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In This Episode:
MGood decisions and good outcomes aren’t the same thing, a solid process can still turn out badly, and a lucky guess can still turn out well. This episode walks through seven practical steps for making better decisions and helping your team do the same, from clearly defining the problem to building in a plan to revisit the decision later.
What You’ll Learn
- Why judging decisions by their outcome alone is a mistake, and why the process and information behind a decision matter more than whether it happened to work out
- How to define a decision or problem clearly before jumping to solutions, including finding the root cause with the five whys and separating your real objective from the means to get there
- Why expanding your options matters, using tools like the vanishing options test to break out of “should I do this or that” binary thinking
- How to gather and test information without falling into confirmation bias, including using outside views and base rates to check your own optimism
- Why getting emotional distance before deciding matters, using tools like the 10-10-10 rule and the advisor test
- How to build in contingencies after a decision is made, using pre-mortems and tripwires to catch problems early
- Why reflecting on decisions afterward, through debriefs and documentation, helps you improve without falling into blame
Resources Mentioned
- Gary Klein’s pre-mortem method, “Performing a Project Premortem,” Harvard Business Review (2007): https://www.gary-klein.com/premortem
- Thinking in Bets by Annie Duke
- Decisive by Chip Heath and Dan Heath (source of the vanishing options test and tripwires)
- The Paradox of Choice by Barry Schwartz
- Thinking, Fast and Slow by Daniel Kahneman
- Executive Intelligence: What All Great Leaders Have by Justin Menkes
- 10-10-10: A Life-Transforming Idea by Suzy Welch
Transcript
As leaders and as people, we make decisions a lot. And if we want to make good decisions, if we want our team to make good decisions, it’s good to understand good ways to make decisions but also the things that might hurt us in the decision-making process.
In this episode, we’re going to talk about seven steps that you can take to make better decisions that will help you see some of the things that can hurt your decision making but also things that will help you—steps you can take to help ensure that you’re making the best decisions that you possibly can, or that your team can if they follow these.
Now, not all these steps you have to use every time. This is kind of just a general guideline of seven steps. Certain decisions may not require certain aspects of it, but it’s still something to think about.
Decisions Are Like Probability
It’s also important to think about when it comes to decisions is that decisions are like probability. I believe Annie Duke in her book Thinking in Bets talks about it as playing poker.
You have your hand, you have the information of the cards in your hand, on the table, and you have to make the best decision possible you can based on the information you have. You can have the best hand—two aces—and still lose.
You can have the worst hand—offsuit—I don’t guess it really matters if it’s offsuit—two and seven—and still lose—I mean still win, because those cards occasionally will win. The best cards at times will lose.
You can make good decisions and they mess up sometimes. You can make good decisions and it still turns out poorly.
You followed the good process based on the information you had, you thought it was a good decision, and it can still turn out poorly. You can make poor decisions and it just happen to turn out well.
You may invest in some investment scheme or maybe your uncle Ernie did and they just happened to win that one percent that it would be successful. Doesn’t mean you should follow that same decision making because it was successful that time.
So I just say that in the front because sometimes it’s easy to judge decisions by the outcomes, but sometimes, again, good decisions can turn out bad, bad decisions can turn out good. It’s best to look at the process used and the information used in it.
So when you’re judging your own decisions and you’re judging the decisions of others, be careful how you do it.
Step 1: Define the Decision Clearly
So to the seven steps of decision making. Number one, you want to make sure you define the decision that you’re making clearly.
Or if you’re in the sense solving a problem, making a decision on a problem, make make sure that you’re defining the problem clearly. And it’s important you do that because it can be easy to rush to start making decisions.
Before you decide what you’re deciding, you’re already coming up with solutions. So be careful to take a pause, make sure you know what you’re deciding.
Write it down if you need to, if it helps. Look at what you’re trying to accomplish, what you’re trying to solve, what you’re trying to do.
You may look at, you know, what started the process of deciding, what does success look like.
Find the Root Problem with the Five Whys
When it comes to problems, you may want you want to make sure you’re solving the root problem and not just a symptom. Sometimes ask using the five whys technique can help with that.
And it’s where you say, “Hey, what’s the issue here? Why did that happen?” or what’s causing that, “Why this?” and then “Why?” and you keep going “Why?” to find the real root of what’s happening.
So if a machine broke, for example, why did the machine break? Well, the part, whatever happened with the part.
Well, why did that happen? Well, maintenance didn’t happen. Well, why didn’t maintenance happen?
Well, because the schedule was changed. Why was the schedule changed?
You know and you can just keep diving back and finding what the real issue is. Otherwise you might solve the wrong thing.
