Categories
Leadership

Setting the Framework

It’s easy to make bad decisions, and it can be hard to make good ones. Almost always, just making the decision, implementing the outcome and correcting as you go is better than getting stuck in Analysis Paralysis and doing nothing.

Given that making the decision is a good move, how can you improve your chances of making a good one, and getting everyone bought in to that choice. We’ll tackle this from the point of view of a business decision, but you can use these approaches in any situation.

First off, get super clear about the scope and parameters of the decision. Create a statement of the problem, one that’s got enough detail to show whether the decision made successfully solved the issue.

So rather than “We need to do something about this”, prefer “We need to decide with investment option has the best chance of returning 3x on its investment inside 18 months”. Once you’ve got this, put together your options. What could you do to solve this problem? What are the pros and cons of each approach, where are the risks?

Now you are ready to take these forwards to make a decision. Get the smallest possible group with the authority to make the call, covering the groups who will be impacted by the decision. Review the problem statement, discuss the options, weigh up the tradeoffs and pick a course.

The outcome of the final conversation needs to be documented and communicated. The process should be made as visible as possible to show how the decision was made, and the outcome tracked to show how successful it was.

For a big decision, each of these stages can be a separate meeting. That allows you to bring in experts when putting together options, while keeping the decision making group small. For smaller decisions, you can use a single meeting, but make sure to split the phases of the meeting clearly. For some groups you’ll need a strong facilitator to keep the conversation moving, especially those that keep circling back to options multiple times. If that happens, don’t be afraid to pause, and regroup in a separate session.

There’s lots more reading to do about effective decision making, from traps to avoid, to emotional connections and much more, but following this simple framework and you’ll see an immediate improvement:

  1. Clearly state the problem that requires a decision
  2. Outline options with pros, cons and risks
  3. Convene a small group with authority, and make a choice
  4. Communicate the decision
  5. Measure the outcome
Categories
Book Review

Thinking, Fast and Slow

Daniel Kahneman’s Thinking, Fast and Slow┬áis the starting point for anyone who wants to stop and really learn about how we think and make decisions. It’s an incredibly information rich book, it’s certainly not an easy read but it is most definitely a worth while one.

It collects decades of research into how we make decisions, how we consider risk and gain and how we use shortcuts that are sometimes great but can often be terrible.

It starts by discussing System 1 and System 2, two models of thought. System 1 is the hasty and instinctual prone to taking shortcuts and making lazy decisions. System 2 is the more rational, willing to spend effort to make important decisions. Kahneman discusses the differences between these two modes, and shows us when System 1 can make good decisions, and where it can fall down.

We then move on to thinking about Humans and Econs. Traditional economic theory suggests that people always make rational decisions. Kahneman shows us times we may not behave rationally, when we are Humans and not the Econs of rational theory.

Finally, he discusses the differences between the remembering self and experiencing self. In this approach, we see that people are often willing to experience greater overall discomfort if the end of it is more pleasant. We remember the end of the experience more clearly, or we recall the peaks more than the average. It’s a surprising insight.

The book is brilliantly researched, each insight is backed up with rock solid studies that are brilliantly footnoted. Every chapter covers one of these major insights, compressed down into less than a dozen pages. There are regular ‘Speaking of’ sections that give great short practical views into each of the complex topics.

Take the time to drink this book in. Don’t rush through it, but do rush to buy it!