Guarding the Mind for Better Business Strategy

Strategic decision making is not easy and comes with a number of fallacies that blind us to the actuality of the world around us. Executives should be aware of their bias and how this impacts their strategic decision-making. Using a few critical thinking tools helps to guard the mind from bias and ensure that decisions are more likely to be successful and have the largest impact.

Executives are faced with all types of different types of pressures that range from investors to employees. Each person comes with their own influence and opinion. At times a presiding opinion forms and this puts pressure on everyone else to accept the premises of those opinions without providing critical thought. When you are at the top and your decisions impact a large group of people you don't have the luxury of making momentous mistakes. 

The mind is seen as a manufacturing unit that results in the product of thoughts. These thoughts help us to reach conclusions about varying topics, beliefs, debates, and strategies. Like a factory your mind has inputs that come through the senses, previous understandings, and others opinions that make their way into the production process. 

Strategic decisions are well thought out and often tested conclusions about how a business should proceed. The best business decisions are something more than opinion and based upon a level of fact that reflects the environment in which the business succeeds. Executives are required to provide the rationale and then the supporting evidence to their decisions. 

From a philosophical vantage point few people can step outside themselves to formulate a true opinion based upon actual observation and fact. The same process applies in many ways to forming a strategic opinion without the bias of ones past. Nietzsche once said, 

"The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. But no price is too high to pay for the privilege of owning yourself."
  
The mind is full of fallacies that we pick up from the world around us and social networks in which we exist. Our thoughts are constructed from previous thoughts and ideas based in our childhood experiences, parents beliefs, friends, family and social networks. We are embedded in our social world around us. 

Strategic decisions should free itself from these biases as much as possible. This is where the concept of guardians of the mind come into play. By using a few tips it is possible to help avoid disastrous mistakes that cost companies millions of dollars in poor decision making and strategy implementation. Before making an important decision try and consider the following guardians:

-Scientific Management: Use literature, science, and the scientific method to help make your decisions. Look at what has been discovered and what other studies have concluded before finalizing your decision. Basing your decision on sound scientific findings helps to ensure a higher likelihood of success. 

-Listen to Your Stakeholders: To be successful a strategy will need a wide group of supporters. This means understanding stakeholders opinions will be important to ensuring that the strategy is designed in a way that is most likely to lead to a successful outcome. The more you listen the more you can create win-win situations. 

-Review Your Bias: It is important for the executive to understand the bias he/she has and ensure that those bias are not making their way into the decision-making process. Every person has some level bias based on their background and it is important to ensure the strategy isn't damaged by limited thinking. 

-Avoid Group Think: The worst decisions are often made from group think where people in the same social group reaffirm each others beliefs even though these beliefs are no longer rational. Step outside your social group and look for alternative opinions to make sure you are not simply just pleasing your friends and colleagues. 

-Rearrange the Data: Sound decisions are based upon data. However, people often take data and jam it together in a way that confirms their pr-existing beliefs. Rearrange the data to find alternative explanations and explore those explanations to ensure they are not more logical and sound.

-Create Feedback Loops: Once a strategy has been implemented it is important to have feedback loops to ensure it is fulfilling its objectives. Feedback loops will help adjust and change the strategy before major damage is sustained. Most strategies will need to be changed at some point.

Strategic Decision: The Difference between Data and Good Judgment

Strategic decision making can encourage you to stronger better paths to achieve important goals. When decisions are well thought out they can help you get closer to where you want to be while using much less effort. Understanding the difference between data and the interpretation of that data helps in seeing and then figuring out the choices that lead down varying paths. A few tips may help you think through options and make more accurate choices that help you improving business and career outcomes.

Understanding the data and thinking through the options affords an opportunity to create critical thinking. Critical thinking can be defined as the objective analysis of information and options that leads to a decisive conclusion. To do this well requires that ability to see the possibilities and pick the ones that are not only most likely but also help you achieve your goals. 

Step 1: Define Your Goals: Knowing your goals and what you want to accomplish might be the hardest part of thinking strategically. We may think the data should define our goals but that isn’t always true. Our general direction and goals be a guide to our everyday decisions to ensure we have a framework for interpreting new data. Keeping your long term goals in mind will help you make the daily decisions that help you get there. 