Clarify Objectives vs. Means
Make sure you clarify objectives versus means. For example, if you say, “I need a bigger team,” that’s a means.
Your objective may be to increase your output, but there’s different means you might use to get to that objective. Sometimes we name our means as the objectives we’re trying to accomplish.
Like, “I just need this software” or “I need new software.” Well, that’s a means. What is the real objective that you’re trying to get or solve or decide on?
Must-Haves, Important Features, and Nice-to-Haves
And for decisions, things like purchasing, for example, it can be good to define your must must-haves, your important features, and your nice-to-haves. Like, these are the things that it must have.
Like, we have to have this. This would be important for us to have.
It’s not like a necessary, but it would be really good for us to have it. And these are just the nice things that would be nice to have.
And it’s good idea to do that beforehand, before you start looking, because when you start looking, you can start seeing all these features or things that you like and then you start judging everything based on those nice features, but it’s not really what you need.
For example, if you’re—kind of in the personal example—if you’re going to buy a house and you see a beautiful tree in the backyard and it just has a nice shade and you’re like, “Man, that’s awesome!” Or maybe it has a certain size kitchen, “Man, that’s awesome!”
And you start judging every house based on how they have that kitchen or tree. But in reality, those things may not be your most important criteria.
But because you didn’t think through it first, you’re judging everything based off the nice-to-haves versus what is most important to you.
Step 2: Expand Your Options
Step two is to expand your options. So now you’ve first defined “this is what we’re deciding” or “this is the problem we’re solving” and you’re looking at options.
So you expand it. And this can be important because we can easily get caught into binary thinking.
And the Heath brothers in their book Decisive talks about this in that it’s often we get into this A or B: “Should I do this or not?” And we often limit ourselves by those binary decisions.
“Should I buy this or not? Should I buy this or this?” And like those are the only two options we see. We view it that way.
So it’s important or can be important to expand those options. You know what else can we do? What are other options?
You can use tools like the vanishing options test—believe that’s one of the things that the Heath brothers mentioned—if A and B were off the table, what else might you do? This just opens your minds to other possibilities out there.
You could also invert the question. Think of the opposite and see what options come from that.
For example, if you’re looking at getting more people to stay in your store to walk around and look more, instead of thinking, “Hey, how do I get people to stay longer?” you could think, “How do I keep them from leaving?” If you just look at it differently, invert the question, invert what you’re trying to figure out, then it can give different options.
Now, do be careful about doing too many options because too many options can paralyze decision making. Think about—believe it was the Paradox of Choice—that talked about having too many options keeps us—it can hurt, you know, in our thinking and it can keep us from making decisions when we need to because we have so many options before us.
So just having a few options, more than two, maybe three, four, try to find your best options. Try not to do too many, but having a couple extra option or two can help you make a better decision.
Step 3: Gather and Test Information
Next is step three, gather and test information. And of course, this can go with step two because as you’re coming with options, you may be gathering information, testing things.
So it’s not necessarily one and then the other; they they can go together. So you’re gathering and testing information.
One thing you want to watch out for is confirmation bias. And that’s where we kind of naturally look for the data that supports our view.
And that’s kind of one of the dangers with social media is with the algorithms—like if it knows you have a certain point of view, it gives you the results that reinforce your point of view. So when it comes to your decisions, be careful about just looking for things that agree with you or what you think.
Intentionally look for things that might disagree. In fact, you want to encourage, especially like in a meeting, disagreement and dissent.
You want people to point out the things that could go wrong or the possible other possibilities, the negatives. You want to prevent blind spots that you might not be seeing and it’s by looking at those possible negatives that you find that.
One good practice may be to write out your assumptions and challenge them. So what are the assumptions you’re making about your decision or about the options that you’re choosing?
What’s your assumption? Like you assume that people are going to behave a certain way, assume something’s going to work out a certain way. Whatever it is, what are you assuming that’s going to happen or that is, and is it true?
Is it a fact or is it just a belief, or is it again, a an assumption?
Consider the Outside View and Base Rates
And it’s also important to consider the outside view or the base rates. Daniel Kahneman—if I said his name correct—is the author of Thinking, Fast and Slow.
And in it, he gives a story of how he and a team was going to write a textbook. And they were making all these estimates of, you know, how fast they thought they were going to make the textbook.
And they thought they were just being—I think it was like three or four years. I don’t remember the exact numbers, but it was like a shorter period of time.
And they happened to have somebody that was there that was experienced with people making textbooks and the length of time. And so they asked, “Well, how long does it normally take?” And the guy was like, “Seven years” or something of that nature.
And it’s like, “Well, how do we compare to other teams?” And I believe he said something like, “You’re not quite at their level.” And sure enough, even though they thought, “Man, we’ll just do it in three or four years,” it took them more than, I believe it was more than seven years to write that textbook and put it out.
