037. Better decision-making

A key responsibility of leaders is the ability to make sound decisions. That doesn’t mean we should funnel every decision in the business through one or two people, but the tough and important decisions—the ones that really impact the future of the business—have to get wrestled with by the leader of the operation. Today we’re going to cover three tools that can help you, the leader, have more confidence in your decision-making, and we’ll finish with some traps to be aware of.

A lot of people have heard of postmortems, or After-Action Reviews—debriefs after a project is done or a season is over, where we get the people involved together and review a) what went well; b) what could have gone better; and c) what we want to do differently next time. The U.S. Army is famous for these reviews, and over the long term they help teams to learn and make better decisions. Unfortunately—as the name implies—the learning doesn’t happen until after the project is done. How can you work to strengthen your team’s decision-making before going into a project?

1. Pre-mortem: Happens at the beginning of the project. The leader starts by stating the project is now finished and it has been a complete failure. Everyone in the room then writes every reason they can think of for the failure, and the leader goes around asking for one reason at a time until they run out of unique causes. With all the imaginable potential causes for failure exposed, the group can begin digging in and shoring up the plan to guard against these potential issues. This process helps get lots of perspectives out. It gets us thinking about hurdles and issues so we don’t get so caught up in the euphoria of the new project or event, and it can give leaders more confidence in the path forward.

2. PrO-ACT: Provides us stages to work through our decision-making. (See the book Smart Choices by Hammond, Keeney & Raiffa)
Identify the Problem. Too often we can get caught coming up with solutions before we really have an understanding of the problem at hand. When we aren’t diligent about digging in to understand the problem, we can we can end up throwing a lot of time and money away on symptoms.
Identify your Objectives. What do you really want for the outcome of the decision? There is power in stopping for a moment before we jump into solutions, to get clear on the outcome we want. That can give us a different perspective on how we end up tackling our decision process.
Identifying Alternatives. Get creative on how to solve the problem and get the outcome we desire. Use creative problem solving. By having different choices—even if it’s only two or three—we can begin seeing different paths of action. Challenge yourself to come up with a certain number of solutions. This can really get your mind working more broadly than simply using the first answer that came to you, or the same fix you used the last time.
Look at Consequences to begin evaluating of the alternatives. Maybe you immediately narrowed down the alternatives to three viable ones. You can then take them out in time to look at how closely the solution will get you to your objectives. This gets you into IF/THEN thinking: If we do this, then how well does it get us to our desired outcome?
Look at Trade-offs. You may realize, in looking at your list of desired objectives and different solutions, that your goals are in conflict and can’t all be achieved. If so, you have to start wrestling with what is really most important and how the different solutions will force some objectives to be served better than others.
As you go through this process, the hope is the best choice begins to rise to the surface—but in reality, life and leadership are messy; no decision is ever going to be perfect because we never have all the information we need at the time. Our responsibility is to be diligent in our process—make the best decision we can, commit to the decision and follow through.

3. “The Four Whats”: This is useful once you have decided on a likely action, but have yet to implement it. This tool uses four questions that force some thinking and get us looking at implications:
“What will happen if I do this?”
“What will happen if I don’t do this?”
“What won’t happen if I do this?”
“What won’t happen if I don’t do this?”
Through these questions—which can be useful in a group setting or by oneself—we can feel more confident about our decisions.

There is a lot of psychology involved in decision-making. To be a solid decision maker we need to be aware of forces at work that aren’t always apparent. Here are five common cognitive traps to keep in mind:

1. The Status Quo: It’s tempting, when facing uncertainty, to default to doing what we’ve always done—even if it may not be the best thing. Sometimes the right answer is to do what you’ve been doing and not make any changes—but that should be a conscious decision rather than a fall-back due to uncertainty.

2. The Wrong Question: Good decision-making begins with a clear understanding of the problem and then asking ourselves good questions to get us focused on what we really want. One trap can be starting the process with the solution—or even worse—what one of our previous guests, John G. Miller, would call victim questions: “When is somebody going to do something?” “Why don’t they ever let me know?” “When will they understand what they need to do?” These types of questions are paralyzing to effective action & should be replaced with questions like, “What can I do?” or, “What’s the real issue here?”

3. Sunk Costs: This happens with machinery, land, people,...you name it—we face sunk costs that hold us back from doing what needs to be done. As leaders we need to be able to emotionally write-off the costs that have been put in and look at the situation from today and moving forward.

4. Confirmation Bias: This is where we have belief, opinion and a perspective on a certain thing. This belief then leads us to let in only information that supports our beliefs and delete any information that is contrary. Managing confirmation bias requires seeking alternate info proactively—it means asking ourselves questions like, “How might I be wrong in my perspective?” and requires an openness to the possibilities of different perspectives.

5. The Dunning-Kruger Effect: This is essentially about people with low ability suffering from the illusion of superiority. Said another way; the less familiar we are with something, the more convinced that we would be successful at it. To manage this, recognize first the tendency to overestimate our abilities in areas we aren’t familiar, then ask yourself “How can I gain the basic knowledge to better understand my likelihood of success?”

I hope this episode has been helpful for you as a leader. I encourage you to listen back through it and pull out one thing that you can try out this week in your decision process.

If you have stories or questions, you can always reach me at [email protected]. And if you have a couple of friends or neighbors that would benefit from this podcast, be sure to let them know about it. Thanks for listening, and I look forward to connecting with you again next week!