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Decision Making: Unavoidable Mistakes that Can (Sometimes) Be Avoided

Oh, the things you can learn from a bent piece of wire!

You have used it a countless number of times.

Introduced in the 19th century and virtually unchanged since, it still sells over 10 billion times annually in the US alone. Its purpose is to secure documents, presumably important ones, but people also use it to hang Christmas ornaments, pick locks and clean fingernails. During World War II, Norwegians made it a symbol of national unity. More recently, it lost its lustre due to such “disruptive technologies” as the stapler and the binder clip.

The humble paperclip; it is hard to believe, but a paperclip — or rather, a defective paperclip — can teach us how to make better decisions and stress less about occasionally making poor ones.

A good last step before pulling the trigger on a big decision, therefore, is to ask, “What could I be possibly neglecting to consider?”
 

Paperclip defects — an incorrect shape or sub-standard tensile properties (excessive “breakability”) — are rare but they do occur. These defects are somewhat surprising: given the simplicity of the paperclip manufacturing process and maturity of technology, one might expect to have virtually zero defects. Little has changed in paperclip manufacturing in decades, and the process itself couldn’t be more straightforward: steel wire is fed into a machine that cuts and bends it into the familiar form.

 

So we have this very simple, well-understood and highly predictable 3-step process that has been repeated billions of times under roughly the same conditions: all kinks surely must have been worked out decades ago. And yet, paperclip defects happen! Why defects happen (entropy and the probabilistic nature of the universe) is less important in this case than the fact that they do — and business professionals can learn a lot from these defects about decision making.

Business professionals are in the business of making decisions — decisions, rather than paperclips, are the output. Compared to paperclip manufacturing, business decisions are made under vastly inferior conditions. Think about the most recent important decision you faced. The chances are you had never faced exactly the same situation, and it was probably subjective, ambiguous and had external factors out of your control. Perhaps you felt you had insufficient information and worried about unforeseen and unintended consequences. What about the cognitive biases hard-wired in our brains: confirmation, availability, framing, the law of small numbers, ignoring regression to mean, etc.? These evolutionary vestiges insidiously shortcut our reasoning faculties and serve up inherently flawed solutions. It’s a miracle we get anything right!

That we make mistakes may seem trivial, and yet how many of us behave as if we never do? Mistakes are often so costly in today’s professional environment, steeped in “aggressive” goals and “ruthless” execution, that admitting — even to ourselves, let alone others — that our decision making is imperfect takes a lot of courage. And so we soldier on, knights without fear and beyond reproach!

If we do, however, accept our fallibility and embrace the paperclip principle, we can learn how to make fewer costly mistakes and stress less about the ones we do make. Here are a few thoughts to start:

  1. Even the most talented, hard working, best-prepared and well-intentioned people make mistakes. Warren Buffett, among the best investors ever, does not miss an opportunity to talk about the numerous bad investment decisions he has made over the years and the ensuing cost to his shareholders.
  2. You too make mistakes. In fact, you probably made a few today! This realization, however, is not a blanket excuse for making bad decisions. On the contrary, awareness of these flaws should become a foundation for improvement.
  3. Develop the self-awareness to recognize situations when you are prone to making costly mistakes. Everyone has blind spots – make an effort to learn yours. Just ask your co-workers!
  4. To minimize particularly costly mistakes, conduct “pre-mortems,” where before launching an important initiative, owners/decision makers imagine that the initiative tanked and write down the reasons for the failure. Nobel laureate, Daniel Kahneman, who arguably understands better than anyone why people make mistakes, is a big pre-mortem advocate. (Kahneman and Tversky’s work should be mandatory reading for every professional in the position to make costly mistakes.)
  5. When a big decision is on the line, doubt is your friend. Although “overthinking” and “analysis paralysis” are habitually ridiculed, slowing down to entertain your doubt can often prevent spectacularly bad decisions. Doubt makes you dig deeper and ask the hard questions.
  6. Knowing when you have enough information is the hardest part. In Rex Stout’s murder mystery novels, Nero Wolfe reveals “whodunit” only upon convening all suspects at his brownstone on 35th street. Such a gathering signals to the reader that she has sufficient information to deduce the solution. Life is less obliging: we cannot know if we are missing a game-changing piece of information. A good last step before pulling the trigger on a big decision, therefore, is to ask, “What could I be possibly neglecting to consider?” Ultimately, mistakes are built into the fabric of the universe, and stressing about it is no more productive than getting annoyed that the third digit of pi is four. You absolutely can get better at making decisions, but you will never bat 1000.
  7. Don’t dramatize mistakes — yours or others. Own up to your mistakes, learn from them and move on. And if you have good people working for you, treat their mistakes as you would want your boss to treat yours: help fix them. And learn from them.
  8. To err is human, but to err and learn nothing is folly. If we absolutely must make mistakes, as a wise colleague frequently implores, let’s make new mistakes!

So there you have it. You have probably already made a few mistakes today and you may make a few more before the day is over. But, guess what? The sun will still shine tomorrow. The only way to not make bad decisions is to not make any decisions at all… And that would be the ultimate mistake!

This article was originally published on CIOReview.

 

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