New ways to make tough decisions
As the business world becomes more complex, decision-making is becoming more complex as well. Just think of the complexities in dealing with risk, issue and crisis decision-making these days. And if you are a member of your organization’s executive team – a role requiring you to confront operational problems – many decisions would be even more complex and longer-term. So how can you use more innovative ways to reach solutions?
Various researchers have developed tools for making better choices. These tools help you to bring new perspectives to the situation confronting you, to find new angles and new dimensions to reach solutions.
Here’s how you can use some new tools to help make tough decisions – based on an article in the New York Times:
Some decision-making options
Pros and cons list
This is a simple, traditional way to help with decision-making. Just make a list of pros and cons. The pros-versus-cons list remains perhaps the most-used technique for making a complex decision. Of course, this merely lists the various factors without putting a weight according to the perceived importance of each factor. A limitation of such a list is that you may not necessarily have thought of all the relevant factors involved.
A feature of a bad decision is only considering two options. Adding a third alternative increases the odds of success. Instead of asking “whether or not,” expand your pool of options by asking “which one?”
Finding alternatives to any course of action is emerging as an important insight from research. In one study, only 15% of decisions involved a stage where the decision makers actively sought out a new option beyond the initial choices on the table. A later study found that only 29% of organizational decision makers considered more than one alternative. In other words, around 70% of decision-makers are asking for trouble.
Researchers have found that considering a greater number of alternatives increased the chances of success with decisions. In one study, participants who considered only one alternative ultimately judged half of their decisions a failure, while decisions that involved at least two alternatives were felt to be successful two-thirds of the time.
The lesson is clear: If you find yourself considering an “either/or” question, you are almost always better off turning it into a “which one” question that gives you more available options.
Increase the options
What’s the best way to expand your range of options? Researchers suggest you should try diversifying the group of people involved in the decision process.
Groups of similar people – whether they are in the same business discipline, residential location, income, gender, age, or other demographic – tend to reach decisions too quickly. These homogeneous groups settle early on a most-likely scenario and don’t question their assumptions because everyone at the table seems to have the same mindset – a definite bias.
A 2008 study came to a seemingly counterintuitive finding: More diverse groups were better at reaching the truth, and they were also far less (over-)confident in the decisions they made. They were more likely to be right and, at the same time, more open to the possibility that they might be wrong.
Once you have alternatives, how are you supposed to assess them? One approach, known as scenario planning, was developed by management consultants in the 1970s, and involves imagining three different future environments for each alternative:
- Develop one story where things get better,
- one where they get worse,
- and one where they get weird.
Psychologist Gary Klein developed a technique called a premortem. Opposite of a post-mortem, the process involves asking people to imagine it is now months in the future and their plan has been completed. But it failed. They have to explain why they think it failed.
The premortem is an effective way to identify the potential flaws in a decision. A whole range of bad cognitive habits — from groupthink to confirmation bias — tends to blind us to the potential pitfalls of a decision once we have committed to it. It isn’t enough to simply ask yourself, “Are there any flaws in this plan that I have missed?” By forcing yourself to imagine scenarios where the decision turned out to be disastrous, you can think your way around those blind spots and that false sense of confidence.
The value model
The value model is a more powerful version of the pros and cons list. It actually involves a matrix.
For example, for an issue in which stakeholders are important, write down a list of the most important factors relating to stakeholders who would be involved in the issue. Give each of those factors a “weight,” a numerical measure of its importance to you. In one version of this approach, you give each factor a weighting between 0 and 10. For instance, you might be evaluating which stakeholder variables are most important to you. You start by listing several of the most important overall factors, such as stakeholder influence with legislators, the strength of their media connections, etc.
After scoring the importance of each of the relevant factors, you give a score for each stakeholder on each of those factors. Then you multiply the score for each factor by the score you have given each stakeholder on those factors.
For instance, if the most important factor in your estimation is media connections, you might allocate a score of 9 out of 10 for that factor. Then you might give a score of 8 out of 10 to a specific stakeholder A for the strength of their media connections specific to the particular issue. Therefore, stakeholder A’s score on media connections relating to the issue would be 9 x 8 = 72.
Stakeholder B’s score might be 7 for the strength of their media connections factor on that issue. Therefore, stakeholder B’s overall score on the media connections factor would be 9 x 7 = 63 compared with stakeholder A’s score of 72.
The same process can be followed for as many factors you consider relevant to a particular issue, and as many stakeholders you consider relevant to the issue.
Then add up each stakeholder’s total score over, say, five factors. Stakeholder A might have a total score of something like 350, while stakeholder B might have a total of 287. Obviously, stakeholder A is more important to you, and you would give priority to activities relating to that stakeholder compared with stakeholder B. This process can be followed until all stakeholders have been considered.
This example related to stakeholders, but you can use the process for other types of situations as well. You can list all the important factors, such as a particular course of action and how it would affect certain groups or entities, giving each factor a score for its importance (score A). Then you can list how the entity scores on that factor (score B). Multiply A x B to reach a total for that entity on that factor. Repeat for other factors and total up the score for each entity and compare with the total scores for other entities. This enables you to reach a decision about which entity has the most value for you.
These tools can help you to reach decisions with a greater chance of success than decisions limited by traditional approaches. Try them and see how they can help you to make better tough decisions.