At its root, extreme decision making is about how we assess possibilities in events. The adage, “Things are never as good nor as bad as they seem,” is a common remedy for it. It is very common in decision making unless we protect ourselves. It is not limited to pessimists and optimists.
Extreme Decision Making Outcomes
“Safe at Any Speed” (Harvard Business Review, September 2014 edition) tells of Mary Riddel’s (University of Las Vegas) and Sonja Kolstoe’s (University of Oregon) research into this “possibility bias” as it is called. They found “amateur auto racers are actually more rational about risk than most of us.”
Outcomes of extreme decision making tend to be of two types. Our fears will encourage over investing in protection and our expectations over investing in opportunities. Experience can help but it could also make it worse.
Negative stories in our lives will deter change and innovation. They make us less open to new ideas and ways. Positive stories, our successes, are less likely to have taught us much. They raise testosterone levels though. This means bigger bets.
Protection Through Reflection and Diversity
To protect ourselves from extreme decision making, at some point we need to remove ourselves from more influence and information. This means taking time to reflect quietly and refer to prior plans. They help us revisit prior views.
Moods greatly impact our decisions. We should avoid pressure and fear. We need to look for times when we feel good about ourselves. Overconfidence though hinders reflection.
When we work with our teams, focus them on the costs and risks. This prevents rosy forecasts. We ensure teams are diverse. This creates options especially in tough times. We must not be afraid to manage the team through conflicts that will arise. Playing out scenarios in gaming exercises helps to test ideas.
A body grows best with balanced nutrition. Our decision making does too with balanced views. Reviewing plans and reflecting quietly upon the views of diverse people are the best protection from extreme decision making.