Improving Decision Making

Chapter 5 – The Decision Process

 

 

What’s Actionable in this chapter:

  • Provides tools to help you make better decisions.

 

At this precise point in time I could do any number of things.  I could go through my emails, replace a spa timer, read the latest headlines, play FreeCell, watch TV, or clean the basement.  Yet, I decided to write this section.

At any point in time you could do any number of things.  And unless someone is putting a gun to your head, you, and you alone, have the power to decide what to do at a specific point in time.[1]  Even a decision to do nothing is a decision.

This actually goes back to the salad bar analogy I used to open the book.  Just as you must make a number of choices as move down a salad bar, you make a number of choices as you move through life.  Sometimes the decisions are obvious and easy.  Sometimes the choices are hidden and hard.  But no matter easy or hard, obvious or hidden they are all decisions none the less. .

The reality of life is that the quality of our decisions determines the quality of our life.  So our goal should be to improve the quality of our decisions.

Think of it this way.  In your life you will make a lot of decisions. Most of your decisions will be little decisions that have no lasting impact on your life, like a decision on what to drink on a plane.  But, a few of your decisions will be huge and have a major impact, like my decision to volunteer for the Army during the Viet Nam War, my decision to marry Annette, and my decision to stay at Verizon for 35 years.

So what is actionable for you in this?  Given that most decisions have little impact on your life and given that there is a fixed amount of time in a day, I suggest you first figure out if a decision will have a lot or a little impact on your life.  And once you figure out the potential impact of the decision, decide to spend the most time on those decisions that have the most impact on your life.

You maximize your opportunities for success by linking the amount of effort in your decision making to the importance of the decision.  The more important the decision the more effort should be spent making the right decision.

Another way to look at this is to look at all your decisions as an aggregate and apply some basic statistical principles, like average and standard deviation.  What you want to achieve is that on average your decisions result in positive results.  And remember the story about the campers in the woods and bear?  In that story the moral was that you don’t have to outrun the bear, you just have to outrun your competitors.  So too in decision making.  On average you just have to be better than your competition.

There is a whole school of thought that suggests reducing the number of decisions is the key to improving the quality of our life.  Some people structure their life so they only make a few decisions.  Others live a life requiring a lot of decisions.   Some end up in their situation by choice.  Others end up in their situation by forces outside their control.

Children start out making no decisions but as they get older they make more and more decisions.  Some people join organizations that make a lot of decisions for them.  When I went in the army I was told when to get up, what to wear, & what to do.  People in prison also have fewer decisions to make.

But even in very structured situations, like the army or jail, there is still a great deal of choice as to what to do. Even though I was told what to wear in the army, I had the choice as to how well I would keep up my uniform and how hard I polished my brass and my shoes.  The point is that, except for a very few rare situations, you have a lot of control over your choices.  It is with that thought in mind that I offer my suggestions on how to improve decision making.

This book is intended to help you improve the quality of your life by helping you improve the quality of your decisions.  Everything I’ve talked about up to this point was intended to get to this specific topic of improving your decision making and as a result improve your life.

To provide a framework to view my intent in this chapter, let me go back to the model I provided on Page 139 in the Chapter on Getting Good Information.  The model says; better decisions come from better information and better information comes from better communication.

In anticipation of getting to this point, I broke this model into three parts, each with its own chapter. 

  • In Chapter Three I talked about the skills you need to get better at communication.  The most important of those skills being able to focus on your intent of the communication and being able to determine what is actionable about the communication.
  • In Chapter Four I talked the skills you need to get better information.  With the most important of those skills being able to separate facts from conclusions.
  • In this Chapter I’ll talk about the skills you need to put the two together – communication and information – to make better decisions.

 

Overview of Decision Making

I found this video.  It is great because it ties the neuroscience discussions of the last two chapters directly to decision making.  I will repost his below in the Section on Why Decisions Fail.  But, I think it also belongs here.

 

So let’s get started.  And a good place to start is with an overview statement.  Broadly speaking, I see the decision making process as; Information determines Conclusions & Conclusions determine Actions. 

I’ll use getting gas as a real world example .  Your gas gauge is the information.  Your decision to get gas is the conclusion, and getting gas it is the action.

A critical aspect of decision making is the acceptance that no decision exists in isolation.  All decisions are layered one on top another, like an onion.  As soon as you make one decision there are a whole series of other decisions underneath.  You first decision is to get gas.  You next decision is where to get gas.  Then you have to decide how much gas and what kind of gas.

Think about it this way.  What is the first decision you have to make in the day?  It’s when to get up.  Right?  And when you decide to get up will mean more decisions, like deciding what to wear.  If you decide to sleep longer, that will mean other decisions, like deciding when to actually get up.

I’m reminded of a song that goes like this;  “Should I stay or should I go?  If I stay there will be trouble.  If I go there will be double.”[2]

As I said in the Chapter on Getting Good Information, one way to think of the decision process is as a factory.  The output of the factory is the decision.  The raw materials are the bits of information.  And communication is the conveyor belt delivering the bits of information to the decision makers at the appropriate time.

 

 

And, just as the factory to make beer is different than the factory to make shoes, the decision process is different for different decisions.  The decision process to get gas is different that the decision process to launch the Space Shuttle.

Some decisions require 100% consensus of the decision makers, some require a simple majority, some a super majority, and some are made unilaterally.  Some decisions are made fast, some slow.  Some decisions are made only when you have all the information.  Other decisions are made with incomplete information.

What I find fascinating is how often people don’t think about the decision process at all.  They just make decisions.  I’ve come to believe there are three basic reasons many people don’t take the time to consider what is the best decision process for a particular decision:

They believe there are time constraints.  They believe our fast paced world demands fast decisions.  They rush to make a decision and they don’t consider if rushing is the best process for that decision.  They simply believe they don’t have time to consider other alternatives.  And they certainly believe they don’t have time to go back and review the decision after the fact.
 
