Decisions

How do you make good decisions? As a manager, as a leader, as a general: making the right decisions, and instilling hope, purpose and a feeling of team unity in your troops are probably the two things that in the end make the difference between building enterprises or empires and failing.

Simple Internet guides advise

1. Know the objective of your decision. If you do not know what you want, you won't get what you want. Consider this within your larger plans, how does it fit with them. Think about how important it is to make a decision in the first place. Are you really addressing the root cause of the issue that needs to be resolved? What is that root? Ask why repeatedly.
2. Gather evidence. What kind of evidence is out there? Where can you get it, how can you get it? How much do you need? You need to manage your time here, there is a point of diminishing returns.
3. Weigh the pros and cons. Make a list of the different options, and list what is the pro and con of each. What is the worst that could happen? What is the good? What are known unknowns that have an influence. Write the pros and cons down in a list.
4. Ask for advice. Whom can you ask who has had similar challenges and can give you good advise? Friends, family, colleagues, peers, or someone who is an expert in the field? Be sure to ask for advise, not validation.
5. Set deadlines - by when will you decide, by when will it be implemented?
6. Take your ego out of the decision -- make sure you are honest with yourself and informed, rather than just seeking affirmation and praise. Don't think the value of your decisions determines your own value, look for opportunities to learn and grow from your decision-making process.
7. (Don't be afraid to follow your intuition, and don't let fear guide your decision.)
8. Decide, and follow through. Evaluate the outcome later -- was it what you expected?

The difficult thing about decisions is that there will be pros and cons and you have incomplete and unreliable information when you make them. You make decisions based on assumptions, and have little time to test them. And mind you, not making any decision effectively is also a decision, to stick with no action -- and sometimes the worst one.

In the military they say, if you hear something from one source it is noise, if from two sources, it is a rumour, and if from three sources, it is actionable information. I know of few managers who are disciplined enough to wait for the third confirmation of something they feel is going on.

I think Darwin was a great man, because when he had a theory or assumption, what he did was searching out any possible way to disprove it; and only if his theory could stand up to the strongest counterarguments he could think of, then he knew he was on the right track. You need a lot of mental fortitude and maturity to be able to do that.

In business, you often do not have the time to test your assumptions in this way? Try and think of easy and cheap ways to test and prove or disprove your assumptions.

The most common mistakes about decisions are either, to not take them, to waver and hem and haw, going back and forth (that's my most common failure mode), or to make them but flip back and forth too easily, not sticking to them, when new information and views become available, or to stick to them if they are wrong, even when clear counterfactual information becomes available. Also common is to make a gut decision up front, not keeping an open mind, and then only looking for supporting information, and dismissing counterfactuals.

Think about what kind of a decision you are dealing with. This is the best way to understand, what kind of heuristics you should apply to the process of taking them.

Is the decision unimportant, no matter which way it is taken? Ignore it.

Is the decision a unique situation that will not repeat, or is it something that is just the first of probably many similar situations? In the latter case, spend more time on thinking things through, and come up with a good general policy, that will save you from having to make the decision over and over on individual cases in the future.

Is the decision reversible, and will not commit you for the long term, or at huge cost? Then just pick something, and move on.

If you have to make decisions for a larger group, even if you are in a position of power, how do you ensure that the group will not silently undermine or sabotage the decision, that it does not only pay lip service to it?

How do you in a group bring out all the facts, how do you enable people

One way is to involve them as much as possible in the decision making process.

One of the main risks is that people are afraid to look stupid. Hence they tend to hold back their opinions, until a probable winning view can be seen, and then they pile into it.

There is often a divergence between power of position, and power of knowledge. Junior people are closer to the issues and technology and understand them better. Make sure they are heard. Everybody should voice opinions as equals, ignoring status. The process for decision making should be 1. Free discussion, looking at the problem from all perspectives, 2. a clear decision, even if not everyone can agree it is the right one, 3. full support by all, also those that did  not agree to implement it. If it turns out it was wrong, repeat. Take pains to frame the decision with utter clarity. Do not fudge to try and keep everyone happy by formulating it ambiguously.

Free discussion is the most difficult to achieve. People should express their view forcefully, but tend to hang back until they see a view winning, and then pile in to support it, to avoid being associated with a losing position. People are full of pride, ambition, fear, insecurity. People are afraid to stick their necks out. People are afraid of sounding dumb, and do not ask, when they do not understand. They are afraid to be vetoed or overruled and thus to lose face in front of their peers. (I might add, they are also afraid of coming across as spoilsports, of being accused of undermining a can-do spirit).

