Fallacies that Affect Business Decision Making - The Straw Man

The Straw Man

The Straw Man involves deception by distortion. It's like a misquote - but more subtle.  The Straw Man is used by creating a distasteful caricature of an opponent, thereby suggesting the audience join in dismissing their point of view.

How it works:

I will attack you by ignoring your actual position and substitute it with a distorted picture of what you stand for.  We cannot possible support a candidate who does not care about the economic future of our nation.

Example: 
When world economic crisis occurs, our manager was asking the workers to increase company's profit by 70%, and I said it is ridiculous.

Click https://www.youtube.com/watch?v=ME7K6P7hlko to meet your Strawman!

Fallacies that Affect Business Decision Making - The Slippery Slope

The Slippery Slope

The slippery slope takes the audience into the dangerous realm of the hypothetical.  Rather than dealing with an assertion directly, a link is made to the impact of a particular position (without causal proof) resulting in an undesirable outcome.  The slippery slope can be used to prey on people's fears.  It makes link after link - each scenario worse that the one before.

Short video about Slippery Slope, https://www.youtube.com/watch?v=aaKvgrMYJxI

How it works:
I will state that if we accept one proposition then another, undesirable outcome will surely follow.  If we grant our customers a refund without asking questions, every past customer will come out of the woodwork and demand their money back.

Example: 

If we make decision to reduce our products, the customers will get less choices. If customers get less choices, they do not want to buy our products. If company experiences loss, the company will bankrupt.

Fallacies that Affect Business Decision Making - The Red Herring

The Red Herring

The red herring is a logical sleight of hand.  A trick to divert attention from the main argument.  Red herrings might indicate that the speaker is on shaky ground.  Rather than dealing with the central issue directly, they introduce a separate argument, diverting discussion to an argument they are more likely to win.

How it works: 
I may listen respectfully to your question, but I will not answer you directly.  Instead I will steer the conversation toward safer ground (for me) by making a spurious link to a different topic.  Yes, overcrowding in our hospitals is a serious issue.  It affects older Australians in particular.  Let me tell you about the changes to mandatory superannuation that we are introducing...

Example: 
Manager: "John, your performance in this month is poor, you need to improve yourself."
John: "Sir, compare to my performance, I notice that Lily does not focus in her work recently."
John want to divert manager's attention from his poor performance to Lily.

Know more about Red Herring? Click https://www.youtube.com/watch?v=exdK7Lirngg&t=85s

Fallacies that Affect Business Decision Making - Bandwagon

Bandwagon

The bandwagon is applied when it is assumed the audience is not sure how to act.  So, they will look to the choices made by others.  It is even more compelling to follow the choices of other people like themselves.  This is a popularity fallacy.  Of course, the fact that any given conclusion is a common choice does not render it correct.
The Bandwagon logical fallacy should not be confused with the influence principle, although you will see a connection.  If, by chance, you have attended a mojologic or 6 Degrees workshop, you may have heard us reference Cialdini's principles of influence - one of which is social proof. 

How it works:

I will support my assertion with facts and statistics that indicate widespread consent.  95% of Fortune 500 companies use this supply chain management system therefore this is the right choice for you.

Example: 
Manager:" I think we should higher our products' price as for now, other companies also do the same thing."

To know more about Bandwagon, click https://www.youtube.com/watch?v=a0sA3GcGlYI

Fallacies that Affect Business Decision Making - Ad Hominem

Ad Hominem

From the Latin, meaning 'to the man'.  Another somewhat cowardly tactic, Ad Hominem directs the attack to the person rather than the proposition.  When used in a fallacious argument, Ad Hominem works like a character assassination.  It is incorrect to link the quality of an argument to the character of the person who espouses that argument.

There are several types of Ad Hominem, like to know more? Click https://www.youtube.com/watch?v=qBkj-AYYg7w

How it Works: 
I will sidestep your proposition and focus on something else about you to cast everything you say in a negative light.  How can we take advice on relaxing firearms regulation from somebody who grew up culling rabbits on an outback station.  He clearly enjoys shooting innocent creatures.

Example: 

Don’t listen to Mary, she is always being bossy to her colleagues' work like she can do better. Rather than address Mary argument, the rhetor attacks Mary herself.

