Not WHAT you decide, but HOW.
In a prior post, we discussed how refusing to step away from the problem is like handcuffing our minds, forcing us to run into a brick wall time after time. Now let's explore how to free your mind by infusing three key ingredients to your problem solving and decision-making framework.
A quick note on decision-making... The ability to decide is decidedly a skill. It combines the ability to consider economics (production, price, utility) with psychology (hypothesis, bias, incentives) to form a solution. There is a lot to explore here and for those interested in optimal solutions, Google "bounded rationality".
If there is a skill behind decision-making, then there is also a need to formalize decision-making. We operate relatively automatically in many tasks - from our wake up routine, to driving to the grocery store. These tasks can be done without direction and without much concern of "am I doing this right". On the other hand, decision-making is not automatic, and is rife with ego, bias, and false tradeoffs.
Without a structure by which we decide, we are likely to fall into an easy trap (you know the common cognitive biases). In increasingly complex situations, we need a powerful decision-making model. One that doesn't break down because of bias, but one that is built on research.
Here are the three key ingredients to insert into yours:
- Build In Allocentricity - in an egocentric world, not only can we be overly focused on what is good for you as an individual, but we are at times only understanding the world through ourselves. Allocentrism suggests that we should think of our decisions as a series of interdependencies. Just as we should remove egocentric decisions, we should create a connection to environmental, social, and corporate-governance (ESG) to understand the connectedness of our decisions to the world around us. We need to step outside of ourselves and evaluate our decisions from the point of view of our employees, leaders, customers, shareholders, AND our communities. One quick way to implement allocentricity in decision-making: assign roles and have your leaders take the perspective of each of the groups just listed above. Go beyond the devil's advocate and put your community stakeholders right in the room with you.
- Break Through Regression - if there is one thing to learn from regressing to the mean, it is that trends are more important than a single data point. However, when we create trends, biases often get in the way. Here's an experiment - what are the odds of rolling a snake eyes (two ones on two dice) just once? How about those odds after you've just rolled two snake eyes? They're the same without conditional probability (2.7%)! One tool you may be aware of is your heuristics (shortcuts) to support fast decision-making. They can let us down when we over-index on single drivers of historical success. They struggle to operate in a probabilistic world. So, we need to break through regressing to the mean, and hack our mind to avoid the correlation vs. causation trick. One quick way to implement the break through is to create nudges or decision architecture that forces a mind hack. An example of this is to explicitly call out assumptions that lack correlation (and can be assumed to be causation) rather than tucking them neatly away at the bottom of slides. Read Daniel Kahneman's work for more thoughts on regression.
- Bring a bit of Satisficing - if our goal is to reduce pollution then why is increasing MPG our measurement of vehicle efficiency? MPG doesn't neatly relate to how we use our vehicles or how we pay for fuel. A useful metric would be Gallons per 100 miles. For those interested... Google "MPG Illusion". We are notably bad at predicting the future, but quite good at creating illusions for ourselves. I mentioned bounded rationality and we can go into quite a deep rabbit hole with the (un)rational actor within us - but the important detail here is that we tend to be very poor at creating fundamental models for deciding and maximizing benefit. Rather than introduce models that are perfect, we can be pragmatic, "satisfice", and introduce solutions that are just as good without waiting for perfect. One quick way to introduce satisficing decision-making is to identify early the goals you're seeking with a threshold of success and select the first solution that meets a threshold of success (vs. the traditional model of trying to create an optimization of every criteria). This threshold solutioning is powerful AND fast!
That was dense, but the ingredients are simple, so, the next time you're deciding, consider ... have we removed egotism and created connection to community? ... have we actively debiased and employed nudges to solve effectively? ... have we defined our criteria threshold and are we willing to act rapidly once the threshold is met?
My goal is to illuminate opportunity for unifying experiences. I would love to hear what model you use to solve your most complex and challenging decisions.
[1] Rational Choice in an Uncertain World: The Psychology of Judgment and Decision Making by Reid Hastie and Robyn Dawes
[2] The MPG illusion. Larrick & Soll
[3] Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard Thaler and Cass Sunstein