They don’t want to look at facts that could challenge their core beliefs.  Looking at decision making objectively and evaluating a situation honestly could force them to question some of their most dearly held beliefs.  Since, many don’t like change, they avoid decision processes that might cause change.  And the more invested in a particular belief, the more they don’t want to risk losing those investments by putting their decisions up for scrutiny.
 
They are more concerned with appearing decisive and in control than making good decisions.  They’ve been taught that appearing bold and decisive is the key to success.  They’ve been taught that it is best to make a quick bold decision and then stick to it.  They’ve been taught that thoughtful consideration projects weakness.
 

When it comes to making decisions it seems that some people simply react as best they can to the situation around them.  They often use instinct, common sense, and guesswork.  If they’re lucky and they have some experience with the situation they might make a good decision.  However, the likelihood of success, when using quick instinct based methods, is usually a matter of good fortune rather than the result of the process itself.  Thus, they find that it is almost impossible to make good decisions in a consistent way over time and/or across many different situations.

The good news is that decision making can be improved by understanding how to make good decisions and implementing a formal process to help make better decisions.

I acknowledge that putting in a formal process will be hard for many.  However, the benefits to both the individual and the organization far outweigh the costs.

I want to make a very important point here.  While picking the right decision process for the specific decision at hand is important, it’s much more important that everyone involved in the decision process agree on the process.  As long as everyone agrees on the decision process, even a less than optimal decision process, for that specific situation, can yield satisfactory results.  A good example of this is the military.  Even if the autocratic decision process prescribed by the military may not be the best for a particular situation, it can work well, because everyone understands it and agrees with it.  This goes back to our discussion on communication.

Being in harmony often times is more important than doing the best thing.

 

Summary

While I have no research to support this, it seems to me that a lot of people take decision making for granted.  It seems to me that many people don’t think much about their decision process at all.  Nor do they think they need tools to help them make better decisions.  However, in my humble opinion, if you think this way you are terribly wrong.

I strongly believe that everyone can benefit from a study of how decisions are made and how they can improve their decision making.  Even the best athlete or artist constantly works on their skills and works hard to maximize their abilities.  Since we make so many decisions every day, why then shouldn’t we spend time working on ways to ensure we make better decisions.

 

 

 

Understanding your Decision Making Style

Each of us has a unique decision style rooted in our genetic and environmental history.  Rather than try to tell you how to make decisions, I will try to help you build on your unique decision making strengths and minimize your unique decision making weaknesses.

So, the first and most important step in improving your decision making is understand our own unique style.

Here are some examples of some decision making styles:

  • Quick or Slow
  • Individual or collaborative
  • Analytical or intuitive
  • Inductive or Deductive
  • Systematic or not systematic
  • Rigid or Flexible
  • Absolutist (there is Always a right answer) or Relativist (any answer may work)
  • Ends justify the means or the ends never justifies the means
  • Never challenge authority or always challenge authority
  • There are right ways to do something based on some moral teachings or there are no right ways to do something, you can do whatever works.
  • Decisions are objective or decisions are subjective
  • When things go wrong blame others or when things go wrong blame yourself

This is not intended to be an exhaustive list.  It is intended to get you thinking about your particular style.

Organizations also have different decision making styles, which would make sense since organizations are made up of people and people have different decision making styles.

My suggestion is to spend some time thinking about your decision making style and the decision making style of those around you.  Be honest with yourself.  Go back to my discussion of “Honesty”  in the Chapter on Learning and figure out who you are and what, if anything, needs to change.  Then put together a learning plan to maximize your strengths and minimize your weaknesses.

 

 

6 Fundamental Skills for Decision Makers

This may sound weird but, the reality is that before you make a decision you need to make a decision about how you are going to make the decision.

Before carpenters cut the first board or hammer the first nail, they develop a plan to cut the first board and hammer the first nail.

It’s easy to take decision making for granted.  But you shouldn’t.  Decision making is like any skill.  And like any skill the more you practice, the more you can maximize your abilities at that skill.

Sports again is a great example.  Professional athletes practice their skills constantly.  Professional athletes don’t say that since I do this professionally I don’t need to work on my skills.  In point of fact, the better athletes are the ones that never stop working on their skills.

So too should you constantly work on improving your decision making skills.  I do.  I’m always looking for ways to improve my decision making.  The great thing about the effort to improve my decision making is that it is a continuous process, in that I don’t try to get it right every time.  I just try to get better every time I make a decision.  And if I make a poor decision, rather than beat myself up about it, I use it as an opportunity to figure out what I did wrong so I don’t do it again.[3]

And if I look at everything I do as a decision, then I understand that everything I do is an opportunity to make a better decision.  Every time I make a decision I have the opportunity to think about the quality of that decision and if I could have made a better decision and if so, how.  As I write these words I think about my decision to write these words and not other words or my decision to take the time to write at all, as opposed to doing other things.

There are 6 fundamental “Skills” required to maximize the opportunity for better decisions.

  1. Determining the goal of the decision
  2. Determining who makes the decision
  3. Determining the communication structure of the decision
  4. Determining when to make the decision
  5. Determining how to make the decision
  6. Determining what can be learned from the decision

This can best be seen as a pyramid, where each skill builds on each other.

 

 

Skill 1 – Determining the Goal of the Decision

No matter what your style, no matter the decision to be made, and no matter the particular situation you find yourself in, a key element of decision making is to have as clear an understanding as possible of the goal of the decision.  I’ve said this throughout this book, so this should come as no surprise.

Whenever I make a decision I first try to make sure I fully understand the goal of the decision.  I constantly ask myself, “what am I trying to achieve and how will this decision help me achieve it.”

In any activity, the more you, and those involved with you, understand and agree on the goal of the activity, the more likely the goal will be achieved.

I’m not going into this because there is a whole chapter devoted to setting goals, Chapter 2.  But, in any activity, the more you, and those involved with you, understand and agree on the goal of the activity, the more likely the goal will be achieved.

 

 

 

 

Skill 2 – Determining who Makes the Decision?

Another key element of making a good decision is deciding who makes the decision.

One of the biggest problems I see with decision making is that it isn’t often clear who is responsible for making the decision.  Sometimes I see too many people thinking they are responsible for making a decision and sometimes I see too few people taking responsibility for making decisions.

