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Why Are Candies Sold At The Billing Counters Of Departmental Stores?

In the midst of making crucial enterprise decisions, The CEO needs to ensure the presence of a few trip wires that will ensure that this decision making process does not suffer from these biases, as Drucker says " making the right decision is a crucial skill at every level".

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When I ask this question to participants at various speaking gigs, the answer ranges from "impulsive purchases" to process exact change" and "brand building to a captive audience "and so on. From an anthropological and neurological point of view, the answer is a bit more nuanced and it begins with the brain.

There are a lot of unique things about our brain-it weighs about 2 per cent of our body weight, but consumes 20 per cent of our energy. Sense and decision making consumes a lot of energy, and when you are low on energy, your body immediately craves for a hit in sugar. Imagine the fatigue when you are shopping in a supermarket in the US, decisions and choices about the brand of toilet paper (41 brands) or bottled water (147 brands) are some of the simple choices you might be making. So, by the time you are at the checkout counter -you are encountering "decision fatigue" due to a phenomenon called "ego depletion" coined by Psychologist Roy Baumeister and your brain asks for a quick hit in Sugar, ergo you respond.

As per an actual incident in the book -"Thinking fast and thinking slow" written by Daniel Kahnemahn, three men doing time in Israeli prisons appeared before a parole board consisting of a judge, a criminologist and a social worker. The three prisoners had completed at least two-thirds of their sentences, but the parole board granted freedom to only one of them. Guess which one:

Case 1 (heard at 8:50 a.m.): An Arab Israeli serving a 30-month sentence for fraud.
Case 2 (heard at 3:10 p.m.): A Jewish Israeli serving a 16-month sentence for assault.
Case 3 (heard at 4:25 p.m.): An Arab Israeli serving a 30-month sentence for fraud.

There was a pattern to the parole board's decisions, and it wasn't related to the men's ethnic backgrounds, crimes or sentences. It was all about timing, as researchers discovered by analysing more than 1,100 decisions over the course of a year. Judges, who would hear the prisoners' appeals and then get advice from the other members of the board, approved parole in about a third of the cases, but the probability of being paroled fluctuated wildly throughout the day. Prisoners who appeared early in the morning received parole about 70 percent of the time, while those who appeared late in the day were paroled less than 10 percent of the time.

The odds favoured the prisoner who appeared at 8:50 a.m. - and he did in fact receive parole. But even though the other Arab Israeli prisoner was serving the same sentence for the same crime - fraud - the odds were against him when he appeared (on a different day) at 4:25 in the afternoon. He was denied parole, as was the Jewish Israeli prisoner at 3:10 p.m., whose sentence was shorter than that of the man who was released. They were just asking for parole at the wrong time of day!
There was nothing malicious or even unusual about the judges' behaviour, which was reported by Jonathan Levav of Stanford and Shai Danziger of Ben-Gurion University. The judges' erratic judgment was due to the occupational hazard of being, as George W. Bush once put it, "the decider." The mental work of ruling on case after case, whatever the individual merits, wore them down

Decision making consumes a lot of energy and hence the thought - "never make important decisions over an empty stomach".This is also the reason that the president of the United States and Mark Zuckerberg don't change their wardrobe as often and this is what Obama told Vanity Fair: "You'll see I wear only gray or blue suits, I'm trying to pare down decisions. I don't want to make decisions about what I'm eating or wearing. Because I have too many other decisions to make."

Why is decision making hard?
The answer lies in the root word of Decide in Latin- "de which means off and caedere" means "to cut". Essentially, when we decide on an option, idea or path -we are in effect cutting ourselves off from other options. Evolutionary insights show that we are most comfortable when we are able to still play out multiple scenarios and we hang on every variable possible till things come to a head.

I ask the following questions at my workshops -

What was the most difficult decision you made and what was the process you adopted?

This has always yielded rich results simply because of the frames of reference that are used. Some Ceo's talk about their struggle with letting people go, some talk about tough business situations and quite a few actually talk about their decision when they chose their Life partners!

According to the book "Decisive" written by Chip and Dan heath, humanity does not have a particularly impressive track record when it comes to making decisions. Career choices are often abandoned or regretted, an American Bar association survey found that 44 per cent of lawyers would recommend that a young person not pursue a career in law. Business decision were frequently flawed -One study of corporate acquisitions and mergers by KPMG showed that 83 per cent failed to create any value for shareholders and when another team asked 2207 executives to evaluate decisions in their organisation - 60 per cent of the execs reported that bad decisions were as frequent as good ones, we seem to have trouble making up our minds -an estimated 61,535 tattoos were reversed in the United states in 2009. The easiest and what we think is very comprehensive -the pros and cons listing of our decision is familiar, commonsensical and profoundly flawed.

