Making the right decision is of vital importance to all living creatures; make the wrong decision and the effects can be deadly. For example, this time of year birds have to make the right decision about where to build their nest for this year’s brood; build it in the wrong place and it can be destroyed by the elements or be susceptible to predators.
For organizations, decision making is more important than ever; the wrong decision can end up costing the company billions of dollars and leave the door open for competitors. A real problem for today’s organizations are the hidden cost associated with what a recent HBR article calls ‘noise’ on decision making .
Things that affect our decision making and make up noise include:
– the weather
– our mood
– our own personal situations
– the last time we ate
– how much we slept
– our health
I’m sure we can all agree that we feel better and more clear headed to make decisions after we’ve had a good night’s sleep, the sun is out and our personal and work lives are going well. Likewise, when we haven’t slept, it‘s been raining for 5 days straight, work is stressful and you are having personal issues, your decision making is probably not on par. This can cause a large variance in our decision making that can deviate significantly from our peers, from prior personal decisions and from organizational rules. As an example of decision making variance, Kahneman et al explains how software developers were asked on two separate days to estimate the completion of a given task. The hours they projected differed by 71%! Examples like this happen frequently in organizations and as a result, the cost of noise is measured in the billions of dollars and the value of reducing noise even by a few percentage points, to be in the tens of millions of dollars.
The article goes on to suggest that AI should be used to eliminate the noise and the cost associated with it in your decision making. Due to the lack of emotion, algorithms are touted as being much more precise than experts, even when the experts have access to more information than the formula uses. Unlike humans, a formula will always return the same output for any given input and decrease the chances for making regrettable decisions.
But we shouldn’t be too hasty to put all our eggs in the AI basket and take out all of the human emotion in our decision making. Emotion is what makes us human after all, we just need to leverage it better. In today’s world more than ever, we need to understand the perspectives of everyone involved in the situation to see their point of view and be empathetic to how they can be affected.
So how can we use the benefits of human knowledge without the emotional aspects that normally come along?
A properly chosen perspective can remove the bias from the equation, obtaining all of the insights
without the emotional baggage normally introduced when dealing with a problem.
Parker and Axtell cite studies who show when people engage in active perspective taking they are more likely to empathize with the targets (the people whose perspective is taken), feeling concern about their misfortune, understanding or identifying with their experiences, and experiencing pleasure in their achievements.
AI can then be used to analyze the results of this perspective taking and determine when your team is adding new insights and when they are rehashing the fight they had with their spouse last night and clouding their judgement.
By combining the predictability of an algorithm with the power of perspective taking, the noise and variance in decision making can be reduced. This powerful combination leads to a clearer understanding of your challenge which ultimately leads to better outcomes. As Seth Godin once said ‘until you remove the noise, you’re going to miss a lot of signal’.