You are going to make bad decisions. We all do, and it happens all the time. If you every want to waste an afternoon, search for “bad decisions” on YouTube and you will get treated to hours of people making poor decisions that result in simultaneously comical and tragic outcomes. One common thread in all of these videos quickly becomes apparent, these outcomes were largely predictable and almost always preventable. Predicting and preventing poor decisions is a commonality that is just as true for major and minor business decisions as it is for strangers performing ridiculous feats on the internet.
Poor decisions are the result of faults in the way decisions are made – notably cognitive biases that subconsciously steer us to faulty conclusions. Bad decisions are prevented by utilizing tools and techniques designed to counter our inherent cognitive limitations. While these solutions are not fool-proof, understanding and applying a process for decision-making can significantly reduce your opportunity for failure.
To be clear, just throwing some tools and techniques into the decision-making process can actually have a detrimental effect if the organization does not understand and embrace the purpose of these solutions. Utilizing tools and techniques for better decision-making requires a commitment to critical thinking, which is often perceived as being at odds with an organization’s desire for consensus. This is not to argue that consensus is bad, actually it’s quite good in that it facilities a cohesive culture and instills shared values within the organization. However, when organizations strive for consensus at the cost of shutting out divergent thinking, critical assessment, and objective challenge to assumptions, the organization becomes an echo chamber that succumbs to the purpose and values of the loudest or most quarrelsome voice.
Better decision-making starts with leadership that embraces and provides latitude for the methods used to achieve effective decision-making. This starts by setting a tone from the top that encourages purposeful critical thinking and ensuring that those individuals who provide divergent thinking or challenge assumptions do not endure retaliation from their peers or superiors. It is also important that leadership understands that making better decisions is not based on following some rules or checking some boxes, it is dependent on a cultural shift in the way decisions are made within the organization. There is no formula that leads to better decision-making, but there is a process that includes: understanding the issue, challenging explicit and implicit assumptions and biases, considering and assessing the merit of alternative solutions, and actively countering the ill-effects of cognitive biases and groupthink.
The road to effective decision-making starts with looking inward. In order to understand and mitigate poor decisions in organizations, we need to have an understanding of how we, as an individual, make decisions. When I make a decision, I define the issue, acquire data, perceive and assess what I have acquired, and make conclusions based upon my own cognitive reasoning (which includes any biases or predispositions that I may have). When we make group decisions that involve several people who have control over the process, we are impacted by our collective cognitive reasoning which further affects the manner in which we challenge assumptions and reach consensus (or do not, as the case may be). One quick tool I use to assess my decision-making effectiveness in the moment is the Three Question Gut Check. When I feel like I am prepared to render my opinion on a decision, I pause and ask these three questions to test my own cognitive reasoning:
- What is influencing the way I perceive and interpret the information I have received?
- What are the essentially values and beliefs that I have imposed on this information to shape my decision?
- If the assumptions I have employed in this decision are wrong, will it change my opinion?
These questions aid in my ability to be more self-aware of the cognitive biases that may have impacted my decision. My own self-awareness helps me to be more aware of the way in which others have made their decisions. Being able and willing to express my own faulty logic affords me the credibility to challenge the decision-making process of others. Constructive challenging mitigates the opportunity for groupthink to impair decision-making. This feeds into the ability for an individual or group to think critically.
But understanding how decisions are made is just the beginning. To become effective decision-makers we must employ tools and techniques that aid us in mitigating the natural weaknesses in our decision-making process. In a perfect world we would intuitively be able to analyze complex data, identify missing data and fill in the gaps, and determine the reliability of the data with which we work. Since we do not live in a perfect world, we must get our decision-making process out of our own head and subject the process to collaboration and critique. Supplementing our own mental power with that of the others and employing tools and techniques that mitigate the unfavorable effects of cognitive biases leads to better decision-making.
I want to empower people at all levels of the organization to make better decisions, but that does not always mean the decision will be “right”. In business, there is often no right answer. So, one of the first lessons you can learn is to not consider decision-making in binary terms. All decisions, and particularly those made in a business context, are best considered in terms of balancing opportunity and risk. The best decisions are the ones that are able to strike this balance, even if the end decision is to do nothing at all.