Getting the right things right: An intro to structured decision making

This article is based on a Yova-internal training.

If you're a knowledge worker, the quality of your work depends on the quality of the decisions you take. At Yova, we use a decision-making framework that can be applied to many situations in life. Are you ready to become a great decision maker?

How often are you faced with the choice of what to do with your day off? Hiking, swimming, or maybe visit that exhibition everyone's talking about?

Life is full of decisions and most of them have no serious negative consequences. However, with some decisions – whether professional or private – there is much at stake.

Why decision making is hard

Good news: The art of choosing wisely can be learned – unless you are like Indiana Jones. Then you are a natural.

Decision-making is a complex process which combines intuition and rational thinking. When deciding, we form opinions and choose actions via mental processes which are influenced by emotions and memories. There are different reasons why we find this difficult. Science revealed that with an increasing number of choices, every single one of them seems less attractive. We easily get overwhelmed if there is too much information to deal with.

Jellybeans and other decision making tools

There are a lot of interesting tools for decision making. The former US president Ronald Reagan for instance used to keep a jar of jellybeans on his desk. He offered them to visitors and decided what to think of them based on their jellybean choice. At Yova, we love jellybeans, but in day-to-day business we prefer other tools.

We are on a mission to turn hundreds of thousands of private investors into impact investors. As an agile tech firm in a highly dynamic market, taking good decisions and taking them fast is one of our most important jobs. 

Use Case: To learn, or not to learn…

So, for Yovis – as we call our team members at Yova – we promote a structured approach to making decisions. Our framework consists of 4 steps, which I will explain to you by using an example.

Imagine, you are an account manager for a firm that wants to enter the Chinese market. While you’ve been praised for your eloquent Oxford English, you’re painfully aware that you lack a core language skill to make the next career step within your company. You have no clue of Mandarin – apart from a feeling that it may be one of the more difficult languages in this world.

Grab your laptop or a pen and paper and let's have a look at this case “the Yova way”. You'll be able to take a decision after the following 4 steps.

These 4 steps will make it easier for you to sort out your thoughts and come to a decision.

Step 1: Turn a problem into a choice

In the first step, you will ask ourselves the following questions:

1.) What is the problem to solve?

2.) Why do you need to take a decision now? What do you need to know to take this decision?

3.) What options can you choose from? 

The third point – creating options to choose from – is a key step in solving any problem. Only choice makes problems actionable. Most problems cannot be solved until they are turned into a choice. The art of creating good options would merit a series of articles in its own right, so we’ll only brush over it here.

But first, we need to define the problem and the resulting choice. Clearly the problem here is, that you won`t get that promotion because you don`t speak Mandarin.

The consequent choice is whether you should learn Mandarin.

"Most problems cannot be solved until they are turned into a choice.”

In clarifying the choice, it helps to put this choice into context. Ask yourself the following questions: Why do you need to decide this now? What do you need to know to take this decision?

In our example you need to decide quickly, because you will need at least one year of intensive studying before you will have reached a proficient level. And your boss is going to promote someone over the next year.

So, time is running. What options can you choose from?

In our case you have two options:

A) Learn how to speak Mandarin.

B) Don't learn how to speak Mandarin.

In reality, you’d have more options. Eg “learn Mandarin later”. But we’ll keep things simple in this example.

Tip: This is what the first part of a framework for your process could look like. Writing down what's on your mind helps you organize your thoughts.

Step 2: Create assessment criteria

To make a good decision, you need to know what‘s at stake. Your assessment criteria should always consider:

· Benefit: What do you get out of it?

· Cost/Effort: What do you need to put into it?

· Risks: Uncertainties or things that could go wrong

You need to apply your assessment criteria to all the options you have identified. Apart from that, make sure that your criteria are measurable.

“You need to know what's at stake”

Sort your thoughts by

1.) writing a list of pros and cons

2.) using WWHTBT criteria (“W criteria”)

Now, you might wonder what WWHTBT stands for. “What Would Have To Be True” for an option to work. WWHTBT criteria add another dimension to your assessment. To avoid fractured tongues, let's just call them "W criteria". The “W criteria'' often work better than pros and cons. Simply, because it‘s easier to discuss them.

W criteria are hypotheses – nobody has to defend their ?truth“ here. And just as important: Often it‘s unclear what you need to consider. WWHTBT helps you pinpoint your criteria. Besides that the question “what would have to be true” makes it easier for most people to really “feel” the consequences of a decision as well as the scenario in which it would play out well. 

In our example the most important “What Would Have To Be True” for option A to work is:

The resources you spend (time and money) are more than compensated for by the promotion (and the accompanying salary raise) plus the joy of learning something new and being able to small talk with more than a billion people.

Step 3: Assess your options and increase your confidence

Let's assume that you will have to study Mandarin for 2 hours every day for a year until you reach the level you need. Additionally, for one year you will get lessons from a private teacher once a week for one hour (CHF 60/h).

Is it worth the effort? Let's have a look at your benefits.

If you learn Mandarin, your chances of getting a promotion are increased. The new job might pay CHF 1,000 per month extra. At the same time, you can achieve self-fulfillment and do a job that challenges you and that you enjoy.

If possible, create a small cost-benefit calculation.

At first glance, the assessment seems clear, however there are some more factors to be considered.

If you list all your findings in a table, it looks like this:

Write up your pros and cons down.

In a next step, you can additionally complete your table with the W-criteria.

Assess all criteria for their truth (true, probably true, unclear) and identify actions to increase your confidence where needed.

Step 4: Pick a winner

We have collected a lot of information and organized it. Now, are we ready to decide? The entire process has led to two findings. 

1. Given the fact that learning Mandarin comes with professional opportunities regardless of your current job, you should take the risk and acquire the skill during the next year.

2. At best you'll get a promotion and a raise, at worst it doesn't work out. In any case, you would have still learned something for life.

Of course this is a very personal decision. So your own assessment may differ.

Keep a bias to action! Just do it

"Always keep a bias to action. If you are unsure, pick your best bet and make your move! "

Even with structured decision making, many decisions will not have a clear path emerging. Have you ever felt overwhelmed and been so absorbed in an analysis that you just got stuck? More details and insights just seemed to make things more difficult?

This happens to many ambitious decision makers!

This is why it is incredibly important to always keep a bias to action. If you are unsure, pick your best bet and make your move!

Leave theory and analysis behind and jump into the turmoil of empirics. Because a wrong decision can help you learn and correct your path. An untaken decision takes you nowhere.

Now, train your decision-making muscle

Making decisions is tough, but as is often the case, practice makes perfect. The Yova framework helps you structure the decision-making process so that you can organise your thoughts and arrive at an evidence-based decision. Convinced? Good! Then, let's take better decisions. 

Sources:

• Gregory, R. & Failing, L. & Harstone, M. & Long, G. & McDaniels, T. & Ohlson, D. (2012). Structured Decision Making. A Practical Guide to Environmental Management Choices. Chichester West Sussex: John Wiley & Sons, Ltd.
• Guo, K. & Liu, S. (2019). Fundamentals of Error Theory. Applications in Decision Making. Cham: Springer Nature Switzerland AG.
• Boutang, J. & De Lara, M. (2016). The Biased Mind. How Evolution Shaped Our Psychology. Cham: Springer International Publishing Switzerland.
• Lafley, A.G.; Lafley, A. G.; Lafley, A.G.; Martin, Roger L.; Martin, Roger; Martin, Roger L.. Playing to Win (p. 187). Harvard Business Review Press. Kindle Edition.