The Psychology of a Business Decision - Introduction
This is the introduction to a series of articles that will allow for a more thorough and thoughtful deep-dive into the elements presented here.
As much as the title of this article makes some people feel curious and excited, it also can make some people feel annoyed, irritated, and even cause someone to write me off in the business world.
Why?
Well, business culture, at large, has done a pretty exceptional job of scrubbing our humanity from its doings.
Essentially, the sole purpose of business is to make money - I get it and I don’t disagree with this, because if you don’t make money, then you don’t have a business.
Many business decisions are sometimes framed as sinister or evil - calling dramatic movie scenes to our minds - when in reality, a business is just doing what a business was designed to do - make money.
The catch is, some people want businesses to do more - to have more humanity, more responsibility, more of a “soul,” and to be more cognizant of how connected our world is (which is often painted as isolated silos where our choices won’t impact others instead of an interconnected system).
This can be difficult because if we actually have to think about and reflect on our interconnectedness, then it challenges some of our choices and behaviors. Maybe it even makes us feel trapped because we have to work in our modern society, and there are only so many companies and jobs out there that fully align with our personal values.
Eventually, you can hit a point where you’re just doing what you need to do to survive in our modern society. I get it.
So, when I discuss psychology + business, I have both seen and personally experienced this human vs. business tension (I mean, I experience it daily 😅).
My goal here is to share some insights I’ve gathered from my experience and education that will hopefully resonate, and help some folks, with their business goals while opening up discussion for what others have experienced.
The Psychology of a Business Decision: Overview
The way I see it, a business decision goes through a series of influential layers that seemingly start at larger, external factors and boil down to more internal, personal, factors.
Each of these layers, and the included concepts, are not exhaustive. Humans are complex and human systems are even more complex. Instead, this is a simplistic overview with higher-level concepts because each layer could be its own rabbit hole of perspectives and angles.
At the top we have business reasons/influences, mainly the Permanent Growth Environment (per Patrick Norton ) which includes urgency, pressure, and avoidance. Also, we have training, education, and experience (and upskilling employees into promoted positions - something I strongly advocate for).
The next layer is culture and group dynamics, which includes the organizational & individual (for example regional) culture, group dynamics like groupthink, and conformity and compliance.
Then it moves onto social cognition which includes elements like the primacy effect, fundamental attribution error, and self-justification.
And finally, heuristics – which includes biases and mental processes.
The entire process can be better shaped and guided by the use of appropriate data.
Each one of these layers requires a more thoughtful deep-dive, which is my intention over the next few weeks.
I’m sure this has already stirred up some thoughts and reactions, which is great! I’m excited to share the rest of it so we can further virtually explore these concepts and see what influences people and organizations with their decision-making. Stay tuned!
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