It’s difficult to read a news article or watch someone being interviewed about their business decision-making without words like rational and logical being mentioned.
Indeed “data-driven decisions” is the war cry of this binary-crazed age. A problem then, because we are fooling ourselves if we think that’s how decisions are actually made.
Data-driven (as long as my gut agrees)
A report recently released by the Economist Intelligence Unit (EIU) called “Decisive Action: How businesses make decisions and how they could do better” surveyed 174 executives and senior managers from around the world about how they saw their style of decision-making and how they made decisions.
According to the report 42% reported being “data-driven”, 17% “empirical” and only 10% “intuitive”*. A further 32% described themselves as “collaborative”.
Interesting then when over two thirds (68%) of those who said they were “data-driven” also said they trusted their own intuition when it came to decision-making. The number was even higher across all decision-making types at 73%.
So what’s going on here? I might describe myself as being data-driven, but if that clashes with my gut instinct, then what?
According to the report, when asked “When taking a decision, if the available data contradicted your gut feeling, what would you do?” the most popular response (57% of respondents) was “Re-analyse the data” followed by “Collect more data” (30%). A mere 10% of these data-loving decision-makers said they would “Take the course of action suggested by the data”.
Rational is in the eye of the beholder
This report shines a light on how mixed up we are when it comes to decision-making. Data is proclaimed as king but often only used if it happens to coincide with gut instinct, and if it doesn’t we keep looking.
And that’s the challenge if you are trying to enlist support for your idea – you might pitch a business case or proposal that ticks all the ‘rational’ boxes and yet gets turned down.
The trick is to know that rational is in the eye of the beholder – a decision-maker will rationalise their reaction to data or analysis to accord with their own views held deep in their subconscious.
We’ve been pitching at the wrong level
In a sense, we’ve been focusing on the conscious, rational, logical centres of decision-making in business but ignoring the subconscious, intuitive, emotional drivers. And that’s where the power lies.
Why rational arguments fail (and what you should be doing instead)
Rational arguments fail because they are not engaging the real path to decision-making. To build a strong case you need to cover why you want to do something, what it is, how you’ll do it, who will be involved, when you’ll do it and where it will happen.
My guess is that you may be nailing these factors for the rational decision-making brain, but what about the ‘non-rational’? What about things that will engage the sub-conscious?
How – How you communicate, matters. For instance, you get to choose whether you describe the opportunity as one to save $10,000 or stop wasting $10,000. The same value from a rational perspective, but the second has a much greater emotional kick.
Who – What others are doing, matters. Your decision-maker will be persuaded by who you are and what other decision-makers might do.
When – The time horizon matters. People are driven by short-term needs and will be more persuaded by good stuff in the short term and leaving bad stuff until later. They will also make different decisions depending on the time of day you pitch.
Where – The environment in which the decision is made, matters. High or low ceilings, circular or angular seating, choice of typeface, noise levels and lighting can all impact decisions without the decision-maker being consciously aware.
Over the next couple of months I will be talking to accountants and financial professionals around Australia about why rational arguments fail, and what they should be doing instead, using tips like those mentioned. But it’s not just accountants, it’s all of us in business who can fall into the trap of thinking rationality will win. If you want to hear more about how to make your argument more effectively to peers, suppliers, stakeholders and customers just get in touch.
*Definitions used in EIU report
Empirical: Where possible, I develop hypotheses and perform tests before making a decision. Data-driven: I collect and analyse data as much as possible before making a decision. Collaborative: I seek to collaborate on decisions as much possible. Intuitive: I primarily use my intuition in making decisions.
Bri Williams runs People Patterns, a consultancy specialising in the application of behavioural economics to everyday business issues.