In broad terms the decision maker can either be an individual or a group.  Group decision making takes longer but decisions made by the group tend to be better.[4]

Deciding who makes the decision is one of the most overlooked parts of decision making.  People just assume they know.  But, this assumption may get you into a situation that is not optimal for a particular decision.  Deciding who makes the decisions is rarely part of the decision process.  But it should be.

Let’s take a look at a few of the people that could make decisions.

  • The Project Manager
    • Often times the decision maker is the manager.  In this case the manager gets input from the staff and makes a decision.
  • The Subject Matter Expert
    • Often we simply defer to the SME.  When I go to the doctor or the mechanic I defer to their decisions.  If the IT staff says that something has to be done a certain way we defer to them.  They are the experts and we defer to the experts.
  • Consensus
    • In some cases we look to have everyone agree on a decision.  Discussion is held until everyone can agree.  Some juries are like this where a consensus must be reached.
  • Majority
    • In some cases we vote and let the majority make the decision.  This can also include a super majority.
  • The First person on the Scene
    • There are some situations where we give the decision making authority to the first person on the scene.  Police, Fire, or medical situations often use this approach.
  • The most senior team member on the scene
    • Again, this is often used with Police, Fire, military, or medical situations.  When the most senior team member arrives they assume all decision making responsibilities.
  • The highest ranking member on the scene
    • This is used very frequently and is by far the easiest.
    • The highest ranking member on the scene may be different than the senior member of the team.  This is where you often see a lot of conflict on a team.  You could easily have a situation where the highest ranking member on the team is not the most knowledgeable about the situation.  I see this often in the military where you may have a sergeant with 25 years experience taking orders from a lieutenant with no experience.
  • The person most sure of the answer
    • There are situations where someone that is not the manager, not the most senior, nor the first person on the scene, but, never the less, is most sure of the answer.  Perhaps they have seen the situation before or have the most to win or lose.
    • In cases where I have a team member that is very passionate about the decision, I will often let them make the decision
    • For example, as a family we need to decide where to go to dinner.  If one family member is passionate about going to a particular place, it would not be inappropriate to let that person make the decision.  The bottom line is the person most sure of the decision should make the decision.
  • The person with the most to win or lose
    • There may be situations where you want to let the person or organization with the most to win or lose make the decision.  They will be the most involved and most willing to spend the effort to get the right answer.

 

Taking Responsibility

Whoever is responsible for making the decision, it is critical everyone agrees they are responsible.  A very important reason to publicly agree who makes the decision is to ensure that the person or organization responsible for making the decision actually takes responsibility for making that decision.  They should get the credit or blame for that decision.

All too often I’ve seen situations where the decision maker blames others for a poor decision.  The reason you want to all agree on who makes the decision is so that there is an ownership to the decision.

 

 

Skill 3 – Determining the Communication Structures in Decision Making

This is an interesting section.  I’ve been struggling with this section for awhile.  The question I’ve been struggling with is, “What’s Actionable” about this section?  What am I trying to accomplish?  How can this section change you?

The goal of this book is to help you make better decisions.  And, understanding the communication structures in decision making will help you make better decisions.

The better you understand the different communication structures available the better able you will be to apply the best communication structure to the specific decision you have to make.  And the better the better you will be at maximizing your participation in the effort.

Very broadly speaking there are two communication structures:

Egalitarian                                                                     Hierarchical.

Egalitarian implies that all members of a team are equal members and have equal access to the process and can communicate in both directions. 

Hierarchical implies that access is structured so that participation is limited, communication is through “gatekeepers,” communication is one way, and/or there are status and/or power differences between the individual team members.

 

Clearly, there can be any combination of the two, creating various hybrids.

 

So, why is this important?  Because information is passed along by this communication structure.  The communication structure can affect the information decision maker get.  So, it is critically important use the best communication structure for the decision at hand.

Let me provide some examples of the different structures and how they are used.

A couple of good examples of hierarchical are:

  • A teacher grading papers.
    • The teacher is solely responsible.
    • Information is one way – from student to teacher and then from the teacher to the student.
    • There is a huge power difference between the student and teacher.
  • A surgeon in an operating room.
    • The communication is very structured with information flowing from nurses to the surgeon.
    • If there are more than one surgeons, it is very clear which surgeon is in charge.
  • An Airplane Cockpit[5]
    • The pilot is in complete control.
    • The co-pilot can offer help, but it is the Pilot’s decision

A couple of good examples of Egalitarian are:

  • Jury making a decision.
    • Every juror is equal.
    • Communication is back and forth.
    • Congress
      • All Congressmen and women are equal
      • Communication is structured so that all points are heard equally.

A couple of good examples of Hybrids are:

  • A business Team with a Business Manager
    • All team members may be encouraged to communicate freely or not.
    • There is a power/status difference between the Manager and the team members.
    • Information may or may not be shared based of political advantages that can be gained.

In putting this list together I realized that I can think of many examples of hierarchical and Hybrid communication structures but only a few of truly egalitarian communication structures.  I wonder why that is?  Probably because true egalitarian structures are not that efficient (as evidenced by watching Congress try to accomplish anything).  Perhaps egalitarian communication is more difficult in competitive environments.

I’ve no proof of this, but I think Hybrids of various sorts seem to work the best.  But, no matter what style you choose, the most important thing is that the more everyone of the team understands and agrees to the structure the more likely decision making will be enhanced.

 

 

Skill 4 – Determining when to make a decision?

Another critical step in decision making is the decision about when to actually make the decision; When to “Pull the Trigger” so to speak.  Many bad decisions are made either because they are made too quickly or not quickly enough.

For many, appearing decisive is crucial to how they want others to think of them.  Hence, they believe they have to make decisions quickly.  For these folks, many of which are bright successful people, the most important factor in making decisions is expediency.  As a result of this desire to appear decisive, decisions are often made on gut feelings based on personal past experiences.  Instinct is often the most relied upon process.  They don’t want to take the time to study a decision and they certainly don’t want to change the decision if new information is discovered, so once they make a decision, they don’t look for new information.[6]

Over the years I’ve come to the conclusion that knowing when to make a decision is actually very simple.  A decision should be made when either one of the following two conditions exist:

  • All information is received and processed.

