Root Out Bias In Decision-Making

In the restaurant business, taking shortcuts in the decision-making process can be detrimental to the success of the business. There's no surer way to waste time and money than to rely on gut decision-making alone. 

In behavioral theory, there is the idea that we utilize one or both of two systems to make decisions. System 1 refers to the decision-making that relies on intuition or gut instinct. It is the quick way of assessing a situation and developing a plan of action. System 2 utilizes calculations and facts to assist in decision-making. Each has their own strengths and weaknesses, and it is important to be able to utilize both systems well. It's just a matter of being cognizant of which system you're actually using and if it's the appropriate one at that time. So just like you would not revert to system 2 to tell you what to do when a foul ball is flying at your head, you wouldn't rely on system 1 to make a decision about your business.

6 Common Biases To Be Aware Of.

Overconfidence Bias- I think that this is a pretty common bias that happens as the decision makers climb the ranks. This is where we think our reasoning is more valuable than it really is.

Anchoring- This is biasthat comes from the first impression you have past results. In ongoing marketing efforts, this would be assuming that future results will be the same as the initial results, even though everything since has proven to be different.

False Causality- This bias convinces us that patterns in current results will influence future results. Just because the last 5 dice rolls have been EVEN doesn't make the next result more likely to be EVEN. It's still 50/50. 

Fundamental Attribution Error- This is the tendency to blame external events for the failure or success of past decisions rather than intrinsic flaws or advantages. Blaming customers for not understanding your brand rather than the choice of location for that brand.

Confirmation Bias- We've all fallen victim to this and probably realized it. This is where we only take into account the information that supports our position. Opposing information is conveniently disregarded or discredited.

Loss-Aversion- This is where we make decisions based solely on fear of losing traction. We reject opportunities to gain more ground because there is a certain amount of risk associated.

These biases can wreak havoc on our ability to make sound decisions. But we can take measures to help us counter the effects of these biases.

7 Strategies To Root Out Bias

Employ devil's advocates- "Yes people" are doing you no favors. For important decisions surround yourself with people with different perspectives and opinions. And most importantly people who are not afraid to take the wind out of your sails.

Use non-chronological formats- Availability bias is putting more weight on information that's immediately recalled rather than all of the information. A good way to combat this would be to take the results and put them in a random order. This way three recent REDs in a row on the roulette table don'tmake you believe there is a higher probability of RED on the next spin.

Look at sources- When looking at feedback from the people around you take into account their motivation or viewpoint. Just because a bartender didn't make any money the last time you ran a certain promotion doesn't mean that it wasn't a successful promotion.

Beware of outliers- The truth is usually somewhere in the middle. Outliers lie outside one or more standard deviations. There may be some important information that these outliers can provide us. But taking too much stock in their face value can be dangerous. Results will ultimately regress towards the mean.

Always look at comparisons- "We did $20k on that day last year when we ran that promotion!" That should never be enough information to make a decision about doing that event again. Do we normally do $40K that day? Did we actually make a profit on the $20k?

Use other tools- No two situations are exactly the same therefore assessing pros, cons, and scenarios cannot be done in the same way. Whether it's polling your staff or customers, or looking at ROI, employ a variety of methods to get a good view of the big picture.

Slow down- Ultimately many of the biases set in because we're going too fast and just trying to get a decision out. It's impossible to stop system 1 from filling your head with intuition and hypotheses. But slowing down and reducing the urgency in your own head will allow you to take a step back and look at the situation more objectively.