In making decisions, people rely too much on instinct and emotion and too little on logical deliberating thinking. The decisions made through above described process usually result in poor business choices and poor outcomes.
How to use Choice Architecture to improve decisions
Setting up an effective and system driven decision making process is usually a topmost goal of most organisation, while one few achieve this feat.
Top business executives are, therefore, usually concern about how best to mitigates the effects of bias and motivate employees and customers to make better choices that are in both the organisation’s and individuals’ better interest.
Putting the dynamic business environment into perspective, setting up bias-roof decision making process is considered important for business growth and survival. Steps towards achieving this are explained below;
STEP 1: UNDERSTAND HOW DECISIONS ARE MADE
A clear understanding of how effective decisions are made is considered the first milestone in setting up this process. This is necessary due to the fact that human beings have two modes of processing information and making decisions; system 1 is automatic, instinctive and emotional and system 2 is slow, logical and deliberate.
When decision making process of an organisation is not properly understood, the system 1 of every individual is allowed to dominate the decision making process. Hence, balancing the mind of individual between the two systems facilitates better business decisions, and this can only be achieved when the decision making process is properly understood.
STEP 2: DEFINE THE PROBLEM/ISSUE
This is most important question to ask while making any decision, what is the problem or concern?
Providing answer(s) to this simple question helps identify the factors that are the core of the problem/issue; ensure people are not acting in their best interest; and help narrow and define the issue or set of issues.
This actually means more time should be spent defining the problem/issues, and not solutions or strategy.
STEP 3: DIAGNOSE THE UNDERLYING CAUSES/INDICATORS
The conclusion of step two above makes easy the process of diagnosing the issue(s) being addressed.
If the issue is a problem, this step will help determine whether the current issue being addressed is a result of poor decision making or insufficient motivation or cognitive biases by the key actors in the organisation.
While on other issue or plan of organizational importance, this step will elicit important aspects that must be taken care of for better results. Hence, facilitating a holistic decision making process.
STEP 4: DESIGN THE SOLUTION
This part of the process requires a combination of cognitive prowess, experience and balanced emotional intelligence.
It is a step that is repetitive in nature, and tends to arouse emotions, harness bias and when properly managed may even help simplify the processes of addressing the issue.
As a result, a joint but individuality strategy/action plan process is encouraged. This would create opportunities for team members to reflection on suggestion(s) of others and inspire broader thinking.
Solutions or strategies drafted through this process are usually effective in addressing the concern issue.
STEP 5: TEST YOUR DECISION/SOLUTION
Since there is no perfect solution to a problem, the proposed decision must be rigorously tested in order to avoid costly mistakes.
Instead of implementing solution entirely, introduce the decision in some areas of the business or organization (the treatment group) not others (the control group).
This will help alteration of the solution for better performance and effectiveness.
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