The decisions you have made in the past have got you where you are today. The decisions you are making today will impact you and your organisation in the future.

How can you ensure these outcomes are always what you intend?

Well, the truth is you can’t.  

But there are things you can do to set yourself up for the best possible outcome.

Effective Decision Making, Andrew Cameron

Remember that you’re biased

Just because you’ve had some good outcomes from the choices you’ve made in the past doesn’t mean you always made the right decisions.

After all, we have very little actual control over outcomes. Environmental changes, economic uncertainty, luck and personal bias all play their fair share is shaping how our decisions really play out. 

And yes, your biases can get in the way of good decision-making.

Now this observation isn’t meant as a criticism because in reality we are all biased. Our life experiences have hardwired our brains to think in certain ways based in the experiences we’ve had in the past, either directly or indirectly.

Daniel Kahneman, author of Thinking, Fast and Slow has demonstrated through research that our innate biases mean that our brains are set up to reach conclusions quickly, thereby prohibiting the potential for further consideration.

Kahneman states that we have two cognitive systems that he calls System 1 and System 2.

System 1 takes over your thinking when your instincts signal that you understand the situation or question being posed. System 1 thinking operates on association – “I’ve seen this before…I’ve done this before…therefore I know the answer!” Two plus two always equals four, so we literally don’t need to think about it. System 1 is a short cut, it saves energy and it is fast, but is also responsible for stereotypes, selfishness and lack of innovation. 

Kahneman is clear about System 1’s pitfalls:  “Most of us view the world as more benign than it really is, our own attributes as more favourable than they truly are, and the goals we adopt as more achievable than they are likely to be.” 

In short, System 1 can – and will – trip us up and our firmly held beliefs can lead us to failure.

System 2 thinking, on the other hand, requires us to slow down because we don’t have the associative element – the ‘experience’ – that enables us to jump to the answer we are seeking. We are forced to slow down and think much more methodically; the effort required means that we can only apply System 2 thinking to a few issues at any one time and if System 2 is ‘cognitively busy’ then that is when we defer to System 1 thinking – and that’s when our biases kick-in. System 2 thinking is hard work…and we all have an innate desire to avoid that! Indded, Lab tests have shown that people who had to apply System 2 thinking to mental problems had reduced glucose levels – it’s not coffee you need, it’s chocolate!

Gleb Tsipursky, author of Never Go With Your Gut, states that we often seek out information to reinforce our biases rather than consider other potential options or scenarios. This trait can be detected in leaders who fail to acknowledge their mistakes, which suggests they have learned nothing from the decision making process and will continue to make decisions based in their own biases.

Even when presented with overwhelming evidence against the decision a poor decision maker will focus on the very small amount of evidence in support of their own argument. ‘When you follow you gut, you pay attention to the wrong things in the wrong manner at the wrong time.’ Tsipursky writes.

It’s not all about the big decisions

When we think about ‘decision-making’ as a subject we might confine our thinking to the big strategic decisions that every organisation has to face, but that would be to under-value the impact of ‘small’ decisions.

Organisations are essentially multiple teams and individuals within teams learn from each other. In their book, The Importance of Small Decisions, the authors (Michael J O’Brien, R Alexander Bentley & William A Brock) state that we learn through ‘social learning’ and ‘individual learning’, where individual learning is acquired through trial and error, and social learning involves emulating the behaviours of others. In an organisational context this means that a ‘small’ decision to change behaviour in one team could eventually be adopted by the whole organisation. This could be viewed as a benefit or a drawback.

In the early 2000s a publishing company held a conference with 150 people during which a phrase was used to describe the culture of the organisation. It caught-on with some delegates, in this case middle managers, who returned to their offices and ordered mouse mats and mugs with the phrase printed on them. Soon others, who had not been at the conference, did the same and before long thousands of people were describing the culture of the company using a phrase that wasn’t in any official documentation, induction or training material. It all seemed harmless until the phrase was used against the company as part of a grievance process – the first question that was asked: ‘Who ordered the mouse mats?’

Five things to consider when ‘deciding how to decide’ 

1. Are you going to solve the right problems with your decision-making? 

In other words, are you making a decision that will tackle the root cause of a problem or merely alleviate its symptoms?  In a business context it might be a more sensible use of time and resource to make the decisions that can solve systemic failings, rather than constantly acting to plug gaps and fix mistakes arising from them.

2. Are you framing your decision-making in the most appropriate way?   

Looking at the possible outcomes of a decision from only one perspective may blind you to other equally important and possible outcomes. Look at a problem from a regulators point of view or that of a competitor’s or a customer’s, in order to see a broader context. Be willing to re-examine your understanding of a decision and its possible repercussions to appreciate how it will impact others. Always consider a range of perspectives to give proper balance and judgement to your deliberations.

To help with this the author Steven Johnson recommends using decision maps to lay out a series of choices and options for the most important choices you make. These “influence diagrams” could help you see the “chain of effects” of your potential choices much more clearly. To enable yourself to build an accurate map, Johnson urges you to identify the issue or problem accurately and to get multiple perspectives.

3. Are you making the right assumptions? 

Every decision is based on certain assumptions, but are those assumptions justified?  There are four ways we should consider the reliability of what we assume to be the case before we act:

  1. What do we know but can’t prove?  
  2. What do we know but haven’t questioned?
  3. What can we know for sure?
  4. What are the gaps we are filling in for ourselves?

Listing the extent and limits of our current knowledge can be a good exercise in judging our ability to make the right call.

We don’t really like to admit what we don’t know. Leaders and charismatic people will often tell stories to fill in the knowledge gaps, which can rapidly become a new and dangerous ‘fact’ based on nothing but supposition and a fear of saying ‘I don’t know’.

Sometimes we confuse the outcomes of luck with the outcomes of skill and judgement. Correlation between good outcomes and the decisions that preceded them is not the same as causation, but the gifted storyteller can make them seem so.

4. Turning the decision into action

The way in which we intend to solve a problem is the bit of decision-making that is usually neglected, but it can have a huge impact on outcomes. Ensure that the implementation of a decision is not hampered by lack of buy in or understanding by the people who will need to enact it. 

5. Read case studies

We shouldn’t assume that there is no precedent for the business choices we are facing. Case studies are a valuable resource and they don’t have come from the same industry or even the same historical epoch to be instructive.  It’s worth considering how different leaders in the near or even distant past have approached the kind of problems that we are trying to solve right now.