Unlocking Success: Five Tips for a Game-Changing Decision-Making Process
While admitting that biases impact decision-making and becoming more knowledgeable about biases is a good first step, that will not ensure a good decision-making process. But what can we do to improve our decision-making? In this blog, I want to discuss five strategies that I’ve been pondering that might help you.
None of these suggestions have anything to do with AI. After all, an effective AI approach depends on humans first. We can experiment with AI solutions, but they are far from perfect. On the other hand, we don’t need to be potted plants, waiting for AI to solve our decision-making challenges.
My suggestions stem from some research into human behavior and its impact on how businesses can and should operate. Much of it has been done by academics, such as Daniel Kahneman, Amos Tversky, Dan Lovallo, Olivier Sibony, and Dan Ariely. But in this blog, I have moved from an academic approach to a more pragmatic business approach.
1. Accept the limitations on our ability to self-analyze our own decisions.
Experts have been researching this for years. Most well-informed businesspeople know about biases by now. We’ve been able to study how investors and buyers behave in different markets and how biases impact that. Other experts have studied how biases impact the decisions of medical professionals.
We’ve also studied the brain using imaging studies. We better understand how decisions are made and how cognition is impacted by strongly held views and emotions. Game theory has taught us that people are often irrational. Using brain studies, we have watched people make decisions using the older parts of the brain, rather than the much more sophisticated parts of the brain.
We simply cannot evaluate how our own biases, and strongly held emotions and opinions shape our decision-making.
The risk for business owners is significant. We risk betting entire investments that we’ve held onto for years in ways that could impact our families and communities. We risk making decisions that could negatively impact our employees and our customer base for years.
The good news is that we’re very good at evaluating bias in others. And probably better at recognizing emotionally driven decisions in others. So, moving to a collaborative decision-making approach can improve your outcomes.
2. Evaluate the culture in your company for the impact of bias and focus on improvement.
Companies of any size that do not engage in healthy debate can be prone to bias and/or groupthink. There is an inherent conflict between managers, executives, and company needs. Incentives play a role here. Commissioned salespeople are notoriously impacted by bias. Companies that operate in silo structures often have an even harder time recognizing bias since there is so little communication between decision-makers across the silos.
Your culture evaluation may also include a quantitative review of previous decisions. You can look at project investments to see if they have produced the results you were expecting. You can look at any mergers or acquisitions to see how they turned out. When these investments didn’t pan out as expected, look for ways that bias may have impacted the decision.
Once you begin to evaluate your company, look for ways to improve. Encourage healthy debate. Avoid groupthink.
3. Use teams to evaluate your strategic decisions even if you are the owner.
Since owners cannot recognize their own biases, big decisions need to be reviewed by others who can provide feedback. And owners must embrace the possibility that they need a course correction from others. It’s hard. No one likes to be told that they are making a bad decision. But wouldn’t you rather hear that before you’ve lost millions, rather than afterwards?
Don’t wait until you have a crisis on your hands. Engage a team of advisors who can help you. Look for a diverse group of thinkers, recognizing that this will make communications harder. And look for the long-term benefit of better decisions. Build this team so that it is comfortable with debate before you need them. And let them practice on smaller decisions. A solid decision-making process takes time and practice.
4. Reduce the impact of bias on your meetings with specific strategies.
Encourage open discussions about bias with teams. Ensure that everyone understands the different kinds of bias and the ways that they can impact decision-making. Invite outside experts to help your teams understand the impact of bias and the difficulties of recognizing it.
Distribute meeting agendas in advance with homework assignments that are designed to identify biases that might impact decisions. For example, you might assign a quantitative analysis to multiple persons or teams to ferret out how bias might be impacting the different approaches that each group uses.
Depersonalize meetings by nudging conversations away from personal beliefs and ideas and towards a debate about the problems and issues that need to be resolved. Help people understand whether their opinion or idea is based on emotions or thought processes. While I don’t underestimate the importance of understanding when gut decisions are appropriate, I generally try to redirect language away from emotions and towards thought processes. I generally recommend that executives at least understand when their decisions are emotionally driven rather than data driven.
5. Embrace a checklist to guide your teams in the strategic decision-making process.
Given our own inability to recognize bias in ourselves, embrace a collaborative decision-making process. Research seems to suggest that this process alone has a greater impact on the quality of decisions than any other single factor. Create a checklist to guide your process. For your next big decision, consider these ideas for your checklist:
- Identify the ways that incentives are driving the decision.
- Look for ways that over-optimism may be influencing your decision.
- Be aware of strong emotional attachments to the preferred outcome.
- Understand that you are probably operating in an environment that is NOT predictable and that gut instinct and expert opinions may not be reliable.
- Arrange a pre-mortem and talk through all the potential outcomes. If there are outcomes that you don’t like, talk through ways to avoid them.
- If you are the final decision-maker, know whether there were dissenting opinions on the recommendation team, whether the team relied on analogies that may not have been meaningful, and that you at least know where the supportive data came from.
Others, including the Harvard Business Review have published similar and longer checklists, but I was trying to keep this a bit more manageable.
