The Best Decision You’ll Make Today: Read This Post
If making good decisions were a science, we’d want to be scientists. Or maybe day traders.
In the meantime, there’s the work of Stanford University professor Chip Heath and his brother Dan Heath, a senior fellow at Duke University’s Center for the Advancement of Social Entrepreneurship. The Heath brothers, an impressive and prolific team, have drawn on as much relevant science and research as they could find to produce their latest book, Decisive, which concerns, you guessed it, decision-making.
One thing they found, not surprisingly, is that most of us are riddled with biases, and we allow these biases to cloud our decision-making. This is a topic that Olivier Sibony of McKinsey & Co. brings up with Chip Heath in a recent conversation that appears in McKinsey Quarterly. “I want to go back to this notion of helping people see when they’ve been wrong and helping them get better at learning from their own experience,” Sibony says. “We’re trying to build a language that would help people see how to get better at making decisions.”
Heath responds, “I love the idea that you can create a language for helping people introspect about their decision process.”
Peter Drucker studied decision-making closely and wrote a lot about it, breaking down the process into a series of seven steps. They include:
- Determine whether a decision is even necessary.
- Classify the problem. Is it common or unique?
- Define the problem. What is this situation really all about?
- Decide on what is right. That is, make the right kind of compromise.
- Get others to buy the decision.
- Convert the decision into action—that is, make it somebody’s work assignment and responsibility.
When it came to helping people see if they’d made wrong decisions, however, Drucker advocated a quite straightforward approach. It’s embodied in the seventh of his seven steps: Test the decision against actual results.
“Systematic decision review” was Drucker’s term for it. “Checking the results of a decision against its expectation shows executives what their strengths are, where they need to improve and where they lack knowledge or information,” Drucker wrote in a 2004 essay for Harvard Business Review. “It shows them their biases.”
A “decision review” reveals more than just bias. “Systematic decision review also shows executives their own weaknesses, particularly the areas in which they are simply incompetent,” Drucker noted. “In these areas, smart executives don’t make decisions or take actions. They delegate. Everyone has such areas; there’s no such thing as a universal executive genius.”
Such an approach, Drucker added, was not the province of senior executives alone. “Making good decisions is a crucial skill at every level,” he wrote. “It needs to be taught explicitly to everyone in organizations that are based on knowledge.”
What system do you use to assess your past decisions?