Fallacies that Affect Business Decision Making - Hot-Hand Fallacy and Gambler's Fallacy

Hot-Hand Fallacy and Gambler's Fallacy

A study by University College London psychology professor Nigel Harvey and graduate student Juemin Xu, published in the May 2014 issue of Cognition, found that gamblers believed in "gambler's fallacy," and this led to an opposite effect, "hot-hand fallacy".

Hot-hand fallacy occurs when gamblers think that a winning streak is more likely to continue. This is based on the idea that having already won a number of bets.

Example: 

Manager:" Increase in our product prices has already contribute a high income for our company, so we need to continue increasing the prices to get higher income."

To know more about Hot-Hand Fallacy, click https://www.youtube.com/watch?v=a0sA3GcGlYI

The gambler's fallacy is the opposite. During a losing streak, it is likely that a gambler's luck will turn around and will start winning.

Example: 
From year 2015 to 2017, company experienced a loss from the sale. Therefore, the company expected that they will get a profit from the sale in year 2018.

To know more about Gambler's Fallacy, click https://www.youtube.com/watch?v=7dKL3DsVrCI

The problem is, in most games of chance, subsequent outcomes are independent from each other. Each time the game is played, the universe forgets all previous outcomes and starts from scratch.

Importance of Business Decision Making - Selecting The Best Alternatives

Selecting the Best Alternatives 

Decision making is the process of selecting the best alternatives. It is necessary in every organization because there are many alternatives. So decision makers evaluate various advantages and disadvantages of every alternative and select the best alternative.

Assessing alternatives is the hardest part of decision-making. It depends on judgment, sorting out bias, and testing your intuition. Ask yourself:

• Is my information correct? Can I get more information to test assumptions?

• How do I use or weigh this information, and the advice of others, to choose the best alternative?

• Have I considered ethics in choosing my preferred alternative?

• How do I deal with resistance from employees and other stakeholders?

Importance of Business Decision Making - Helpful in Planning and Policies

Helpful in Planning and Policies 

Any policy or plan is established through decision making. Without decision making, no plans and policies are performed. In the process of making plans, appropriate decisions must be made from so many alternatives. Therefore decision making is an important process which is helpful in planning.

With a strategic planning process, any organisation will be able to know:

• what it wants to achieve in the long-term – Vision

• which principles guide its work – Values

• how it wants to bring about change, what is it doing – Mission

• what specifically the organisation wants to see changed based on the identified problems – Overall goal

• what the organisation wants to achieve in short to mid-term – Immediate objective

• which results the organisation aims to reach – Key results areas

http://www.unoy.org/evaluationguide/learning/for-organisations/2-planning-and-decision-making/

Importance of Business Decision Making - Evaluation of Managerial Performance

Evaluation of Managerial Performance

Decisions can evaluate managerial performance. When decision is correct it is understood that the manager is qualified, able and efficient. When the decision is wrong, it is understood that the manager is disqualified. So decision making evaluate the managerial performance. 

For example, making decisions properly at the right time and in the best period has the potential to increase the overall success of the manager.

Decision-making which means comprehending, thinking, evaluating the alternatives and choosing one of the alternatives is a factor that affects manager’s performance directly and provides a competitive advantage for organisations. managers who have high decision-making competence will have high managerial performance.

Importance of Business Decision Making - Pervasiveness of Decision Making

Pervasiveness of Decision Making

Decision-making is a pervasive function of managers aimed at achieving organizational goals. There are three dimensions of the pervasiveness of decision making. 

1. All managers in the management hierarchy take decisions within the limits of their authority.

2. Decision making is done in all functional areas of managements such as, production, marketing and finance etc.

3. Decision making is inherent in all functions of management. In example, planning, organizing, staffing, directing and controlling. Without decision making, any kinds of function is not possible.

Therefore, it is pervasive.

Reasoning in Business Decision Making - Why We Need Business Decision Making?

WHAT IS DECISION MAKING?

Decision-making is a vital part of any business and a key function of its success. SME Directors and owners are largely responsible for the ultimate outcome of all their decisions, unlike CEOs and managers of large companies. Decisions made in a smaller company, particularly regarding staff, will have a higher impact on the business than those made in a large company.

http://www.ascendtwentyone.com/2014/03/effective-decision-making-is-important-for-your-business/

Strategic decisions such as an increase or decrease in the size of the company’s workforce can be critical to its success of a business. The video below shows the importance to make business decision making:

Refer to the video: https://www.youtube.com/watch?v=VWn0gUErXjA&t=6s