3 Traps That Cause CIOs To Make Bad Decisions

by drjim on August 17, 2011

CIOs Often Don't Realize That They've Made A Bad Decision Until It's Too Late!

CIOs Often Don’t Realize That They’ve Made A Bad Decision Until It’s Too Late!

How do you make decisions? We’d all like to think that we carefully weight the available evidence and then use our past experiences to make the right decision each time. However, the reality is actually quite different.

As CIOs we are asked to make some very big “bet the company” types of decisions. If we don’t know why we sometimes make bad decisions, it may cause us to hesitate and wait too long before making a decision.

It turns out that there are 3 different reasons why a CIO can end up making a bad decision. We’re going to take a look at each of these hidden decision making traps and show you how to identify them and, even more importantly, how to avoid them…

The Anchoring Trap

John Hammond is a researcher who has looking into why CIOs make bad decisions. His research has revealed that CIOs (along with other decision makers) struggle to make complex decisions.

We’ve developed ways of coping with making the “big” decisions. We use what are called heuristics which are basically little unconscious routines to reach a decision. Normally this works just fine. However, it’s when they don’t work that we run into troubles.

Is the population of the United States greater than 100 million? What is the population of the United States? It turns out that if I had asked you if the population of the United States was 50M in my first question, most of you would have guessed a much lower number in answer to my second question.

The reason that we do this is the same reason that CIOs can make bad decisions: we give way too much weight to the first information that we receive on a topic that we’re going to have to make a decision on. We say that this first blast of information “anchors” our following thoughts on the subject and clouds our judgment.

CIOs can deal with this problem by taking the time to try to view each decision that they have to make from multiple perspectives. Also remain open minded – see the thoughts of others in your organization who may be better positioned to view this issue from a different angle.

The Status-Quo Trap

Let’s all face it: we like things the way that they are. When it comes to making decisions this bias does not go away.

When we have to make a decision, we prefer to choose those options that will keep things pretty much the way that they are as opposed to introducing radical change.

The researchers who have looked into why we fall into the status-quo trap report that this is a deeply engrained part of who we are. We are actively looking for ways to shield our ego from anything that could result in damage to the way that we see ourselves.

In order to overcome this decision making trap, while making a decision CIOs need to remind themselves about what their goals are: what do they really want to accomplish. Sticking with the status quo might be the right way to go, or maybe it isn’t.

Make sure that you don’t allow yourself to be fooled by what you might think your switching costs are. It’s never easy to move from the status quo to something else, but it might not be as hard as you are imagining it to be.

The Sunk-Cost Trap

A sunk cost is something that we’ve spent either time or money (or both) on in the past that we can never hope to get back. The problem that CIOs run into is that once the cost has been realized, it can cloud our future decision making.

Specifically, once we’ve committed ourselves to investing in a project or an employee, we find it much easier to continue to invest in them as opposed to cutting off the flow of funds and / or time.

The reason that we make this kind of mistake is very simple: we don’t want to admit that we made a mistake in the past. By admitting that we made a mistake, we will be publically opening ourselves up to criticism and nobody wants to do that.

In order to avoid falling into this decision making trap, we need to work hard to mentally set aside decisions that we’ve made in the past when we are making new decisions. This is also a great time to find others in the organization who were not involved in the previous decisions and ask for their views.

What All Of This Means For You

An important part of the job of being a CIO is to be able to quickly make the right decision, no matter how big the question is. It turns out that this can be harder to do than we might think: there are three decision making traps that CIOs often fall into.

The three decision making traps that CIOs often fall for include placing too much weight on the first information that they receive, trying to perpetuate the current status quo, and making decisions that justify our past decisions.

Being aware of these decision making traps will allow us to detect when we are starting to fall into them. CIOs will always be asked to make important decisions, we just need to make sure that we are able to make the best decisions possible.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: How do you think that you can make decisions without being influenced by seeking out evidence that supports the way that we currently see the world?

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What We’ll Be Talking About Next Time

As a CIO you are going to be called on to make decisions. A lot of decisions. Do you have any thoughts on

Let’s face facts shall we? Cloud computing appears to be the real deal. It can no longer be considered just yet another IT fad. It sure looks like every company will be using cloud based computing resources eventually. Since this appears to be inevitable, what should CIOs be thinking about right now?

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{ 2 comments… read them below or add one }

Daiv Russell August 18, 2011 at 1:36 pm

The sunk cost trap is a good reason why the lifespan of a CIO can be fairly short. Once a CIO promises some big ROI from an initiative or program, when those directions take a turn for the worse and the initiative loses steam, they struggle to maintain consistency with their previous recommendations rather than admit that they might have been misguided previously or that the world changed and their perspective, while accurate at the time, was impacted by external stimuli. To admit that it HAS happened leaves the door open for subsequent doubt for future endeavors – and when the executive isn’t trusted… let’s just say, they’ll know flavor of the Grim Reaper’s lip gloss.

So, the executive team or board is left with few choices to truly understand the situation at hand — hire a consultant or swap out the CIO.

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Dr. Jim Anderson August 19, 2011 at 7:58 am

Daiv: so true! One of the biggest challenges that a CIO faces is that it takes sooooo long to make any changes that will produce real results. The conditions that made the decision to do the project a good idea in the first place may have completely changed by the time that the project is done!

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