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“45 % of all our decisions

are wrong”

WHY?

Roger Claessens, Prof. UBI

www.rogerclaessens.be

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Could your neighbour introduce

YOU?

Why than such a high

%?3

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You may remember the…

1. Define

2. Measure

3. Analyse

4. Innovate or Improve

5. Control

5 Steps

DMAIC

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7 Stages

1 Define2 Causes of problem3 Possible solutions4 Decide5 Responsibilities6 Evaluate results7 Test

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3 R’s

Reflect RespondRevise

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Maths

2

m

miim

im

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We have TOOLS, don’t we?

THE COMPLEXITY OF DECISION

MAKING

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MARGIN CALL

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• You are in the Arizona desert in the hottest time of the year. You know that you are about 125 km from the nearest town. Fortunately you have some pieces of equipment and items left that you could use for your survival.

• The decision to make is: either to stay put and wait for help or move and walk the 75 miles to the nearest town. Whatever the decision it needs to be taken unanimously!

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• Compass

• Small transistor radio

• Shaving mirror

• Snake repellent

• 1,5-liter of water per person

• 4 square meter of plastic

• Mosquito netting

• 1 case of rations

• Maps of the desert

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• Cushions• 5 litre of an

oil/gas mixture • 1 bottle of rum• Two boxes of

chocolate• 5 meter of ropes• One boomerang

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Decision making

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Intuition is the ability to acquire knowledge without inference or the

use of reason

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Decision Making

Intuition = Recognition

We are often wrong, and an objective observer is more likely to detect our errors than we are

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Decision Making• System 1 operates automatically and quickly

with little or no effort and no sense of voluntary control. It includes the innate skills that we share with other animals.

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• System 2 allocates attention to the effortful

mental activities that demand it, including complex computations. It requires attention and effort.

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Decision Making

Decision Making

Overestimation of intuition and underestimation of what we need for the analytical part of the decision making process will induce:

IRRATIONAL PERSEVERANCE

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Decision Making

When people believe a conclusion is true,

they are also very likely to believe

the arguments that appear to support it,

even when these arguments are unsound.

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Decision Making

High intelligence does not make people immune to

biases!

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Decision Making

The illusion that one has understood the

past feeds the further illusion that one can predict and control the future.

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Decision Making

• It is natural for System 1 to generate

overconfident judgements, because

confidence is determined by the coherence of the best story you can tell from the evidence at hand.

• Therefore your intuitions will deliver predictions that

are too extreme and you will be inclined to put far too much faith in them.

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Decision Making Expertise depends essentially on the quality and

speed of feedback, as well as on sufficient opportunity to practice.

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Decision Making

• When faced with a difficult question, we often answer an easier one instead, usually without

noticing the Substitution

• There are several ways human choices deviate from

the rules of Rationality

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We have the illusion of making decisions! MIT _ TED Talks

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SO,

WHAT DO WE DO?

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Think Different

Kick start your brain.

New ideas come from

watching something,

talking to people,

experimenting, asking

questions, getting out

of the office

- Steve Jobshttp://steve-jobs-biography.pics-grabber.appspot.com/

Stev

e W

he

ele

r, U

niv

ers

ity

of

Ply

mo

uth

, 20

11

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35

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WHAT MOTIVATES YOU?38

•DO YOU FEEL YOU THINK EFFECTIVELY?

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•DO YOU KNOW WHAT YOU NEED TO KNOW?

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This is the result of a way of thinking:

Better

Faster

Cheaper

Smaller

Simpler

Smarter 41

CONSEQUENCES!

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• What were the CONSEQUENCES of the wrong decisions?

• What would have beenCORRECT decisions?

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Discussion

GSM MERCHANT BANK

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CAR DEALERSHIP

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The 20 steps for good DECISIONS

Examine every alternative

Use previous decisions if the are still applicable

Make long term

decisions with the short term

in mind

Change decisions that are no longer appropriate

Consider the implications

of each decision

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The 20 steps for good DECISIONS

Try to foresee and prepare

for any changes

Always ask what can go wrong with

your decision

Always consider the

possible outcomes

Always try to balance

intuition and logic

Avoid making decision that have a large element of chance in

them

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The 20 steps for good DECISIONS

Follow a precedent

when it works

Challenge the

company culture if need be

Be aware of politics behind

decisions

Weigh the impact of decisions on people

Do not be afraid to delegate

the process

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The 20 steps for good DECISIONS

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Do not be afraid of

rejection, think about

an alternative

Build your trust in

decision making

Never make decisions

under pressure

If it proves to be a wrong

decision, take fast action

Never postpone vital

decisions –make them

quickly

Decisions…, don’t forget the

MYTHS

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WHAT YOU WILL BE ABLE TO DO AFTER A GOOD DECISION

contact@rogerclaessens.be

« Thinking, fast and slow, Daniel Kahneman,; Penguin Books, 2011

« Blink » Malcolm Gladwell, Back Bay Books, 2005

« Inside Steve’s Brain », Leander Kahney, Atlantic Books, 2008

« The black swan », N.Taleb, Pinguin 2007

« Organisational culture and leadership », Edgar H, Schein, Jossey-

Bass, 2010

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