mightn’t work again, and what didn’t work before might work this time. All this applies in other contexts too like how we treat new customers, new employees or new product launches, or indeed new children, new football matches or anything else.
‘Negative transfer’ is when previous learning obstructs or interferes with present learning i.e. we may erroneously apply our past experiences from other contexts onto current contexts where they’re not applicable. Our past experiences mightn’t transfer onto our present challenges hence experience is a tricky thing – it’s at times useful because we should learn from the past yet at other times it can lead to errors through overconfidence. Our own individual experiences are limited too, and that’s why we must expose ourselves to new experiences and tap into the minds of others, like customers or external advisors.
This is of course related to expertise – being an expert in one domain doesn’t necessarily mean we’ll be one in a seemingly similar but not perfectly identical domain. We can therefore overestimate how much we know about the things we don’t, with disastrous consequences. Like experience, expertise is usually valuable, but we can start to think we know it all thus we stop being curious, we become blinkered, we stop learning new things, and we might even fail to realise our expertise has become outdated, even in our own domain of competence. We overspecialise instead of occasionally look up at what’s happening in the wider world. We might think those ‘beneath us’, ‘too different to us’ or ‘outside of our circles’ cannot teach us anything. We become complacent, then others soon overtake us, or we blame a ‘perfect storm’ of events for a catastrophe simply because we failed to predict it.
What used to be right mightn’t always be. We might have to even unlearn some things (and this can be tougher than starting afresh with no preconceptions). We can be fixated on trying to follow ‘best practices’ instead of leading with even better ones. Cutting costs isn’t always the best answer because it can undermine safety and standards. Rapid growth isn’t always the right path. We need to periodically question the ways things are done instead of blindly accept ‘that’s how we’ve always done it’. We’ve got to look at the opportunities from change, not just the risks; look for revolutionary solutions, not just evolutions to old solutions (we might be afraid of major changes or think we’re making major changes when they’re not); and propose some new strategies and tactics to address new challenges. Being an expert is good – however it’s not a destination but an ongoing lifelong learning journey of keeping relevant, updated and meaningful. Meow.
Challenge your expertise, methodically revisit your assumptions, and learn from your mistakes. Ego is the enemy of genuine expertise so ditch it – don’t try to upstage or overshadow others to make yourself look good, dictate solutions rather than let others think for themselves or speak, put pressure on yourself to always appear right, or place excessive pride about awards and recognition. Tone down or eschew some of your executive perks to mingle amongst the rank and file so that you can listen to them – these perks can actually become physical or symbolic hierarchical barriers that create distance between you and your team and ruin the free flow of creativity.
Stay grounded and in touch with all levels of your organisation, highlight and credit other people’s ideas or accomplishments, and most of all regularly go out of your way to listen to others (especially those diverse to you – everyone is a teacher) instead of only giving orders. Team up with a mentor or furry learning buddy. Leverage everybody’s mind, and reward rather than punish or dismiss those who speak up. Tap into a wide variety of sources, inside and out. Record whatever you learn. Meet new people because you never know if you might pick up something juicy! Occasionally break up your routine or go out of your comfort zone. Seek surprises as a way to stay fresh. We’re afraid of unpleasant surprises but we should pay most attention to these for the lessons they teach us. Too many pleasant surprises might even mean that our expectations are too low and we should aim higher? (Somewhat related – both ‘labelling what’s safe as a threat’ and ‘labelling what’s a threat as safe’ are costly. But sometimes one is costlier than the other – usually false negative threats; thus it’s often more prudent to err on the side of caution. Some false positive threats can even drive us to push harder towards a goal and excel.)
Of course do all this without spending too much time and other resources on things that mightn’t prove relevant or insightful.
Our self-interests can also seriously tarnish our judgements. In one experiment, two teams of forensic accountants were tasked to find accounting irregularities in a fictional company’s accounts, with the only difference between them being that one team was told that future business may be coming their way from this company. The result was that the team that wasn’t told the above statement identified way more accounting anomalies than the other! This has real-world analogues with accounting firms and ratings agencies and how they can fail to truly impartially audit or rate their regular clients. (And this is why suggesting the possibility of repeat business is a common negotiation tactic.) It’s like we don’t want to upset those who could serve our self-interests. It’s a conflict of interest. This bias plays out in other contexts too, including romantic relationships. And it’s typically subconscious – we don’t know we’re doing it.
Our emotional attachments to people, places or things are another significant source of bias that can cloud our judgements, like our loyalty to the long-term colleagues we’ve personally gotten to know (in major downsizing events, CEOs are less likely to fire those from the department they personally rose up from) or to our friends, family or cronies. We mightn’t be willing to relinquish the business we founded itself. We might blindly trust our favourite celebrities or influencers simply because of our emotional attachment to them. We might automatically dismiss the advice of those from outside our cliques. We end up potentially making sub-optimal commercial decisions because something personal, either positive or negative, clouded our judgements. This is sometimes okay as long as we’re honest with ourselves about and can identify (write them down) our emotional attachments.
Yet another significant bias comes from our pre-judgements, as in deciding that something is the way it is and then sticking to it no matter what. If we preconceive an option as a threat, our approach will usually be different to if we framed it as an opportunity, for instance, so our preconceptions matter (hence try reframing a situation). We may have prejudged others or ourselves, like assuming we’re not capable of something. We may jump to conclusions, immediately disregard other ideas, then rationalise to ourselves that our decision is correct by fudging the figures or arguments to make it appear better than all the alternatives i.e. we figure out ways to convince ourselves we’re right. This means we cannot always trust the data because it can be confirmation-biased – we need to ask what data was omitted. We can easily fool ourselves to see the world as we wish it were, not the way it is. Our beliefs become zealous. We can be too decisive.
Post No.: 0880 pointed out some other common mistakes in business.
Meow. In sum – we must guard against our biases; and past experience and expertise are invaluable as long as we perpetually remain humble.
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