How to Make Better Decisions as a Leader (Step-by-Step Guide)

Ever made a decision you later regretted? Or found yourself stuck between options, unable to move forward?

As a leader, your decisions shape not just your success, but your team’s as well.

The problem?

Many of us make decisions based on gut feeling rather than a solid process. We jump to conclusions, miss better options, or get trapped by emotions.

Think of decision-making like poker, not chess. In chess, you can see all the pieces and predict outcomes. But in poker, you work with limited information and probabilities – just like real-life decisions. You can make a great choice and still get a poor outcome sometimes – and vice versa (See Annie Duke’s book Thinking in Bets for more on this).

That’s why it’s important to understand the steps and techniques to make the best decisions you can and to avoid the common mistakes we as leaders (and humans) can make.

This article will walk you through a seven-step framework to make better decisions consistently. It won’t guarantee perfect results every time, but it will help you make better choices more often.

1. Know what you are deciding (or solving)

Have you ever spent time solving a problem only to realize you were tackling the wrong issue? Or decided on something, only to find it wasn’t what you really wanted?

That’s why it’s important to clearly define what you are deciding or solving.

Define what you want to accomplish, do, or solve

When making a decision, write down what you’re trying to accomplish. What’s the main goal?

When solving a problem, make sure you understand what the real problem is before looking at solutions.

You can ask questions like:

• What started this decision process?
• What does success look like after this decision?
• Am I fixing a symptom or the root cause?
• What are other ways to look at this problem?

When you skip this step, you risk wasting time, money, and effort on a solution that doesn’t actually help you.

Set clear criteria before exploring options

Before looking at solutions, know what you’re looking for. Otherwise, you’ll likely fall for the first good-sounding option or let your biases take over.

For example, when buying new software, it’s easy to start browsing before deciding what you actually need. You might get distracted by a fancy feature and end up with something that doesn’t meet your basic needs.

We can easily get attached to the first “nice” option we see and then downplay the others.

What matters most in your decision? Write it down and sort into:

• Must-haves: Deal-breakers if missing
• Important factors: Significant but you can be flexible
• Nice-to-haves: Would be good but not essential

Then rank them. For example, when choosing project management software, you might rank “ease of use” as 9/10 and “Excel export option” as 5/10.

This step helps you avoid being dazzled by one amazing feature while missing critical flaws.

Understand your objectives vs. means

We often mix up what we want with how to get it. Your real goal might be hiding behind what seems like the objective.

For example:

• “I need a bigger team” (means) vs. “I need to increase our output” (objective)
• “We should build a new feature” (means) vs. “We need to reduce customer complaints” (objective)

To find your true goal, keep asking “why” until you reach the core purpose. This is called the 5 Whys technique. You ask “why” 5 times (or more) until you get to the root issue.

When you focus on your true goal rather than one possible solution, you open yourself to more options.

Question for reflection: Think about a decision you’re facing right now. Have you written down what you’re really deciding, or have you jumped straight to comparing options?

2. Expand Your Options

When making decisions, it’s easy to get stuck in a limited view of our choices.  “Should I hire this person or not?” “Should we launch this product now or wait?” But this narrow thinking limits you and often misses better solutions.

Break free of narrow framing

It’s easy to get stuck in “this or that” thinking. You might be in a narrow frame when you hear yourself asking:

• “Should I do X or not?”
• “Option A or Option B?”
• “Do we continue with this project or kill it?”

When you catch yourself in a two-option choice, simply ask: “What’s option C?” This simple question can break you out of the either/or trap.

Generate multiple alternatives

Research by Paul C. Nutt showed that decision makers who looked at only one option had about a 50% success rate. Those who considered multiple options reached 70% success. As Chip and Dan Heath explain in Decisive, looking at least three options greatly improves your choices. More options give you a better view of what’s possible.

Try these ways to find more options:

• Ask “What else could we do?” at least three times
• Mix and match elements from different options
• Think about what you’d do if your current options disappeared
• Try solving the opposite problem first

Tip: Don’t go overboard. Having 3-5 solid options is usually the sweet spot. Too many can make it hard to decide at all.

Look outside your immediate view

We often get stuck seeing problems through our immediate lens. To overcome this, try these approaches:

• Ask “What would someone with unlimited resources do?” then scale that solution to fit your situation
• Find people who’ve solved similar problems in different settings
• Switch from “OR” to “AND” – how could you achieve both goals?
• Ask what advice you’d give your best friend facing this decision

This last technique comes from Decisive, and works because we often give better advice to others than we follow ourselves.

