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The Hidden Traps in Decision Making

Instructor: Sean Kennedy

Sean has 8 years experience as a supervisor and has an MBA with a concentration in marketing.

The hidden traps in decision making can affect the profitability of a company. In this lesson, we will discuss the anchor trap, status-quo trap, overconfidence trap, and the sunk-cost trap.

What Are Hidden Traps

There are hidden traps in decision making that will keep managers from making the best decisions for the company.Sometimes we can be our own worst enemies because we let our own thoughts get in the way of making the best decision. We may lose confidence, or have self-doubt because of a failed past decision. It is crucial as decision makers to learn from the past decisions and accept failure as a positive learned experience.Decision makers in business are top-level management and owners of the company.

The Anchor Trap

Often as decision makers, we may hold on to past occurrences and let that weigh us down. This is known as an anchor trap. An anchor trap gives a decision maker unbalanced weight to the first information they have received.

When a manager gets stuck in a decision because of an initial judgment, this will anchor their decision-making process. A past event can anchor a decision makers judgment. While it is crucial to learn from past mistakes, it is important to continue to be innovative and not let one bad experience cloud your judgment. In a business where there is continuous change, it is important for a manager to make the decisions that will lead to a successful outcome.

Jason is the manager of a technology company and has to make some important decisions regarding introducing new products. Jason had a bad experience when they created an underwater camera and is letting this cloud his judgment. The company has created a brand-new model, but Jason is letting a failed attempt anchor his decision making. This can be a problem because this new model can bring significant income to the company.

Status-Quo Trap

Following the status quo can be one of the biggest mistakes of a decision maker. The status-quo trap is staying safe with the way an individual makes decisions, and their decision process stays the same. It is crucial in a fast-paced, innovative business for managers to not follow the status quo and have innovative ways of thinking. When a decision maker thinks by the status quo, there is little room for growth for the company as well as for the individual. Depending on the situation, the status quo might be necessary, but as a manager, it should not be a decision that holds you back.

The technology company Jason works for is fast-paced and innovative. Jason's job as a decision maker is to think outside of the box and to continue to develop new ideas for product development. Jason has developed numerous products for the company by not following the status quo and by letting himself be creative in his decision-making process. It is crucial for him to stay out of the status-quo trap to continue his successful product development in the company.

The Overconfidence Trap

As a decision maker, there is a tendency to get excited and think your plan will definitely be successful. The overconfidence trap is when an individual is too sure in their decision making, which could lead to failure of decision making. It is important to be able to realize there are often tweaks that may have to be made, or a brand-new plan may have to be developed because it will not be as profitable as expected. Being too over confident will lead to team members thinking you are arrogant and are not open to changing a decision.

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