  • There is no more time to wait, a decision must be made, and making any decision is better than no decision.

The first condition; knowing all the information, happens rarely, but it is possible.  Most often you are operating in the second condition, where a deadline is set based on the belief that waiting any longer is not an option.

Please note that knowing all the information does not guarantee that you will make the correct decision.  Selective perception, hidden agendas, or forces outside of the decision makers control, may result in a wrong decision.  The point here is that it is not necessary to gather more information if gathering more information will change nothing.

A critical point is in order to pick option 1 you need to have an good idea of what information you need to make a good decision.  If I have to make a decision on what cereal to pick, and I am going to base it on the food label on the box, and I can read the food label, there is no need to get more information.  I have everything I need to make the decision.

However, most often a decision has to be made before all the information can be collected and analyzed.  In that case, the time for a decision should arrive only when the result of a bad decision is worse than the result of no decision.

The way to look at this is to weigh the lack of a decision against the probability of making a wrong decision.

So, let’s try some examples:

  1. Your driving at freeway speeds and the truck in front of you drops a ladder.  If you make no decision you run over the ladder.  So you need to swerve.
  2. Annette sends me to the store to buy paper towels.  I get to the store and I see a lot of choices, and I don’t know which one to buy.  I am better off coming home with something then nothing.  If I come home with nothing I will have to go back.  If I make my best guess, I am be right.  So I am better off making any decision than coming home empty handed.  Making any decision would be better than being wrong.
  3. I have to buy airline tickets.  The longer I wait the more expensive it becomes.  So making a decision is more important than waiting.

If the risk of making a wrong decision is low, and you believe you have enough information than go ahead and make the decision.  If the risk of making a wrong decision is high then the decision must be put off until the last possible moment.

I see this as the biggest mistake decision makers make.  I see often in business the decision to make a decision is not related at all to the facts surrounding the decision.  I have heard many decision makers say that it’s best to appear decisive.  Hence, they make quick decisions, not because it’s the right thing to do, but rather because it’s the way they think they should act.  And I have seen many decision makers analyzing things too much, what we often hear called “analysis paralysis.”

In many decisions it really does not matter what decision is chosen.  We often hear this as “6 to one, half dozen to another.”  Essentially we are saying there is no wrong decision.  In this case a decision can be made at any time.  I often use the example of going to the store to buy toilet paper.  Absent specific instructions on what kind to buy, it really does not matter what kind I buy.  So I do not agonize over the decision, I just make it.

 

 

Skill 5 – Determining how to make a decision

There are many academic theories about how we make decisions.  A Google search brought up 12M+ hits.  The website ChangingMinds.org was the first on the list and has a good description of various theories.[7]

In reviewing the literature I’ve come to the conclusion that all those decisions making theories can be summarized as a six step process.   (Notice I linked the specific process to the Chapter I talked about it. )

  • Decide on the goal. – Chapter 2
  • Decide on the appropriate decision making process. – This Chapter
  • Find the right information. – Chapter 4
  • Reach a decision based on the right information. – This Chapter
  • Implement the decision.  – Chapter 3
  • Evaluate the decision to determine if it achieved the goal. Identify next steps.  At a minimum one next step is to learn something.  – Chapter 1

 

 

Flexibility is the key

It’s absolutely critical to note that the decision process not be seen as a serial process.  The decision process should not be seen as a rigid process that must be followed sequentially one step after the other.  Rather, it should be seen as a checklist of things that must be done at some time.

The best way to make decisions is jump around and work on all the steps concurrently.  The best way to do this is to jump back and forth between the steps.  For example, a goal could be set only after looking at what the specific actions will be required.  Then during the information gathering stage the goal could be changed because of the information gathered.  Or,as the goal is being set, learning can take place which might force a change in the goal or a change in the information being gathered or a change in the planned actions.

In other words it’s critical that people who like order and require processes be followed one step after another in a serial way, do not control the decision process.  People have to be flexible and accept the possibility that half or three quarters of the way through a project things could change.

 

 

Thinking Ahead

Think of a Chess match.  Some people play chess one move at a time.  Others think many moves ahead.  Common wisdom says that the most successful chess players think many moves ahead.  And the more moves ahead you can consider the better.  It’s hard to win in chess thinking only about the current decision.  So to with our personal and business decisions.  The people that think ahead have a better chance of making better decisions.

 

 

Decision Making under the Microscope

Look at a glass of water.  It looks clear and clean.  Now take a little of that water and look at it under a microscope.  It is teaming with stuff, some of it alive and complex.  The same is true for decision making.  At a high level decision making looks simple; you simply make a decision.  But looking at it under a microscope one finds it is very complex.

In this next section I am going to put decision making under the microscope and try to figure out its structure.

 

 

Difference between the Objective and the Strategy

One of the key things that you must understand is the difference between the objective and the strategy.

  • The objective is the target, the goal, and/or the end state.
  • The strategy is how to get there, a plan of action, a roadmap.

The strategy is the plan to achieve the objective.

To make the most effective decision the first thing you must do is decide on an objective.  It is only after you’ve decided on the objective that you can then decide on a plan to achieve that objective, the strategy.

The tricky part here is that once you have developed a strategy, you now have to develop new objectives to achieve that strategy.  Then each one of those strategies requires additional objective/strategy pairs.

Let’s look at a couple of examples:

  • Since I have moved to Atlanta, I have become very interested in the civil war.  So let me use a civil war example.  The objective for the South was to secede from the Union.  They could have done this any number of ways; political, economic, or militarily.  They – the THEY in this case would be Jefferson Davis and the Confederate political leadership –  chose a military Strategy.  Then once they chose a military strategy, sub-objectives were developed, the sub-objectives included winning the war, and the strategy was to invade the north.  Another sub-objective was develop a military alliance with the British, and the strategy was to invite British Military advisors over to observe the war.
  • After work the objective may be to go home.  There are a lot of ways you could get home, the bus, someone could pick you up, you could drive, or you could walk.  Now you have to decide all the sub-objectives, do you want to get home quickly, or do you want to take the scenic route.  If you decide you want to get home quickly, your strategy would be how to achieve that objective.

