Big Sky Thinking

In our previous post in this series, we introduced “The Hidden Traps in Decision Making” by John S. Hammond, Ralph L. Keeney, and Howard Raiffa, in which they describe six traps in organizational decision-making that can adversely affect performance. This week’s post covers the second trap, the “Status Quo Trap,” that we also observe in our clients on a regular basis. In organizations that display the Status Quo trap, decision makers display a strong bias toward alternatives that perpetuate the status quo. Breaking the status quo means taking action, and when we take action, we take responsibility, thus opening ourselves to criticism and to regret.

Big Sky sees this trap in our clients especially when…organizational cultures do not encourage change. When employees are not rewarded to take risks but are penalized for unfavorable outcomes, they choose to stay with the tested-and-tried way of doing business. For example, we have observed in some R&D clients a tendency to reward large projects that transition to operational use, but stigma is applied to failed attempts at innovation. This encourages R&D planners to over-weight project with a high probability of success and projects that are already fully funded, rather than creating a portfolio that includes some high-risk projects.

Techniques to overcome: A few ideas for avoiding the status quo trap include:

1. Remind yourself of your objectives and examine how they would be served by the status quo
2. Identify other options – don’t assume that there aren’t any
3. Ask yourself if you would choose the status-quo alternative if it was not the status quo
4. Avoid exaggerating switching costs
5. Evaluate alternatives in terms of future as well as present context

Our next post in this series will discuss the “Sunk-Cost Trap” outlined in the article and will be posted next week.

Labels: decision optimization

#1: The Anchoring Trap: When considering a decision, the mind gives disproportionate weight to the first information it receives. Initial impressions, estimates, or data anchor subsequent thoughts and judgments. This pernicious mental phenomenon is known as anchoring.

• Big Sky Sees this trap in our clients when. . . time is of the essence. When organizations are under particular pressure to make a decision fast, the anchoring trap becomes particularly acute as there is little patience to wait for alternative information.
• Techniques to overcome: View a problem from different perspectives (use a different starting point to avoid the anchor), be open minded, be careful to avoid anchoring your advisor (tell them as little as possible and ask for their opinion), and be particularly wary of anchors in negotiations.

Our next post in this series will discuss the “Status Quo Trap” outlined in the article and will be posted next week.

Labels: decision optimization