Agriculture is too modest. There are so many intelligent, innovative and forward-thinking people in Canada’s agriculture industry — people who are hungry for bright ideas that they can play with, evaluate, adapt and adopt. This is an industry that loves bright ideas, which is why Country Guide is introducing this new bi-monthly column called exactly that.
‘Bright Ideas’ will introduce you to insights, tips and resources from cutting-edge research in science and business that haven’t been explored enough in relation to agriculture. You’ll also learn about additional resources showing how these concepts can be harnessed to drive farm performance. Get ready to be inspired!
If I said that most of the time you spend running your farm business was spent making decisions, I wouldn’t expect to hear a collective gasp of surprise. But what if we found out there can be better ways to make decisions, and that with a few minor tweaks we could decrease the effort expended to make them and still end up with better, more robust outcomes?
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It turns out science has a lot to tell us about this. It shows us the problem with our decision-making often isn’t because of the processes we use, but the way the human brain works. Decision-making is prone to psychological mind traps that we aren’t even aware of.
The research on how your brain can hurt your farm can help you get more out of your decision-making efforts.
Don’t believe it? Well, read on.
The hacks
How can you differentiate between meaningful and useless input when working your way through the decision-making process? Here is a research-backed checklist, plus some additional resource suggestions to help you minimize decision-making traps.
- Think more probabilistically. Consistently ask questions (“What else could happen?”, “What if I’m wrong?”) and consider the range of possibilities that might occur as opposed to assuming that things will go as planned. Also reframe the problem in various ways to discover anything that might distort the issue (e.g. Recall Ability — see below), particularly in an uncertain, previously unexperienced situation. Reframing from multiple vantage points can help you identify influencing factors that might hinder your ability to assess the probabilities of an outcome. Then, as new information comes to light, continue to revise those probabilities.
- Not asking enough questions leads straight to poor outcomes. Take the time to ask more questions, better questions, different questions. In “Relearning the Art of Asking Questions” the authors classify four types of questions to achieve different goals: clarifying, adjoining, funneling, and elevating. The first two types help affirm what you know; the latter two help you discover new perspectives. You should also check out Daniel Kahneman’s “12 Questions to Ask Before You Make That Big Decision,” which groups questions into three phases: preliminary, challenging and evaluation.
- The author of “How to Make Rational Decisions in the Face of Uncertainty” says that by inverting the problem-solving process (begin at the end), you can focus on the known unknowns that matter to you. She suggests not only jotting down questions that can help you make a decision but also that you group those questions into four main categories: behaviour, opinion, feeling and knowledge. This creates a variety of perspectives from which you can probe the data you’ve collected and become aware of, and reverse, biases related to preconceived assumptions.
- Decision fatigue is a well-known phenomenon; wartime leaders have dealt with it for centuries. They slow down their decision-making not only to avoid mistakes stemming from brain fog, but because there is often very little information to work with. To limit the fumbles when your brain is just not functioning on all cylinders because of exhaustion or distraction, try implementing “creative constraints” like Parkinson’s Law, to conserve energy. The law states that “work expands to fill the time available for its completion”. In terms of decision-making constraints, this can mean assigning a set amount of time in which to make your decision and a cap on the quantity of data you will use to make it rather than an ongoing process with no data quota. The goal is to conserve precious time and reduce the complexity of any decision-making process.
