Not all decisions require a high level of rigor.\u00a0Fundamentally, the amount of time and effort invested in making a decision should be contingent on the risk of making the wrong choice and whether the consensus of other stakeholders is needed to move forward. In situations where the threat of making a poor choice is relatively low and others involved are aligned on the best alternative, the gut feel approach may be appropriate. \u00a0Gut feel is probably enough when choosing which brand of peanut butter or how to spend a Sunday afternoon.<\/p>\n\n\n\n
However, a more systematic approach to decision-making is needed for any high-impact decision where the risk of making the wrong choice is serious, or when its necessary to consider other people with differing views on the best choice. \u00a0Acting on gut feel when deciding a new strategic direction or choosing someone to hire, for example, may fail to properly evaluate alternatives and fairly consider all individual and organizational objectives.<\/p>\n\n\n\n
Too often, people dive headfirst into talking about the alternatives they have in mind before they\u2019re even clear on what they want out of the decision, let alone why they\u2019re making it.\u00a0 Typically, this is evidenced by what seem to be binary or \u201ceither\/or\u201d decisions.\u00a0 For instance, suppose someone is in the market for a new car and they\u2019re wondering whether they should go with an Acura TLX or Infiniti Q50.\u00a0 While both are solid choices, a question I would ask is, why just consider those two?\u00a0 Now, perhaps this person has already done their due diligence on this, and these truly are their top two car alternatives \u2013 fair enough.\u00a0 Nonetheless, what are the chances there\u2019s still another car competitor they haven\u2019t considered that\u2019d turn out to be just as good for this person, if not ultimately better, than the current two alternatives?\u00a0 What is it about both those vehicles that scream, \u201cthey\u2019re the ones\u201d?\u00a0 Moreover, has this person arrived at the TLX and Q50 out of a careful consideration of what\u2019s important to them in choosing the right vehicle, or are they emotionally smitten by a laundry list of flashy features causing them to act impulsively?<\/p>\n\n\n\n
When making a complex or costly decision, best practice is to initially avoid thinking about alternatives and focus instead on clarifying the fundamental purpose of the choice to be made and the objectives that will influence the outcome.\u00a0 This serves to minimize decision-making bias and maximize the odds of making an overall, fair, well-balanced choice, that doesn\u2019t end in \u201cbuyer\u2019s remorse.\u201d In the car example above, what does this person ultimately wish to have?\u00a0 For example, the \u201cfundamental purpose\u201d isn\u2019t to have an Acura or Infiniti, but to \u201cchoose a 4-door luxury sedan to finance\u201d of which an Acura and Infiniti comprise two, very decent alternatives.\u00a0 The benefit of framing the decision in this way is to focus on the primary outcome without prematurely filtering options to consider and encourage \u201cout of the box\u201d thinking that includes a range of viable alternatives.<\/p>\n\n\n\n
With the fundamental purpose clear, stakeholders should then brainstorm a list of objectives \u2013 what they need and want from the \u201cideal\u201d choice \u2013 aligning around what I think of as the Four Rs of rational decision-making:\u00a0 Results \u2013 Resources \u2013 Restrictions \u2013 and Risks.<\/p>\n\n\n\n
Decisions are all about results.\u00a0 At the heart of it, we make decisions because current conditions no longer satisfy expectations.\u00a0 The implication of being in the market for a car is that my vehicle situation no longer meets my needs, whether because I no longer have viable transportation, my car got totaled, my lease expired or I\u2019m just not happy with my car anymore.\u00a0 What will it take to satisfy expectations and ensure happiness with the outcome, both now and later?\u00a0 What are the short-term benefits, and what will keep us satisfied that we made the right choice in the long-term?<\/p>\n\n\n\n
\u201cMy amazing vehicle ended up falling short of my long-term expectations because I neglected to consider why I was investing in the car and acted out of gut feel\u201d \u2013 sound familiar? <\/p>\n\n\n\n