 

 

 

 

Establishing Priorities

It is important to note that at any given time for any given situation you may have a lot of goals.  The decision you come up with could be different depending on which of your goals is the most important at that particular instant.  Hence decision making success is tied to your ability to assign the right priority to your goals.

Let’s go back to the Salad bar for an example of how priorities can change day to day.

  • Monday – You forgot to go to the bank and you don’t have a lot of cash.  As a result, here are your priorities and their order:
    • Priority 1 – Cost
    • Priority 2 – Calories
    • Priority 3 – Quantity
  • Tuesday – You saw a story on the news about the dangers of Dairy products.  As a result your priorities have change to:
    • Priority 1 – No diary
    • Priority 2 – A lot of Protein
    • Priority 3 – Vitamin D
  • Wednesday – You got on the scale and didn’t like what you saw.  So your priorities changed to:
    • Priority 1 – Calories
    • Priority 2 – low fat
    • Priority 3 – A lot of fruit

All three are perfectly reasonable goals and priorities.  But depending on the situation the priorities can change.

 

Team vs. Individual Priority Setting

Setting priorities for a team is much more difficult than setting priorities for an individual.  In team priority setting the individuals have to set the priorities first.  Then the team has to set priorities.  This is always difficult because each member of the team has difference priorities.

A great example is the launch of the Space Shuttle Challenger.  The NASA managers had different priorities than Thiokol engineers.

  • NASA Managers
    • Priority 1 – Launch the Shuttle
  • Thiokol Managers
    • Priority 1 – Make sure the Booster Rockets perform as required
  • Shuttle Astronauts
    • Priority 1 – Be safe

All three are perfectly reason goals and priorities.  They are just different.

 

Ways to set goals and priorities

There are many ways to set goals and their priorities.  There are too many to do a all-inclusive list, so I’ll just provide a few examples that I use and hopefully that will be sufficient.

  • Simple List/Weighted List
    • Make a list of the goals and determine the top priority.  At Verizon our lawyers use this method to work on our projects.  The lawyers only work on one thing at a time.  So even though we may have 100 items for them to work on, they require us to identify which is the top priority and they will work on that.  This results in a binary list of what you are working on, and everything else.
  • Weighted List
    • Make a list of the goals and weight the priorities.
  • Actionable list
    • One way is to use something like the table below.  Obviously the critical goals have to be addressed.  And the Easy goals are just that Easy.  I wish there is a way to teach people how to pick the right mix of goals.  I think that is what sets successful decision makers apart.
  • Structured Table
    • There are many structured tables to help you set priorities.  Here is one I often use.

  1. I try to have very few items in “Not Important, Urgent, and Hard.  (Let me make an important point here.  Notice that I have “lose weight” as not important.  That is true for me.  Losing weight is not that important for me.  However, for you it may be very important.  So this is a good example of how priorities are situational.)
  2. There should be few, if any, action items in “Important, urgent, and Easy” that stay in that category, because you should complete all those actions.  This list should turn over frequently as you accomplish the easy tasks.
  3. The action items in “Not Important, not urgent, and Hard” should only be acted on when nothing important would suffer.
  4. There must be a plan to work the action items in “Important, Urgent, and Hard,” and there must be an expectation of completing these action items at some time.  If there is no expatiation of completing those items then they should move to another category.
  5. The action items in “Not Important, Not urgent, and Easy” are to be acted on only if time permits and it will not impact getting anything that is important done.  These are good items to complete just for a sense of accomplishment.

 

 

Skill 6 – Determining What Can be Learned

The last skill you need to hone is being able to learn.  Throughout all the steps required to make a decision you should ask yourself, what can I learn from this.  You should look at everything that contributed to the outcome and HONESTLY evaluate what went right and what went wrong, what you did well and what you could get better at.

There are two broad learning’s:

  1. The outcome could not have been better and nothing needs to change
  2. The outcome could have been better and something needs to change.

If the learning is that everything went as expected and nothing needs to change than great!  You can move on to the next decision with the confidence that you are doing what you need to do.

If, however, the learning is that the outcome could have been better then you should evaluate what could have been better and work to make it better.

 

 

Overview of the TIDAL Process

I’ve come up with a mnemonic to help me remember all the steps in decisions making.  I call this the TIDAL approach to decision making.

  • Target – Decide on the goal
  • Information – Find the right information
  • Decision – Reach a decision based on the information
  • Action – Implement the decision
  • Learning – Evaluate the decision to determine if it achieved the goal.  Identify next steps.  At a minimum one next step is to learn something.

While these steps seem obvious, it’s surprising how few people actually follow them.  For any number of reasons many people don’t follow a process and make decisions haphazardly and unsystematically.

And of all the steps, learning is the one most often left off.  For some people there is rarely any learning after the decision was made.  And my experience with this group is that the only time decisions are reviewed is if something goes wrong.  And then, their review is focused on finding someone else to blame.

It’s important to note that that this is in no way a serial process.  All the steps have to be worked con-currently.  Learning, for example, must occur at all stages.  After each action we should ask what have we learned by this action.  Should we change in anyway.

 

Applying the TIDAL approach to Driving

Let’s use driving as an example of the TIDAL approach to decision making.  Driving is a great example because we all do it.  We all can relate.

