5 Steps Toward Making Wise Decisions

— by Bill Yeargin

Ever notice that some people have a knack for making the right decisions? Do you wonder if they are lucky, smart or intuitive? Or a combination of the three? Ever notice that other people seem to make bad decisions consistently? Do you wonder why they cannot catch a break?

I was thinking about these questions as I finished former President Obama’s new memoir, A Promised Land, in which he shares his perspective on the 2008 election and the first three years of his presidency. Something Obama wrote jumped off the page at me, something most readers may not have noticed: As president, he rarely had simple decisions to make. He was always dealing in probabilities.

It was the word “probabilities” that made me think about the process leaders use in decision-making.

As leaders, we may not be required to make the consequential decisions of a U.S. president, but we are still making decisions that will have a big impact on organizations and people. Sometimes, those decisions end up being wrong. Often, that is because of probabilities.

For instance, even if we make a decision that is right 80 percent of the time, one out of five times, that decision will turn out to be wrong, and the negative impact may be significant. We often label someone who gets caught by the 20 percent probability a bad decision-maker when that may be untrue; 80 percent of the time, he would have been a hero.

The opposite also happens. A leader makes a bad decision, but the good, low-probability result occurs, and he is labeled an expert or a guru when, clearly, he is not one. People think the poor decision-maker saw something coming that others didn’t when he actually made a bad decision and got lucky. That’s why it is smart to make sure you are not taking too much advice from a one-hit wonder.

In her excellent book Thinking in Bets, former professional poker player Annie Duke deals with this conundrum, which she calls resulting. Resulting happens when we determine whether a decision was good or bad based solely on the outcome, but overlook the process used to make the decision, thereby ignoring probabilities and luck. Most of us prefer to use resulting because it is simple. Frankly, we often don’t care how the decision was made. We just want the right outcome.

Fortunately, a good decision is still generally a result of a good decision-making process, and some things can improve that process. Here are five ways to become a better decision-maker.

Identify what you need to decide

This seems obvious, but frequently, it is the biggest decision-making challenge. Our team will often frame this question as, “What is the problem we are trying to solve?” Creating clarity around what is being decided, and what problem is being solved, will significantly improve the odds of making a good decision.

Use broad data

The foundation of a good decision is good information. When speaking at conferences, I often hold up a beach ball to make this point. I explain that whatever slice of the beach ball we are standing on will color our perspective. Good decisions need good information from different perspectives. The danger with seeking perspectives is that when leaders don’t want to decide something, they just keep asking for more information, frustrating their teams. Be sure to brainstorm while being aware of diminishing returns and avoiding paralysis through analysis.

Think past the immediate impact

Sometimes when we are deciding something important, it is hard to get out of the moment and immediate concern. We need to consider possible unintended consequences. We also need to consider the worst-case impact of our decision, keeping in mind that a low probability — but huge negative-impact worst case — may want to be avoided, while even a high probability but low-impact worst case may be within the leader’s risk tolerance.

Have someone play devil’s advocate

The devil’s advocate was a position that the Catholic church first used in the 1500s to argue against candidates for sainthood. The job of the devil’s advocate was to find reasons not to move forward with the canonization, to uncover any character flaws. This process is also important in business decision-making and is described well in Edward de Bono’s book Six Thinking Hats.

Decide based on principle, not emotion 

This is probably the toughest way to improve decision-making, because when leaders are making decisions based on emotion, they are usually totally blinded to what is happening. Emotion can make our thinking seem clear even though it is extremely clouded. Emotion trumps logic every time. The best way to avoid this trap is for a leader to surround himself with a team that not only sees things differently, but that also is willing to speak up when the leader is emotionally hijacked.

I suspect that some leaders reading this article think the advice might be good for others, while they have a great track record of making decisions. I understand that feeling. However, I also know that probabilities will catch up with even the best decisions-makers. Using the steps above will help leaders ensure they have a good process even if the outcome is negative.

At Correct Craft, one of our key values is the idea of being both right and fast. It is easy to be right if you have enough time, but being both right and fast provides a competitive advantage. Sometimes, even with the best process, an unlikely probability will sting you, however, the above steps will help improve your odds of being right and fast in 2021 and beyond.

This article was originally posted here by Trade Only Today

Recent articles

——

[ Photo by Nathan Dumlao on Unsplash ]