In this article, I’ll examine the impediments humans face when making decisions. Moreover, I’ll look at how more companies are turning to information technology, including AI, to support and sometimes even take the lead in business problem-solving. As IT becomes the basis for our decision-making toolkit, understanding our human limitations is more crucial than ever. So, we’ll look at the essentials of the human problem-solving process and identify the top 5 stumbling blocks we face in the business world. By recognizing these weaknesses, we can best leverage information technology to truly optimize our business decisions.

“We must accept human error as inevitable – and design around that fact.”

Donald Berwick

1. The 4 Basic Steps Of the Human Problem-Solving Process.

In the business world, identifying the problem itself is often elusive and challenging. This is unlike in academia where students are presented clearly defined problems to solve. Indeed, recognizing the right problem is a significant part of the challenge in business problem-solving. Further complicating matters, issues may not even be real, but simply perceived as a problem by employees within the organization. Historically, before computers, institutions like the military developed intricate problem-solving methodologies. These processes have proven extremely effective, not only for the military, but also for businesses to greatly enhance decision-making.

For example, below is a 4-step problem-solving process that businesses can use without the use of information technology.

4-Step Problem-Solving Process

1. Define The Problem.
2. Generate Alternative Solutions.
3. Evaluate and Select An Alternative.
4. Implement And Follow Up On The Solution.

For a more detailed discussion, see Unvarnished Facts’ A Superior Problem Solving Process: How To Produce Better Results.

2. The Precarious Nature of the Human Problem-Solving Process.

Now, let’s look at challenges we humans have with making good decisions. Indeed, what exactly are the limitations of relying solely on human problem-solving? Moreover, what necessitates the integration of information technology to include artificial intelligence (AI) into our thinking processes? The simple answer lies in human fallibility: biases, emotional influences, and errors that can severely affect our ability to make rational business decisions. Though human expertise and experience are undeniably essential in decision-making, cognitive biases, information overload, and time constraints often result in less-than-ideal outcomes.

On the other hand, the human brain may be finite, but it is amazing in its capabilities. In fact, this is one of the reasons we have built AI to emulate our thinking. Moreover, it is amazing that our decision-making and intelligence has evolved over the millennia. To summarize our transformation, Eric Colson in his article, What AI-Driven Decision Making Looks Like, says it well on how our human brain functions in regard to decision-making. Eric’s quote below summarizes it well:

“as early hunter-gatherers, we developed a system of reasoning that relies on simple heuristics — shortcuts or rules-of-thumb that circumvent the high cost of processing a lot of information. This enabled quick, almost unconscious decisions to get us out of potentially perilous situations. However, ‘quick and almost unconscious’ didn’t always mean optimal or even accurate.”

Eric Colson

3. Top Challenges With the Human Problem Solving Process.

So along with our finite human brain we have inherited cognitive biases and shortcomings. As a result, our survival heuristics can cause less than optimal decision-making in the modern business world we live in. To detail, below is a list of challenges we have with making day-to-day business decisions.

a. Humans Have Biases. 

Bias can be conscious or unconscious. Also, it can affect the way we perceive information, interpret data, and make decisions. For more on bias, see Unvarnished Facts’ article, Bias With Examples – Everything You Need To Know. This article discusses eleven types of biases. This includes being overly optimistic, over relying on our past experiences, maintaining the status quo, and being unduly influenced by a good story to name a few.

b. Humans Have Emotions.

Also, emotions can influence decision-making by clouding judgment, leading to impulsive or irrational decisions. Furthermore, emotions cause individuals to prioritize short-term gains over long-term benefits. For example, people have trouble accepting unexpected or disappointing data. Thus, irritated and frustrated, they will dismiss the unanticipated result instead of taking action on the new information.

c. Humans Make Errors. 

Here is the case of basic human error. We make mistakes due to lack of knowledge, miscommunication, or other cognitive weakness. Subsequently, these errors can lead to costly consequences such as financial losses, damaged reputation, or even legal issues.

d. Humans Get Tired and Distracted. 

Also, fatigue can impair our cognitive functions, leading to poor judgment, decreased productivity, and increased errors. Further, this holds true when we are bored or distracted as well.

e. Human Information Processing Is Limited.  

Lastly, the human brain can only process a certain amount of information at a time. As a result, this can lead to cognitive overload. In these cases, we humans will either summarize the data, misinterpret, or even ignore important information. Subsequently, this increases the chance of us making a bad decision. Additionally, we have finite memory capabilities, different levels of intelligence, and a wide range of experiences that can drastically affect our decision-making capabilities.

Business Decisions Made Better: First Automation, Then Data, Now AI Tech

References.

For more on human decision-making, see Unvarnished Facts’ A Superior Problem Solving Process: How To Produce Better Results. Also, for more from SC Tech Insights, see our article on information technology and decision science.

Now, this article is the first in a series on AI Impact On Business Decisions. Subsequently, the rest of this series will explore the opportunities and the challenges we have had in the past with using automation in decision-making. Specifically, this will include process automation, data-driven decision-making, and lastly, AI’s impact on business decisions. For more on this series, AI Impact On Business Decisions, see links below:

• The Human Problem-Solving Process (This Article) – Part 1
• Process Automation – Part 2
• Data-Driven Decision-Making – Part 3
• AI Impact on Business Decisions – Opportunities – Part 4
• AI Impact on Business Decisions – Limitations – Part 5

An Agile Decision Platform to Empower Executives For Superior Supply Chain Performance: Here Are The Best Attributes

Lastly, if you are in the supply chain industry and have a need to supercharge your decision-making cycles, please contact me to discuss next steps. I’m Randy McClure, and I’ve spent many years solving data analytics and decision support problems. As a supply chain tech advisor, I’ve implemented hundreds of successful projects across all transportation modes, working with the data of thousands of shippers, carriers, and 3rd party logistics (3PL) providers.  I specialize in launching new analytics-based strategies, proof-of-concepts and operational pilot projects using emerging technologies and methodologies. To reach me, click here to access my contact form or you can find me on LinkedIn.