If sensitivities of two interest groups are involved, give both sides roughly equal representation in meetings to foster an even-handed decision.

Do not push for a decision prematurely, make sure you have heard and considered the real issues, rather than the superficial comments that often dominate the early stages of a meeting. Do not use authority to influence the exchange of views in any direction.

When all views and arguments have been brought out, when everything is heard, it is time to push for consensus. A decision has to be taken, even if no consensus can be found. A senior person with position authority must make a clear decision at that point.

To ratify a decision, listen to the alternatives and background, and reasons for the choice, and ask questions to probe the depth of information and thinking. If the final outcome is dramatically different from what people expect, make the announcement, adjourn so people have a chance to recover, then reconvene and solicit views, to help people accept and live with this outcome.

The important decisions, the ones that really matter are strategic. They are about finding out what the situation is, or changing it: on business objectives, organizational, affecting productivity, or about major capital-expenditure decisions. For these, the hard part is not problem solving, it is asking the right question. Few things are as dangerous as the right answer to the wrong question.

A decision should always be made at the lowest possible level, as close to the action as possible. It also should be made at the level where all that it impacts are considered. The first tells how far down it should be made, the second, how far down it can.

Once the decision has been made, it is essential that it be carried out. Nothing is as useless as the right answer that quietly disappears into the filing cabinet, or that is quietly sabotaged by the people supposed to carry it out. Decision-making has five phases:

1. Defining the problem

What courses of action are unacceptable and can be discarded, because of fundamental values, economic, moral, structural, cultural issues that cannot be touched? (quick-screen)
What is the critical factor that has to change before anything else can be done?
What will happen in time, if nothing is changed?
What could have been done or avoided, when the problem first appeared, that would have altered the present situation?
It the problem lack of or contradiction of objectives or organizational structure? Is it changes in the environment?

2. Analyzing the problem (finding the root cause of the problem)

Understand who must make the decision, who must be consulted and who informed:

i. What is the futurity of the decision — for how long into the future does it commit the company? How fast can it be reversed?
ii. What is the impact on other areas and functions — how much of the business does it affect?
iii. Does it affect fundamental values? What political, ethical, social questions have to be considered on that level?
iv. Is it a unique decision or is it recurrent? Does it only appear to be unique? The recurrent decision requires the establishment of a general rule, that is, a decision in principle. The rule needs maybe to be decided on a high level, but its application can then be done at a lower level. (This is like laws).

You will never have all the facts. Decisions must be made on incomplete knowledge. It usually is either impossible or too costly to get complete information.

3. Developing alternative solutions

We tend to see one solution and consider it the right if not the only one. Look for at least two or three alternative solutions. Do not just do the first thing that comes to mind. Alternative solutions are the only means to bring underlying assumptions out, and test if they are right. They are to only tool to force us to use our imaginations.

People who have to carry out the decision should always be involved in the work of developing the alternatives. All the typical creativity tools can be used here.

No action is a decision as valid as all other ones. Spell out the consequences that follow from a decision for no action.

4. Deciding upon the best solution

i. The decision should accomplish the desired end with minimum effort and disturbance. Don’t pick an Elephant gun to kill sparrows. What will give the most result for the least effort and disturbance? Often a 80% solution that is easily done is preferable to a vastly more resource-hungry 100% solution. (I combined here risk and effort.)
ii. Timing. Is urgent action needed, or long, continuous effort?
iii. Ability to implement. No decision can be better than the people who have to carry it out. It is well possible that the solution requires skill from people they do not possess today. Then the right course is to hire or train people to obtain this knowledge. The wrong decision may never be adopted because people and the competence to do what is right are lacking. If a solution requires more of people than they can give, they must learn to give more or be replaced by people who can. (How do you afford this? Often you are restricted by economical reasons to not do that?)

5. Converting the decision into effective action

Time spent on “selling” the solution is a waste. If the first steps were done right, it will sell itself by improving things. Also, what is right is determined by the nature of the problem. If people like it or not is quite irrelevant. They must be led to accept it, if they first like it or not.
To do so, remember the first law of rhetoric: present it to them in the language they speak and understand.

Biases

It is good to know about biases you have, courtesy of hardwiring by evolution for surviving as a hunter and gatherer in the wild, that may mislead your thinking when making decisions. There is a whole list

Tools

• Make a list of Pros and Cons
• Generate a second idea how to solve it. Brainstorm.  Do not go with the first thought you come up with, without at least looking for a non-obvious, better solution.
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