Don’t Fall into a Heuristic Trap

Heuristics are mental shortcuts that our brains use to make decisions quickly. Rather than carefully analyzing a situation, we rely upon past experiences, core beliefs, and patterns to come to a quick conclusion. These solutions may not be optimal, but given the limited time and information available, they are incredibly useful. People use this sort of intelligent guesswork, trial and error, process of elimination, and experience to solve problems or chart a course of action. In a world that is increasingly complex and overloaded with big data, heuristic methods simplify and accelerate decision-making through shortcuts and good-enough calculations. Without leveraging heuristics, our brains would suffer cognitive overload.

If you are hiking in the woods and come to a fork in the trail, you will likely opt for the trail that appears to be well-worn and clearer than the one that seems rarely used and slightly overgrown. This is heuristics in action. Most of the time, the more popular trail does lead to the correct route. But relying on heuristics alone can lead you down the wrong path—literally. That trail that appears more popular might lead only to an overlook, making it necessary to backtrack. Trusting the visual cues instead of checking a map, GPS, or trail marker means you might not notice your mistake until you are well on your way in the wrong direction. 

The Heuristic Trap

A heuristic trap occurs when your brain says, “This is obvious,” but the situation is more complex. Many business decisions are based on incomplete information, uncertainty, or the need to adhere to a timeline. Basing decisions on assumptions rather than evidence leads to gaps in efficiency, reductions in productivity, and excessive costs. 

Perhaps the most common heuristic trap we encounter in business is confirmation bias—seeking out information that confirms or supports a belief. Perhaps a small group of users is very excited about a new product you’re developing, while the larger market is uninterested. Relying only on the feedback from the former group and continuing with the project anyway is an example of confirmation bias. Some others include the following:

Non-event feedback: A poor decision has good results, so we may think the decision was sound. Your company implements new software, but employees receive little to no training on how to use it. They are frustrated, confused, and quietly struggling. Management doesn’t hear any complaints and assumes that the implementation was successful. 

Anchoring and adjustment. With anchoring and adjustment, a person begins with a specific target number or value, called the anchor, and subsequently adjusts that number until an acceptable value is reached over time. 

The sunk cost fallacy: We continue with a decision because we have already invested time, effort, and money. We understand this is not optimal, but we have invested so much that we may as well continue. Think of finishing an awful movie because you’re already halfway in.

The halo effect: We make assumptions about someone or something based on one characteristic. If someone has one favorable trait, we tend to assume that they possess other positive qualities as well, even if we have limited or no evidence to support those assumptions. Your star salesperson may be great with clients, so you promote her into management only to discover that she is terrible at coaching and communicating with her team.

Availability: We estimate the probability or risk based on how easily examples come to mind. If we can think of many examples, then we assume it happens frequently. For example, highly publicized airline crashes may lead us to believe that flying is unsafe. The truth is that the vast majority of flights are totally uneventful, and flying is statistically safer than driving your car.

The No-Brainer

Our brains are always at work, sometimes without our conscious awareness, and sometimes in ways that hinder rather than help us. At every stage of the decision-making process, misperceptions, faulty assumptions, and other mind tricks can influence the choices we make. The best protection is awareness. Forewarned is forearmed. You cannot eradicate the distortions ingrained in the way your mind works, but you can at least build tests and disciplines into your decision-making process that can uncover errors in thinking before they become errors in judgment. More on how to do that in a future blog!