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ARTICLE MAY/JUNE 2016
 
Markus Domeier on ...
 

SYSTEM ERROR

Or: The logic of failure



There are many paths that lead a company to ruin, but only a few that lead it to success. Top managers are accustomed to being confronted with complex decisions that will dictate a company’s direction. Yet despite a certain “decision-making routine”, many of them miss the mark. Paul C. Nutt, a decision researcher, is of the opinion that 50 percent of all decisions made in complex situations are the wrong ones. How can so many poor choices even be possible?


Bad decisions point to systematically irrational patterns

The latest research shows us that the causes of bad decisions can most often be found with the decision makers themselves. In particular, it is their personal motives and the behavioral patterns based on those motives that are the main culprit. They lead to inadequate handling of information and cognitive distortions in the interpretation of information that is relevant to the decisions at hand. It appears our poor decisions are the result of systematically (!) irrational patterns that are nobody’s fault but our own.
Given this data, there are certain mechanisms that play a significant role in our decision-making processes, and they can lead to distortive effects and ultimately to misinterpretations and bad choices. These mechanisms include searches for information that only confirm our own opinions (perceptual defense), simplistic modeling (simplex models), and a disregard for side effects and long-term effects…just to name a few. We would of course be aware of these types of causes, and thus be able to avoid them, if it weren’t for our unconscious STRUCTURE OF NEEDS, which finds it quite practical that it can access whatever “set of techniques” it requires, at any time, to feed our desire for power, competence or a sense of belonging.

Could these mechanisms of pulling the wool over our own eyes be part of a “self-preservation program” that helps us fulfill our own needs even if it leads us to poor decisions? It is a question worth asking, and one we will try to briefly answer here. To do so, however, we need to take a closer look at our structure of needs.


Our structure of needs manipulates our decision-making!


The first thing we need to understand is the complex interplay of COGNITION, EMOTION AND MOTIVATION in the context of human decision-making processes. The lion’s share of research on decisions (good and bad), however, has masked out this fact and focused instead on one (!) of three drivers. An exception to this rule is the PSI Model, developed by Professor Dietrich Dörner. His holistic approach not only allowed him to explain the complex interplay and consequences of cognition, emotion and motivation in human (decision-making) behavior, but also to make this behavior PREDICTABLE to a certain extent. In doing so, he impressively shows the massive overall influence that an individual’s needs exercise on how we conduct ourselves and how those needs, in particular, determine our logic when making decisions.

The influence of human needs on our behavior is well illustrated in our basic PHYSIOLOGICAL needs. An example: Imagine you are (really) hungry. You’re bound to get something eat when you get the chance, but we know our hunger cannot be appeased forever. It will keep coming and we will have to do something about it every time. You could say our physiological needs force us again and again to compensate for the “deficit” at hand.

This basic pattern can also be found in many PSYCHOLOGICAL needs. According to Prof. Dörner, three (informal) needs play particularly significant roles in our decision-making processes: AFFILIATION (a sense of belonging), DETERMNINATION (knowing what is coming) and COMPETENCE (being able to solve complex problems). Simply put, our bad decisions almost always lead us back to the fact that we will do everything in order to

  • be liked and feel like we belong
  • construct a simplified “reality” of the future in order to feel like we understand it and have a degree of control over it
  • confidently be able to depend on our own abilities and skills when finding solutions so that we can continue to feel a sense of being capable.

So how do these needs make themselves noticed in our everyday management roles?


An example of the need for affiliation

Let’s take one of our three informal needs: affiliation. As we just established, this is the need we have to BELONG to something. We are always looking for signals that give us the feeling of being part of a group that values us. Positive signals crop up primarily when a person is in harmony with the norms and rules of other people or social groups. If you conflict with those norms and rules, the group reacts with negative signals: rejection, exclusion or a lack of recognition. As a result, we very often tend toward behavior that conforms to the situation.

NOW PUT YOURSELF IN A MANAGEMENT MEETING...
You are a member of management and need to make some decisions about three fundamental topics with two other colleagues of the same management level. You have been working with these colleagues for a long time and have a completely friendly relationship with them. Each member of the group has the task of forming the basis for a decision for one of the topics. Each will then present it and put it up for discussion so that you all can then decide either FOR or AGAINST an investment. Your topic is last on the agenda to be presented and decided upon. How will you behave? Will you really challenge your colleagues on their subjects with the necessary objective rigor and contextual criticism? Or will you hold back a bit because it might serve your own cause better if you don’t antagonize them too much? Studies show that the latter is often the case. We have learned our whole lives that objective criticism is not only unappreciated but that it can also be met with undesired reactions. As such, we tend to present such criticism with caution when we are among equals and often affiliate ourselves with the majority when it comes to decisions. The open and objective discussion required for the actual matter at hand ends up taking a backseat to the harmony of the group.

SO WHAT IS THE SOLUTION ...
... to consciously avoiding that type of “shielding mechanism”? Come to our IMP Strategy Days and experience Markus Domeier “live” to find out from him how we can navigate around all of these methods of self-deception and ultimately make good, self-reflecting decisions.

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You want to discover the hidden motives behind our decision-making processes? Markus Domeier will navigate with us through our structure of needs at IMP Strategy Days.
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Markus Domeier, who has delved deep into this subject over the last 10 years, will show us the logic that forms the basis for our bad decisions.

The business psychologist has worked with researchers at the University of California, Berkeley, among others, on this extensive subject and was recently in Silicon Valley for a number of months to study the decision-making behavior of the “fauves”, or the wild young entrepreneurs.

 

 

 

 


MARKUS DOMEIER 

 


UNIVERSITY OF INNSBRUCK  AND BERKELEY 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STRATEGIEARBEIT DER ZUKUNFT
Wohin des Weges?

16/17 June 2016 |
IMP Strategy Days |
Innsbruck |

You want to know how to navigate around bad decision-making? Markus Domeier will be at the IMP Strategy Days to talk about the logic of failure and how not to “run aground”.

Conference language |
german |

 

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