Before you make that decision... - June 2011

Before you make that decision is an article in Harvard Business Review that talks about how bias can distort business decision and how we should avoid it. It also talks about the difficulty in avoiding such bias and thus has proposed the following 12 questions to help management detect and dismiss such bias. The questions are:


Questions that decision makers should ask themselves:
1) Is there any reason to suspect motivated errors, or errors driven by self-interest of the recommending team?
2) Have the people making the recommendation fallen in love with it?
3) Were there dissenting opinions within the recommending team?

Questions that decision makers should ask the team making recommendations:
4) Could the diagnosis of the situation be overly influenced by salient analogies?
5) Have credible alternatives been considered?
6) If you had to make this decision again in a year, what information would you want, and can you get more of it now?
7) Do you know where the numbers came from?
8) Can you see a halo effect?
9) Are the people making the recommendation overly attached to past decisions?

Questions focused on evaluating the proposal:
10) Is the base case overly optimistic?
11) Is the worst case bad enough?
12) Is the recommending team overly cautious?

These questions should be used at decisions where stakes are high rather than routine decisions.

These questions gives a framework on detecting as much bias as possible and also helps us to understand the recommending team's dynamic and its members too. Being humans, it is unavoidable that we would have biases in our decisions thus I would feel that the above questions is something that most management should take note of and go through it. The only constraint that I can see from these framework is whether managers would have the capacity to adequately answer these questions.