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Tag Archives: risk management

Watch for the negative impact of self-serving bias in decision-making

positive_negativeThe self-serving bias is a concept that has been extensively studied in social psychology.  Essentially, it is people’s tendency to attribute positive events to their own character but attribute negative events to external factors. It’s a common type of cognitive bias that exists in all aspects of life, including in the workplace.

For example, a salesperson who attributes a significant sale to his own business insight and relationship-building skills, but attributes a loss of a sale to the customer’s lack of acumen or the competitor’s unfair advantage may be exhibiting the self-serving bias. Similarly, a leader’s inclination to take credit for the team’s success, but to blame individual team members for mistakes or missteps is another common example of self-serving bias.

The self-serving bias can negatively impact decision-making

The problem of course with the self-serving bias is that it can negatively affect organizational decision-making.  For example, Continue reading

Periods of vulnerability can present both threats and opportunities

vulnerabilityRecently I had a conversation with a scientist friend who told me how biologists use information about animal life cycles to accomplish diametrically opposite objectives – in some cases to purge populations, and in others to conserve them.  The secret: determining in which stage of its life cycle is the animal most vulnerable.  And it’s at these points of vulnerability that either the worst or the best is the easiest to accomplish.  It is when the animals are at greatest risk that it takes the least effort to destroy them, or conversely, to protect them.  He gave me two examples to illustrate his point.

The Bertha armyworm

The Bertha armyworm is a significant insect pest of canola in Manitoba, Saskatchewan, Alberta and the interior of British Columbia.  Like many insects, it goes through a four stage life cycle – egg, larva, pupa and finally, the adult moth stage.  However, their vulnerability is greatest at the larval stage.  As eggs, they are not susceptible to pesticides; as pupae, they are buried in the ground and therefore well protected; as adults, they are widely dispersed and therefore difficult to control.  Because scientists know that the insect’s defences are the weakest when at the larval stage, substantial and successful control efforts are targeted at this point in the life cycle.  Continue reading

Worrying won’t help you solve problems or make decisions

A couple of years ago, I wrote a short series on decision-making here on the blog, and I was reminded of that recently when I read the following quote about worrying:

rockingchair“Worry is like a rocking chair: it gives you something to do but never gets you anywhere”

― Erma Bombeck

These words were penned by Erma Bombeck, an American humorist, whose syndicated columns were read twice-weekly in the 1970s by 30 million readers of 900 newspapers in the U.S. and Canada.  Even though Erma’s columns were written primarily from the perspective of a midwestern suburban housewife, this particular adage carries sage advice for leaders.

Leadership is a non-stop journey of dealing with issues, some everyday problems, others full-blown crises. This constant barrage of concerns, complications and quarrels can leave many a leader anxious, uneasy and constantly worried … about what went wrong, what is wrong, and what could go wrong.  And even worse is when these very same leaders fool themselves into thinking that worrying is actually doing “something” about the issues at hand.  It isn’t.

Stop worrying, do this instead

So instead of worrying, consider this two alternative (and more constructive) strategies. Continue reading

Waiting for all the facts … and making decisions

making decisions“We need to wait until we have all the facts …” is something I hear many managers and supervisors say.  It’s often in response to an issue that needs to be dealt with or an unexpected problem that has occurred.  Usually the situation is a difficult one and because the manager has no prior experience with making decisions in an identical or similar scenario, s/he is stalling for time.  The unfortunate reality of course is that if you wait for all the facts, you might be waiting for a really (really) long time; perhaps even an eternity.

When it comes to making decisions, you will never have all the facts

Leadership is about making decisions – it’s inherent in the role of a leader.  The reality is that there are very few instances in which leaders will have complete information … ever.  Whether it is predicting customer behaviour, forecasting sales volumes, expecting employees to act in certain ways, or anticipating your competitors’ activities, you will simply never have all the facts.  Which means that the real question is Continue reading

Don’t just seek advice, pay attention to what you hear

Last year, I wrote a short series of posts on specific techniques you can use as a leader to improve the quality of your decision-making.  This story about a Swedish warship from the early 1600’s emphasizes not only the importance of approaching your team and experts to seek advice, but to also pay heed to the advice once you’ve heard it.

The tale of the Vasa: one king’s folly

seek adviceIn 1626, King Gustavus Adolphus of Sweden ordered the building of the Vasa, a new warship that was intended to become, for that era, the most powerful marine vessel in the Baltic Sea.  As was common in warships then, the Vasa was to have a rank of cannons on each side of the boat so that soldiers could easily fire at their attackers, no matter what direction the assault came from.

