Five Steps for Making Better Decisions

By Paul C. Donehue

What you decide to work on, what you decide to improve, which projects you decide to undertake - these decisions make all of the difference in your organization's success.

Traditionally, people have often thought that if they had more data they could make better decisions.

But we're all familiar, no doubt, with the taunting acronym, "TMI" (Too Much Information!) that is commonly directed at those who "over-share" personal details. Similarly, in today's business world, the flood of data can make many decisions more complex... and the decisions made by considering all of this data are not always better!

In fact, the decision-making process is rarely studied and improved, and in a study of 500 managers and executives it was reported that "only 2% regularly apply best practices when making decisions, and few companies have systems in place to measure and improve decision-making over time."

If this sounds familiar, you might consider these five critical steps to improving your organization's decision-making process for complex decisions:



Start with a clear goal or objective - a good understanding of the problem and objectives. This step will help an organization refrain from starting with a compelling idea and backing into the rationale.




Widen the alternatives you are considering - As the French philosopher, Emile Cartier, put it, "There is nothing more dangerous than an idea, when it is the only one you have." A single idea is dangerous because when we focus on our current option, other and quite possibly better alternatives are outside our spotlight. Yet our natural inclination once we arrive at an idea is to stop looking for alternatives and devote our effort to convincing ourselves and others that this is the right decision.




Know what you know and what you don't know - Behavior economists assert that human beings are wired to give much more weight to information we have than to information we do not have and by doing so, we mis-calculate our risks and opportunities.




Achieve distance & perspective before deciding - A third condition for good decision-making is emotional distance. If you were the outsider, with no emotional stake in past decisions, what advice would you give yourself? Bringing in other perspectives, suppliers, customers, and other stakeholders can also help provide different perspectives on the decision to be made. Another way to gain distance is to imagine the impact of the decision one year in the future or even five or ten years.




Take a hard look at the uncertainty - One way to combat uncertainty is to figure out what you do know and use that to "bookend" the decision: what would be the outcome if all the bets go against you, and what would it look like if everything fell into place. This can help you evaluate if there is more upside opportunity or downside risk. You might also test and learn from small experiments before going whole hog. Find ways to test the waters or test some key assumptions to reduce the range of uncertainty to arrive at better decisions. The greater the uncertainty and risk associated with a decision, the more valuable these small experiments will be.




Learn & Improve

If you follow the steps above, your decision-making will likely improve. However, to accelerate organizational learning, write down the decision made and why. Schedule a follow-up at an appropriate time in the future to evaluate and take corrective action if necessary. In this way, you'll learn from the decision process and make your next decision will be even better.

Paul Donehue is a Senior Associate at [http://www.conwaymgmt.com]Conway Management Company, a management consulting firm that helps improve the way organizations run.

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