Living in Australia, some people abroad almost treat me as a trepid explorer, for the daily risks they assume I encounter - giant sharks, venomous snakes, poisonous spiders, deadly jelly fish…the list goes on. Statistically, I am far more likely to be killed by a very friendly, non-threatening fellow driver on the roads, or due to a myriad of very well-known diseases that affect us all, but facts and statistics related to the infinitely small risk of encountering a big, scary event, give us no comfort.
In management, it is no different. Despite all our analytical tools for risk assessment and objective decision-making, we make decisions based on fear and uncertainty. The New York Times (Tues, 4 Nov 2014) refers to an article written in The New England Journal of Medicine, by Dr Lisa Rosenbaum, regarding asbestos in schools. “It is widely believed that better education will keep them (parents) from behaving irrationally, but people did not respond as expected. Research by Dan Kahan, who heads the cultural Cognition Project at Yale University, indicates that people pick and choose evidence that re-enforces their sense of who they are and the groups they belong in.”
So what do we do about it? Just being aware that we are not as objective as we like to think, will help with our decision-making and make us more open to considering a broader range of alternative views and outcomes. In “Thinking Fast and Slow” by Daniel Kahneman, he presents very compelling proof for why our gut instinct is sometimes so good, and also why its so dangerous to completely rely on it.
To make good decisions, we should pay attention to our “gut reaction” but sometimes deliberately over-ride it, knowing that it overreacts to scary sounding outcomes, however unlikely.