Taking the bias out of decision making
– Unilever’s story
Andrew Evans
Think Clearly – Act Decisively – Feel Confident

Introduction to Unilever and the role of
Decision Analysis
What we will cover
Why are we biased?
Some steps to take the bias out of decision making

Unilever is a large, culturally diverse and complex organisation
Some of our top brands:
• 167,000 employees
• Products sold in more than
180 countries
• Large degree of cultural diversity
Global presence
2010 Turnover ~€44 billion
Americas €14 bn Europe €12 bn Asia / Africa €18 bn
“2 billion consumers worldwide use a Unilever product on any day”

Decision Analysis is being actively applied across Unilever, in areas such as…
… Innovation, Mergers & Acquisitions, Supply Chain, Safety, Regulatory and other complex one-off decisions
All these applications have common features: there are multiple compelling alternatives; there are significant contradictions / disagreements on how to proceed; and stakes are high

The Unilever DMUU programme is embedding
Decision Analysis throughout the organisation
Framing & Structuring
• Clarifying the problem
• Creating alternatives
• Structuring information
• Improving communication
Analysis
• Quantifying uncertainties
• Testing assumptions
• Evaluating alternatives
• Identifying sources of value
Insight and commitment to action
Creating a culture where we have the debate, make a decision and move on as a team, even when we have to

Can you see what it is yet?

Our ability to recognise and learn patterns has been an important part of our success story!

Our individual personalities give us unique perspectives!
Our offices, as seen by someone with a strong detail focus…
…and by someone with a more abstract focus!
These perspectives make us susceptible to different biases

There is a wide range of decision making biases…
“I’m an above average driver”
“Of course my product launch will be a success”
Confidence is important, but overconfidence can be dangerous

…and further decision-making biases are constantly being identified
Sunk cost
Selective perception
Status Quo Framing

Despite its tendency to bias, a human brain is excellent at:
Recognising and remembering patterns.
Comparison of NPV distribution for four strategies
Detecting differences in views.
-3.8
5.1
8.0
7.7
Drawing insights from analysis.
We need a way of exploiting the advantages our brains give us, whilst avoiding the downsides!

Suggestion #1 – Understand the decision, and understand yourself!
Increasing Complexity
Low Complexity High Complexity
When operating in this area:
1. Consider your own biases
2. Consider ‘decision fitness’:
• Overtired?
• Stressed?
• Not well?
3. Use the Decision Quality
‘Quick test’
At high complexity levels, use an appropriate process to drive out biases
The level of decision complexity will determine the best approach

The Decision Quality ‘Quick test’ helps in lowcomplexity situations
Appropriate frame – what question do we want to answer?
What is the full range of alternatives to consider?
What information do we need and where can we get it from?
Criteria & trade-offs – how will we decide between alternatives?
Logical reasoning – have we reliably assessed each alternative?
Who is the decision maker and will they commit to action?

Suggestion #2: Use an effective process for complex decisions…
Review 1
Review of framing and structuring.
Review 2
Review of key data and confirm frame is still valid.
Review 3
Discussion of analysis, agree decision and actions.
IDENTIFY
PROBLEM

…and choose tools that will compensate for team member’s biases
Selective perception
Run a brainstorming session to force new concerns to be considered
Create a range of strategies to ensure a full range of alternatives is covered
Status Quo
Build several strategies to ensure other options are considered
Fully explore each strategy – get others to comment on the benefits and disadvantages of each one
Framing
Explore multiple frames at the start of the process and document the agreed decision frame
Re-examine the frame at stages throughout the process
Sunk cost
Use communication aids such as decision trees to identify past and future costs

Suggestion #3 – Focus your presentations
“Modified Original strategy had an EV of W$ -3.8m, whereas Step by Step strategy was W$8.9m better with an EV of W$ 5.1m. National Factory now showed a 56% improvement over Step by Step but only a 4% improvement over National Factory Later strategy which had an EV of W$ 7.7m.”
Comparison of NPV distribution for four strategies
-3.8
5.1
8.0
7.7
“a picture is worth a thousand words”

Suggestion #3 – Focus your presentations
Your senior decision maker may not need all of the technical content!
48% chance of negative NPV
Mean = W$ 7.7m
NPV (W$m)
!

Our goal is better decisions – despite the biases!
Our brains are excellent at recognising patterns and drawing insights. But this strength makes us all prone to biases. If we are aware of them, we can limit their impact on decision quality
In low complexity situations we can use a checklist to avoid some common biases
In more complex decisions a more thorough decision process, with careful choice of tools is appropriate
IDENTIFY
PROBLEM
Review 1
Review of framing and structuring.
Review 2
Review of key data and confirm frame is
Review 3
Discussion of analysis, agree
We can tailor the insights from our analysis to the needs of our decision makers