- The author of the “The Five Traps of High-Stakes Decision-Making” says that “making good decisions nearly always result(s) from robust decision processes. Similarly, decisions that go wrong nearly always stem from procedural or organizational failures.” To avoid that, and figure out what worked, what didn’t and why, the author suggests conducting post-mortems into decisions, taking into consideration the five most common mistakes that lead to the vast majority of poor decisions:
1) Don’t waste time looking for an unrealistic silver bullet solution;
2) Make sure to consider alternatives: “You can’t make good decisions without good alternatives”;
3) Don’t involve too many people in the decision-making process — the rule of seven should apply: for every individual you add to a group beyond seven, decision effectiveness declines by 10 per cent;
4) Don’t forget to factor in opportunity costs: “The decision to start doing something new is only one form of high-stakes decision. Another, often with equally big consequences, is to keep doing something you’re already doing.”;
5) Don’t underestimate the challenges inherent to executing on your decision and change management. - The author of “From ‘Economic Man’ to Behavioural Economics” suggests developing a standard approach to weigh options in an uncertain future. By combining “imagined events with probabilities” you can calculate the “expected utility” of an outcome. Basically, it’s a technique that multiplies the likelihood of a result against the gains that would accrue, so that you get a number to guide your decisions.
The science
Although learning to be aware of the traps that can hijack the decision-making process won’t tell you what decision to make, you will be better equipped to remain focused on the input that matters, and end up with better results.
Over the millennia, the human brain has developed into a powerful information processing machine, but it’s a high-energy process, so in order to maintain optimum efficiency it employs cognitive biases and mental shortcuts to conserve energy where it can.
In its simplest form, the decision-making process consists of a problem, possible courses of action, and assessment of those options for the ideal outcome. Making multiple daily decisions is an inherent part of being a business owner, but it can result in a lot of stress and time spent in unproductive analysis loops as you dither back and forth on what input is relevant and whether, when and to what you should commit.
And the more tired you are, the more likely you are to overthink it all, which creates even more stress and loops.
Psychological research also demonstrates that when people have access to too many choices (called choice overload bias), they actually have a harder time making a decision because they’re afraid to pick the wrong option. They often end up defaulting to the safest option, one that “worked before”, or avoid choosing at all. Worse still, as the authors of ‘The Hidden Traps in Decision-Making’ point out, “The higher the stakes, the higher the risk of being caught in a psychological trap.”
The traps
Arguably, the main goal of decision-making is to “bridge the gap between strategy and execution to make on-the-spot decisions and adapt to rapidly changing circumstances while keeping the big picture in mind”, say the authors of “Simple Rules for a Complex World.”
To get that kind of clarity and proficiency, you need to be very aware of the potential traps and shortcuts your brain prefers to use. The following are some common traps and biases to consider each time you’re working your way through the decision-making process:
- Confirming evidence bias: This affects which sources you choose to collect information, data or evidence from, and how you interpret that information — meaning that you might select and/or assign too much weight to information that supports the subconscious path you’d prefer to take and not enough weight to any information that conflicts with your existing preconceptions.
- Overconfidence bias: This bias occurs when a person’s subjective confidence in their judgments far exceeds the actual objective accuracy of those judgements. This gap causes the decision maker to greatly miscalculate probabilities, reinforcing a faulty process.
- Recall ability: Any factor that contributes to misinterpretation of how you recall a past incident in a balanced way will warp your capacity to assess the probability of a current event. Your recall ability can distort an objective assessment of probabilities.
- The sunk cost trap: In business decision-making, a sunk cost is a cost that has already been incurred and cannot be recovered. Business owners fall into this psychological trap when they proceed with a demonstrably failed project because they have already invested so much time, money or effort.
- The status quo trap: Sticking to choices that worked for us in the past feels safe. It’s also easier on the brain’s cognitive load since a thought-heavy and difficult choice is avoided. This bias frequently occurs when there is choice overload and, sadly, often when only small transition “costs” are required but the impact of the decision is considerable.
We commonly approach decision-making in the moment, on the fly. But that’s exactly when biases, mental shortcuts and traps are most dangerous. Your brain doesn’t want to expend additional energy in an urgent, frazzled or exhausted state, so it will revert to the tried and true and the quick. But, again, it’s not the speed of the decision that matters if the results are not optimal.
The benefit to learning about mental traps is that even if the knowledge doesn’t tell you what decision to make, you will at least be very aware of the ways of thinking that slow down or impede the decision-making process. Leverage these insights to create a strong, vetted decision-making process. It will move your business forward.
