Today is the day I should really be planning my new consultancy – turning the dream of lucrative and stimulating self-employment into a reality. A couple of hours in and I am already procrastinating with a blog article (which I feebly justify as good for my profile).
In recent years I have taken an interest in Behavioural Economics to help clients influence their consumers, customers (or if about capability) their colleagues. Awareness of biases and heuristics is remarkably helpful stuff, but right now feels more of a hindrance. It means I simply can’t ignore the probability that my intentions are over-optimistic and over-confident. Put more harshly, I’m taking comfort and confidence from a successful consulting career that may have had as much to do with luck as talent.
What’s more my judgement on next steps will be subject to my confirmation bias and an increasing commitment to the original plan of action. Which basically means I will embrace information as evidence my approach is right and be increasingly reluctant to change my mind. So even if my decision to launch a consultancy is a good one, my decision-making to deliver it is at serious risk of being flawed.
Already strongly attached to the idea of my own consultancy I looked for guidance on what I could do to at least limit the damage of poor decisions as I progress my project. In doing so I found a Harvard Business Review article by professors Jack B. Soll, Katherine L. Milkman and John W. Payne. It explains a list of actions to mitigate bias and flaws in decision-making and I have aggressively summarised below. You can (and should) read the full article at:
Here’s my summary:
1. Identify 3 possible outcomes
Thinking in terms of scenarios will mitigate for over optimism and remind you how unpredictable the future is. The middle estimate is likely to be closer to ‘reality.’
2. Think twice (about key decisions)
Our decisions reflect the choices we have in front of us and context. Taking a break, changing the location and then revisiting a decision will help.
3. Conduct ‘premortems’
The article recommends ‘premortems’, that is, spending time on imagining future failure and then the likely cause. (This I suspect will have the endorsement of all the risk managers I have ever met).
4. Encourage outside challenge
The endowment effect means we see our own plans as better than others. Using those less attached to take a cold, hard look will reveal more realism.
5. Start with expansive objectives (using outside input)
As time goes on we will find it increasingly difficult to acknowledge or value other options (meaning good ones may get overlooked). Collaborative and early generation of lots of options and objectives makes sense.
6. Set some ‘trip wires’ for the future.
Our ownership, loss aversion, confirmation bias, present bias, etc, aggregate into a tendency to carry on even when we are clearly and increasingly off-track. The authors recommend ‘tripwires’, or, as they describe it, doing what mountain expedition guides do: “They announce a deadline in advance. If the group fails to reach the summit by then, it must head back to camp…”
I found the article and list helpful. Unfortunately, however, awareness of such actions doesn’t mean that I will take the right approach at the right time.
This is acknowledged in a another HBR article “The Big Idea: Before You Make That Big Decision” by Daniel Kahneman who explains “you may accept that you have biases, but you cannot eliminate them in yourself.” His ‘big’ remedy is to move from the “individual to the collective, from the decision maker to the decision-making process, and from the executive to the organization”.
Embracing Kahneman’s simple suggestion I now have my list and my first action. Namely, to talk to my wife and anyone else willing to input and challenge my planning.