How managers can leverage the power of heuristics to speed up decision making processes.
A heuristic is any approach to problem solving that employs mental shortcuts to simplify a set of circumstances to quickly reach a reasonable conclusion or solution. Heuristics are part of how the human brain is wired. The brain can only process so much information at once and it has therefore evolved to employ shortcuts.
As we learn, our brain creates practical rules of thumb so that when we encounter a similar set of circumstances again in the future, the brain can take the shortcut and reach what it sees as the most likely solution.
Heuristics facilitate timely decisions that may not be the absolute best ones but are good enough to get by. For example, when we cross a road, we learn to do so at a crossing and to wait for the green light. The brain remembers this and creates a shortcut. Next time you go to cross the road, you will instinctively wait for the green light. This is the correct approach. However, if you are crossing the road at 5am and there is no traffic, it may be safe to cross the road on a red light. The brain will not process this decision automatically and further analysis of the situation will be required, before stepping into the road.
So how can heuristics be applied in the context of managing a business? As managers gain experience and expertise over many years, they can use heuristics as a tool to tap into this expertise.
When faced with a similar situation, a manager’s heuristic may guide them to a tried and tested solution, without having to do an end-to-end analysis.
Heuristics can also help managers to manage risk. By drawing on their past experiences, they can intuitively weigh up the potential outcomes of a decision, enabling them to choose the option that aligns best with their goals and risk tolerances.
Heuristics can also help managers to allocate resources effectively. Using past experience, managers can utilise heuristics to quickly identify which projects or initiatives are likely to result in the most significant returns.
They can also use heuristics to make assessments on how much resource will be needed in order to successfully complete a project in a timely manner.
Heuristics can help managers to speed up decision making but they should also be used with caution. Over reliance on heuristics can lead to errors of judgement and bias.
Therefore, it is important to understand when to use heuristics and when to employ more in-depth analysis, depending on the complexity and risk association with a particular decision.
