Tag Archives: how to make better decisions

Decision making process

In a past post we discussed the importance of having a decision-making process, as researchers from various sources all agree that “how” we make decisions in business is as important as the decisions themselves!

Their studies also indicate that the “best” decision-makers share certain traits. They:

  • Follow a process
  • Involve others when appropriate and use knowledge, data and opinions to shape their final decisions
  • Know why they chose a particular choice over another
  • Are confident in their decisions
  • Rarely hesitate after reaching a decision

The first trait is critically important, as following a standard process enables people to make more deliberate, thoughtful decisions by organizing relevant information and defining alternatives.

Naturally, there are different processes from which to choose, and the previously mentioned article shares one approach.

Here is another option developed by the University of Massachusetts, Dartmouth.

  1. Identify the decision
  2. Gather information
  3. Identify alternatives
  4. Weigh the evidence
  5. Choose among the alternatives
  6. Take action
  7. Review your decision

Decision-Making Process?

decision making

Has your organization defined a “decision-making process” and, if so, is it widely and regularly put to good use?

Consider that making decisions could very well be our most important responsibility as leaders and managers — and also the riskiest. Yet the decision-making process is rarely studied and improved.

In fact, we’ve found that decision-making is viewed as more of a craft than a process, dependent entirely on the skill of the craftsman which varies greatly from person to person.

In a Harvard Business Review article, A Checklist for Making Faster, Better Decisions, author Eric Larson shared a study of 500 managers and executives which concluded that “only 2% regularly apply best practices when making decisions, and few companies have systems in place to measure and improve decision making over time.”

Similarly, data-driven decision making has been advocated for decades, yet this approach has not lived up to expectations. For example, behavioral economists report that “data driven” decisions increase confidence in the decision far more than quality of the decision.

Dan and Chip Heath, in their book Decisive, point out that “Our normal habit in life is to develop a quick belief about a situation and then seek out information that bolsters our belief.” AKA, confirmation bias!

However, decision making processes can be standardized and improved upon to consistently yield better decisions, and this will be the subject of our next post.

Confirmation Bias Part 2: Examples & Avoidance

Our previous post explained the concept of “confirmation bias,” which is the tendency to pursue and embrace information that matches our existing beliefs.

Here are some general examples of how confirmation bias can creep into our day-to-day thinking, and three proven ways to avoid the pitfall:

Decision-Driven Data
As previously noted, the inclination to look for supportive data can easily lead us to serious mistakes. Social scientists report that analyses of investments we favor inexorably take on a rosier look than investments we are doubtful about.

Many small choices go into collecting and crunching data and analyzing opportunity and risk and presenting results. Absent a conscientious effort to avoid confirmation bias, small choices — all valid on their own — tend
to be made to support our initial opinion. We think we are making data-driven decisions, but we are really collecting decision-driven data.

For example, author Daniel Kahneman once described a study of high-performing schools to determine if size played a role in quality of educational outcomes. The data indicated that the top quartile in educational performance contained a disproportionate number of small schools, supporting the hypothesis that small schools provided better quality education. This led to some expensive policy decisions that produced no educational benefit. It turned out that small schools are disproportionately represented in the worst performing quartile as well, due to the statistical tendency of larger populations to “regress to the mean” or basically become more “average” and thus to be under-represented in the top and bottom quartile.

First Impressions
Confirmation bias also plays an important role in the inordinate impact of first impressions. A first impression provides a very tiny and possibly serendipitous sample of a candidate’s qualities and qualifications. Yet,
people who believe this is a very intelligent candidate before the interview tend to notice more signs of high intelligence.

Here are three things we can do to protect our decision-making process from conformation bias and potential distortion:

  1. Recognize the bias and remind yourself to look for it in your decisions and analyses. Remind yourself that the authors of everything you read (including this article) are making a point that is supported by the data they present, but is not necessarily by data they do not present — and in fact may not even have seen if they did not look hard enough for contrary data. Remind yourself that the talented and well-meaning people providing you with analysis and recommendations are also subject to confirmation bias. Ask for contrary data.
  2. Ask “what else could it be?” Think creatively about alternative explanations and alternative solutions. Explore the whole feasible set, if possible.
  3. Encourage the expression of contrary views and ideas. “If you value the differences in people, the differences will produce value.” Aggressively seek out and try to understand contrarian views. For many people, the first impulse is to refute contrarian views and argue our own. But the best decisions are likely to be made by those who “seek first to understand rather than be understood.”

