Friday, 22 April 2016

How to make good decisions, all the time!

Decisions are the processes we pass through to make choices. We do them everyday. Often a lot of people make mistakes with their decisions. Unfortunately, some mistakes earn the maker terrible consequences.

We would never mind making mistakes in small decisions, such as not taking an umbrella with you on a rainy day. But when we make decision mistakes that costs us a lot, it is painful. Such can be buying a stock that lost 90% value in just 1 month of sale. Or, hiring the wrong sales manager to lead the sales team of the company.

Suppose you are able to make less of wrong decisions every time you're faced with a choice in your business, how would you enjoy that? Great I know. Everyone wants to be perfect or atleast get a better hang of something.

Making good decisions has been on my mind lately. Hence, I researched a bit and thought long about it.

First here’s what I learned about the best decision-makers:

they rely on instinct
they have a formula for processing or validating choices before making decisions
they have a mentor they turn to when push comes to shove
they are extremely analytical when they need to be
they find a way to do mini-tests
We can reduce all those traits by saying:

They rely on instinct or gut feelings to make decisions, yet
They are analytical and follow a thinking process when they need to be
Gut or Instinct

Animals act with instinct 99.99% of the time. It is a fixed way of acting or responding to a stimuli. The birds for example build their nests instinctively. Ants gather food in the summer instinctively. Their minds are just wired that way and there is no deviation. It turns out that 99% of the time, they make the best decisions.

Similarly, when we make decisions out of gut feeling, we are often right. Yes, often right. You know why? Because buried inside you are facts and reasons for the decisions you need to make. You can look at it this way: there’s a quiet little voice inside of you that often says the right thing. Yet, there’s another louder, shouting voice that tries to trump the little voice. That louder voice wants things done more methodically and likes a long process. It is as though the louder voice is saying: “common shut up thats a weird decision and besides won’t you need to confirm it first or think it through? Now, here’s a saner decision to make and this is the process… see, I told you.” Then the little voice goes totally quiet.

Managers must learn how to listen to the little voice inside of them. But as with with any skill, you need to train yourself to be better at making instinctive decisions that are right. You have to do this over many years to become better at it. Yet, you need to have developed a process inside of you for quickly validating your instinct. This can be two questions that you have found useful and apply in many situations. Ask yourself these questions to validate your instinctive decision. Or, those two questions could lead you to a decision. So this could be in two ways; working to the answer or working backwards from the answer.

I read somewhere (?) that Indians are good at this type of decision making than people from the west. If so, it will worth your while to study their decision making process and follow such.

The benefits of making decisions from your guts outweigh the long methodical approach. It shortens decision time, you truly solve a problem.

Care must be used when making gut or instinctive decisions though. You must not let your emotions get the better of you. Emotions are decision crushers. If you let your emotions mix with your gut feeling, you will hardly make the right decision. Let’s give a clear and straightforward example. You have a national sales manager and your sales have dipped tremendously in the last 2 - 3 quarters. With many of the external conditions constant, your gut feeling says fire the Manager and poach a great star in a small but performing company. You thought: I know the manager is passing through some problems right now, so let me coach him or give him some time. It happens that the manager is your brother. In this case your emotion is getting a better hang of you and preventing you from hearing the little voice. Now that louder voice will kick in and say: why don’t you do more analysis and determine if you can provide a support manager for his role and also help him with his problems as you better understand them and also send him to harvard for an executive management program and also visit him at home to show you care and also …”. There the voice goes on and on.


In recent times, management gurus have come up with a lot of tedious and winding ways of reaching a decision. The advent of technology too has contributed to this. So, the following procedure takes place:

Gather data in many ways of interaction that the company has with its stakeholders. Nowadays this is 'Big Data'. This data gathering process involves using technology tools to capture interactions from frontline people, the website and some other many ways.
Based on the data obtained, synthesis is done to arrive at a clear information of what the data is saying. More like an aggregation of the data to make sense of it all.
Once the information is obtained, knowledge kicks in. The manager now knows what is popular or going on and can then be said to be informed
With knowledge of what is going on, the manager now makes a decision.
This process has now become the new normal for making decisions today. While it is logical and sensible, it has some serious flaws for certain kind of decisions. For example, if you’re a technology company and innovation is a corporate KPI, you are unlikely to be truly innovative since people will always want a faster horse if you’ve always built a horse than they would a car.

Another problem with this approach is that it can take a long time to arrive at a decision. This is the reason why we call big companies bureaucratic. They want all the information and have knowledge before acting. That takes months if not years to do. Some corporate CEOs operate like startup entrepreneurs and make faster decisions through gut feeling. They leave room for improvement or changes and tweak as they move on.

But, there is nothing wrong with the 'analytic' process in general. It is a great way of obtaining a deeper understanding of what is going on and acting accordingly. To the manager who has trained himself to make instinctive decisions, the ‘analytical’ approach is a way to validate his gut feeling.

Next time you have a decision to make, first ask yourself: what did my guts say. Formulate two or three questions to validate your gut feeling. If you have some time, conduct a mini analysis to also validate or disprove your guts. If you do this many times over for many years, you will be a better decision-maker and will tremendously lower your errors.

Culled from Tayo Gbenro.

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