We all make hundreds of decisions each day.  Many of the decisions we make are automatic, based on established patterns or habits – the route to take to work each day, what to have for lunch, or which pant leg to pull on first. Arguably, we could say that these are just actions based on decisions we have made in the past.

There are times however when we are faced with significant decisions that require a more structured and rational approach.  These decisions are more important in their impact, or may have more risk associated with them.  Choosing to make a strategic acquisition, hire a key employee, or retire a challenging product line would be decisions of this category.

Rarely are we ever taught a process for structured decision making.  And if we are, we might be introduced to the so called Ben Franklin approach to decision making.  This approach involves identifying decision choices and listing the pros and cons of each choice, possibly weighing those pros and cons, and then choosing the best path.

But could Ben Franklin, the famous scientist and inventor, be leading us astray?

Why we make bad decisions

In researching their most recent book Decisive, authors Dan and Chip Heath analyzed hundreds of articles and research studies to try to unlock the root causes of poor decision making.  They identified what they call the “four villains of decision making”.  These factors often underpin poor decisions:

  1. Narrow Framing – when faced with a decision people generally consider only one or two solutions.  We tend to consider only Yes/No or A/B options, rather than looking for three, four, or more possible solution paths.
  2. Confirmation Bias – when we look for data or information to support our choices, we are biased towards accepting (or looking for) data that already supports the decision choice we are leaning towards.
  3. Short Term Emotion – many important decisions can be emotional, and human beings will tend to be swayed to an option because of their short term feelings about the decision or choices they are considering.  Further, significant decisions are often stressful, and that stress may cause us to make a decision too quickly simply to alleviate the stress.
  4. Overconfidence – rarely do people ‘plan for the worst’ after a decision is made even though we know that the future is uncertain.

These factors present themselves in countless situations throughout the research, and throughout history, driving poor results.

Interestingly, the traditional Ben Franklin approach does not do a good job of helping to mitigate these issues.

How to make better decisions

The Heath brothers suggest a simple, 4-part process to avoid the pitfalls listed above.  They use the acronym WRAP:

  1. Widen your options – look for more than just two paths or solutions when faced with a decision.  Creative thinking techniques, like structured brainstorming, can force the generation of additional options. So too, consider the ‘do nothing’ option.  Business owners and leaders often have a bias for action, but consider that explicitly choosing not to change is, in fact, a choice itself.
  2. Reality test your assumptions – identify ways to test the options or assumptions being put forward before committing fully to a particular path. In his book Great By Choice, Jim Collins refers to this as firing bullets then cannonballs.  Commit small amounts of energy and resources first (the bullets) to test assumptions and validate the choice before committing larger amounts (the cannonballs).
  3. Attain distance before deciding – get away from the emotional fog that can sometimes cloud thinking around important or stressful decisions.  This can be done by taking time (delaying the decision), separating oneself from the decision or issue for a period of time, or seeking outside advice from people who don’t have a vested interest in the decision.
  4. Prepare to be wrong – people tend to make plans assuming their choice or assumptions are correct.  Explore scenarios including worst and best case situations, and make contingency plans to be prepared should these situations occur.  Further, exploring best and worst case scenarios can shed further light on a particular path of choice.

In addition to these considerations, look for ways to supplement your decision making process in these ways:

  • Involve more people – the old saying “two heads are better than one” applies to decision making provided it does not delay the decision being made or generate ‘group think’.  Additionally, involving people in a decision that will impact their work or situation can lead to faster and better execution.
  • Rely on collective intelligence – information resides in many places (and with many people) in the organization.  Seek out information and data at the source, be that with employees, customers, directors, or other sources outside the organization (like trade associations, suppliers, etc.)
  • Document assumptions and capture lessons learned – If decision making is going to improve in our organizations, we must learn from past decisions.  Take the time to look back on past decisions and analyze if and how the assumptions and predictions played out.  It is easier if all the assumptions and predictions associated with a decision are documented.  This should be formally embedded in every quarterly strategic planning meeting.
  • Leaders: Avoid predetermined choices  – In small and mid-sized firms, there is often an assumption that key decisions are meant to be made by the business leader.  In fact, this precedent evolves naturally from when the firm was founded.  But if an organization is going to grow and thrive, decision making must cascade down to all levels of the organization. Savvy leaders must be willing to give up control, have tolerance for decisions being made which may not be the same choice they would make, and be willing to enter discussions without a predetermined choice or course of action.

Better decisions, better results

Making better decisions drives better performance in our organizations.  Sometimes one significant decision, like choosing to launch a new product or enter a new market, can drive significant changes in company results.  But even small, day-to-day decisions like how we prioritize our tasks, which candidate to select for a role in our firm, or how to respond to a new request from a customer can, in aggregate, have a significant impact on overall results.

Do you know someone who could benefit from better decision making? Share this post with them!

Article by Tim O’Connor
photo credit: indecision dice via photopin (license)