Sometimes just rewording the question uncovers new possibilities. Instead of “How do we reduce customer complaints?” try “How do we make customers so happy they tell their friends about us?”

Question for reflection: Think about a current decision where you’ve only identified one or two options. What’s a third option you haven’t considered yet? What would you do if your current options suddenly disappeared?

3. Gather and Test Information

Once you’ve framed your decision correctly and created options, you need good information to evaluate them. We naturally seek information that supports what we already believe (confirmation bias), but this hurts your decision-making.

Seek out disagreement

We naturally look for information that supports our existing views. We seek and accept information that shows our opinion is right, and dismiss information that speaks against it.

In leadership roles, this problem often gets worse. Team members might hesitate to challenge your ideas. You might create an environment where people tell you what you want to hear rather than what you need to hear.

To overcome and prevent this:

• Directly seek and ask for concerns and objections and information that might disagree with you
• Thank people when they disagree
• Assign someone to play devil’s advocate when evaluating important options
• Create a safe environment where people feel comfortable speaking up
• Ask “How might I be wrong?” instead of “Why am I right?”

Roger Martin (The Opposable Mind) suggests asking about each option: “What would have to be true for this to be the best choice?” This helps you evaluate each option fairly instead of just pushing for your favorite.

Test your assumptions

Every decision is based on assumptions. The problem isn’t having assumptions – it’s not recognizing them.

Take time to identify what you’re assuming and sort each into:

• Fact: Proven with solid data
• Educated guess: Based on experience but not verified
• Pure assumption: What you’re taking for granted without evidence

For important decisions, test your key assumptions before moving forward.

One helpful question is “How confident am I about this?” Annie Duke suggests in Thinking in Bets that when you express your confidence as a percentage rather than saying “I’m right,” you open yourself to new information. Would you bet your house on being right? Your car? $100? Your answer reveals your true confidence level.

Consider the outside view

We tend to think our situations are unique, but most problems have been tackled before. The “outside view” means looking at how similar situations typically play out rather than focusing only on your specific case.

For example, when estimating how long a project will take:

• Inside view: Breaking down your specific project into steps and estimating each
• Outside view: Looking at how long similar projects typically take in your organization or industry

This distinction between inside and outside views comes from research on planning fallacy by Daniel Kahneman and Amos Tversky.

When possible, run small tests before fully committing. The concept of “ooching,” from Decisive, means testing your ideas with small experiments before making big commitments. If you’re considering a new approach to managing projects, try it with one project before rolling it out everywhere. This gives you real data instead of just guesses.

Think long-term, not just short-term

It’s easy to focus on how a decision will help you right now—but how will it affect you in the long run? That software might solve your current problem—but will it still work for you in a year or two?

Hiring someone new might fix today’s issue, but is it a lasting solution or just a quick fix?

Take time to examine the long-term consequences. Does it help you move you toward your mission and long-term goals? Look at different scenarios. Ask for others input (as sometimes we can be too close to a decision and miss certain perspectives).

Make sure it doesn’t just help you short-term, but long-term.

Question for reflection: What’s the most important assumption in a current decision you’re facing? How could you test that assumption before fully committing?

4. Gain Emotional Perspective

Our emotions and gut feelings can be useful (in fact, with our emotions, they are vital) for good decision-making. But if not handled well, they can also lead us astray.

Create distance before deciding

When emotions run high, your perspective narrows. Creating mental distance helps you see the bigger picture and make more balanced choices.

Try these techniques:

• The 10/10/10 method: How will you feel about this decision in 10 minutes, 10 months, and 10 years? Asking this can help you look past how you are feeling now into the longer-term consequences.
• The advisor approach: What would you tell your best friend to do in this situation? We’re often wiser when advising others than when deciding for ourselves.
• Sleep on it: For non-urgent decisions, give yourself a cooling-off period. The emotional intensity often decreases, allowing clearer thinking.

This distance is especially important for people-related decisions, resource allocation, or when you feel pressured to act right away.

Sometimes just stepping away and taking a walk can help us see things differently.

Recognize your biases

We all have mental shortcuts that affect our decisions, whether we realize it or not. Some common ones include:

• Loss aversion: We feel losses about twice as strongly as equivalent gains. This makes us cling to what we have rather than take smart risks.
• Status quo bias: We prefer things to stay the same and overestimate the risk of change. This makes “doing nothing” feel safer than it often is.
• Sunk cost fallacy: Having invested time or resources makes us reluctant to let go, even when continuing doesn’t make sense. “We’ve already spent X dollars” isn’t a good reason to spend more.
• Confirmation bias: We notice and value information that confirms our existing beliefs and dismiss contrary evidence.