Decision-making Pitfalls: Part 3

4 Pitfalls to Avoid

Our previous two posts focused on the decision-making process, as outlined in a Wall Street Journal Article by Robert I. Sutton, a professor in the department of management science and engineering at Stanford University. The premise is that “how” leaders make decisions is just as important as the decisions themselves. 

In his article Sutton identified four bad habits associated with “how” bosses make decisions. As discussed in our previous two posts, the first of these pitfalls are:

  • Telling people they have a voice in decision-making when, in reality, they don’t
  • Treating final decisions as anything but

The final two habits to be avoided are:

  • Moving too fast: While some leaders suffer from indecision and procrastination, some decisions require more careful thought— “especially risky, important and complicated ones that are costly (or even impossible) to reverse,” Sutton says. Despite the fact that employees most often like working with managers who are confident  and don’t waste time, they are also leery of snap decisions, which are likely to turn out wrong. These decisions are also more likely to undermine employees’ faith in their leader and the decision, and can make employees less motivated to implement the decision. It’s the difference between a smart, confident decision and a  rash one, possibly made without proper research or without sufficient facts and data.
  • Using decision-making as a substitute for action: “A decision by itself changes nothing” says Sutton. Simply “deciding” to change a protocol or process doesn’t help unless someone actually does it! The gap between “knowing” and “doing” is real, yet too many leaders act as if, once they make a decision, and perhaps spread the word, their work is done.

Decision-Making Pitfalls: Part 2

Decision-Making Pitfalls

Our previous post shared data from a Wall Street Journal article about decision-making, which indicated that the way in which leaders make decisions (the process) is just as important as what decisions they make.

In that article, author Robert I. Sutton described four specific pitfalls associated with the decision-making process that can compromise a leader’s effectiveness as well as the effectiveness and attitudes of people throughout the organization.

The first of these pitfalls, which was the subject of our previous post, involves telling people they have a voice in decision-making when, in reality, they don’t.

Next on the list is the poor habit some leaders have of “treating final decisions as anything but!”

“Many insecure bosses have a habit that is especially damaging: After a decision has been made and communicated and implementation has begun, their insecurity compels them to revisit the choice too soon and too often. A few complaints, a small early setback, or simply anxiety about the decision can provoke such unnecessary reconsideration.”

Sutton goes on to explain that the insecurity and waffling “infects their teams.”  In addition, many of the people involved lose faith in their leaders’ ability to make good decisions, and also lose interest in implementing new directives that could soon become subject to change.

We will take a look at two additional decision-making pitfalls in our next post.

Decision Making Pitfalls – Part 1

In a recent Wall Street Journal article, Robert I. Sutton, a professor in the department of management science and engineering at Stanford University and co-author of “Scaling Up Excellence,” shared some interesting and important insight into decision-making.

In his article, Sutton makes several points consistent with the fact that all work (i.e., decision making) is part of a process, and every process can be improved.

For example, he first explains that in organizations of all types, how  leaders make decisions (the process) is just as important as what decisions they make.

Sutton then described four specific pitfalls associated with the decision-making process that can compromise a leader’s effectiveness as well as the effectiveness and attitudes of people throughout the organization.

The first of these pitfalls involves telling people they have a voice in decision-making when, in reality, they don’t.

“Good decision-making entails consulting key stakeholders—and using their input to shape final choices,” Sutton said.  “Doing so improves the quality of the decisions, and makes employees more motivated to implement them.”

Unfortunately, in too many cases the consultation of others is only make believe… it starts out looking like the real thing, but in the end leaders are just pretending that others’ input has some influence over the final decision.

