I’ve been reading a few books on decision-making lately.
I’m sharing this because almost everyone I know uses the “List of Pros and Cons” technique when they’re making decisions. But there are better ideas on how to make tough decisions. Here’s what I learned.
First – Consider both Quality and Quantity
Too often we can get caught up in the complexity or difficulty of a decision, when any progress would be better than a delay.
Great decisions make the difference, and great decisions only come where we’re making decisions.
If a decision is easily to reverse, make it quickly and move on. Likely with only 70% of the information you think you need. This idea comes from Jeff Bezos’s 2015 Shareholder Letter, and was reiterated in 2016.
If a decision is close between two good options, make the choice and move on.
A close decision means two alternatives of roughly equal value: you’re better off making an informed choice and getting to the next decision so you can keep learning. This comes from Annie Duke’s book “How to Decide.”
Second – Use a Process –> “WRAP”
In their book Decisive, Chip and Dan Heath outline a simple process for making better decisions.
Important to note – you don’t need to agonize
Each step is designed to confront one of the “Four Villians of Decision Making.”
- Narrow Framing – seeing things as a choice when they’re not
- Confirmation Bias – seeking out information to confirm, rather than contradict
- Short Term Emotion – making us feel conflicted, when we shouldn’t
- Overconfidence – making us think we know more about the future than we do
Here is the process they recommend.
- Widen your options – Take time to consider what other alternatives are available. Often we miss better alternatives because we’re too focused on what is in front of us.
Tools to help:
- Avoid “whether-or-not” decisions. When one comes up, look for more options.
- Find people who have solved the problem. Either other people who have successfully solved your problem, or places in your life where you have already solved a similar issue.
- Use the “vanishing options” test. If none of the options you’re considering were available, what else might you do?
- Blend two mindsets. Normally our decisions are focused on either preventing negative outcomes or pursuing positive ones. Consider blending these two ideas. If I’m cutting cost, can I cut more and find a way to invest? If I’m investing heavily in the future, can I also find a way to mitigate risk?
2. Reality-test your assumptions – Look at what the data says about what you’re considering. Specifically, look at the “base rates”–what happens on average.
Tools to help:
- Talk to an expert; ask about base rates. Find someone with more experience than you, and ask what happens on average (not what will happen in your situation).
- Ask “What would have to be true?” Consider: what if your least preferred option were actually the best option? What data would you need to convince you? This harnesses your confirmation bias to surface information you might not otherwise consider.
- Ooch. In situations when you need more information, test a small step in the direction you’re considering. “How can I dip a toe in this decision without diving in headfirst?”
3. Attain emotional distance – We often overweight the short term consequences of our actions, while underweighting the long term impact. Finding distance to overcome the short term emotion can help.
One reason we overweight the short term is “mere exposure”. We grow to like things we’re familiar with. That, combined with loss aversion, generally leads us avoid change.
Tools to help:
- 10/10/10 rule. How will you feel about this decision in 10 minutes? in 10 months? in 10 years?
- Advise a friend. What counsel would you give to someone else in your same situation? Or, if I were replaced, what would my successor do with this dilemma? When we’re advising others, we pay less attention to the short term emotion, helping us give better advice.
- Honor your core priorities. Write down your values and your principles for making decisions. Then, when deciding, ask “What would the person I want to be do in this moment?”
4. Prepare to be wrong – we often think we can predict the future better than we can.
Across all domains, everyone, including experts, are terrible are predict what will happen in the future. We should prepare for our choices to be wrong.
One of the most interesting ideas in this chapter was that preparation has a relatively low bar. Simply thinking through how you’ll address obstacles when they come up can help you deal with them. In goal setting, this method is referred to as “WOOP”, which stands Wish –> Outcome –> Obstacle –> Plan.
Tools to help:
- Bookend the future. Specifically think about the range of possible outcomes. What is the low end of what could happen? What is the high end?
- Premortem for the lower end. Consider–if this decision doesn’t succeed, how will you know? What was the most likely cause? What will you do to mitigate the factor which could cause it to fail? What can you do recover if it does fail?
- Preparade for the upper end. If this decision exceeds all expectation, what does that success look & feel like? What factor caused the unexpected success? What should you do to prepare for it?
- Create a safety factor. Will I get a better result if I build redundancy into this system? Or if I deliberately leave space for
- Anticipate problems to help cope with them. For each problem that you might face, spend a few minutes writing down how you’ll cope with it. Create a plan for how you will deal with it in the moment.
Third – Treat Decisions as a specific Instance of a General Problem
A really interesting insight was from The Effective Executive by Peter Drucker. He proposed that effective leaders make fewer decisions. Instead, they make them well, once, and define a principle to eliminate future decisions.
He proposed that new, unique situations are rare. Instead, new situations are often early manifestations of growing, recurring problems. Effective decision makers always assume new problems will become recurring problems.
He proposed these steps for developing a principle to handle a new problem:
- Acknowledge the situation is recurring, and should be solved through a principle
- Define the boundary conditions of the problem – what are the edges where this principle applies?
- Think through what is right, before compromising. It’s always possible to compromise and negotiate later–but first, spend time thinking about what the answer would be without compromise.
- Build into the decision the action to carry it out. In organizations, this means assigning responsibility, defining metrics, and changing incentives.
- Create the feedback mechanism for the principle when you create it–so you know when to revisit this decision in the future if it’s not working. “Failure to go out and look [at what is happening] is the typical reason for persisting in a course of action long after it has ceased to be appropriate or even rational.”
Essential in these steps is writing down the principle so you can come back to it.
I hope these tools help you in your decisions.