Another example with the base rates is with entrepreneurship is, you know, many entrepreneurs believe they’re the exception, or they don’t really look at the base rates of the percentage that succeed, how long it takes to get started—all of those things. And so it’s easy to kind of have this optimistic view sometimes.
So it’s good to see outside view, the base rates: what generally happens with these kind of decisions, how long do these things normally take? I mean, we can have our optimistic view, but what’s generally the way it happens?
And if you learn the number and why, then maybe you can do something to help yourself succeed better or faster, but just seeing that can help.
Step 4: Get Distance and Perspective
So next, again, a lot of this depends on the decision, but step four to get distance and perspective. Because sometimes we can get emotionally involved in it, whether through fear or just excitement, and we can make a decision based off of that.
So sometimes it’s good to get distance of the decision and perspective before you make decide. For example, if you’re buying a house, sometimes it’s good to sleep on it before you make that decision.
You know, even sometimes going for a walk or taking a break can help you clear your mind and see something in a better view if it’s something that’s possible or that you need to do or could or that could be helpful.
The 10-10-10 Rule
You could also use the 10-10-10 rule. So if you’re trying to decide on something, you can say, “Okay, how will I feel about this decision in ten minutes, ten months, in ten years from now?” And that can kind of give you different perspective on the decision.
Like, “What will I think about this decision from ten years? Well, I probably won’t even think about it.” Or, “Man, it’s really important, you know, it could change a lot.” Whatever it is, it can help.
The Advisor Test and Common Biases
You could also use something called the advisor test. “What would you tell someone else in your position?” So if you’re trying to decide, you take the outside, somebody else comes up to you trying to make this this decision, what would you tell them?
Be careful for some common biases, such as loss aversion. Because we fear losing more than we value gaining.
Or we—we put more weight on loss than we do gain. We fear loss, so sometimes that fear of loss, we may do more to prevent that than we do for gaining something.
So loss aversion’s a real thing that hurts us or can.
Sunk cost fallacy—that’s when we’ve invested something, maybe your team has put in thousands of dollars and hours of time in a project and it’s not going well, but it’s really tempting to keep going because you’ve already invested that time and money. And so sometimes that happens in relationships, that happens in other things.
We keep putting money and time into things that if we were starting over, we wouldn’t do. But we feel like we’re wasting it if we stop.
And just something to think about that is, no matter what, that time and money’s already gone. The question is, is it worth the future time and money to keep going?
There’s a thing called zero-based thinking. And you can ask a question like, “knowing what I know now, would I still make this decision this this decision if I hadn’t invested anything yet?” And if the answer is “no,” then you probably don’t want to keep going.
There was also what we talked about confirmation bias—you know, looking for the data that supports what you want.
Step 5: Make the Decision
So you want to make sure you’re defining the problem, what you’re trying to solve, whatever it is clearly. You want expand your options to a degree.
Gather information, test it. Get distance and perspective. And then you make the decision.
Being Decisive Doesn’t Mean Being Fast
Sometimes people confuse being decisive. They see decisive as making quick decisions.
“Oh, I got to be decisive.” I believe it was the book Executive Intelligence—I don’t remember the author off the top of my head—but one of the things he talked about is people would be like, “Man, we got to be decisive, we got to make these quick decisions,” and they don’t have time to research it.
But somehow they always have time to go back and fix it afterwards. Be careful about that.
Decisive isn’t being quick unnecessarily. It’s making the decision when it’s time.
Avoid Delay and Waffling
Sometimes it’s easy also to delay because of fear. Like, “I don’t have all the information. I don’t want to be wrong.” Whatever it is.
And so there’s this unnecessarily delay, and that hurts you. And then there’s also waffling.
Because because again, remember we talked about how you’re never be 100 percent certain on your decisions. And because of that, you’re going to be wrong sometimes, you will make mistakes.
You just make your best decision and move forward. So it can easily be like, “Oh, I made the decision. Was this the right decision? Should I—should I have gone this? Should I—?” You don’t want to do that.
You want to be confident in being decisive is, when it’s time I decide and then I’m going to act confidently and move forward with this decision. I’m not going to delay out of fear and I’m not going to rush to try to get the image of being quick or whatever it is.
I want to make the decision when it’s time.
Not Deciding Is Still a Decision
Not deciding is a decision. Like if it’s like, “Oh, I just don’t want to decide yet.” Well, that’s a decision not to decide.
And you need to look at the cost of not deciding because sometimes the cost is worse than deciding and quote-unquote being wrong. And once you’ve decided, once the decision is made, however—know if you’re on the team, it can be done in different ways.