(Daniel Kahneman explains these in detail in Thinking, Fast and Slow.)

Simply being aware of these biases helps reduce their impact. When you spot one, you can work to overcome it.

For the sunk cost fallacy specifically, try zero-based thinking: “Knowing what I know now, if I were starting fresh today, would I begin this project/hire this person/pursue this strategy?” If the answer is no, it might be time to change course.

When to use intuition

Your intuition is a powerful tool—but only in the right circumstances.

Your gut instinct works best when:

• You have lots of experience in that specific area
• The environment gives clear, quick feedback
• The situation has patterns you can recognize

Gary Klein shares a story in Sources of Power about a firefighter lieutenant leading his crew in what seemed like a routine kitchen fire. Suddenly, he had an uneasy feeling and ordered everyone out. Moments later, the floor collapsed.

When asked later why he gave the order, he couldn’t immediately explain—he just knew something was wrong. After thinking about it, he realized his experience had subconsciously noticed that the fire was unusually quiet for its size and the living room was much hotter than it should have been. His “gut feeling” was actually pattern recognition from years of experience.

Intuition works poorly when:

• You lack significant relevant experience
• Feedback is delayed or unclear
• The situation is very complex or brand new

In these cases, structured decision processes become more important.

And it’s not one or the other—you can use both. For example, after you gather information and analyze it objectively, you could check how the logical conclusion feels intuitively. If something feels off, explore why—there might be important factors your analysis missed.

Question for reflection: Think about a recent decision where emotions played a big role. Which technique could you have used to create more distance? Which biases might have influenced your thinking?

5. Make the Decision

After framing your decision, expanding options, gathering information, and gaining perspective, it’s time to decide.

Be careful about deciding too fast or too slow (or not at all)

Leaders often make two big mistakes: rushing to decide (because “there’s no time” or to appear “decisive”) or over-analyzing (and possibly never deciding).

Being decisive doesn’t mean deciding quickly—it means making the decision confidently when it’s time and moving forward with it. Strangely, when leaders rush because “there’s no time” to gather more information, they often seem to have the time to fix it when it goes bad.

For over-analysis—try seeing decisions as experiments and learning opportunities. Remember, decisions are about probabilities, not certainties. You’ll never have all the information. You’ll make mistakes, so when it’s time to decide, use what you know and move forward. However it turns out (good or bad), you’ve learned something.

How much time should you spend gathering information? It depends on how important the decision is and whether you can easily reverse it.

There’s no fixed rule, but generally for important decisions (especially ones that are hard to undo), spend more time researching if possible.

A helpful way to know when it’s time to decide is to ask: “What’s the cost of waiting longer?” If the cost of delay is greater than the potential cost of being “wrong”, it’s probably time to decide.

Remember that not deciding is itself a decision—usually to keep things as they are. This can be the right choice, but it should be made intentionally rather than by default.

Consider opportunity costs and trade offs

Every “yes” means saying “no” to something else. When you choose one option, you give up other possibilities. These trade-offs are unavoidable, but seeing them clearly helps you decide better.

For different options, ask:

• What am I giving up to pursue this?
• What else could I do with these resources (time, money, attention)?
• What opportunities might I miss by going this direction?

This applies to simple decisions too. When you say yes to another meeting, you’re saying no to focused work time.

This is why writing down and ranking your criteria beforehand matters—because rarely will any option have everything, and there will always be trade-offs.

Good decision-makers know perfect options rarely exist and focus on choosing the best available path rather than searching forever for a flawless solution.

Commit with appropriate confidence

Once you’ve decided, commit with the right level of confidence:

• Too little confidence leads to second-guessing, hesitation, and failure to bring others along.
• Too much confidence creates rigidity, blindness to warning signs, and inability to adapt when needed.

We discussed earlier that being decisive doesn’t mean rushing to a decision. Instead, being decisive means making the decision when it’s time and moving forward confidently without constant second-guessing. The hesitation, going back and forth, second-guessing yourself—that’s what being indecisive means.

It’s important to remember that committing to a decision doesn’t mean never reviewing it. You shouldn’t stick to it rigidly if new information emerges.

As we’ll discuss below, it’s smart to set “tripwires” (planned review points) after a certain amount of time, when new information arrives, or after using a certain amount of resources.