King Adolphus considered himself something of an expert boat designer so he took an immense interest in the actual design of the ship.  About mid-way during the ship’s two year construction, he learned that Poland, his greatest archenemy (and rival to take control of the Baltic Sea), had stepped up their naval firepower by building warships with ranks of cannons on two levels.  Well, Adolphus wasn’t going to be outdone!  Continue reading

Making risky decisions: a simplified approach

Making risky decisionsBy definition, there is always uncertainty in making risky decisions; after all, the old adage “no risk, no reward” holds true.  No doubt, leadership instinct and past experience play an important role in determining whether the possible reward is worth the perceived risk, but I am nevertheless often asked by leaders whether there is a more systematic approach to making risky decisions.  Decision-making theory abounds with a plethora of techniques and methods, but there is one relatively simple approach that I have found to repeatedly give positive results.  Ask yourself: does making the decision result in more options or fewer?  If the answer is more choices, then move forward.  If the answer is fewer options, then don’t take that action.

Here is one example

Let’s consider an example to illustrate this approach.  You are trying to decide whether to invest in a new piece of equipment for your manufacturing operation.  There are several risks involved with this purchase including Continue reading

Compensating for Parkinson’s Law – good practice or disingenuous?

parkinsonYears ago, when I was still at university, I experienced first-hand the validity and strength of Parkinson’s Law. This time-tested adage – Work expands so as to fill the time available for its completion – stand true even today, as it still very aptly describes what repeatedly occurs in workplaces. And if you’re managing projects or leading teams, it’s definitely worth your while to not only be conscious of it, but also deliberately adapt to counterbalance it.

Parkinson’s Law doesn’t usually occur with any sinister or negative intent, or for that matter, even deliberately. It just happens. Conflicting priorities and other responsibilities mean that work expands to fill the time available up to the pre-determined deadline. Which means that if you’re a leader or project manager, you need to assign target dates to team members so that you are left with some “buffer” should things go off the rails. Not everything works out perfectly the first time (understatement of the year!), so creating a “false” deadline is a prudent business decision. Continue reading

The key to problem solving is to define the problem first

solution ahead, answer to solve all your problems, resolution yeWhen it comes to problem solving, leaders are apt to often leap directly to a possible solution without completely understanding exactly what the difficulty is.  After all, if you’re in a position of leadership, you probably got here because you have a track record of making decisions and getting things done, which means that you also have a natural tendency to fix it and move on.  This, even if the fix isn’t necessarily what is needed or wanted, or even worse, is more than is required.

Which is why effective problem solving requires you to step back and clearly define the problem first.  Ask yourself (and your team) these three key questions: Continue reading

Do men and women have the same approach to taking risks?

LeanInSandbergIn her book Lean In, Facebook’s COO Sheryl Sandberg encourages women to “lean in”, to “be more open to taking risks in their careers” since “being risk averse can result in stagnation.”  She suggests that women need to “overcorrect” from their current risk-averse position in order to “find the middle ground”.  Earlier this week, Professor Karl Moore at McGill University’s Faculty of Management (and my fellow columnist at The Globe & Mail) penned an article about just the opposite, how men need to “lean out”.  Together with his student Shaun Collins, they make the case for why men “need to ‘overcorrect’ from their excessive risk-taking towards a more calculated neutral position”.  This point of view that not only caught my attention, but also echoed what I repeatedly hear from leaders (both male and female) in client companies.  Continue reading

Be proactive – think like a chess grand master to avoid a “checkmate”

ChessPiecesIn chess, a checkmate occurs when a player’s king is under attack, and has no alternative plan or course of action available because every possible escape route is blocked.  At the moment of checkmate, the game is already lost, so the only way to avoid being checkmated is to be proactive, to strategically think several moves before ever getting to this point.  Chess grand masters, able to visualize permutations and combinations involving ten or more moves into the future, have perfected this skill.  Fortunately, it’s far less complicated to avoid a checkmate in the world of work!  In fact, there are only three elements needed to develop a leadership approach that is effective in avoiding a workplace checkmate.

  1. First, pay attention to “checks”.  In chess, a “check” (called by a player when the opponent’s king is under threat of capture) serves as a warning that a checkmate is imminent and gives the opponent a chance to take evasive action.  Checks are also present in the workplace, alarm signals to leaders that things are about to go awry.  But it’s up to leaders to pay attention.  Whether it’s an increase in errors, a rise in customer complaints, or grumbling around the staff water cooler, it’s up to leaders to heed the cautionary signs and take evasive action.
  2. Second, pay attention to the pieces on the board.  Continue reading