Step 2: Understand the Data: Understand what the data covers and what it doesn't. This requires knowledge of the methods of data collection and the areas that the data has no measurement. Better knowledge of the data will help you stay away from illogical interpretations. 

Step 3: Evaluate the Interpretations: Data is just numbers and letters but there are always multiple interpretations of that data; the most popular isn't always the most accurate. Make sure that you understand all of the most likely interpretations of the information to ensure that the main paths are exposed. This is important if you want the full breadth of options because some of the best one's are not always apparent.

Step 4: Narrow Down the Paths: Based upon logic, experience, risk, and reward narrow down your options to the one or two that will most likely help you achieve your goals. Out of the many possibilities only a few will make any real sense to you. Some can be discarded right away.

Step 5: Select Option and Alternative Option: Among the remaining few options you should select the primary and the secondary option as a strategic action forward. If the primary doesn't work out for some reason you can fall back on your secondary plan. The final selection should include not only your experience, and knowledge, but also sound judgement as this is the selection that will impact a future course of events.

Poem: The Road Not Taken by Robert Frost

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;
Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,
And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I-
I took the one less traveled by,
And that has made all the difference.

The Road not Taken speaks about the lives we live and the multiple opportunities we have to make decisions. Each decision leads down different paths where new opportunities and challenges reside. Where one decision is chosen a sequence of other decisions becomes possible. So on and so forth throughout our lifetimes. 

In old age we often look back at the decisions we have made and can sometimes find that precise moment where we defined our lives. This is where the big decisions are made that change the patterns of life.  Each person has a few moments that have led them to where they currently stand.  Age brings better perspective. 

When you reach a fork in the road it is beneficial to look down as far as one can see. Sometimes you have to get out your binoculars and other times you simply have to take a giant leap and accept the results. Roads are definitive but it is possible that they reconnect in various places in the future. It is important to think critically where you want to go and start moving despite the well traveled paths others have taken.

Scientific Learning Fosters Strategic Decision-Making Skills

Permission to Use D.S.

Socio-scientific answers are rarely specific enough to concrete. The complexity of making determinations in this field helps in highlighting which methods of strategic decision-making people are using. Research by Eggert & Bogeholz delves into the complex processes students use to make socio-scientific decisions based upon competing information and ambiguous direction (2010). Their results show that scientific thinking improves complexity of thought and strategy making.

The process of making decisions that border between scientific research and sociological concepts is difficult. In scientific research it is necessary to answer ambiguous and specific questions like the potential societal benefits of research or the exact measurements used in instrumentation. It is hard for people to make cognitive models that can handle such widely dispersed information effectively. 

Understanding science requires the ability to look at data, be open to new data, and understand its implications on people. It is a higher skill set that not everyone can develop and those who do have spend years learning. It uses analytical thinking, creativity, systematic approaches, and sociological perspectives all meshed together to come to conclusions. 

 Science can enhance skills in argumentation, decision-making, and problem-solving.  Strategy can be developed when people learn about trade-offs which is seen as the ability to weigh and balance certain factors. Where a loss occurs in one set of options there can be gain in another set of options. Most people are limited to only a few factors and simply cut off the rest. As intelligence and knowledge increases more factors can be incorporated into the systematic thinking process without having to automatically limit oneself to a few simple possibilities.

In science it is possible to make decisions on key pieces of data. Each one has their own weight of influence. To come to better conclusions a level of meta-reflection on the decision making process is necessary to ensure that thinking patterns are appropriate and not biasing the outcome. To do this well requires the integration of multiple pieces of information, seeing how they interact, determining trade-offs of different factors, and reflecting on the whole process. 

Complexity of thinking ranges from spontaneous thinking with no reflection to high levels of tradeoffs with meta-reflection. Intermediate thinkers use both cut offs and tradeoffs with some level of reflection on the thinking process. The highest level scientific thinkers use tradeoffs with relative weighting to think through possibilities.  The far majority of people use cut-offs because it is easier to work with limited data.

The researchers Eggert & Bogeholz used the Rasch partial credit model to determine the competencies German science students were using to make decisions. A total of 436 students were engaged within the study and assessed based upon their decision-making skills. Their work helps highlight that even with a scientific education the skill can be increased but is not developed by everyone. 