Research in psychology over the past 40 years has identified a set of biases in our thinking that breaks to bits the pros and cons model of decision making. To make better choices, we must learn more about these biases and how we can break them. A normal decision making process goes like this:

1) You encounter a choice
2) You analyse your options
3) You make a choice
4) Then, you live with it.

As per the same book, there are 4 villains of decision making that plague "top decision makers" and these are:

1) Narrow framing - A Ceo Coachee wanted to fire a senior level report and was stuck in a yes or no situation, he was going through a "what you see is all there is" effect as described by Daniel kahnemahn, the only psychologist to win the Nobel for economics. Something akin to a spotlight that focusses a beam of light only on a small area. When this insight was unearthed, the CEO went on to consider a series of options including getting the concerned report work with a different manager or make the report go through a job rotation etc. This approach helped the coachee to get unstuck in an "analysis paralysis" scenario and consider other options.

2) Confirmation Bias - Our normal habit in life is to develop a quick belief about a situation and then seek out information that bolsters our belief. Imagine a leader staring at two sets of research data -one is titled -"data that supports what I think" and the other titled "data that contradicts what I think" -guess which one will get cited at staff meetings. When people have an opportunity to collect information, they are likely to select information that supports their pre-existing attitudes, beliefs and actions. The tricky thing is, it can look very scientific! Dan lovallo -professor and decision making researcher says "confirmation bias is the single biggest problem in Business, because even the most sophisticated people get it wrong. People go out and collect data without realising that they are cooking the books. My million $ question of my Coachees -How well do you handle differences in opinion and people? Seeking out uncomfortable answers and diverse points of view help in surfacing initial opposition on both sides and aids in better navigation.

3) Short term emotional conflict - Nothing illustrates this better than the decision Andy Grove had to make at Intel as narrated in his memoirs "Only the paranoid survive". He had to decide to close the memory chips division, it was a tough call considering that Intel was the only source in the world for a long time, but by the end of the 70's, a dozen competitors had emerged. Intel's customers were raving about Japanese memory manufacturers, whose market share went up from 30 to 60 per cent in 10 years at the cost of Intel's. The leadership team at Intel was divided- One team wanted to open up a new facility to double manufacturing memory chips, another team wanted to get into avant garde new technology while a third camp wanted to double down and start serving speciality markets. It was at this time they had also launched microprocessors even though memory was still the dominant source of revenue. It was during this backdrop that Andy Grove met up with Intel's chairman and CEO Gordon Moore and they were both fatigued by internal deliberations. During this discussion, Andy asked Gordon "If we got kicked out and the board brought in a new CEO, What do you think he would do? Gordon answered without hesitation "he would get us out of the memory business". Andy numbly stared and said "Why shouldn't you and I walk out the door, come back in and do it ourselves". This was the moment of clarity! There was one critical ingredient missing from this kind of analysis: emotion. Earlier to this moment, Grove's decision making process was not difficult because he lacked options or information, it was difficult as he was conflicted. Short term pressures and political wrangling clouded his mind and obscured the long term need to exit the memory business. A quick dose of detachment helped him break the paralysis.

4) Overconfidence about the emerging future - "The odds of a meltdown are one in 10,000 years" - Vitali sklyarov, Minister of power and electrification two months before the Chernobyl incident.

Who the hell wants to hear actors talk? - Harry Warner, Warner Bros, Studios 1927.

With the powers of hind sight vested with all of us, we can safely say, these were absolutely disastrous decision. A study showed that when doctors reckoned themselves "completely certain" about a diagnosis, they were wrong 40 per cent of the time. We have too much of confidence in our own predictions. When we make guesses about the future, we tend to shine the spotlight on information that is close at hand and we then draw conclusions based on that information.

In the midst of making crucial enterprise decisions, The CEO needs to ensure the presence of a few trip wires that will ensure that this decision making process does not suffer from these biases, as Drucker says " making the right decision is a crucial skill at every level".

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Jay Kumar Hariharan

The author is an Executive Coach, Speaker and Deep Sea Diver. He is a graduate from International Coach Academy, Sydney. He provides coaching interventions to create transformational Leadership practices. For more read about the author visit www.coachjaykumar.com

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