bad decisions

Bad Decisions
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Decision-making is a cognitive process which comprises of different thinking styles. Depending on the resources required, amount of obtained information and the degree of analyses, there are three different categories of decision-making. These are non-analytical, unaided analytical and aided analytical (Paluch, 2012, p.10, para.2). Through the decision-making process good and bad decisions are made, but it is the bad ones that cost the business and the involved parties heavily. According to Andersen (2013, para.2), these bad decisions arise due to the decision makers lack of facts relevant to the issue, disregard for the input of other involved parties and assumptions based on fear or ego. This essay will discuss some of the bad decisions that have been made in the recent past specifically the cases of The Beatles and George Lucas. It will further expound on the biases that were involved in the decision making of the two cases and their impacts and will conclude with a summary of the cases in regard to bad decision making.
Paul McCartney, John Lennon, George Harrison and Ringo Starr (who replaced drummer Pete Best) are the members of The Beatles, a famous rock band group from Liverpool (Lifton, 2016, para.5). In their early career before they got their ‘big break’, the Beatles performed fifteen songs live in an audition for the staff of Decca Records (the best record label of their era) based in London (Andersen, 2013, para.5). The talent executive at that time rejected the group since according to him they sounded similar to an already existing group.

Additionally, the talent executive felt that the group’s style was becoming obsolete and quoted that “Groups are out; four-piece groups with guitars particularly are finished.” (Andersen, 2013, para.5). This decision by the leaders in Decca Records has been recorded as one of the bad decisions ever recorded in the music industry.
Similarly, in 1977 all rights for merchandising of products from all the films for Star Wars were relinquished to George Lucas, a decision by senior leaders of 20th Century Fox at that time (Andersen, 2013, para.4). Born in Modesto, George Lucas is a celebrated filmmaker and the original creator of Star Wars film, and, according to Andersen (2013, para.4), this deal was signed over to him in exchange for a cut of twenty thousand dollars from his pay. This decision has been regarded as a bad one especially for the 20th Century Fox since the merchandise value has been increasing over the years to over three billion dollars. According to Jerabek (n.d., para.6), the studio was overconfident in the decision making of this deal and also they underestimated George Lucas’s abilities as a filmmaker and entrepreneur in the industry.
In both cases, the parties there were various biases that influenced the decision makers hence the bad decisions. Recency bias involves the propensity of considering only the recent and latest events or information rather than the older events or information. This bias was at play in the decision by the 20th Century Fox since they only considered the recent information they had about the film industry. Similar to the Decca records, both entities did not consider the potential each of the investments had in the long run. They based their decision on the current market at that time and only the information they had at hand.
Overconfidence bias is well portrayed in the case of George Lucas and the 20th Century Fox. According to Friedman (2017, p.36, para.2), with overconfidence bias, people are likely to be overconfident by overrating their abilities this results into taking greater risk than one should. This bias undoubtedly played a huge role in the decision made to relinquish all the merchandising rights to George Lucas. The slight miscalculation made by the 20th Century Fox leaders then was based on the belief in their superior deal-making abilities and the knowledge of the film industry at that time. Similarly, the Decca records were also overconfident with their knowledge of the market trends in the music industry. They believed that ‘guitar music’ was becoming obsolete and this was the bases for their decision not to sign The Beatles.
According to Friedman (2017, p.15, para.4), conservatism bias, on the other hand, is where favor is placed upon the original view even in light of new evidence or information i.e. “reluctance to accept something new”. Friedman (2017, p.15, para.4) further suggests that conservatism bias and status quo bias are related. However, according to Azzopardi (2010, p.88, para.3), status quo bias is emotive and leads to clinging on the current situation of things while conservatism bias is intellectual and one tends to clutch on to preceding idea and opinion frames despite changes in the fact. This bias was at play in the decision and due to this the record label settled for the local band (Tremeloes from Dagenham, London) rather than The Beatles from Liverpool since they would be able to easily work the local band and keep in touch without any hustles and fewer costs.
Status quo bias occurs when one “favors the familiar and prefers that things remain the same rather than opting for change.” (Friedman, 2017, p.45, para.3). The Beatles had a different sound and unlike the familiar arrangement in other bands at that time where there was only one solo lead, all the members would solo different songs. This was a strange and rare arrangement which made them not fit into what the Record Company expected or had seen before. The need to stick to a group that was doing things in a conversant approach was a bias that influenced the decision made by Decca Record to take the Tremeloes.
In both of the above scenarios, the decisions made were influenced by different biases resulting them to be bad decisions. These bad decisions have denied the decision makers involved and their entities the ability to enjoy the fruits of what turned out to be the best investment they would have taken on. For instance, The Beatles have been the bestselling band for years, have won several awards and the fame they have amassed is unimaginable. If Decca Records gave them a shot at their label they would have been a part of the legendary story of The Beatles. Equally, the value of the Star Wars film merchandise has increased over the years to billions of dollars. The simple miscalculation and uninformed decision by the 20th Century Fox leaders then, has denied their entity an opportunity to be part of such a lucrative investment. Therefore, from the above scenarios, it is crucial for decision-makers invest in each decision they make to reduce the consequences and loss that may be incurred from a bad decision influenced by any type of bias.
References
Andersen, E. (2013, October 07). It Seemed Like A Good Idea At The Time: 7 Of The Worst Business Decisions Ever Made. Retrieved January 17, 2018, from https://www.forbes.com/sites/erikaandersen/2013/10/04/it-seemed-like-a-good-idea-at-the-time-7-of-the-worst-business-decisions-ever-made/#220e17db3e80Azzopardi, P. V. (2010). Behavioural technical analysis. Harriman House Limited.
Friedman, H. H. (2017). Cognitive Biases that Interfere with Critical Thinking and Scientific Reasoning: A Course Module.
Jerabek, I. (n.d.). It Seemed Like a Good Idea at the Time. Retrieved January 17, 2018, from https://www.queendom.com/articles/articles.htm?a=56Lifton, D. (2016, January 01). The Story of the Beatles’ Failed Audition for Decca Records. Retrieved January 17, 2018, from http://ultimateclassicrock.com/the-beatles-decca-records-audition/
Paluch, D. (2012). Overconfidence bias in decision-making at different levels of management (Doctoral dissertation).