Have you ever wondered what makes a good decisionmaker? How can you tell if you’re one?
In life, we’re frequently confronted with decisions. Some decisions may be benign, like choosing what to order for lunch. In contrast, others might have more significant consequences, like choosing to lay off workers or the decision to acquire another company. We often look to C-levels as decisionmaking experts because of their experience, leadership, and vision. But the truth is, even these ‘experts’ make poor decisions – and much more frequently than you’d expect. And though your daily decision to buy a cheeseburger and a large fries for lunch might impact your waistline if chosen too often, poor decisions made in business can have a much broader, far-reaching impact.
The good news is that anyone, from C-levels to student interns, can improve their decisionmaking skills by becoming aware of the sneaky saboteurs that cloud our judgment. In this article, we’ll discuss what authors Chip and Dan Heath coin “villains of decisionmaking” in their best-selling book Decisive and how you can equip yourself with the tools you need to make better decisions.
You Think Your Options are Limited
Whether we realize it or not, we often set ourselves up to make poor decisions by approaching a dilemma with a limited point of view. If you’ve ever found yourself in a scenario asking if you “should do this OR that,” then you, too, have been a victim of narrow framing. Narrow framing, according to Chip and Dan Heath, “is the tendency to define our choices too narrowly, to see them in binary terms.”
For example, “Should I take this higher salary job, sell my house, and move to a new city, or stay at my current job in the city where all my friends and family live?”
Depending on where you are coming from, you might think ‘take the job’ or ‘keep the house,’ when the question you should be asking yourself is, “How can I earn more money and grow my career without having to move to a new city for work?”
By reframing the question, several new options may emerge. Perhaps the new employer would accept a remote-first arrangement with monthly in-office visits. Or, you ask your current employer to counter-offer, knowing that you’ll accept a lower salary increase if it allows you to stay where you are. Or, more boldly, you decide to start your own business so you can set your hours and salary.
The antidote to narrow framing:
The only way to avoid a narrow frame is to widen your options. Much like horses are sometimes outfitted with blinders to prevent them from seeing to the rear or the side, we often limit our own decisionmaking. The first step in learning how to widen your options is to distrust “whether or not decisions” (whether or not I take the new job or stay at my current one). If you see yourself falling into the “whether or not” trap, that’s a sign that you need to widen your options.
So, how do you do that? There are a couple of methods you can try. First, evaluate the decision’s opportunity cost. Ask yourself, What am I giving up by making this choice? What else could I do with this (time, money, etc.)?
Another method is to apply the vanishing options test. Imagine that neither of your options (the new job offer or staying in your current job) were available. What would you do instead? How you answer can reveal important options you might not have considered otherwise.
Your Method for Gathering Support is Flawed
Despite our best efforts, most of us encounter biases in our decisionmaking. One of the most pernicious biases in decisionmaking is often well-intended: confirmation bias. Confirmation bias is the act of searching for evidence that supports our way of thinking. Sometimes, this is intentional, but often, even well-meaning decisionmakers can listen to persuasive arguments curated for their ears or make choices based on evidence that aligns with their beliefs.
Dan Lovallo, a professor at the University of Sydney, and Olivier Sibony, former director of McKinsey & Company, analyzed 1,048 business decisions over five years to determine both how the decisions were made and the outcomes regarding revenue, profits, and market share as a result of those decisions. The researchers found that the decisionmaking process was six times more successful in leading to better outcomes than analysis alone – due in part to confirmation bias.
“Confirmation bias is probably the biggest problem in business because even the most sophisticated people get it wrong,” shared Lovallo. “People go out, and they’re collecting the data, and they don’t realize they’re cooking the books.” (Heath and Heath 2013)
The antidote to confirmation bias:
• First, ask neutral questions. Whether asking colleagues’ opinions or drafting a customer survey to perform market research, use netural language to avoid sabotaging your feedback.
•Take on (or assign someone) the role of devil’s advocate and debate the issue. If you want to up the ante, take a page out of the Netflix playbook and “try having people argue the opposing side, poking holes in their own position.” (McCord 2018)
You’re Falling Prey to Groupthink
Groupthink is another cognitive bias preventing business leaders from getting honest thoughts and opinions from employees. According to a definition by Psychology Today, “Groupthink is a phenomenon that occurs when a group of well-intentioned people makes irrational or non-optimal decisions spurred by the urge to conform or the belief that dissent is impossible.”
It’s easy to think of ourselves as rebels immune to groupthink, but that’s not often the case.
Picture this scenario: you’re in a meeting discussing budget issues when a colleague suggests that the company should provide catered lunches every Friday because it will improve employee morale. You know the state of the company’s finances and understand that a catered meal for 100 people every Friday is an unnecessary and frivolous expense outside the annual budget. As soon as your colleague has finished, the CEO says, “That’s a great idea; I think we should do it.” Your other colleagues follow suit and support the CEO’s position. A victim of groupthink would say nothing and prefer silent consensus to group objection.
