BOOK REVIEW: Decision-making is a skill – here's how to learn it
The decision checklist: A practical guide to avoiding problems, by Sam Kyle
Imagine an untrained golfer who is unhappy with her golf game. She would like to do better, but never learns formally. She just hopes that every time she lifts a club, the outcome will be better than the last time.
This is similar to most people’s decision-making ability. They hope that this time the decision they take, whether it is to raise an employee’s salary, to buy an expensive item, to take a new job, will be a good one. This time, they hope, they will make a good decision.
The difficulty with decision making is what poker players call "resulting". It is a function of creating too tight an association between the quality of the outcome and the quality of the decision. It is possible to make a bad decision that through shear dumb luck, turns out well, and it is possible to make a good decision that has a bad result through no fault of your own.
Chance is a fine thing
Every leader must make decisions. This is as true if you lead an organisation and it is true for a parent leading a family. The chances of a good result are higher if the decision was a good one, so making good decisions more often, increases your chances of success.
There many of books on this subject written by sophisticated academics and practical people. Amazon lists over 60 000. What I liked about this one, is its simplicity with a greater likelihood that it will be applied.
Author Sam Kyle’s fundamental theme is the importance of having a process for decision making, putting decisions to paper, and reflecting on them. Nobel prize winning psychologist, Kahneman (author of the classic, Thinking, Fast and Slow, reviewed in this column), believes reflection to be the primary tool of self-improvement.
To become a better decision-maker you will need to keep a ‘decision journal’ in which you describe your decision in a way that will stimulate thought. Clearly, you wouldn’t take to your decision journal every time you buy a couple of bottles of Merlot rather than Shiraz.
The starting point for decision journaling, is first to ‘name’ the decision you are taking.
Second, describe the situation or context that gave rise to the need to make the decision, complete with the variables that govern the situation.
Third, identify the complications or complexity as you see them.
Fourth, list the alternatives that you considered seriously and explain briefly why they were not chosen.
Fifth, explain the range of outcomes you deem possible with their level of probability, as well as what you expect to happen, along with your reasoning.
Finally, identify any significant contributing elements to your decision-making ability such as the time of day you’re making the decision, and how you were feeling, physically and mentally.
Do it properly
The key to doing this properly is to be specific and concrete.
Then make a note in your diary of a review date on which you will revisit this decision. It is from the review that you will learn to be a better decision-maker.
"If we can’t recognise when you’ve had dumb luck, we’ll never be able to correct the way we’re making decisions," Kyle explains. The converse is true too. You will recognise when your decision making was good but bad luck or circumstances beyond your control, led to a bad outcome.
To improve the gap between your potential as a decision-maker and how you make decisions in practice, you should at least start with the simple six step process described above.
There are many improvements that can be added to this that are described in the book. These include conducting a ‘pre-mortem’ in which you imagine that the decision was a failure. Then you examine why it was a failure, and take preventative action to ensure this does not occur.
We rarely receive feedback on the quality of our choices and we rarely make provision for reflecting on our decisions. Only through this process can we pick up our inherent biases and weaknesses.
Are you generally an optimist? Does your ‘optimism bias’ leads you to focus on possible positive outcomes while not anticipating and preparing for potential negative ones?
Are you quick to jump to conclusions, because you give too much weight to the information in front of you? Do you fail to search for new information that might disprove our thoughts? Kahneman calls this tendency "what you see is all there is."
The Heath brothers, in their book Decisions, identify weaknesses that include overconfidence, a reliance on short-term emotions, and our tendency to select information that supports our pre-existing attitudes, beliefs, and actions.
The need for alternatives and our ability to identify plausible alternatives, will also be evident from the review of our journaling. Consider this example of framing the problem too narrowly: ‘Should I terminate my relationship with my partner or not?’ Instead, add ‘What are the ways I could make this relationship work?’ Your decision can never be better than your best alternative.
A McKinsey Quarterly survey of 2 207 executives found only 28% reporting that the quality of strategic decisions in their companies was generally good. A full 60% thought that bad decisions were about as frequent as good ones, and the remaining 12% percent thought good decisions were infrequent!
Raising the odds
Yes, even good decisions using a good process, can have bad outcomes. But we can raise the odds of obtaining good outcomes by using a good decision-making process. If you want to increase your effectiveness and productivity, you need to take the time to think about your decisions.
"Good decisions don’t ensure success, but bad ones almost always ensure failure," the author reminds us.
A good place to start is with your decision journal. You will find a template in the book and many on Google.
Readability Light +---- Serious
Insights High --+-- Low
Practical High +--- LowSUBSCRIBE TO FIN24 NEWSLETTER