You could as a leader make the decision, maybe you’ll have a discussion and then you’ll decide, maybe there’s a vote and—it can be different ways depending on the type of decision. Sometimes somebody else just makes the decision, sometimes you just make the decision.
But depending how it’s made, you want to make sure you clarify who is responsible for what by when. Know with clear deadlines.
Every action item that needs to happen needs to have a—have an owner. This person owns it or it likely won’t get done.
Step 6: Prepare for Contingencies
So you’ve made the decision, step five. Step six, you can prepare for contingencies.
And if you have struggled with fear of being wrong or it turning out poorly, this is a step that can help you make the decision knowing you’re going to go back and check it or knowing you’re going to do the things to make sure it’s going to be successful as much as you can. So prepare for contingencies.
There’s a couple that we can look at.
The Pre-Mortem
Number one is to use a pre-mortem. And a pre-mortem is in the sense sort of like a post-mortem—you know as a post-mortem when someone dies, they look at the body, see why that person died.
So a pre-mortem is you’re doing that before the person dies or before the decision fails. So you look at your decision, we’re deciding to do X, Y, or Z.
However, six months from now, it’s failed. Why did it fail? And you just discuss that.
Well, maybe it failed because there wasn’t enough money to make it happen. Okay. We failed because people didn’t know about it or weren’t supportive.
It failed because somebody didn’t have the training, because this software didn’t come through, because there was a logistical issue. Whatever it may be.
You write out the different reasons why it failed six months from now. And once you have those reasons, then you can work to prevent those reasons from happening.
Tripwires
So that’s one kind of contingency you can do. The second is tripwires.
And tripwires are just things, and they—the Heaths I believe talked about in the book Decisive as well—the things you use, like a tripwire, when you hit it, you reevaluate the decision. Now, when you make a decision, you want to confidently move forward with it.
It doesn’t mean you can never revisit it. Sometimes it’s wise when you get new information.
For example, a tripwire could be, “Okay, we’re making this decision. In our meeting three months from now, we’re going to reevaluate this decision to see where we’re at and if it’s on track or if there’s some changes we need to make.” Or if it’s a personal decision, you may just have an alarm on your calendar: recheck this decision.
Maybe it’s after spending a certain amount of dollars. After we spend $1,000, $10,000, whatever it is, we’re going to reevaluate and look at it and see how it’s going.
Or it may be if this one thing happens. Maybe when we get the first report done, then we’re going to—or maybe when this customer responds this way, we’ll do this.
Whatever it may is, when X, Y, or Z happens, then we’re going to reevaluate the decision and make sure it’s on track and see if there’s any changes we need to make or what have you.
Step 7: Reflect and Learn
Then step seven. So we’ve talked about defining the problem clearly, or defining the decision clearly. To expand your options to a degree, gather and test information, get distance and perspective, making the decision, making contingencies, and then step seven, reflect and learn.
You can use what’s sometimes called debriefs. Whether your decision turned out well or it didn’t, you discuss the decision.
So you look at it: what went well? Even if it failed, there may be certain things that went well.
What didn’t? Even if it succeeded, it still could be things that didn’t go so well.
What would you or could you—what would you do differently? And what can you learn?
If you whether personally you go through like you make an important—make a decision, important decision, you go back and reflect on it. You know, what went well, what can I learn from this, what would I do differently next time?
What—that can just help you make better decisions in the future. And it isn’t about blame, whether on yourself or other people; it’s just about improvement.
Because again, the more you learn, the more you grow from these, it can keep you from making the same mistakes in the future and it can help you make better decisions.
Document Your Decisions
Another thing you could do depending that could be helpful is to document your decisions. “This is the decision we made. This is why we made it. These are the key factors that influenced it. These are the alternatives we considered. This is what we expected to happen, maybe uncertainties.”
Obviously you don’t have to do all of those. “This is why we decided this and this is, you know, the result,” whatever it is.
And this can just help you be able to look back at the decisions you made and learn from them. Just another learning tool; that’s an option.
Wrapping Up
Those were seven steps that you can take when it comes to making decisions. Again, it’s not meant to be you have to follow it one by one, etc.
You may not use everything. You know, if you’re deciding where to go to lunch, you may not debrief every time afterwards. But these are just things to think about that maybe can help you make better decisions.
There is on theexceptionalskills.com there is an article that most of what we covered, there may be a couple extra things if you want to dive a little bit deeper. I hope this helps you.
Have any questions, comments, thomas@realtruthleadership.com. And if you want to go to the no-cost training, you can just go to realtruthleadership.com and it’ll redirect to the main site that has the training, and you can click, I believe it says “choose your path” on the top right.
Hope that helps. See you next time.