Conscious Leadership — How to make good decisions
We need better decision-making for our complex world. Awareness is the key. We explore causes for bad decision-making through the lenses of cognitive psychology, group dynamics, and social psychology. Better decision-making is achievable and takes practice.
The need for decision-making arises because of the uncertainty associated with the future and the inherent unavailability of all required relevant information (Tannenbaum, 1950). Honing strong decision-making skills is important for leaders. After all, wrong moves can damage your community, your organisation, your team and your career.
This is a picture of the Deepwater Horizon Platform in flames. How could we get here? Being involved in shaping culture and leadership in the aftermath at BP was my baptism by fire. Exploring and addressing the organizational factors, group dynamics, and individual circumstances which led to this man-made disaster changed me. We have made great leaps in technology but have not yet invested enough into our minds to catch up.
Few leaders receive formal training or spend much effort and time on developing their decision-making. Most of the time we run on autopilot. We are not aware of what drives us. We actually do not make decisions but automatically sort the reality we experience into past patterns. We basically repeat what we have done before and this results in bad decisions.
We explore five areas of impediments for good decision-making:
- Cognitive biases
- Social interaction patterns
- Group dynamics
- Organizational dynamics
- Culture and societal discourse
Our brain is wired to constantly establish and seek patterns in our experience. Once a pattern is established aka learned and we perceive the triggers to be there, we execute the associated behaviours automatically. This pattern repetition applied to situations which are a bad fit, results in what psychology calls biases (see image below). There are quite a few of them.
It is hard to overcome these biases. They are practical heuristics, which work quite well in many daily situations and save us a lot of “energy.” Most of the time we do not even realize that we apply them. For an untrained mind, it takes serious mental effort to switch to more conscious decision-making (Kahneman, 2011).
Let us examine the bias loss aversion as one example. It is our preference to avoid losses to acquire equivalent gains. Research shows that if a 50–50 gamble could cost the gambler $1,000, most people, given an objective assessment of the odds, would demand an upside of $2,000 to $2,500 (Kahnemann & Tversk, 1979).
We also tend to evaluate every option as a change from a reference point — usually the status quo which activates our loss aversion bias and often leads to inaction and undercommitment. If we would instead view the option of “continuing as is” as one of many possibilities for gains and losses over time it would make sense to take more risks. Most of the phenomena commonly grouped under the label of risk aversion actually reflect loss aversion.
2. Social interaction patterns
Most decisions are made not on our own and for ourselves but with and for others. Each person involved in the decision-making will be influenced by the biases outlined above. Additionally, as soon as we interact with others our learned social interaction patterns muddle the waters even further.
We start to learn how to interact with others as soon as we arrive on this world. During childhood we are exposed to powerful others, who we need to adequately deal with in order to maximize our chances of survival and to avoid physical and emotional pain, e.g. parents, older siblings, peers, other adults etc.
As adults, we are usually not consciously aware of the patterns we learned during childhood. Thus, most of us act out emotional-behavioural patterns, which we adopted as children. The more stressful or overwhelming our childhood experiences the less accessible the patterns and their causes are to us. And the stronger their impact on how we think and act.
“Man’s main task is to give birth to himself. ” ― Erich Fromm
In social interactions these programs get (re-)activated — usually without us even noticing. Certain triggers have us execute unconscious reactions, which might not at all be good responses to the actual situation at hand. This can result in us becoming afraid and freezing up, overly trying to please others, feeling guilt or shame when somebody opposes our opinion, trying to control others to establish psychological safety for ourselves etc.
Very severe experiences we call childhood traumata, which occur when children experience actual or threatened negative events, series of events, or sets of circumstances which cause emotional pain and overwhelm the child’s ability to cope. Depending on how traumatic experiences are defined:
- 8–12% of American youth have experienced at least one sexual assault;
- 9–19% have experienced physical abuse by a caregiver or physical assault;
- 38–70% have witnessed serious community violence;
- 1 in 10 has witnessed serious violence between caregivers;
- 1 in 5 has lost a family member or friend to homicide;
- 9% have experienced Internet-assisted victimization; and
- 20–25% have been exposed to a natural or man-made disaster.
Between 20–48% of all youth are exposed to multiple types of victimization and trauma (Saunders & Adams, 2014).
Survivors of childhood trauma often experience worry, shame, guilt, helplessness, hopelessness, grief, sadness, and anger. Traumata have been linked with higher rates of anxiety, depression, PTSD, drug and alcohol misuse and relationship difficulties. Survivors can develop ‘heightened stress response’, which impacts the ability to regulate emotions, leads to sleep difficulties, lower immune function, and increases the risk of various physical illnesses throughout adulthood.
It is easy to see how our social interaction patterns interfere with good decision-making. Even more so when the pressure increases because the decision at hand potentially has a high impact and is urgent or risky etc.
3. Group dynamics
When we interact with the same people over time another special set of distortions creep into our decision-making: group dynamics.
