We’ve all done it – and will no doubt do it again. Despite our best thinking, we make bad decisions. And when our job is to make the sale or manage the sales process, bad decisions can have ramifications that everyone else in our organisation can see.
It was always handy for Captain Kirk to have an un-emotional, rational lieutenant in the form of Mr Spock to guide his decisions as they went boldly where no one had gone before. Today, Vulcan side-kicks are hard to come by – and they can have their own peculiar problems.
However, perhaps there’s a way for us to channel our inner Mr Spock and apply a little more intention to our decisions – and get better results in the process.
Recent research presented in the Harvard Business Review by Andrew Campbell, Jo Whitehead and Sydney Finkelstein, has shown that there are reasons why we make poor decisions – and outlines actions we can take to reduce our chances of making bad decisions. This article will review some aspects of this research and apply the findings to a sales and sales management setting.
The core of the problem with human decision making, say Campbell and his co-authors, lies with two hardwired processes that we all rely on when we make decisions. Our brains lead us to do two things:
- recognise patterns, based on our experience; and
- interpret these patterns in an emotional manner – again based on personal experience.
Both these things have been developed to allow us to operate in a complex world. In a more primitive setting it’s important to be able to quickly recognise whether a person is a friend or a foe; whether the pretty berry we’re about to eat is sweet or poisonous; and whether the charging woolly mammoth is heading our way.
In today’s organisational setting, we also make quick decisions. Is the meeting the boss has called really important – or can I afford to skip it; can I incorporate the data from last month’s report in the new report I’m writing; can we reallocate our warehousing space to defer a move to new premises for another 12 months.
We make thousands of decisions every day. Many are inconsequential in the larger scheme of things; some will have unintended consequences which may be good or bad; and yet others will have major consequences – again good or bad – and often we don’t give some of these the decisions the attention they deserve.
The reason?
Pattern recognition and emotional tagging.
Pattern recognition helps us make quick decisions – which are usually appropriate. It helps us know which foods are safe to eat, and to know which meetings to make sure we attend. Our very survival can depend on these decisions, and we make them without thinking at all about the information we’ve processed, the conclusions we’ve drawn and the actions we’ve taken.
The typical journey from home to office is full of life and death decisions that we don’t think about. We wait for the light at the crossing to turn green before we cross – and even then we take another look in case an impatient driver is late for their arrival. We choose to wait until it is safe before we alight the tram. And again we take care to avoid passing traffic. We take care to avoid the icy pathway, and go another way. And so it goes.
As well as our experience of previous patterns making our life easy – and safe – as we journey to work, we also make some decisions based on previous emotional experiences. We choose not to walk down a particular laneway which would make our journey shorter because it felt unsafe when we used it 12months ago. We avoid sitting in a certain section of the tram carriage because we nearly missed our stop when we sat there on another occasion – even though it may mean standing up.
We are creatures of habit – based on past experience which informs our behaviour today.
Interesting, you may say – but what has this got to do with how I perform my sales role, or my sales management role.
Consider these business examples that Campbell raises.
- In the early 1980s, the emerging word processing industry was dominated by Wang Laboratories. The company’s founder, An Wang, realised that the sector was changing and would become heavily influenced by the emerging personal computer. Wang had a choice – utilise a proprietary operating system to build a product to rival the emerging competitors, or adapt a platform from a new third party – Microsoft – which would allow him to compete directly with the fledgling PC market. According to Campbell, Wang decided not to use anything associated with IBM, due to a past experience which had led him to dislike IBM. Wang’s decision – based on an emotional tag from his past – proved fateful, with his company disappearing as the environment moved to operating standards.
- A second example involves the purchase of the Snapple drink brand by Quaker Oats in the 1990s. The chairman at the time, William Smithburg, had great memories of the success he had enjoyed with the acquisition of Gatorade. The similarities between the products were not as substantial as hoped, and Quaker ended up offloading the drink some time later at a loss of in excess of US$1 billion.
Both decisions were coloured by past experience which actually hindered the decision.
And – as professional salespeople and sales managers – I’m sure we can all recall a time when we’ve made a poor sales decision. These decisions can take a wide range of forms, including these:
- approaching markets in a new company the same way as we did at either a competitor or in a different industry;
- assuming industry conditions are the same today as what we experienced in the past;
- preparing to deliver presentations in a way which has worked before – but which doesn’t take into account the specific nuances of individual clients; and
- believing that a strong competitor yesterday will be a strong competitor today.
This is not to say that learning from the past, and applying behaviours which have led to success is wrong. Not at all – when particular things work we’re wise to continue to apply them. However, we can also continue to apply ideas and behaviours which worked 6 years – or 6 months – ago which aren’t as successful as they used to be.
As the world and our sales environments continue to be subject to constant change, we need to constantly question our methods – and the decisions which underlie them.
So – what can we do to avoid the problems that come from patterns and emotional tags and the human biases that accompany them? Campbell and his friends have a few suggestions for us.
1. Look for fresh analysis and experience. If the decision relates to a major account sale – look at what successful colleagues are doing in the commercial or channel area. Ask the view of people in service, or customer delivery. Look at colleagues or customers in different situations and apply a different perspective.
2. Open the decision to debate. Many leaders have strong personalities – and can be prone to enforcing their ideas and decisions on others. There is a place for the learning leader – the leader who genuinely encourages debate from the team. Successful teams tend to be diverse in experience and background. Ensure you team is diverse in terms of gender, ethnicity, experience, age, etc – and then actively tap this diversity. Not only will it deliver insights no one individual can achieve on their own, but – when done with authenticity and consistency – encourage and build engagement with the team when they see that their opinion and views are valued.
3. Apply rules and governance. I’m not advocating rampant bureaucracy. But a checklist for particular key decisions can ensure that decisions are made more rationally – and not emotively based on poor judgement.
We don’t have a Mr Spock at our right hand to be a vigilant guide for our decisions. But we can learn to accept that we can’t make any decision in life without the experience of the past coming to bear. We tend to leap to conclusions, and are reluctant to revisit these initial assessments.
However – if we want to ensure we get more decisions right, we’d be wise to firstly accept that our decisions are coloured by our past – and then apply some of the simple rules outlined in this article.
“Fascinating, Mr Kirk, simply fascinating.”
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Access the full HBR article here:
http://hbr.org/2009/02/why-good-leaders-make-bad-decisions/ar/1
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Thanks for reading this post – Paul Sparks, Sales Effectiveness Australasia. “Taking you beyond sales training and keeping you informed about the latest ideas, trends, innovation, research & best practice in professional selling and sales management”
If you would like to connect with Paul Sparks please email paulsparks [at] saleseffectiveness.com.au
