Have you ever ordered a coffee at Starbucks? Maybe you’ll know what I’m talking about. I still remember the first time I went there just to buy a cappuccino. It was not ‚just buying a coffee ‘. After finally fighting my way to the front line, I was ready to order (I didn’t even look at the blackboard with the various offers). I tried to order my cappuccino confidentially. But here, the drama starts. What size should it be – Demi, Short, Tall, Grande, or Venti? Should it be cold or warm, caffeinated or decaffeinated? Do I prefer vegan milk, and what flavor – Vanilla, Caramel, Cinnamon Dolce, Hazelnut, Toffee Nut, Peppermint, Raspberry, or Classic? Phew, so many decisions that completely exhausted me at first.
What is my point? Making decisions is part of our everyday lives and is particularly difficult when having too many options or extensive consequences. It can be a tremendous challenge for many executives because leadership means constantly making decisions that either affect many people or have far-reaching implications for the organization. In many cases, we have to choose between two contradictory alternatives.
This article is about decision-making, its pitfalls, and finally, about making ‘good’ decisions.
What Characterizes Decisions?
First of all, it is crucial to understand that there are no good or bad choices. We always judge whether a decision is ‘the right one’ based on our preferences, needs, or experiences. It’s not the decisions we often struggle with, but rather their consequences.
But first, let’s take a look at what makes decisions:
Most decisions involve uncertainty, which means we do not know all the details and cannot assess the effects for the future. Sometimes we have to decide under significant time pressure, and sometimes there is some kind of dynamic involved, e.g., because situations change quickly.
Since we humans are not very willing to take risks, it complicates decision-making.
Contrary to the widespread assumption, especially by many executives, decisions are not made rationally. Our emotions always drive our choices. We may not be aware of it, but we always make decisions based on our standards. If this were not true, everyone would choose the same job or the same car. Our gut feeling also plays a vital role. But more on that later on.
We often tend to make the ‚perfect choice ‘ when deciding. However, this perfectionism often leads us to avoid a decision or unnecessarily prolong the decision-making process.
In addition to these obstacles, some decision traps make it hard for us to make ‘good’ decisions.
What Are Decision Traps?
Decision traps are often based on biases that unconsciously influence our thinking and, thus, our decisions.
The most common decision traps are:
- In many cases, we only consider available information or the ones that fit the facts. We overestimate them, and hence they influence our decisions. This Availability Bias induces us to neglect further information. In addition, due to a possible Confirmation Bias, we prefer data that matches our attitudes. For example, suppose someone is very environmentally conscious. In that case, the decision as to whether all company cars will be e-cars in the future will undoubtedly be different than if the person is horsepower-focused. In both cases, we believe that we are making fact-based decisions. But the truth is, we ignore unpleasant facts and unconsciously do cherry-picking.
- Decisions made in the past that turned out to be rather disadvantageous are rarely questioned and corrected. We defend these decisions and stick to them – the Perseverance Bias is at work.
- When making business decisions, we often underestimate the risks while overestimating the opportunities. The new product is seen in bright light and will, for sure, sell very well.
- In addition, we often make decisions very hesitantly and repeatedly delayed. How many meetings have you attended where the same topic kept coming up without making a final decision? Welcome to Groundhog day.
But what can you do to make really ‘good’ decisions?
Five Terrific Strategies For Clever Decisions
Take Away
- Sometimes decisions are difficult because they always involve uncertainty, and we often cannot fully assess its consequences.
- Our emotions affect our decisions and can be distorted by fallacy or biases.
- While you are in the process, it is vital to decide timely, incorporate all the facts, and consider risks adequately. An outside perspective of an ‚neutral’ person also improves the quality of the judgment. Balanced decisions include both emotional and rational aspects.
So how do you decide? Rather spontaneously from the gut or weighing all the facts? My five strategies can support you in making effective and well-founded decisions in the future.
Are you stuck in a decision-making process? How about short-term coaching where we will have a closer look at all aspects. Register here for a free information session.