The results showed that science education raised non-compensatory decision-making strategies to mixed strategies and then to tradeoff strategies as people developed. Participants had difficulty weighing many different criteria to make appropriate decisions. Meta-reflection changed thinking from a content specific analysis to a strategic analysis that is based on an analysis of multiple options. 

The majority of participants used the cut off method that focused on looking at a single or few aspects of the overall problem. They had difficulty weighing and balancing a greater amount of information, points, and criteria to get a more concrete picture. Yet as a person’s education rises from six to twelve years their ability to manage more pieces of information grew tremendously. 

The cognitive structure and complexity of thought are important aspects of making decisions and developing a strategy. It is a skill that increases as one spends more time in school or learning about science. Generally, the more one is capable of balancing multiple pieces of information the more able they are to build progressive strategies that achieve goals. Seeing information through varying possibilities and weighing and balancing the likelihood of each outcome is a higher order skill. Quickly discarding options without thorough analysis limits how well one can respond to environmental challenges. The report helps to show how leaders decision-making ability can be enhanced by focusing on evidence based strategic management and then reflecting on those decisions to ensure they are accurate. 

Effert, S. & Bogeholz, S. (2010). Student’s use of decision-making strategies with regard to socioscientific issues: an application of Rasch partial credit model. Science Education, 94 (2)

The Strategy of Level-K Decisions-Outside Bounded Rationality

Art Dr. Murad Abel

Reviewing a number of game theory results the authors Crawford, Costa-Gomes, and Iriberri (2013) discuss why people often deviate systematically from equilibrium in game theory. By understanding why some choices appear irrational (level-k) it is possible to better determine under what circumstances such behavior is prevalent. Their paper reviews and analyzes a large swath of game theory results to make some conclusions. 

Strategic thinking is a natural part of everyone’s life and influences everything from school choice to business decisions. In game theory each person seeks to maximize their payoffs based upon predicting the choices of others by assuming the rationality of the other players. This is called bounded rationality as all players work under the same assumptions. 

There is also something called level-k responses. It is an assumption that all players actions will improve in an attempt to take the dominant stance that eventually leads to equilibrium. A level-k response would indicate that a person is making decisions outside of shared understandings of “rational” choice. This indicates the person’s cognitive model and assumptions of the game may be different than other players. 

Because there is a lack of information when a game starts, some players recognize this ambiguity and avoid dominant positions that often fit within the equilibrium model. Each person responds to the game with a personality type that impacts the types of decisions they make. It is their personal beliefs that help them develop a strategy for dealing with the components of a game and choosing certain patterns. 

Equilibrium is seen as rationality with a common belief among players. The more evidence a person obtains from the game the more accurate and rational their decisions. Players often make larger and wilder maneuvers in the beginning of a game and then move to define choices toward the later part of the game as they begin to understand the rules. 

Using a concept called level-k models it is possible to see how certain behaviors move away from equilibrium choices and under what circumstances such behavior can be expected. Many poor decisions may be made from a lack of time, information, or cognitive deficiencies.  Yet it is possible to find that level-k decision-making may have some advantages in resolving games and conflict. 

In a level–k decision it is believed that the player is making decisions regardless of the other players within the game. Level-1 players have higher cognitive hierarchies than Level-0 players and believe others are playing at a lower level. So and so forth up the chain of complexity. Higher level thinkers (i.e. L3 players) may come to the conclusion that the game takes into account many different levels of strategic thinkers and their actions are based upon the aspects of their complex environment.

Expanding on the concepts within the paper it is important to make a distinction between irrational behavior and perceived irrational behavior. In small games with clearly defined rules the rational choices are obvious. In larger games without restrictions, what is seen by one as irrational choice may yet be the most rational choice. These choices may depend on objective, environmental testing behavior, countering limited thinking of other players, or even drawing in the behavior of other players. 

Strategic thinking is important as organizations seek to move from local to global marketplaces where the environment has many more options and choices. The perception of rationality is based upon the abilities of those who are doing the judging and their ability to understand the environment or the behavior.  As cognitive complexity rises so does the ability of individuals to make choices where the strategic purpose of the decisions are not immediately apparent to lower level thinkers. This could be an advantage in and of itself.

Crawford, V., et. al. (2013) Structural models of nonequilibrium strategic thinking: theory, evidence and applications. Journal of Economic Literature, 51 (1).