The antidote to groupthink:
Groupthink is particularly dangerous in situations like this when primary decisionmakers answer first. Because they’re viewed as experts who ‘know’ more than other leaders or employees, the perspective of the primary decisionmaker can unknowingly sway the rest of the group simply by responding as an authority figure.
Instead, if you’re a decisionmaker and want honest feedback, share your opinion last. Similarly, if you get feedback from other dominating speakers first, you may still fall prey to groupthink! Instead, ask for the views of individuals who are typically less vocal or less opinionated to gather competing perspectives.
Temporary Emotions Often Clouds Your Vision
Emotion is one of the core characteristics that make us human, but in decisionmaking, it is usually seen as a liability. Whether it’s pride, compassion, guilt, or greed, any number of emotions may arise when making a difficult business decision. Often, pros and cons lists are utilized to try to ‘balance out the logic.’ And though pros and cons lists can be helpful for visualizing the benefits and the disadvantages, it doesn’t solve the core issue: internal conflict.
When emotions cloud our decisionmaking, it’s rarely because we lack information or options. The difficulty arises because we feel conflicted; it means we’re too close to the situation or too involved. Simply put, “we can’t see the forest through the trees.”
But in business and life, you can’t simply assign complex decisionmaking to someone else. So what can you do instead?
The antidote to short-term emotion:
The 10-10-10 principle is a tactic for gaining distance when short-term emotion impacts decisionmaking. The idea is to view a decision ten minutes, ten months, and ten years after it is made.
For example, maybe you’re at a restaurant, and you’ve just finished eating a delicious dinner. You are full and don’t need any more food, but you want something sweet to cleanse your palate. Short-term emotion might say, “Yes!” when the waiter asks if you would like to see the dessert menu. But let’s look at it through the lens of the 10-10-10 principle:
- Ten minutes after you’ve finished the dessert, you’ll probably feel very satisfied and pleased with your choice.
- Ten months after you’ve finished the dessert, your pants might feel a little tighter than they used to because you’ve habitually said yes to dessert.
- Ten years from now, you likely won’t recall the dinner and might ask yourself, “What dessert?”
This same principle can be applied in business. Maybe you’re deciding whether to launch a service in a new market, but you’re unsure if it’s the right fit. In ten minutes, you might be nervous. In ten months, after you’ve committed to the decision and are starting to grow the market, perhaps you feel more confident in your decision. In ten years, you might say, “That was the best decision I’ve ever made.”
You Think You Know More Than You Do
Confidence is an amiable quality for a business leader, but there are times when overconfidence can get in the way. Perhaps you have years of experience in your role and feel very confident about how a particular situation or deal will play out, only to watch it backfire. That experience, which in other business areas can be a real asset, may become a liability in decisionmaking if left unchecked.
Elon Musk’s purchase of Twitter is a great case study in unchecked confidence. Musk, a highly lauded businessman for his success with Tesla and SpaceX, acquired Twitter in 2022 for $44 billion – a shocking sticker price for a social media platform with declining advertising and user ship. Less than two years later, after a hostile restructuring, a rebrand, the departure of 23% of its users, and a valuation less than half of what Musk paid, it’s safe to say that Musk’s overconfidence clouded his judgment.
The antidote to overconfidence:
Conduct a ‘premortem’ analysis. Whereas a post-mortem analysis occurs after death and attempts to answer “What caused it?” a premortem analysis starts by asking “What killed it?” (Heath and Heath 2013). The idea here is to consider every possible way a project might fail. Though it might seem grim, it’s also a method for reality-testing your assumptions to ensure that overconfidence doesn’t blind your judgment.
For example, if Elon Musk had conducted a premortem analysis, he might have realized that Twitter was already in decline before purchasing it. He might have realized that advertising is Twitter’s primary source of income, and a robust audience is critical to guaranteeing that future source of revenue. With that knowledge, he may have made fewer erratic decisions (like laying off staff and rebranding the platform as X), which likely would have retained existing users longer than the rate at which they’ve currently left the platform.
Decisionmaking is a Skill That Can be Developed
Decisionmaking is a skill that can be cultivated and refined over time, much like any other ability. Through practice, reflection, and learning from successes and failures, you can enhance your decisionmaking prowess to improve your business or day-to-day life. By familiarizing yourself with various decision-making frameworks and decision-making villains, you can begin to understand your strengths and weaknesses to better hone your critical thinking and problem-solving skills.
Need an outside perspective? CS-STRATEGIES is a management consulting firm that helps public and private companies, governments, NGOs, and international institutions make well-informed decisions and turn them into actions that meet expectations and achieve sustainable results.
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