While the motivating force behind the make-believe-consultation can vary — some bosses do it to fool people into getting behind the decision’s implementation, and others because they think the mere opportunity to voice opinions somehow makes people feel better — it doesn’t matter. In the end, pretending to consult others for decision-making purposes and then ignoring their input turns out to be demoralizing. Further, the associated deception and disrespect often causes employees or stakeholders to lose faith in their leaders.

In upcoming posts we’ll look at three additional pitfalls related to “how” decisions are made, and how each impacts all of the people involved.

Decision-Making & Predicting Success

crystalballA recent post focused on best practices for making the best decisions. However, despite the best intentions Project Managers, Leaders and other members of the workforce frequently look back at failed or semi-successful decisions regarding Continuous Improvement projects with critiques galore about what could have or should have been done.

Fortunately, there is a method for predicting success for continuous improvement projects.

The Conway Success Predictor was developed a few years ago by the Conway team of improvement coaches and distills a century or two of collective experience with what characteristics are most necessary for an improvement project’s success. This wisdom was built into a fun little spreadsheet tool that can help predict your project’s “fortune” after asking you to rate the project, on a scale of one to ten, relative to eleven key criteria. This straightforward approach involves rating potential projects in eleven key areas on a scale of 1-10.

These “rating areas” vary, and include:

  • The potential benefit of the project to the organization is clear, substantial and quantifiable.
  • The problem to be solved is clearly defined and quantifiable, and the project scope is focused and well-defined.
  • The project has top management’s commitment and support (resources, sponsorship and follow-up); no influential person is actively opposed to the project.

A review of the answers can then enable you to predict with a fair degree of accuracy how likely your project is to succeed.

Read the full article…

Can Too Much Data Make Decision-making More Difficult?

decisionsTraditionally, many people thought that if they had more data, they could make better decisions.

But we’re all familiar, no doubt, with the taunting acronym, “TMI” (Too Much Information!) that is commonly directed at those who “over-share” personal details. Similarly, in today’s business world,  the flood of data can make many decisions more complex… and the decisions made by considering all of this data are not always better!

Sometimes, because there is so much data to consider and evaluate, people can easily become overwhelmed; or over-think each decision, thus slowing-down or compromising decision-making processes.

As author Christopher Frank stated in a Forbes article, “The irony is we have more information available, but we feel less informed.”

If this sounds familiar, you might consider these five critical steps to improving your organization’s decision making process for complex decisions:

  1. Start with a clear goal or objective.
  2. Widen the alternatives you are considering… as the French philosopher, Emile Cartier, put it, “There is nothing more dangerous than an idea, when it is the only one you have.”
  3. Know what you know and what you don’t know. Behavior economists assert that human beings are wired to give much more weight to information we have than to information we do not have and by doing so, we miscalculate our risks and opportunities. It is important to seek missing information as well as available information with equal zeal, and to make a special effort to look for dis-confirming information as well.
  4. Achieve distance & perspective before deciding by maintaining a healthy emotional distance. Bringing in other perspectives, suppliers, customers, and other stakeholders can help provide different perspectives on the decision to be made.
  5. Take a hard look at the uncertainty. One way to combat uncertainty is to figure out what you do know and use that to “bookend” the decision: what would be the outcome if all the bets go against you, and what would it look like if everything fell into place. This can help you evaluate if there is more upside opportunity or downside risk.

Read the full article…

How to Minimize Confirmation Bias

confirmationbias2As noted in our previous post, confirmation bias is the tendency to pursue and embrace information that matches our existing beliefs; and this inclination to look for supportive data can easily lead us to serious mistakes…

In other words, we become more likely to look for evidence that the idea we favor is correct rather than look for ways it may be wrong.

Here are three ways in which we can protect our decision-making from the related distortion:

  1. Recognize the bias and remind ourselves to look for it in our decisions and analyses. Remember that the authors of everything we read are making a point that is supported by the data they present, but is not necessarily by data they do not present.
  2. Make a habit of asking ourselves, “What else could it be?” We must think creatively about alternative explanations and alternative solutions, and do our best to explore them.
  3. Encourage the expression of contrary views and ideas.

Read the full article…