In our experience, many people focus too heavily on what they want now.\u00a0 They make an impetuous decision without considering something they\u2019ll still want down the road.\u00a0 To give a personal example, years ago (before learning KT Decision Analysis, of course) I bought a sports car.\u00a0 Admittedly, I acted on total emotion; at the time, my buddy was leasing a similar sports car, and I wanted to rival what he had without copying.\u00a0 At first, this car was great \u2013 it was flashy, nimble, fast and made me feel good driving it.\u00a0 Then, as the months went by, I grew unhappy with a few things.\u00a0 My monthly lease payments were expensive.\u00a0 My car insurance went up.\u00a0 A tank of gas didn\u2019t last for very long and it was premium only.\u00a0 My lease didn\u2019t include enough miles for how far I\u2019d be driving and, moreover, the seats just weren\u2019t comfortable.\u00a0 I had buyer\u2019s remorse.\u00a0 My amazing vehicle ended up falling short of my long-term expectations because I neglected to consider why I was investing in the car and acted out of gut feel.\u00a0 Had I considered objectives like \u201cmaximizes driving comfort\u201d, \u201cmaximizes fuel economy,\u201d \u201cminimizes my monthly payment,\u201d as well as \u201cfeels good to drive,\u201d perhaps I would have considered better choices.<\/p>\n\n\n\n
There is a big difference between what we\u2019d like to have out of a decision, as opposed to what\u2019s truly required.\u00a0 By setting objectives with clear measures of the results we want to achieve, we can make reasoned choices. A discussion around objectives is great for maximizing team collaboration and having meaningful discussions rather than simply arguing why one alternative is better than someone else\u2019s. \u00a0Objectives that must be achieved (MUSTs) are enhanced by objectives that are desirable and allow alternatives to be compared (WANTs). \u00a0With objectives it becomes easier to eliminate poor choices that fail to deliver the results you need and to focus on which alternatives will deliver the most ROI.<\/p>\n\n\n\n
Generally, nobody ever works with unlimited time and resources, so the sky is seldom the limit when making a choice.\u00a0 What resources, such as costs and time spent, can be saved or spent in your decision-making process and how do available resources influence your choice? \u00a0Some decisions may be yours alone and involve little to no costs, while others will require input from a variety of perspectives and considerable expense \u2013 not just from a financial standpoint.<\/p>\n\n\n\n
A complex decision may require examination of a large amount of information and involve the judgment of many people. \u00a0Hiring may involve the expense of headhunters and the involvement of HR and management. \u00a0Choosing a new business location may require extensive travel. \u00a0Large capital expenditures involve significant budget and financial inputs. \u00a0When selecting a corrective action for a problem, it may be important to minimize the number of engineers involved in getting the fix in place, so other priorities aren\u2019t impacted.\u00a0 Restrictions to available resources can affect possible alternatives, how decisions are made and by whom, so the question is:\u00a0 What are we prepared to save, spend or give up, in order to make a choice?<\/p>\n\n\n\n
Often, there are certain thresholds that decisions must meet.\u00a0 Sometimes, these are factors beyond our control that are indisputably levied by regulatory bodies and company policy, as in quality guidelines defined by the FDA.\u00a0 In other cases, they\u2019re more subjective and imposed at the behest of the decision-maker, as in a car buyer declaring they will not consider putting more than $2,000 down on a car, else they\u2019ll walk away.\u00a0 The value of these objectives is to eliminate flat out poor choices from consideration; those that fail to meet certain basic standards.\u00a0 Nonetheless, there\u2019s danger in having too many restrictions in that you may quickly run out of available choices to consider. Where the quest for perfection becomes the enemy of good enough.<\/p>\n\n\n\n
Pressure check any restrictions to verify that they answer these three questions:\u00a0 Are they truly mandatory in that we will walk away from something if it doesn\u2019t 100% meet the objective?\u00a0 If mandatory, is there a clear limit that must be achieved?\u00a0 If there\u2019s a clear limit, is the restriction legitimately realistic and can it be achieved?\u00a0 If \u201cno\u201d to any of those three questions, avoid labeling something a \u201cmust have\u201d and don\u2019t use it as criteria for sending something packing.<\/p>\n\n\n\n
The first Three Rs identify what we truly \u201cmust\u201d have versus what we simply \u201cwant\u201d to have so that we can consider all viable alternatives, eliminate those that won\u2019t succeed and narrow down those that will give us the most benefit.\u00a0 However, at the point we have identified the best alternatives, at minimum, we need to identify the presence of risks \u2013 where\/how each alternative could fail during implementation to deliver on results.<\/p>\n\n\n\n