What is analysis paralysis and rational ignorance ?
- Sometimes more decision options you have, the worse your decision – or you might not make a decision at all
- Curiously, overanalysis, or analysis paralysis, is easy to fall into when the possible negative impacts of a bad decision (the opportunity cost) seem much greater than the potential gains made by deciding
- For example if one stands to lose $3 Million with a bad decision but gain only $500,000 with a correct one, its very easy to spend more time than necessary analyzing the problem.
- The root cause of this paralysis is the overwhelming negative view that causes you to naturally focus on only one side of the equation (unfavourable outcomes) which can limit a product manager’s creativity.
- A simple technique to break this type of deadlock is to assume the worse case and then work upward from there
- For instance in the previous example, a seasoned decision maker will quickly recognize the onset of paralysis and approach the problem differently:
- “Assume we’ve lost $3 Million, Now, how can we improve on that situation before it happens ?”
- Rational ignorance is a deadly sin of decision making
- When its very expensive or difficult to gather facts for an informed decision, you need to consider the possibility that an informed decision might cost more than any benefit you’d gain from getting the facts.
- Hint: there aren’t very many of those situations in corporate life.
- In short, if you want to make better decisions more often, you must avoid focusing too much on negative consequences (analysis paralysis) while ensuring that issues are not unduly suppressed (rational ignorance).
- In product Management roles – the glass as a product is neither half-full nor half-empty – simply something that must eventually be washed and reused till the end of its life cycle.
Awareness of above two factors will help one scale their analysis efforts accordingly given a particular situation.