When investors make an investment in a company, or when executives are running one, they are also making a series of decisions about people. Do I trust this person to get the results we expect? When making a decision of that importance, it stands to reason that you’d want to access as much as your brain power as possible Here are some ways to do that.
The problem with decision making, particularly decision making about people, is that we are all “gut decision makers” whether we admit it or not. The research tells us that most people spend a few seconds assessing, then the balance of the meeting looking for evidence that confirms our initial perception (psychologists call it “confirmation bias”).
What is gut instinct anyway? Our brains are prediction machines; we are wired to find patterns at a subconscious level. (If you’ve ever been sickened by eating something, then felt nauseous at the sight or smell of that food afterwards, you’ve experienced that powerful pattern recognition machine.) Gut instinct is an accumulation of predictive powers that helps you make sense of new situations. It’s simple and nearly instant. (“I like this person. I want to talk to them more.” Or, “I am not ready to buy this now.”) Most of the time, your gut is helping you access valuable knowledge that isn’t even consciously available. But sometimes it will lead you astray.
Taming the Gut Instinct
So how do we limit the downside of our gut, while still benefiting the wealth of wisdom it offers us? The first way to do this is to tune consciously into what the gut is telling you — so that you can examine it. This is easy to say, not so easy to do. Practitioners of mindfulness and meditation report that they can bring instinctual perception to the conscious mind more readily, so that is one way to help.
Generally, if you are making a decision, you can see where you are coming out, and then try to go backwards to determine what data might be informing the view. Does this person remind me of someone – either good or bad way? Was there something they said that set me off? What about me caused that? Once you know what your gut is telling you, you can try to determine if it’s using useful data, or something less likely to be accurate, like whether the person looks or sounds like a friend of yours.
The second way you can reduce the negative effects of gut feel is to use behavioral interviewing and data collection. Here’s how it works: you leverage a basic principle of predicting human behavior. Go with past behavior and extrapolate. If someone can provide compelling, recent examples of a behavior, chances are you can count on that quality come through once they’re in the job.
There’s a certain kind of question that starts with, “Tell me about a time when…” or “can you give me an example of when you did that?” The evidence you get this way is qualitative, for sure — you can’t easily score someone on the ability to handle ambiguity — but good answers should really stand out, versus sounding plausible or unimpressive. It doesn’t take much to improve those outcomes. A little bit of discipline and process goes a long way.
So in short, listen to your gut. Figure out what it is saying and try to intuit why you may be getting those gut decisions, and use structured interviewing to get at the most important qualities. These two techniques hold the power of dramatically improving people decisions and the investment outcomes that surely lag behind those decisions.