• How scarcity diminishes our decision-making capability



    We have all come to accept the adage that nobody is perfect. But think about the last time you made a major mistake at work. What were the circumstances led to that mistake? Were you stressed out over an impending deadline? Were you juggling one too many tasks? Were you forced to take on additional workload because a colleague suddenly left?

    Chances are your misstep can be traced back to a lack of time and resources. Scarcity—a state of having a very small or limited supply—can cause even the most talented professionals to do dumb things.

    This played out in a truly tragic way 10 years ago when a stampede outside the venue of a widely popular local game show resulted in the death of over 70 people. Several factors—most of them marked by a scarcity of some sort—led to the tragedy: For one, about 30,000 people gathered outside the sports arena that day for a chance to participate in the game show. The organizers were used to handling a crowd of only about 5,000, making them ill-equipped to control such a throng.

    According to some reports, one of the show organizers announced to the crowd that only the first 300 people would be allowed to enter the arena. This triggered panic especially among those who were far behind in the queue. They began pressing forward, crushing the people at the head of the line. That was also the first time the organizers used that particular venue so they may not have had sufficient knowledge regarding the layout of the arena and the surrounding areas.

    Many factors were involved in the tragedy that claimed the lives of 73 people, mostly women, and injured over 300 others. Among them were inadequate preparation, the failure to anticipate a large crowd as well as the lack of experience in dealing with such a mass of people, which, in turn, created a sense of anxiety among the organizers and the security personnel and lead to poor decision-making.

    In a report entitled, “Does scarcity make you dumb?,” Deloitte researchers look at the negative impact scarcity may have on organizations and how leaders can mitigate such an impact.

    Scarcity interrupts thinking. Like sudden noises or e-mail messages, scarcity creates constant distractions that prevent people from engaging in higher-level thinking.

    It is believed that our brains process information in two distinct ways: top-down and bottom-up. The first is directed by a conscious choice and draws on higher levels of mental functioning—the kind you employ when you’re, say, leading a strategic planning session. Bottom-up processing is often simply reacting to external stimuli, happening beyond our conscious control, as when we react when someone calls our name.

    When our cognitive load—the total amount of mental effort being expended—is high, our ability to prevent bottom-up intrusions can be greatly diminished. Scarcity creates a high cognitive load by constantly pulling away our attention to an unmet and urgent need. This may explain why you sometimes have workers who are physically present but mentally absent—scarcity may be interrupting them throughout the day so they are unable to focus and work.

    Scarcity draws our attention to the urgent. The presence of an unmet need can become all-consuming, so much so that we are unable to weigh other concerns.

    In the case of the arena stampede, the urgent need for the security personnel was not to allow the large crowd into the stadium. So they closed the entrance gates. On the other hand, the people who crowded outside were eager to enter the venue. They did not think about the harm they could cause by pushing forward to enter an area that cannot accommodate all of them.

    Research shows that our brains are wired for survival and as such, we instinctively focus on what we lack. While this behavior has its advantages, persistent scarcity compels the brain to focus only on the urgent at the expense of the important.

    Scarcity exhausts the mind. The constant pull to attend to urgent needs forces us to make trade-off decisions; for example, you have a client who calls for an emergency meeting at the same time as your child’s piano recital. Regardless of which activity you decide to attend, you will likely feel distress or guilt. Constant trade-offs such as this deplete mental reserves and make us feel as if we have less control over the situation, which can ultimately lead to poorer decision-making. Moreover, unlike physical fatigue, we tend to be less conscious of how low our mental reserves have become.

    Considering all these negative effects, how will you handle scarcity?

    Our Deloitte researchers recommend creating slack in your system. While slack may seem like a negative (who wants to see someone in the office doing nothing?) it can support overall performance in key ways.

    In the form of excess capacity, slack allows individuals and organizations the time to grow, adapt, and change. The right amount of slack—a buffer for the uncertainties that make scarcity such a consuming mental challenge—gives people the chance to focus on creating longer-term change and to increase agility.

    Based on the Deloitte report, here are five ways to create slack in your day:

    Start your day off right: Take the time to define and prioritize your daily goals, and refer back to those goals throughout the day to ensure alignment.

    Create meeting buffers: Reduce meeting times to 25 or 50 minutes to create time to reset before moving on to the next meeting or task.

    Schedule focused work time: During this time, turn off your email and your phone so that you can give your full attention to the task at hand.

    Take breaks: Schedule time to mentally recover. This means stepping away from your work to get up and move around or practice deep breathing to center yourself.

    Meditate daily: Just a few minutes a day can provide a wide array of mental and physical benefits.

    Leaders need to consider strategies to mitigate the negative impact of scarcity and to preserve mental capacity. Knowledge work, after all, requires mental capacity, and that capacity is finite for everyone. By building slack into the system, workers stand a better chance of seeing the big picture and making smart decisions.

    The author is the Financial Advisory Leader of Navarro Amper & Co., the local member firm of Deloitte Southeast Asia Ltd., a member firm of Deloitte Touche Tohmatsu Limited—comprising Deloitte practices operating in Brunei, Cambodia, Guam, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.


    Please follow our commenting guidelines.

    Comments are closed.