      • Step 1 – Set the Target: Where do you want to go.
          • The first thing that happens before you get into a car is you pick a target – you decide where you want to go.  Some typical targets might be:
            • Shopping
            • School
            • Visit a friend or relative (hopefully your relatives are also friends – but that is a different book)
            • The Movies
          • Do you see the point? The first step is deciding where you are going.  Based on the target, you will make different decisions along the way.  If you are going to work you might turn right out of your driveway.  If you are going to the movies you might turn left.
          • But let’s say along the way you notice that car needs gas.  Now the target could change.  Based on this information your target can change.  And if you don’t change your original target and you run out of gas, then the learning would be to pay attention to the gas gauge.
      • Step 2 – Get Information:  What is the information I need to get to where I want to go?
        • Once you have a target you then need information to get there.  Now here is an important point; some information will not change, while other information might change all the time.  With driving it’s obvious.  Location and directions usually do not change.  Whereas traffic conditions can change based on time of day and the specific day.  So once you set a target, you then gather the information you need about getting there.
      • Step 3 – Make the decision: Actually deciding what to do
        • So you have a target and you have the information, now you need to make the decision about how you are going to drive to work.  If you are going with someone else, are they going to be part of the decision process?  If you are driving to work, you might chose a different plan based on the time of day you are driving.
      • Step 4 Take Action: Put the decision into action
        • This is actually a very critical step for two important reasons:
        • First obviously you need to actually do something, you need to implement the plan.  You actually need to drive somewhere.
        • But more importantly, if a careful articulation of the actions could help determine what the appropriate target(s) should be and what information you need.
        • The point here is that determining what actions are going to actually be performed is very important.
        • The issue here is that often times the actions are not well defined or the action items are hidden.  This is where the concept of a hidden agenda can be very detrimental to the decision process.
      • Step 5 Learn something:  Looking back and deciding if we made the right decision.
        • In terms of driving, this is where we are sitting in traffic and thinking we made the wrong decision.  That during rush hour we need to take another route.

Ok, so that is a high level view of the Tidal Approach to decision making.  The way it’s presented above seems pretty easy and straight forward.  However, in reality it’s not that easy.  That is why you need to practice and try to improve every time you make a decision.

 

Barriers to Effective Decision Making

This is a very important section.  In that, understanding the barriers to effective decision making is critical to learning how to make better decisions.

Clearly, bad decisions come from setting bad goals, or getting bad information, or having the wrong people make the decisions.  And I’ve talked about those things a lot.

In this section I want to highlight a few common barriers so that you will be better prepared to overcome them or go around them.  This section is not intended to present an exhaustive list.  Rather it is intended to simple highlight a few interesting concepts that you should try to avoid.

In his book, “Why Decisions Fail,” Paul Nutt suggests that, particular situations can influence which decision making process one might use.[8]  In other words, while there are some specific things one can do, there are a few general principles that everyone should follow to make good decisions, no matter the situation.

 

Groupthink

Here is is a transcript of an interview with Syndey Finkelstein I found at http://blogs.hbr.org/ideacast/2009/02/why-smart-people-make-bad-deci.html

SARAH GREEN: Hello, I’m Sarah Green from HarvardBusiness.org. And I’m on the phone today with Sydney Finkelstein, a professor at Dartmouth Tuck School of Business, and the author of, Why Smart Executives Fail. His new book, written with co authors Jo Whitehead and Andrew Campbell, is called Think Again; Why Good Leaders Make Bad Decisions and How To Keep It From Happening To You. Our goal today is, hopefully, to help those bad decisions not happen to you.

Sid, thanks for coming on the program.

SYDNEY FINKELSTEIN: Thank you, Sarah. Great to be on.

SARAH GREEN: I just want to start by asking you about that subtitle, “Why Good Leaders Make Bad Decisions.” Do good leaders make bad decisions, or would that make them bad leaders?

SYDNEY FINKELSTEIN: It’s a good way to look at it. The reality is that being a successful leader is not just about intelligence, not just about being smart. It’s about actually making the right moves at the right time. And people that have the intellect, the track record, the success, are not necessarily going to be good leaders if they make bad decisions. The remarkable thing is, they often do.

SARAH GREEN: Can you give us some examples?

SYDNEY FINKELSTEIN: Well. Most people would have consider John Thain a tremendous leader up until recently. John Thain was the former Goldman Sachs senior executive who ran Merrill Lynch, and successfully sold the company to Bank of America just about the beginning of 2009, and it turned out to be very successful– the acquisition for Merrill Lynch shareholders. Because if it wasn’t for that, they would have gone the same way of as Lehman and as Bear Stearns. He also long track record in many other things that he had done at Goldman before that.

What did he do wrong? Well, I think in the last few months what we found is that John Thain has spent a lot of time looking for bonuses for his former staff members, trying to get a large bonus for himself. This while Bank of America, and even Merrill Lynch was struggling. There’s the famous million dollars spent on office decoration, and the list goes on. No one’s going to say those were good things to do. No one’s going to say he’s not an intelligent, smart, capable leader. But he did them.

SARAH GREEN: Can we really tell whether a decision was good or bad without the benefit of hindsight? I mean, when things come out later, it seems like, oh, of course. That was a terrible decision to make. But how can you know in the moment that decision won’t turn out to be wrong?

SYDNEY FINKELSTEIN: The reality is, of course, you can never guarantee that any decision is going to be successful. It would be great if I could tell you how to do that. But no one can. On the other hand, there are a lot of warning signs and a lot of ways to think about whether a decision has, at least, a reasonable probability of being successful. When we did our research for Think Again, we really spent a lot of time thinking about what the decision makers knew at the time that they were making the decisions, and tried not to think about all the subsequent events that may have had an impact.

And so the reality is we’re not going to bat 100%, but I think there’s enough that you need to look at, and that you can look at, at the time you’re making a decision that could significantly influence whether it works or it doesn’t.

SARAH GREEN: What are some of those, maybe, red flags that you need to look at to make sure you’re not making a bad decision?

SYDNEY FINKELSTEIN: In our research, we identified four key red flag conditions. The first one is experience. And misleading experience in particular. Most people will think, of course, experience is a good thing. And in many instances, it is. But the reality is that if that experience is not closely tailored with the situation that you’re in, it could lead you astray. It could lead you in the wrong direction. One of the classic examples during the financial crisis really is Dick Fuld at Lehman Brothers. And if you think about what happened to Lehman, you go back in their history, you find that about 10 years ago, during the long term capital management crisis– and that was in the late 1990’s, Dick Fuld really saved Lehman. He battled through the problems because that created an international financial crisis.

