How we make decisions has fascinated thinkers and researchers across many disciplines for millennia.

As far as decision-making is concerned, it seems that human beings rely very heavily on the emotional brain and much less on the rational brain. Additional research is emerging that stresses that our brain is not composed of just the emotional and the rational, but is more like a neural network, involving multiple systems that interact, compete and co-operate in our decision-making.

Cognitive bias

Psychology has helped us understand some things that get in the way of good decision-making —known as cognitive biases or fallacies.

A very famous bias is the so-called ‘halo effect’ where we make generalisations about a person based on their positive (or negative) traits. Other cognitive biases include our tendency to positively view and give preference to people who are like us, and our willingness to go along with the crowd. A major driver of financial decision-making is our desire to avoid loss. And of course we all think that we are much less biased than other people (our bias blind spot)! There are about 100 defined cognitive biases.

Biases also affect the degree of influence particular information has on our decision-making. We are more likely to be influenced by material or information that is easy to access, familiar, recent and presented simply in a visual format. We are much more likely to remember information that comes either at the beginning or the end of a sequence, is dramatic and emotional in nature and which is congruent with our own belief system.

We are also impressed by the idea that something is scarce, or secret or restricted – like so-called luxury items or rare materials like gold.

Robert Sternberg, one of the leading researchers in the area of wise thinking, suggests five very common fallacies in thinking that can result in foolish decisions:

• Being unrealistically optimistic.
• Being egocentric (own interests are most important).
• Displaying omniscience (thinking you know everything).
• Being omnipotent (believing you have power).
• Being invulnerable (believing you have complete protection).

Learning to be wise

Clearly, there is value in reflecting and thinking about how our own decision-making might be affected by some of these cognitive biases and how we are feeling on the day.

While consensus is still emerging, there now seems to be general agreement that wisdom is a state or development stage, not a capability, and that it is difficult to attain.

It seems that wisdom initiates and guides positive change and is the apex of intellectual, emotional and moral development. It involves being reflective, future-oriented, and values-based. Wisdom helps us discern the right path forward

Leadership maturity

Developing wisdom involves understanding leadership maturity, which includes a number of key elements:

• Knowing: about the world and how it operates.
• Connecting: interacting with others to collaborate.
• Discerning: interpreting information and relationships.
• Doing: actions we take as a consequence of decision making.
• Being: how our values and character moderate the interplay between these actions.
• Impact: what lasting positive impact does our decision or action have on the world?

All of these elements need to be switched on for wise decision-making to emerge. We also need to pay attention to the critical elements or conditions of wisdom, if we want our decisions to be good for us and for others.

Research on how the brain decides indicates that:

• We access our reason and our emotions when decision-making.
• Our rational mind uses serial processing and is best equipped to help us solve simpler problems.
• Deliberative thinking uses reason and logic and is more susceptible to distraction and decision fatigue.
• Our emotional brain uses ‘parallel’ processing.
• Going with our gut or intuition can be dangerous.
• Positive mood and low anxiety can improve our decision-making skills.
• We chop and change between processing styles depending on the situation, our emotional response and our expertise.
• Our personality influences how we process information.
• Cultural background influences the way we think and make decisions.
• Spend time and energy building your knowledge and experience base.
• Understand your emotions so that they can help, your decision-making.
• Keep the mood positive; don’t make decisions when you are stressed, anxious or angry.
• Connect with others to draw on their thinking and creativity.
• Embrace uncertainty, entertain competing hypotheses, suspend bias and don’t limit thinking time.
• If you are an expert in a field, let your emotional brain do the work.
• Think about your thought processes to steer clear of obvious foolish errors and cognitive biases.

Maryanne Mooney and Karen McMillan are partners in Lindentree Leadership Consulting.