Question for reflection: Think about a decision you’re currently hesitating on. Is your delay giving you valuable new information, or are you simply putting off an inevitable choice? What is the cost for waiting another week or month?

6. Prepare for Contingencies

For many decisions, it’s wise to prepare for possible problems and pitfalls.

Prepare for failure and pitfalls

Contingency plans are plans you create for when things don’t go as expected.

In your discussions for the decision, you and your team may have come up with possible issues or potential pitfalls with the decision. Plan for them and prevent them if you can.

One useful tool is the premortem. Ask yourself and your team: “It’s one year from now and this decision has completely failed. What happened?”

List all the possible reasons for failure. Then review that list, judge how likely each scenario is, and create plans to either prevent problems or respond if they happen.

Set tripwires

Tripwires are specific conditions that tell you when to review and possibly change your decision. This might be after a certain time period, when key metrics change, when new information arrives, or after spending a certain amount of resources.

Having these planned in advance keeps you from getting too busy to review when you should and from stubbornly sticking with a decision when you shouldn’t.

Tripwires can also give you peace of mind (for you and your team) because you know you’ll revisit the decision at a set time.

Make an action plan

Decisions and plans often fail because no one owns the tasks and actions needed. When a task belongs to “the group” instead of a specific person, usually nothing happens. For each decision, determine:

• Who is responsible for each task
• What specific actions they need to take
• When each task should be completed
• How you’ll measure progress
• How and when you’ll follow up

Build in appropriate follow-up methods such as:

• Regular check-in meetings
• Progress updates at key milestones
• Dashboards tracking important metrics
• Brief daily updates for fast-moving projects

Question for reflection: For your last major decision, did you create contingency plans? If that decision faced unexpected challenges, what would you have wanted to prepare in advance?

7. Reflect and Learn

After the decision and related project(s) end, take time to reflect on what happened so you can improve in the future.

Hold a debrief

You can debrief as a group or individually (or both) depending on the situation.

In a debrief, review what happened, what went well, what didn’t go well, what you learned, and how you could do better next time.

A debrief isn’t about blaming anyone—it’s about learning.

Watch how you judge your decisions

Be careful about judging decisions solely by their outcomes. Sometimes good decisions can turn out poorly because of bad luck or unforeseeable circumstances. Likewise, poor decisions sometimes work because they get lucky.

Just because you won once by playing the worst possible poker hand doesn’t mean you should do it regularly.

Instead, look at the process you used and the information you had (including what you focused on or ignored) to judge the decision.

Document your decisions

Consider keeping a decision journal for important choices. Record:

• The decision you made
• Key factors that influenced your choice
• Alternatives you considered
• What you expected to happen
• Areas of uncertainty

This record helps you learn from experience and improve your decision-making over time.

Question for reflection: When did you last reflect and debrief with your team on a completed decision or project, whether successful or not? How can you make this a regular practice?

Conclusion

While no framework guarantees perfect outcomes every time, following these seven steps will help you make better decisions more consistently:

1. Know what you are deciding – Define what you’re really deciding, set clear criteria, and understand your true goals.
2. Expand your options – Break free from two-option thinking, generate multiple alternatives, and look beyond your usual perspective.
3. Gather and test information – Seek out disagreement, test your assumptions, and look at similar situations.
4. Gain perspective – Create distance before deciding, recognize your biases, and balance logic with intuition.
5. Make the decision – Balance speed with thoroughness, consider what you’re giving up, and commit appropriately.
6. Prepare for contingencies – Create contingency plans, set review triggers, and make a clear action plan.
7. Reflect and learn – Hold debriefs, judge decisions by process not just outcome, and document your decisions.

You might not need every step for every decision, and you can adapt this process to fit your needs. That’s completely fine.

There are other decision frameworks you might prefer‑that’s fine too, just remember to apply the key principles we’ve discussed.

Now to you: What will you do differently based on what you’ve read?

---

Sources and Resources:

• Thinking in Bets by Annie Duke
• Decisive: How to Make Better Choices in Life and Work by Chip and Dan Heath
• Thinking, Fast and Slow by Daniel Kahneman
• Sources of Power: How People Make Decisions by Gary Klein
• The Opposable Mind: Winning Through Integrative Thinking by Roger Martin
• Value-Focused Thinking: A Path to Creative Decisionmaking by Ralph L. Keeney
• 10-10-10: A Life-Transforming Idea by Suzy Welch