The Smarter People Blog

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

Who Determines Whether You Offer Good Service?

People often study a subject until they can get 100% right on a test of their understanding of the subject. While this is a sensible approach, it turns out that about 10% of the correct answers are comprised of guesswork, short-term memory, and information not fully learned.

 

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Do You Use the Logic of Failure to Succeed?

Logic of Failure

In The Logic of Failure, German psychologist Dietrich Dörner summarized experiments on how people deal with complex systems. Dörner created a computer model of an imaginary country in West Africa that he called Tanaland. The people of this imaginary land depend on growing crops, gathering fruit, and herding sheep and cattle. Participants in Dörner’s experiment were given the opportunity to control certain variables of the Tanaland computer model, such as whether to use irrigation and fertilizer. Most participants quickly wiped out Tanaland’s population, but a few were able to preserve a healthy rate of growth. The differences between the experiment’s two groups, Dörner wrote, were striking: “The good participants acted more complexly. Their decisions took different aspects of the entire system into account, not just one aspect. This is clearly the more appropriate behavior in dealing with complicated systems,” he added, because complexity means there are “many interdependent variables in a given system,” which makes “it impossible to undertake only one action.”

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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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From: Your Global CEOs—Here’s What Really Keeps Us Up at Night

From: Your Global CEOs—Here’s What Really Keeps Us Up at Night

This year PwC released their 20th Global CEO Survey. They share insights from 1,379 CEOs from 79 countries revealing issues such as competing in the age of divergence, managing man and machine, gaining connectivity without losing trust, and making globalization work for all.

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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 5: Make Smarter Decisions by Avoiding Illusory Correlations

Step 5: Make Smarter Decisions by Avoiding Illusory Correlations
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Do you know how stereotypes are formulated? It’s through an illusory correlation. People have a tendency to jump to conclusions about the relationship between two variables, even when no causal relationship exists. All jocks are dumb, women are not as smart as men, blonde-haired women are unintelligent...you know where this is going. Yes, these relationships may be true in some instances, but not for the majority. This mental error leads to poor decision-making.

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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 3: Make Smarter Decisions by Overcoming Confirmation Bias

Step 3: Make Smarter Decisions by Overcoming Confirmation Bias

In the midst of all the current political rhetoric, do you tend to automatically believe what your preferred candidate or party posits? Do you ever try to objectively listen to the opposing party’s position? Do you watch all the news channels to gain multiple perspectives? It’s hard to do because it’s uncomfortable. Your party’s position tends to reinforce your existing self-image, which is within your comfort zone. The reason it’s uncomfortable is due to your own confirmation bias. We tend to rely on and actively search for information that will confirm our existing view of the world and support our existing hypotheses. At the same time, we instinctively avoid information that might disconfirm our preexisting beliefs or hypotheses. We have a stubborn attachment to existing beliefs.

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Step 2: Make Smarter Decisions by Recognizing Overconfidence Bias

Step 2: Make Smarter Decisions by Recognizing Overconfidence Bias

Have you ever been surprised when it took you much longer to complete a task than you expected or you overestimated your knowledge or ability in a situation? This happens to me all the time with any home maintenance task. I end up spending more time watching DIY YouTube videos trying to solve the problem than I actually do working on the task because I don’t have the knowledge to complete the task. Half the time, I come to the realization that I need to outsource the task if I want it done right.

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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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Your Grittiness Can Create a New Habit Loop

Your Grittiness Can Create a New Habit Loop
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I just finished Angela Duckworth’s Grit: The Power of Passion and Perseverance. For those of you who haven’t read it, the book talks about the combination of passion and persistence—not necessarily genius—that leads to success. I scored a 4.4 on her grit scale, which means that I am grittier than about 85% (one standard deviation above the mean) of the Americans in her sample.

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Forecasts & Predictions Are Getting Harder

Forecasts & Predictions Are Getting Harder

In 1900, London was the world’s most populous city with 6.5 million people, followed by New York, Paris and Berlin. Tokyo was the only non-Western urban center on the largest cities list. This year, no US or European city will be in the top 10... instead, it is Mumbai (India), Chongqing (China) and Lagos (Nigeria) with 15 million+ each.

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Things to Remember as a Leader

Things to Remember as a Leader
When you are a leader, you need to determine: Who you are; What you are committed to accomplishing; What is missing in your plan?

During this process, remember:

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How to become an expert

How to become an expert

When scientists began to study expertise, they first assumed that experts must be smarter or more talented than novices, but they quickly learned that the key difference between experts and novices is not mental power, but knowledge. Cognitive psychologists Michelene Chi, Marshall Farr, and Robert Glaser have defined an expert as somebody who has a great deal of highly organized domain-specific knowledge, where a domain is a network of knowledge, such as chess, mathematics, or music. For experts, knowledge has morphed from many pieces into a unified whole. An expert can start with any piece of knowledge and explain how it fits with every other piece. I always picture the way Sherlock Holmes could start with a soil stain and, through a chain of reasoning, solve the case.

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