Many people will go along with the group regardless of what they themselves might think as individuals. A famous experiment by psychologist Solomon Asch (Ash, 1951) showed how powerful group conformity is. Asked to choose which of three lines was the same length as a prototype line, nearly every subject chose correctly when acting alone. But then Asch put each subject into a group of several confederates, all of whom had been instructed to pick the wrong line on one of the “tests.” Almost 75% of the subjects agreed with the group at least once — even though many later reported they knew the group’s answer was wrong.
It’s easy to stand in the crowd but it takes courage to stand alone. ― Mahatma Gandhi
We often believe that a group would moderate individual points of view. In fact, the opposite often happens. In a phenomenon known as group polarization, deliberation can intensify people’s attitudes, leading to more extreme decisions. A study of US federal judges, for example, found that judges working alone took a relatively extreme course of action only 30% of the time. When they were working in groups of three, this figure more than doubled, to 65% (Isenberg, 1986).
Groups have a tremendous impact on our decision-making. Below is a good depiction of how group dynamics can lead us to keep repeating past patterns without taking the actual situation into consideration. (Note: It is a thought experiment.)
4. Organizational dynamics
Much of our daily life we take part in organizations. Organizations shape our world. Most decisions, which have big impacts on large amounts of people are taken by organizational leaders. Organizational dynamics get overlaid on top of group dynamics, social interaction phenomena and biases influencing individual decision-making.
People who assumed organizational leadership positions will recognize the picture below.
Decision-making in organizations is inherently pestered with principal-agent problems (Jensen & Meckling, 2001). Whenever the incentives of certain employees are misaligned with the interests of their companies, they tend to look out for themselves in deceptive ways. Below are three examples for how organizational dynamics distort decision-making (Lovallo & Sibony, 2006):
5. Society and societal discourse
Last but not least, our basic mental models, the lenses, through which we perceive the world, are determined not by ourselves but by the societies we live in. Whether you grow up on the West Coast of the USA, a city in Iran, or in rural China makes a difference for how you view the world.
“Culture is the collective programming of the mind which distinguishes the members of one group or category of people from another.” ― Geert Hofstede
Culture shapes what we perceive as possible to make decisions about, what options we come up with or accept as valid, and how we go about making the decision. As one example find below the goals of MBAs from different countries (Hofstede, 2007):
As you can see these future leaders will pursue very different goals in their decision-making. Four of India’s top five goals are among Denmark’s bottom five (family, continuity, wealth, and power). Three of Denmark’s top five goals are among the bottom five in the USA (creating something new, profits 10 years from now, and responsibility towards employees). Respecting ethical norms comes top in China but among the bottom five in India. Short term (this year’s) profits are among the top five in the USA only, and among the bottom five in China.
Depicted below is the dynamic, which cultural differences can easily lead to:
What can you do?
So, what can we do to overcome these “flaws” in our decision-making? Simply put, it comes down to becoming aware. If we are fully present, conscious of our thoughts, feelings, bodily sensations, and our surrounding environment we can start to overcome our lazy monkey brain.
This is what mindfulness and meditation are all about. With mindfulness, the decision-making process becomes a thoughtful, cognitive exercise, rather than an impulsive reaction to immediate needs. Mindfulness research shows that this kind of heightened awareness allows for (Atkins & Reb, 2017):
- Early identification of decision opportunities
- Improved ability to recognise the limits of one’s knowledge
- Improved ability to identify trade-offs and unintended consequences of potential decisions
- Better problem-solving by being able to hold conflicting and paradoxical options and to combine them into superior solutions
- More thorough ethical evaluation
These benefits are just the beginning. Practicing mindfulness improves well-being and health. For example, it increases self-regulated behaviour, positive emotional states and reduces mood disturbance and stress (Ryan & Warren Brown, 2003). Mindfulness also improves anxiety, depression, and reduces pain (Goyal M, 2014).
Over time, the right meditation practices will help you to become aware of your unconscious emotional-behavioural patterns from your earlier life. This is where psychotherapy as another approach to increase self-awareness comes into play. Instead of repeating outdated schemas you will be able to respond coherently and effectively to what is happening now.
Epistemological and philosophical reflection helps to us to flex and expand our basic mental models (Brendel, 2014). Becoming aware of how we view the world opens the path to grow beyond our limited conceptions. Combined with deep mindfulness and the compassion that comes with it, we become able to create good next steps in and for our interconnected and polarized world.
Ultimately, those who practice mindfulness are more capable of aligning their intentions with their behaviours — a key trait for gaining respect as a leader, making better decisions and powerfully making our world a better place. Being able to live in integrity is a challenge for many leaders in small and large organizations.
This is why we are building the Homecoming Academy. Our mission is to serve people who take on responsibility for others and help them make better decisions for a better world.
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Nico Czinczoll is a trusted advisor to executives and management teams. Nico helps leaders develop and implement robust strategies, smart re-organisations, and effective leadership. His clients include innovative digital champions, complex industrial Fortune500 / Dax30 corporates and family-owned hidden champions.
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Sources:
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