Decision-Making 101

Tips and tricks from the book Decisive.

Photo by Javier Allegue Barros on Unsplash

1- 4 Villains of Decision Making:

• We face a choice, but we narrow it down to our own frame. This leads to missing better options.
• We analyze options and collect facts but we favor the information that we would like to be true. This creates a self-serving cycle, leading you to pick what is already on your mind. According to the book, a recent meta-analysis of the psychology literature concluded that we are more than twice as likely to favor confirming information than disconfirming information.
• As human beings, we always tend to be more affected by our short-term emotions. That decision you have just made probably will not feel right once you look back after 6 months.
• We are generally over-confident. We like the idea of being always right.

2- So what to do against these conditions ? Glad you asked:

• We have to widen our options.
• We must always test our options against the harsh reality.
• We better get some distance before we decide on that.
• We need to prepare to be wrong.

3- Widen the options :

• Scientist Nutt analyzed the decisions made in big companies. His analysis concluded that ‘whether or not’ decisions failed 52% of the time over the long term, versus only 32% of the decisions with two or more alternatives.
• Which means, you have to avoid giving decisions based on binary options.
• Should I move to Miami or stay in SF you ask ? How about New York ?
• Always ask yourself, what am I missing here ? What would other options be ? Is there a better way?
• Try the Vanishing Options Test: What if your current options
  disappeared?
• Try to ask a friend about the question. Or employ the tactic of What would my dad/mum do in this situation ? Insert here your role model. Just try to see your situation from different angles.

4-Multitracking: Consider more than 2 or 3 options at the same time.

• Ask your designers to come up with 3 different options instead of one. Then choose 2 ask them to improve and then made the final decision. To employ multitracked decision making will help you and your employees to bring out creativity.

Over one particular 18-month period, the archives revealed that the executive board had debated and resolved 83 major decisions. Decisions never involved more than three alternatives, and 95% were either a “whether or not” decision (40%) or a two-alternative choice (55%).

5- Ooching: Try small experiments.

• This idea can be likened to MVP or A/B testing of the modern world. Before you make that decision think of small ways to test the idea.
• For example, if you’d like to live in Paris for work, just book a 7-day holiday and try to pretend like you work there. Get up early, prepare for work, use the subway, etc. Does it really feel good ? Is Paris the one for you?

6- Do a Pre-Mortem

• A premortem is like a postmortem — except you do it at the beginning instead of the end . You ask, “it’s a year (or such) from now. Our plan failed. Why?

7- Do a Preparade

• This time you ask “It’s a year from now and everything is just fabulous. Will we be ready for success? What do we need to do to prepare for that success?
• You have made the decision to switch your jobs. Think about one year from now. What does success look like ? Did it worth switching the jobs ? What are the added values of the new job that you could not find in the previous one?
• Defining success is also the most important step in problem-solving. When you are dealing with a problem you have to define what success looks like after the problem is solved. You always have to optimize your solution space under the constraint of success criteria.

8- Look at from observer’s point of view or ask

• Andy Grove tried to make a decision for Intel. They were deciding what they better do with memory products. The problem is that the product is not selling that much any more. They could not decide. Then asked, “What would our successors do?” and answered that they would get out of the memory business. So, they got out.
• Sometimes you have to let go of your ego. Try someone else’s shoes. The main solutions may lay in looking at the problem with additional perspective.

9-Consider the opposite.

• One of my favorite tactics when I am dealing with a problem. Try to refute your arguments. Ask yourself what might be some assumptions I am making to reach this conclusion? What has to be true in order to make my decision false? Play the devil.

To make good decisions, CEOs need the courage to seek out disagreement. Alfred Sloan, the longtime CEO and chairman of General Motors, once interrupted a committee meeting with a question: “Gentlemen, I take it we are all in complete agreement on the decision here?” All the committee members nodded. “Then,” Sloan said, “I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what this decision is about.”

What a legendary leader.

10- Overcome Short Term Emotions

• Loss aversion: Research suggests that we set ourselves up for loss aversion almost instantly. This is intuitive and there is not much you can do to eradicate this feeling. However being aware of this is the first step, you may ask yourself in the process that “Am I making this decision just because I am afraid ?”
• Chip and Dan recommend using the 10/10/10 technique. Our immediate reactions and emotions affect the decision-making process. Ask yourself: How will I feel about this in 10 minutes, 10 months, and 10 years?

“People who overweight the first-order consequences of their decisions and ignore the effects that the second- and subsequent-order consequences will have on their goals rarely reach their goals.” — Ray Dalio

11- Reframe your problem

• Do not ask “Should I quit or not”. Instead, ask yourself “What is missing in my current job that makes me consider leaving?” or “ What are the differentiator offerings of the new job ?” or “What may happen to change my mind to stay at the current one ?
• Do not ask “Should I buy this or not”. Instead, ask yourself “How else could I spend this money?”
• Instead of “should I break up with him or not”, ask “What step(s) should I take for our relationship?”

12- Your decision-making process matters the most.

• By trial-and-error, you develop your style of giving decisions. After you feel pretty confident about the decisions you have made recently, stick to the process. You may make minor adjustments along the way.

“When the researchers compared whether process or analysis was more important in producing good decisions — those that increased revenues, profits, and market share — they found that ‘process mattered more than analysis — by a factor of six.’” — Chip & Dan Heath

Cheers.