Five Essential Steps to increase Confidence in Decision Making

Making quality decisions consistently can increase the number of good outcomes. Those of us familiar with James Clear’s Atomic Habits concepts, might consider what I recommend below a “system” for making good decisions.

There are many variables and unknowns in every decision, therefore, it’s impossible to guarantee good outcomes.? For example, one can decide to drink and drive or decide not to drink and drive.? In both cases, due to uncontrolled variables and unknowns, each decision can lead to safely arriving home or being in an accident.

The advantage to improving our “system” of decision making is one, to increase confidence in our decisions and two, to increase the number of good outcomes by recognizing mental biases (gut decisions) and doing a little research.

Step 1 is to create a sentence or two called the Statement.? It can be any type of Statement, for example an opportunity statement or a problem statement.?

An opportunity statement might look like this:

·?????? How can I identify the ideal next opportunity for me within a Houston- based company that aligns with my values?

A problem statement might look like this:

·?????? How can I identify future employers that are not a good fit for me?

The Statement helps narrow the focus, define the situation, and define the desired outcome.

Following is an example of an opportunity statement and a better opportunity statement. From this example, we see the importance of being specific.

Step 2 is to list the requirements. ?

Just as we paused to refine our Statement to focus on a more satisfying dining experience, the same principle applies to requirements.?

‘Requirements’ essentially reflect what truly matters. ?Sometimes we are keenly aware of what we care about and sometimes it’s a bit fuzzy.?

One way to dig deeper is to seek insights from those who’ve made similar decisions. By understanding their successes and missteps, we uncover blind spots we might have otherwise missed. Our own perspective might not encompass every detail.? The more comprehensive our requirements, the better our outcomes.??

Simple Example of Missed Requirements

A salesperson approached the Hotel Concierge seeking an upscale restaurant recommendation for an important client dinner. The outcome of this seemingly straightforward scenario held a valuable lesson: the power of precise problem-solving and decision-making.

Only during dinner did it become evident an opportunity was missed. The outcome that truly mattered to the salesperson was to continue critical conversation to conclude a business contract.

While the restaurant was beautiful, and the food was delicious, no one could hear each other well because of poor acoustics. To delve a little deeper, to be more specific about our requirements, can lead to what truly matters and better results.

A good way to get clarity about what matters is to rank and assign weights to our requirements. This provides a strong up-front foundation which prevents wavering as various alternatives present themselves.

Let’s take the example of interviewing for a new position.? We want a strong foundation in what matters to avoid being swayed by the “nicest recruiter” who makes us “feel” like we want to work for that company.? We will ask the right questions and feel more confident in our final decision.

Step 3 is to list alternatives.

Navigating Step 3 of decision-making can often lead to a phenomenon known as Decision Fatigue. The process of listing alternative solutions can appear daunting. Our predispositions often lead us to conclusions before we’ve researched other options. This step seems tedious because we wonder why we should spend extra energy looking at other possibilities. Why not opt for the familiar and known. Or opt ?for the one new alternative immediately before us. ?These new, unknown alternatives are likely presented by someone trying to sell us something.?

We often lean towards forming assumptions and making decisions based on our past experiences or received information, rather than engaging in the necessary groundwork to learn.

The Rational decision-making process, designed for optimum outcomes, calls for the mental strength to remain curious even in uncertainty. In a state of indecision, without a known, clear way forward, all of us are tempted to take shortcuts.

Researching alternatives takes energy. If we make decisions based on what we already know, we don’t need to learn, but we risk outcomes similar to what we’ve always experienced.

However, when approached with a clear understanding of what truly matters, we can be energized to think about new alternatives, some we possibly never imagined. We might consult those who already have specialized knowledge or use AI prompts for our research. This groundwork can lead to new information and potentially surprising, positive breakthroughs in our career and business strategies.

If we research with a clear understanding of what we care about, we begin to experience a momentum where one idea leads to another which leads to another. ?We may decide on an alternative solution that never would have occurred to us within our normal biases.

As we move into Step 4, evaluating our alternatives against our foundation of initial requirements, the importance of this step-by-step approach becomes evident. ?

This next step can be easy and simply administrative. We’re on the downhill slope as far as mental stretch work goes. We simply take the alternatives we’ve listed and understand how each alternative rates when considering each requirement we’ve listed.?

It might a little math if we are looking for returns on investment, salary and compensation packages, etc… but for the most part it’s a subjective rating of the facts we’ve gathered about each alternative as it relates to a single requirement.??

In complex industries, like oil and gas exploration, this step can get involved with decision trees and monte carlo simulations.? But in most business or personal decisions, it’s less complex to evaluate each alternative against the initial requirements.??

An alternative to the Rational decision process is called the Bounded Rational decision process. This is designed to be quicker because we find one alternative at a time and evaluate against our initial requirements. ?At the first alternative we find that meets the requirements, we stop looking for alternatives.

This Bounded Rational decision-making process shortcuts alternative research. This process takes advantage of our biases and easy to access knowledge.? We evaluate the first alternative that seems reasonable against the requirements.? If this alternative meets the requirements, we are done! We move to the decide and commit step.

