Mariwyn Evans writes about commercial real estate for REALTOR® Magazine. You can reach her at firstname.lastname@example.org.
Smart Decision Making in an Uncertain Age
A conversation with Magda Osman.
September 1, 2011
Commercial real estate is a numbers game—run the figures and pull the trigger. Right? Not so fast. Economic volatility and shaky property fundamentals make it hard for commercial real estate investors to trust their assumptions. What decision-making techniques are most valuable to overcome these uncertainties? Magda Osman, lecturer in cognitive psychology at Queen Mary, University of London, and author of Controlling Uncertainty, provides insights.
How does today’s uncertain business climate affect a person’s ability to make good business decisions?
In a complex situation, there is much more information to take into account before making a choice. Usually, this means that the greater a person’s
How else does uncertainty make the decision process more challenging?
Uncertainty can destabilize what we think we know. In turn, that can result in our junking information that would otherwise be useful or shifting the focus from looking at success in the long term to meeting short-term needs. When uncertainty persists, bad decision makers frequently make ruthless changes to their plans without considering how these changes affect other aspects of the plan. These methods of coping increase uncertainty.
What techniques can assist a decision maker in volatile times?
Having clearly defined goals based on reliable information and following a well-structured plan of action help individuals cope with uncertain situations better. If a lot of things are changing at once, it’s incredibly difficult to identify whether subsequent changes in a situation are the direct result of your own behavior or caused by unknown factors in the environment. In tackling an uncertain situation, it’s often a good idea to make as few interventions as possible in a strategic plan, at least initially.
What role does intuition play in decision-making during uncertain times?
Much has been made recently about the role of intuition and the unconscious. In particular, strong claims have been made that we should make decisions based on our gut feelings. The rationale for this approach holds that our intuition, which is based on experience, can integrate complex information better than our rational analytical system. This is nonsense. Our experience comes from evaluating information carefully and learning which decisions and actions worked best. To continue to make good decisions in an uncertain world, the best thing we can do is to keep rerunning the numbers. The more accurate our estimates of future outcomes are, the more sensible our decisions become.