The Smarter People Blog

Human Capital Analtyics thoughts, views and opinion, from SPP thought leadership and industry experts.

What Does Being Strategic Look Like?

What Does Being Strategic Look Like?

In Diana Thomas‘ CLO article, What Does Being Strategic Look Like?, she states that there are four key behaviors of strategic leaders:

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Step 7: Make Smarter Decisions by Checking our Egocentrism

Step 7: Make Smarter Decisions by Checking our Egocentrism

Decisions have to be sound and implemented effectively. Decision-making success is a function of decision quality and implementation. One cognitive bias trap we fall into is called egocentrism bias. This type of bias is when we assign more credit to ourselves for an outcome than an outside party would attribute. For example, “I deserve the bonus this month more than the others on my team because I worked harder.” We put too much emphasis on our own actions. Another form of egocentrism is attributing more blame to ourselves than an outside party would attribute.

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Step 6: Make Smarter Decisions without Hindsight Bias

Step 6: Make Smarter Decisions without Hindsight Bias

The hindsight bias, or the “we knew it all along” phenomenon, says that when more time passes, the more likely we are to think we could have predicted the eventual outcome. After an event occurs, we feel we knew what was going to happen. Much like when you ‘re not surprised when a glass falls off the table after you saw it sitting on the edge. Our hindsight bias can lead us to believe that an eventual outcome was more predictable than it actually was. We have a tendency to oversimplify the cause and effect. The problem with hindsight bias is that it makes us believe that we can predict future outcomes, which can lead to overconfidence in unknown outcomes.

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Step 4: Make Smarter Decisions using the Anchoring Effect

Step 4: Make Smarter Decisions using the Anchoring Effect

One cognitive bias that affects decision making is that of anchoring. We depend on anchoring every day to predict outcomes of events. When you need to estimate or predict an outcome, you have a starting point – that’s your anchor. If you’re familiar with the negotiation tactic of starting high, then you’re familiar with anchoring. I remember a college friend once said she was failing a class and was scared to tell her parents, so she concocted a story to tell them that she was pregnant and getting married. Then, after her parents would go into a tailspin, she would tell them she was joking, but she was failing Chemistry. I now realize that my friend’s anchor, or starting point, was high (pregnant and getting married) and winning the parental negotiation by bringing their tempers down on failing a class. This tactic is also used in retail every day – the MSRP makes the sale price seem more attractive. When you’re making a decision, be aware of the anchor you’re using, or in many cases you need to be aware of the anchor that’s being used against you.

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Step 1: Make Smarter Decisions by Accepting Sunk Costs

Step 1: Make Smarter Decisions by Accepting Sunk Costs

One cognitive bias in human decision-making is the sunk-cost trap, or escalation of commitment. Over the past forty years, there has been lots of research focused on sunk costs and their effects on human behavior. The sunk-cost trap is a tendency for people to escalate commitment to a course of action in which they have made substantial prior investments of time, money, and other resources. With high sunk costs, people become overly committed, even if the results have been relatively poor. They have a hard time cutting their losses. Alternatively, they keep investing because the initial investment was so large and the situation continues to escalate. I’m sure you can think of both business and personal situations in which you have doubled down on a failing investment due to high sunk costs.

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7 Steps to Making Smarter Decisions

7 Steps to Making Smarter Decisions

You’re making poor decisions every day in your personal life, in business, and about your learning investments – sometimes unbeknownst to you and only because you’re human. Have you thought about how and why you make the decisions you do? There are many types of cognitive biases involved in decision making, and you fall into the traps of these biases every day. They affect all of us and are rooted in human nature; thus, they cannot be avoided. It isn’t about a lack of intelligence—it’s about being people.

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Beware: Interact and Engage! Will Cause a Decline in Coffee Stocks

Beware: Interact and Engage! Will Cause a Decline in Coffee Stocks

I just read Interact and Engage! By Kassy Laborie (@Kassy_L) and Tom Stone (@ThomasStone) and am convinced that if I attended more meetings and webinars that employed the activities listed in the book I would need less coffee to stay engaged. I do like attending virtual sessions, but let’s face it, many of them are just not designed with participant engagement in mind. I understand this design challenge as I have delivered virtual session myself. See my latest webinar here.

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