Managers today make important decisions under conditions of uncertainty. Decision-making is a complex process. But according to psychologists, leaders spend 95 per cent of their time in intuitive decision-making mode that is, they depend entirely on heuristics.
Heuristic thinking was convenient in the distant past for quick orientation and survival with minimum mental effort. But it shows serious defects. It is marked by cognitive biases. Because of them, we interpret things incorrectly, act irrationally, and our memory recalls events selectively.
Cognitive biases are especially harmful to business. Some of the information that they filter out turns out to be critically important. They also make us blind to new information and get in the way of seeking and reviewing alternatives.
Cognitive psychologists and behavioral economists say that the constrained time, overabundant information and unfamiliar dynamics of today’s world, make us more susceptible to cognitive bias related fatal errors.
A large portion of decision-making theory has little application value. But the knowledge about heuristics and cognitive biases is both practical and useful. It reveals the factors that lead to decision errors, which make it essential for every manager and organization, set on optimizing their decision-making process.
Today, coping with cognitive biases is more important than ever. Large and small companies invest serious resources to educate their people on their negative impact. In the US, for instance, CEOs, managers, and every employee pass through training programs that teach them to recognize and fend against cognitive biases. Special emphasis is placed on decisions related to hiring and promotion.
Luckily, the influence of biases can be seriously mitigated, using relatively simple techniques before cognitive biases get to poison our decisions. This course is dedicated to coping with biases and making decisions free of cognitive errors.