Some decisions are pretty easy to make – what to wear (OK, maybe not), where to eat – but others require much more cogitation, reflection and analysis, particularly those that will have long-term consequences – for example, whether to fire some of your team or fund your losses. Below is a synthesis of views from experts, all of which are grounded in research from psychology and behavioural economics to help you make wiser and better decisions.
1. Establish the real question
The real question is not often the one you think you’re dealing with. Avoid the temptation to seize the data that’s in front of you; if you’re answering the wrong question, you’ll make the wrong decision. Instead, identify the outcome you need to achieve and work backwards – this will help you identify the ‘real’ question.
2. Manage your data
I know from experience that complex decision making is often complicated by having too much information, leading to what is known as ‘information overload’. Data/information overload can lead to ‘analysis paralysis’: we literally find ourselves ‘paralysed’ by the analysis. Instead, sort the information and data you have into relevant ‘drivers’ – for example: time, money, motivation, resources, and people. This avoids you having to make decisions based on an unmanageable amalgam of data and allows you to access the right information easily.
3. Determine your criteria for success
How will you know if your decision was the right one? Knowing how you will measure the success of your decision will also influence how you make that decision.
4. Be your own critic
Studies have shown that being your own critic (“dialectic bootstrapping”) broadens your thinking and inspires a greater consideration of the facts. Studies have shown that the ‘wisdom of the crowd’ is more accurate than that of an individual person alone, so by ‘summoning the crowd’ within, you will be more likely to arrive at a more accurate decision. For example, if you have to decide whether to take on a new employee to relieve others of their increasingly overwhelming workload, write down your first answer to the question. Then, assume your answer to be wrong and think about why that might be the case. In other words, be your own critic. The insights you will gain from adopting the two opposite positions will help you make a better informed decision.
5. Squash your biases
Decision-making is often stymied by the presence of biases within us. One example is that our optimism often leads us to disregard the ‘base rate’: the probabilities that govern any particular situation. For example, assuming that the man sitting next to you who is listening to classical music is more likely to be a music professor than a lorry driver is to disregard the base rate – there are significantly more lorry drivers than there are music professors. Other ‘base rates’ include that most small businesses will fail and most elections are won on the state of the economy. Here are some other biases to take into consideration:
- Availability bias: the instinct to rely on what is most ‘top of mind’
- Halo effect: the tendency to disregard negative aspects of a situation because you’re so enamoured by the positive elements
- Confirmation bias: the tendency to formulate a theory and then look only for information that supports it.
Making the right decision is often a tough call. What works for you? Let me know in the comments box below.