Faculty News | Decide in advance how you are going to make decisions! – interview with Sandy Vaci

Sandy Vaci - Faculty at SEED Business School

Interview with Sandy Vaci, our Faculty Member and Founding Partner of CodeBreakers™ – a company dedicated to bringing the latest cognitive applications to businesses worldwide – about the latest insights in behavioural business approach with practical examples and reflections on the current pandemic crisis from this new, refreshing perspective.

The original article appeared at DigitalHungary.hu (in Hungarian) – the online portal behind the conference series of Internet Hungary and Media Hungary.

Hereby, we share an edited version of this interview (translated to English).

Business is all about influencing others’ decisions. For this, we need to know in advance how people are going to make decisions based on what they do.

Artificial intelligence (AI) and algorithms that predict our decisions are already part of our daily lives. So what is exactly new about the behavioral approach?

Big Data and artificial intelligence-based technologies using past data see patterns based on correlation analyzes and provide forecast for the future. However, the world is changing faster than these databases could update – which could take months, even half a year.

At the same time, the human decision-making mechanism, the “human factor,” is pretty much constant and brings stability to this picture. The functioning of our brain changes very slowly. Building on this, the human decisions remain predictable.

The best forecasts are therefore based on the processing of
the machine learning forecasts through a “human filter”.

How does the “human filter” work?

Let me give you an example.

On a hot summer day, you sunbathe on the shores of the Lake Balaton and you have a bottle of water, but a cold beer would be nice. There are two possibilities. First, you can buy it from the local store. Or you could get it from the bar of a hotel restaurant, but it’s much more expensive.

How much does the same beer worth to you in this two cases?

In the first case maybe 300 HUF, in the second let’s say 600 HUF.

I ask further: why are you willing to pay more in the second case?

Because only that is available, so I adapt.

That’s exactly, what behavioral economics is about.

I have already influenced you by offering the two scenarios. You were willing to spend more for the same product at the same place – just because of the context.

And you get the same result in both cases! While you didn’t think at all, that you didn’t even need it, because you already have the water.

99% of people would have made the same decision. There is nothing wrong with that.

The 30.000 decisions we make every day, it can’t be thought through one by one.

However, it is good to be aware of what, why and how we decide.

Does this have a biological background? There is no miracle, that sales or package offers are working all over the world.

Yes, actually our brain is working with a fixed mind set, in order to not to constantly analyze or think through the decision making situations, which would be impossible.

I’ll be brief with the biological explanation needed to understand these biases.
Our brain is basically encoded on three levels:

  • The most ancient is the physiological brain, which is called the reptile brain in a more descriptive way. It’s around 500 million years old, the only code here is the individual survival, everything is subordinated to this.
  • The next level is the psychological brain, called the limbic brain, which is responsible for social coexistence. The emotional reactions are coded here.
  • The latest part is the neocortex, which appeared only 2-3 million years ago. This makes us conscious, planner beings, this is where cultural coding also comes into play – namely the influencing power of the norms accepted by our environment, the compliance with external expectations.

The problem appears, when the three basic codings take you in three different directions – as if a car has three drivers.

It can be a hectic situation where someone has to choose between saving their own lives and the lives of others, or even something trivial as a faulty car ad.

For example, if a little boy on a billboard asks his father to buy this or that car, the adult will not accept it on a visceral basis, even if he says he is listening to his child. Our oldest reptile coding involves being responsible for my own survival and that of my child, which – in this situation – is the opposite of paying attention to him or her for giving me advice – no matter how culturally accepted the behavior is.

Therefore, this advertisement can’t be effective. Everybody say, that they like it and it’s cute, but in the end they don’t buy the car.

Are the codes burned into us so much, or is the “recoding” possible?

Experience has shown that people can be culturally recoded.

At the individual level, it would take roughly ten years, while in the whole society it would take three decades for conscious behavior changes.

Emotional recoding is even more difficult and physiological recoding is almost impossible.

That’s why I don’t think the current coronavirus crisis would leave a deep imprint on people. After all, the reactions that have developed over many millions of years are stronger and it takes at least ten years to recode at the conscious level.

We live with the coronavirus and our changed life only a year now. This may seem like a lot at first, but a special situation of one or two years will not overwrite the millions of years of engraving.

As soon as possible, everything will return to the previous life cycle in a short time. So we couldn’t expect that suddenly everyone will think green and consciously in the long run as well.

What’s more, everyone responds to the crisis differently because of their situation and attitude: there are those who will be depressed by it, some who see the opportunity in it. I used to say that there is no single coronavirus crisis, but there are 7 billion crises at the human level worldwide.

Is there a way out from this bias determined world?

The solution is to create a well-functioning decision-making structure to minimize these distortions.

I could also say that we need to decide in advance how we are going to make decisions. And this “how” doesn’t concern the output, the option A, B or more, but the decision process itself. This needs to be optimized.

We at CodeBreakers also deal with this: we have a 40-question checklist that we ask our clients to map out their decision-making processes. The goal is to create a structure that suits the company, which brings to the surface the inputs and opinions from all parts of the organization. The different they are, the better.

After all, this means that they see the same thing from several points of view. Of course, we also need a suitable platform to put together these points of view, which isn’t always easy.

This is because the decision architecture must be designed into the corporate culture.

Next Program with Sandy Vaci, Frigyes Endersz, Krisztián Komándi and Barnabás Szászi

21 Oct | 28 Oct | 4 Nov 2021 – Mastering Decision Making

Improve your strategic decision making, strategic pricing and influencing skills with the latest cognitive and neural coding tools and “nudge” techniques – using the method outlined by Oxford professor Dr. Olivier Sibony, made practical by SEED faculty based on advanced discussions with the author.

An exclusive course for executives, leaders in positions with constant decision-making demands or for professionals in strategic planning, HR, communication, product development or pricing field – led by Sandy Vaci (SEED Faculty) and three internationally recognized guest speakers, Frigyes Endersz, Krisztián Komándi and Barnabás Szászi.

If you want to join this program, click here and register your place!

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