By: Paul Dank, PCI, CFE
We are funny creatures, wired to make our own lives far more complicated than we deserve. Cognitive bias is one of our quirks that helps us to screw up decision making and, lucky us, is a built-in part of how we think! A cognitive bias refers to the systematic pattern of deviation from rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion. Individuals create their own “subjective social reality” from their perception of the input. I saw her picture in Crain’s, so she must be good at business. His LinkedIn profile says he is an expert. Her clothes are wrinkled, she must be disorganized. They live in Grosse Pointe, so their kids must be good. So and so said she is great and that’s good enough for me.
Feeling bad about yourself yet? Don’t. Awareness that you, or rather your brain, engages in cognitive bias is a great help in reducing it.
In my business, investigations, I can only deal in facts. Everything needs to be objective, verifiable and quantifiable. In short, we evaluate every piece of information based on our ability to stand before a judge and jury and explain exactly how we found this information and determined its meaning within the given context. We do this in all our background checks, due diligence investigations, employee screenings, etc. Cognitive bias must be rooted out.
Unfortunately, not all business decisions go through our filtering process. Every day we get assignments to investigate things that have gone wrong. Business partners that should not have been partnered with. Harmful employees that should not have been hired. A common thread that emerges is that many original decisions to work with these folks were made using flawed reasoning, a lack of objective information to rely upon or some underlying desire to believe in what is simply not there. They wanted a certain outcome and dream up a way to rationalize it.
A great example is the Michael Lewis book Moneyball, which demonstrates so vividly how a well thought out and designed system for evaluating what really wins baseball games, embarrassed the “experts” relying on their cognitive bias filled experience and gut feelings. The same goes for great stock traders compared to me, autonomous vehicles verse drivers, breathalyzers verses a bartender’s judgment.
Back to you; be aware of your natural cognitive bias, ask yourself what you really know objectively and how significant those facts are. Add the question, “what else you really should know to make an informed decision?” Think more systematically and intentionally and you will be better at business and life!
If you really want to dig into cognitive bias and how to think better, I recommend the book Thinking Fast and Slow by Daniel Kahneman. It’s not exactly an easy beach read, but it will teach you a thing or two about your thinking. Have a great summer.
Paul Dank, PCI, CFE
Paul is the President of Advanced Surveillance Group, a background check and corporate investigation agency with global reach, based in Metro-Detroit. Paul is a client of Mr. Denha as well as trusted investigative resource. As a Michigan based professional investigative agency, all clients benefit from a legal guarantee of confidentiality that matches the attorney client privilege. For more information about Paul’s services, please visit ASGInvestigations.com or call him directly at 586-493-0300.