And he had saved the company. And when we move forward to the current financial crisis driven by subprime mortgages and the like, Dick Fuld continued to think he could figure it out and solve the problem. He had experience in one situation. Thought it was the right experience, and kept on going. And the problem that he encountered is that this type of financial crisis that we’ve been in, in the last year or so, is so dramatic, so fundamental. It’s just not the same magnitude. It is the largest financial crisis we’ve seen since the great depression. And the upshot is that he was, by trying to save the company, he didn’t put himself in a position to actually sell Lehman Brothers. And Lehman went essentially bankrupt.

And he had an opportunity to sell in the same way that John Thain and Merrill lynch did, successfully sell. So experience, yes it’s great. But let’s be careful and make sure that it’s not misleading experience.

The second key red flag is about self interest. And you know, we all know self interest is a big driver of behavior by people in all walks of life. Adam Smith said as much more than 200 years ago. But I think what most people don’t realize is that self interest often operates at a subconscious level. So much so that we often don’t even know that we’re behaving in the ways that we are. We don’t even realize we’re being as self interested as we are.

And we go back to John Thain and the story of the bonuses. And does anyone really think that he consciously sat around and said let’s see how I could rip off shareholders? I’m quite certain he never did think that at all. He behaved in this self interested way because that’s the way he had always been doing it. It’s the way Wall Street operates. And it never occurred to him that there was anything unusual. It didn’t even enter his stream of consciousness. And you know, sometimes we talk about a sense of entitlement in different walks of life. I think the sense of entitlement comes up because of this self interest that becomes fundamental to how people think. And they don’t even know they’re doing that.

SARAH GREEN: So there’s self interest. And there is misleading experience. And what are the last two?

SYDNEY FINKELSTEIN: Last two. Pre-judgments. Pre-judgments refers to a decision that somebody makes really early. A judgment about a problem somebody makes really early and then they refuse to adapt and change. And this is another one of those things that people are aware of in every day life– how many of us have just decided something is the way it is and refuse to budge.

We studied Hurricane Katrina, and in particular, the department of Homeland Security’s operations center and how they managed the federal government’s response to Katrina. And the head of the operation center decided, right at the beginning, that, in fact, Katrina was going to be a, quote, typical hurricane, no different than anything in Florida. And as a result, when you make these pre-judgments, you tend to look for data that is confirming, that supports your point of view, and you tend to discount, or even ignore, data that speaks otherwise.

And actually, an operations head who testified to congress afterwards– so we have a long track record of this– actually said that he saw a report on CNN, that people were partying in the French Quarter, that they had dodged a bullet. And he said, well, you know. I saw that. And what would you expect me to think? And the reality is, at the same time, he was getting, literally, dozens of other notices and reports from different places that were indicating that the levees were beginning to breach, and it was a much more serious situation. So pre-judgment’s a very, very dangerous situation, and one that I think is remarkably common.

And then finally attachments. Attachments refers to the way we are all influenced by people, by places, by things. And they influence us in ways that sometimes we don’t even know. And one of a really good examples, I think of attachments in action is, if you go and look at what happened to Yahoo in mid-2008, when Jerry Yang, the CEO and the founder of the company, was offered a bid by Microsoft to acquire Yahoo. And the reaction was absolutely not we want more money, it’s not enough. And why did he say that?

Well, it’s a story, I think, of a leader that was the founder of the company, that had this tremendously emotional attachment to Yahoo. And not only that, but to sell the company to Microsoft, which in Silicon Valley, for a lot of their competitors, is seen as the Evil Empire, that’s even a negative attachment. And that combination of being the founder of Yahoo and not wanting Microsoft to make an acquisition, simply because it was Microsoft, ended up costing shareholders $30 billion, because that’s the difference between what Microsoft was offering and what the stock price, and where the stock price had languished for a number of months afterwards. So attachments, another one of those red flags that I think decision makers have got to be on the alert for.

SARAH GREEN: It’s interesting. When you talk about these red flags, attachments, self interest, misleading experiences, and pre-judgments, it sounds like a lot of what you’re talking about here is brain science, cognitive science. Do we have to outsmart our own brains if we’re going to stop ourselves from making these choices?

SYDNEY FINKELSTEIN: It’s a great question. Because at the heart of all this is really how our brains work. And we spent a lot of time in our research for Think Again to try to learn whatever we could about this– the neuroscience, the cognitive psychologist, the decision theorist, all of these different academic areas have been spending a lot of time in the last decade, have made huge discoveries. And I think if we were to summarize the one or two things that are most pertinent for our discussion that has come out of that research, we would say that, number one, our brains are geniuses at patterned recognition. We collect all sorts of data and we create a pattern. And whether or not we act on that pattern depends on our emotions. It depends on what we call emotional tags, or the extent to which we have a sense that this is a good thing to do or a bad thing to do on the basis of emotions.

And this is the thing that I think a lot of people don’t really understand and that surprises people. That really leads us to highlighting the importance of these red flags. Decision making is not a rational, step by step process. It doesn’t follow the textbook that says let’s identify a set of alternatives. Let’s look at the pros and cons, and the costs and benefits and weight them all and come up with the best optimal solution. I mean it sounds good. But the way in which we decide is very different than that. It’s much more emotionally driven. And it’s what we actually call one plan at a time, where we come out with a solution to a problem without going through any discussion of alternatives, without thinking about the pros and cons. We jump to that conclusion because our emotions quickly interact with the pattern recognition process and come up with that solution. That solution might be right or might be wrong. Over the ions of development of the human brain the reality is that we’re pretty good at this.

Most the time this intuition– this what Malcom Gladwell called, blink is going to be right, but sometimes it’s not. And the key thing to point out is what are the conditions when that intuition, that quick emotional response to a problem is not likely to be or potentially might not be the right decision when those red flag conditions exist.

