The Process of Decision Making – Part Two

In the last installment we pointed to the obvious: good decision making is essential to your success. Do you think about it deliberatively though? If you’re serious about wanting different outcomes maybe you should get a little better about how you choose those inputs. Adhering to a process ensures a disciplined approach and improves the probability that outcomes are more consistently aligned with your expectations.

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In their book, Smart Choices, John Hammond, Ralph Keeney, and Howard Raiffa identify step one in the decision making process as defining the problem.  To start the process, it’s essential you pose the problem as accurately as possible to help guide you to the most appropriate course of action. If you define the wrong problem, you’ll assuredly end up with the wrong answer. It can be that simple at the beginning.  

It is important to guard against the inherent laziness that compels many people to define the problem by the first thing that pops into their heads. A more effective approach is to redefine the problem as an opportunity and have your team brainstorm out-of-the-box creative solutions for capitalizing on that opportunity.  It doesn’t mean there isn’t a problem to solve. It just recognizes the benefit of how looking through the prism of opportunity can inform the process of solving the problem.

Many problems have a trigger, or a beginning action, that initiates them.  Look at the correlation between the trigger and your problem. For example, if you’ve been told your company needs to purchase new CRM software to better track your direct mail campaign, rather than looking into different packages, you might seek alternative ways to conduct the campaigns.

While you’re at it, examine any constraints in the problem statement you’re formulating.  If you’ve decided the problem is how to conduct selective market testing of a credit card in the Midwest, rethink whether the constraint of focusing on Midwest isn’t actually diverting your attention from other markets.

Decision Making Implications—The Big Picture

Next, what are some of the elements of your problem and how will other decisions affect the problem you are working on?  If your company will not be spending money on software training over the next year, you might think twice about purchasing a sophisticated CRM package requiring additional training.  

When you have dealt with the impact other decisions could have on your current problem, look at the big picture. The tendency to solve your current crisis with a quick fix is hard to resist. Best practices for risk management would have you avoid hastily made decisions.  More often than not they create unintended consequences affecting other priorities. We see this in policy making all the time.

Once you’ve explored the problem to this point, step back and seek new perspectives from others.  Peers, family members, and trusted acquaintances can lend valuable, often objective, insights. A new perspective brings a different light to the problem and possibly an angle you didn’t see before.  

Parochialism seeps into our decision making if we don’t make a concerted effort to banish it.  The markets we do business in today are often affected by what happens in other parts of the world.  If you aren’t considering global perspectives, even if you dismiss them once considered, you are not managing the risk as well as you can.  More than one family business that has succeeded for generations has succumbed to changes they ignored or were blind to. This is an opportunity for new family members coming up in the business to avoid this end to their grandfather’s business.

With new perspectives, it’s helpful to reexamine your problem; after all, your own perceptions might have changed in the process.  Expanding into South America sounded great until you compared the growth rates there to those in Southeast Asia. Now, with a better understanding and perhaps moving outside of our comfort zone, your range of options is expanded.  You might still opt for South America but at least you understand the opportunity costs of that choice.

The authors emphasize that the more time you spend on defining the problem the less likely you’ll face limited options down the road. While it is tempting to get at the core issue as soon as possible, sometimes decision-makers equate having made a decision to having made progress.  Don’t be that traveler barreling down the highway at high speed coming upon a sign that tells him he’s been making great time—going in the wrong direction.

Start at step one!