“Decision making is the specific executive task.”- Peter Drucker
After spending over a year blogging about how people's decisions can be influenced by cognitive biases, hormones and group dynamics, here is a 5 step decision-making framework.
Step 1: Choose the highest priority decisions
It can be hard to stay on track and make constant, consistent, thought- through decisions. To do so, we have to fight distraction and false urgency that is presented to us. We make 35,000 decisions a day, how do we decide what to focus our attention on?
a) Is this a high priority decision?
Is this decision consistent with my (or the firm's) goals?
Is this decision a distraction? How has it come to my attention?
Am I the right person (is the right company) to be dealing with this decision?
What if I did nothing on this decision?
b) How to find your highest priority
If I had to do one thing, today or this week/month/year what would it be?
Is this a high leverage decision?
Will this decision matter a lot in a year's time?
Is this a 'hell yeah' decision?
Step 2: Gather information
a) Work out what you know about your decision
Be careful what you consider knowledge. What we consider knowledge could be out of date, based on incomplete information or derived from a source that is not credible. Part of the information gathering process is to unlearn our biases and not blindly follow our intuitions.
b) Find and consult credible sources
Efficient information gathering needs 2-3 credible sources to have a decent read of the information. The best sources are directly experienced, are incentivised to give you their unbiased opinion and can draw on real data to support their thoughts.
BEWARE: look carefully at any numbers or charts you receive. What story do they really tell, and have you been presented with a piece of information or chart that really gets you to the point. Numbers are not as innocent as they look.
c) Analyse the information
What does the information tell you that is important? What does it not tell you that is important?
d) Fill in the gaps
The 80/20 rule definitely applies to information gathering i.e. you will quickly be able to get up to a general understanding fairly quickly, but an expert level of understanding will take time. You will never get all the information, it's not possible. Have a thorough understanding of the key variables of the decision.
e) Get some context with the outside view
We often feel like what we are doing is unique, but chances are, there are similar decisions being taken in different arenas. People who modelled social media engagement, found that biological models of virus growth helped them replicate some of the observations, hence the phrase going 'viral'. Which mental models or similar situations can you find and learn from? Whatever you are doing, it is not completely unique.
Step 3: Generate Choices
Whilst it's tempting to go straight to a solution after gathering information, a systematic way of weighing up your options is important. I believe this step will put you on strong footing to avoid bias, feel more convicted in your decision and to help others understand why your chosen path is sensible.
Firstly, generate alternatives through brainstorming. These questions can help you:
1) What are the different paths that others have taken in this situation?
2) What else came up in the information gathering?
3) What unconventional ideas can you think of?
4) What is the quickest fix for this?
5) What is long-term solution?
6) What is in between?
Step 4: Decide
Choice is a privilege, but too much choice leads to paralysis. Being systematic helps. These are questions that will help you.
a)Who decides?
Is it an individual decision or a group decision? If it is a group decision, will it be a majority, super-majority, unanimous, selective veto or other system. I find a group of 3 trusted individuals with a majority rule is a fine way to decide most things.
b) Whittle down options
You cannot decide easily between 30 options, there are too many variables. Adding additional constraints that remove options will help get you there. Start with must-haves and if lots of options left strong preferences. Constraints might be i) strategic vs tactical, ii) how risky is this option, iii) cash outlay.
c) Pick features and rank
According to Daniel Kahneman's work you can make a surprisingly effective decision through a simple process. Pick 6 dimensions that are important in your solution (e.g. quality, riskiness, cost etc.) and for each choice rank it on each dimension from 1-5. Use a simple sum or a weighted sum to express the importance of certain factors. You can now rank them.
d) Listen to your gut
It is here, that you should listen to your gut - instincts are useful once you have done the work. Do the highest rank options feel optimal to you? What might you be missing, or underweighting? Review your approach if not and feel free to make justifiable changes.
e) Make the decision
If it's a sole decision, pick a decision and reflect upon it. If not, present your top two or three choices, your recommendation and your process. This transparency helps identify gaps, misjudgments or assumptions. Now you are off to the races.
Step 5: Execute
The whole point of making decisions is to act upon them. Decision-making processes can be bureaucratic. Overwhelm, analysis paralysis and doubt are typical reasons people don't follow through.
i) Save a document down called 'Execution.docx'. This small act takes you from idea mode into execution mode. Motivation often dramatically increases with momentum.
ii) Chunk up the key steps in executing this decision, put them into your execution document
iii) Put each step with a name and a time and add it to your diary. If you are getting other people involved let them know (people expect and deserve to be given a decent heads up). These mini-deadlines will give you accountability and structure to stop you getting stuck.
iv) Focus on step 1 and then pick off each step.
VIP tips
1) Evaluate (brutally, honestly) how well you did after every big decision. You will only get better at things once you incorporate feedback.
2) Where the decision impacts other people, if appropriate, give people advance notice. Change, even for the better, is hard. If sounding out and getting buy-in is done well, people will know it's coming, understand why, and be ready for it.
3) You will sometimes realise, with hindsight, that the the wrong decision was made. Other times, the result will be sub-optimal. You will only ever know what works by giving it a try. How can you size your trial so that you get valuable information? From scientists to inventors and marketers to AI algorithms, all of them employ some form of trial and error. Even if you don't win, you can learn.
I hope by using this system, it helps you make any and all decisions, from which product to launch, charity to donate to, house to buy, or even which Netflix series to watch next.
Please don't forget to subscribe. Next week's blog will be on 'why you should care about EQ'.
Other blogs in the 'Anatomy of a decision series'