SARAH GREEN: Before we wrap up, I just want to play devil’s advocate for a minute and wonder is there a danger in trying to make ourselves choose too wisely? Is there a downside to being more cautious? I know in the current environment that probably seems heretical but there is a school of thought out there that says that bad decisions are useful in the marketplace. That the market will sort them out, and that there is a danger when you become too cautious and have too many safeguards in place. And that just end up preventing any decisions from getting made.

SYDNEY FINKELSTEIN: You know I like bad decisions as much as the next person, as long as somebody else that does them and not me. And so I’m happy to learn from other people. And I’m happy to learn from my own past bad decisions, because, after all, everyone will have some. But when I’m in the midst of trying to figure out something important, I’m not interested in being a case study for someone else. I want to try to get it right. And I think that’s the way most people will probably think about.

 

 

 

 

The Paradox: Continuity and Chaos

Businesses must confront the “Two-Headed Dilemma:”

  • How to unleash the creativity that promotes growth and change without being fragmented by it.
  • How to control innovation without stifling it.

 

Continued success in a high-technology environment requires periodic shifts between chaos and continuity. 

As the world moves forward innovation happens periodically!  Think of the innovation of the internal combustion engine.  For centuries horses were the dominant transportation system.  We developed roads and blacksmiths and stables to accomodate horses.  This all changed when we started to put internal combustion engines in land vehicles.

We went from a long period of continuity to a period of chaos.  Now, internal combustion engines in vehicles are in a period of continuity.

This is a common part of life.  We move of periods of chaos to periods of continuity.  Even in human development we grow through periods of chaos like puberty and illness and periods of continuity like middle age.  Some planned, like getting married.  And some unplanned like getting in an accident.

Change causes chaos, which is why so many people and organizations resist change.

Research demonstrates that some people and/or companies seem to favor promoting disorder and informality, while others seem to favor consistency continuity.  Thus, there is a fundamental tension is between order and dis-order.  How one manages this tension is critical to success in many activities.

This tension creates a “paradox!”  On one hand, we like stability and continuity because we can better predict the future.  However, on the other hand, we like chaos and change because it creates new opportunities for success.

This paradox has frustrated many academicians who seek to identify rational processes and stable cause-effect relationships.

By their very nature, established organizations resist innovation.  By defining jobs and responsibilities and arranging them in serial reporting relationships, organizations encourage the performance of a restricted set of tasks in a programmed, predictable way.  Not only do formal organizations resist innovation, they often act in ways that stamp it out.

But, in a rapidly changing world, this type of behavior may not be the best approach.

The challenge for decisions is to know when to embrace stability and continuity.  And when to embrace change and chaos.

 

 

The Paradoxical Challenge

There has to be a balance between the two ideas.  It’s critical that everyone has the opportunity to express their views.  However, it necessary for the organization to, at some point, pull together toward one goal and work fully as a team.

Disorder, slack, and ambiguity are necessary for innovation since they provide the porosity that facilitates entrepreneurial behavior.  However, they can be disruptive when trying to accomplish a specific task.

This is why innovation is so difficult.  The process of innovation, once begun, is both self-perpetuation and potentially self-destructive.

Although the top managers of high-tech firms must sometimes espouse organizational disorder, for the most part they must preserve order.

“An enthusiastic inventor is a menace to practical businessmen.” Charles Ames, former president of Reliance Electric

Older products, upon which the current success of the firm was built, at some point have to be abandoned.  But, this reality demands hard-nosed managers who are continually managing the functional and divisional interfaces of their firms to change.  They cannot be swayed by nostalgia, or by the fear of disappointing the many committed people who are involved.

Yet firms also need a certain amount of continuity because major change often emerges from the accretion of a number of smaller, less visible improvements.

In fact interspersing periods of tension, action, and excitement with periods of reflection, evaluation, and revitalization is the same sort of irregular rhythm that characterizes many things – sailing, flying etc.  Knowing when and where to change from one stance to the other and having the power to make the shift are the core of the art of high-tech management.

I often ask my classes how much chaos should there be in a give time period?  10%, 50% or 90%.  Many say 50%.  I think on the right mix is 10% chaos and 90% stability.

It is up to the decision makers to take this into account and plan accordingly.

Ten Barriers to Brilliant Decision-Making and How to overcome them – J. Edward Russo and Paul J. H. Schoemaker

 

Coaches have learned that excellent athletic performance depends on processes they can analyze systematically.  The best coaches learn more about the processes involved in great athletic achievement as well as better ways to teach these processes.

 

Becoming a good decision-maker is like becoming a good athlete.  You need to know how each part of the process contributes to an excellent decision, and know the errors associated with each part.   You need to work consistently on eliminating the errors you still commit in each phase.  For example, managers whom we’ve training are alert to overconfidence in their judgments.  They avoid rationalizing mistakes in past decisions.

 

The right way to play golf often violates your intuition.  (Most beginners for example think they should bend their arms as they swing a golf club.)  So also, the right way to make decisions often violates your natural inclinations.  Good decision-makers have learned that what they “know,” even about a field where they are recognized experts, is often wrong.

 

Summary

The key elements to consider when making decisions are:

  1. Framing: Structuring the question
  2. Gathering Intelligence: Seeking both the knowable facts and the reasonable estimates of “unknowable” that you will need to make a decision.
  3. Coming to Conclusions: Sound framing and good intelligence don’t guarantee a wise decision.
  4. Learning (or failing to learn) from Feedback:  Everyone needs to establish a system for learning from the results of past decisions.  This usually means keeping track of what you expected would happen, systematically guarding against self-servicing explanations, then making sure you review the lessons your feedback has produced

 


[1] It is even possible that even if someone puts a gun to your head you still have a choice to comply or not .

[2] The Clash

[3] This is where honesty comes in.  You need to be honest with yourself about why you made a poor decision.

[4] I remember studying this in college.  And makes sense.

[5] There are great case studies on the positives and negatives of this approach in a cockpit.  A good case study is in the Gladwell book the Outliers.

[6] In Psychological terms this would be avoidance of “Cognitive Dissonance.”

[8] Why Decisions Fail Paul C Nutt