The downside to this approach is that it generally causes us to bypass innovation and or first mover advantage. It’s important to weigh the pros and cons of each decision process as it relates to a situation to choose the best approach.

Many times, if we have listed our requirements carefully, there may be no advantage in looking for an alternative that is new to us. During either the Rational or Bounded Rational evaluation process, we are more clear about what truly matters. ?We can also stop the decision process to accept an alternative that only partially provides the outcome we are seeking because we know what truly matters and can manage expectations about results.

The Final Step 5 is to Decide and Commit

This step may seem obvious, but it’s a game-changer. It’s about getting everyone on board. It’s the foundation for successful changes when we implement our decision. ?It’s especially important that all key stakeholders are on the same page, understand the tradeoffs we had to make as it relates to what we care about, and agree to support the alternative chosen.? Without this agreement, the obstacles to successful implementation of change are many.?

Some people think Change Management techniques begin after decisions are made and change is implemented.? It’s actually more difficult and sometimes impossible to successfully manage change at that point. The best process is to include key stakeholders in the decision process, with a seat at the table, to participate in the ranking and weights assigned to the requirements, and the evaluation of alternatives.? As a result they typically fully support, or at a minimum can live with, the decision and help evangelize the subsequent change.

A Third Decision process is Intuitive, "Trusting Your Gut!"

Intuitive decisions are typically made during emergencies when there is no time to follow the Rational or Bounded Rational decision process.? The best example is a Paramedic or ER staff.? With expert knowledge and experience, we can skip requirements, listing and evaluating alternatives and go directly to decide and commit.?

The risk in these instances is the depth and breadth of the expert knowledge and experience.? If the depth and breadth is low, the risks and probability of unfavorable outcomes are high. There’s also the matter of motivation, beware if an expert’s agenda leans toward a sale, as their advice might be skewed. ??

When I observe Intuitive Decision making in non-emergency situations, decisions are typically made with human bias and tend to be irrational with unexpected and unwanted surprises as part of the outcomes.? It also causes conflicts within organizations because change needs support to be successful.? It’s hard to support change without an understanding of the rationale for the change.

In non-emergency decisions, wise and successful leaders, with deep and broad expert knowledge and experience, forgo the intuitive decision process, respect the rational decision process, and make their thinking visible by writing down all the steps listed above.

The final step is to decide and commit. Change depends on commitment, in teams or as an individual. ??No looking back.? We pull together and make it work. ?With decisions grounded in what truly matters and researched alternatives with factual evaluation, we are confident and move forward with strength and synergy.

Companies with high maturity levels in decision making and organizational change will also measure and document the outcomes for each major decision. Watching the “scores” of our decisions helps us discuss and improve the decision process.? We celebrate what we did right and improve on what we missed in our requirements, our alternatives, and our evaluation of the alternatives.?

Below is an easy matrix to use to document the ranking and weighting of requirements, and the rating of the alternatives against the requirements.

From the picture above, you can see that High ROI weighs twice as much as the quickest solution.

In the intersection of the alternative and the requirement is a place to make a note to remind us of what we discovered about how the alternative addresses that specific requirement.?

We can then rate each alternative with 10 being the alternative that meets the requirement the best and rating the other alternatives relationally.?

Notice the Type column.? There are some non-negotiables.? In this example, the solution must cost less than $15M.? Both alternative 1 and 2 come under that estimated cost.? However, if an alternative was over $15M it would be a NOGO.? No need to evaluate further.? The research for alternatives is more efficient when we can eliminate certain alternatives based on these MUSTS.?

Also notice that the overall score of alternative 2 is higher than alternative 1.? In many cases, when I facilitate groups through this decision process, the final decision maker chooses an alternative without the highest score. ?

The process still works because of the clarity of the requirements, the breadth of the alternatives, and the facts gathered.? The process is a way for leaders to delegate and direct decision work, see the results and rationale and make better final decisions.? In all instances, the one accountable for the outcomes of the decision has the prerogative to choose the alternative regardless of the final score.

In summary, the first decision we want to make is what approach we want to take in making our decisions. The above processes are not exhaustive for decision making.? For example, in some situations we might use a pair-wise analysis technique.? This is used at times to decide the order of steps we need to take.? But the decision steps listed above can bring clarity to many types of decisions, including which company’s job offer to accept.

Being aware of the pros and cons of Rational, Bounded Rational, and Intuitive decision making helps us define the steps we need to take.? For example, if we decide speed is of the essence, we can use the intuitive process to understand the risks.? If our outcomes are not ideal, we have confidence that we did the best we could based on our process.??

It allows us to understand why we choose what we choose. When we document the information walking through the process, it lessens the “second guessing” later on.

I encourage all of us to stop and think a bit to be aware of? which process fits our important decisions best. There’s incredible value when over time, as we follow this “system” we can feel more confident about our decisions.? We can also be more realistic and committed to our outcomes and the resulting change because we are more thoughtful and understand the tradeoffs we made and how they impacted our outcomes. Try this process and let me know how it goes for you. ?

If you need support facilitating an important decision personally or in your organization, I'm available on a contract basis. Many times, it's beneficial to have a neutral facilitator, especially when the stakes are high.

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