Wednesday, 9 March 2011

4 pointers to make better decisions

Good decision making is crucial for a happy life and building successful businesses. So how do we guard against poor decisions? Whilst some bad decisions are just annoying, others can have truly dreadful consequences. So why, when often others can see a mistake is being made, do people sometimes bash on so determinedly?

The answers make uncomfortable reading. Uncomfortable because I recognise them in my decision making, and I bet you will recognise them too. Just knowing this list, however, helps us make better decisions. When we recognise them, we can double-check ourselves.
  1. Intuition. Generally, we have a great belief in something we call gut feel or having a “nose” for something. But good decisions are rarely, if ever, made on intuition. Good decisions are based on evidence and data, in many different forms.
  2. Emotion. We get overly engaged with our decisions. Somehow if someone is challenging our decision we thinking they are also challenging us as a person, our judgement and our very worth. And isn’t it just true that the more emotionally involved we are, the more certain we are that we are making an objective decision? Emotion is the second sign of danger when it comes to good decision making.
  3. Attachment. Attachment is when we care more for people or things more than we care about whether a decision is right or wrong. We rationalise why we are right, knowing in our hearts that we are really attached to something that we may not want to even articulate.
  4. Self-interest. Making a decision based on what’s in it for us. More money, more power, more kudos as a leader. Bigger, better, more beautiful. More, more, more. There are too many examples of where greed and self-interest have led to disastrous decisions. Self-interest does nothing for clear headed decisions.

All four traits lead us into subjective decision making, rather than objective decision making.

Of course that’s not to say that buying the pretty, but dilapidated old cottage, isn’t the right decision for example. But our objectivity should at least enable us to realistically budget for renovations instead of potentially making an expensive mistake.

9 comments:

  1. I found this very interesting however a couple of thing that came to mind when reading it.
    Firstly in my experience complex situation often require an element of intuition. I often rely on instinct to tell me when something is not right or where there are likely to be problems. I would agree that this instinct should only be used as a guide to further investigation but to ignore it entirely; I believe would be as equally likely to lead to poor decision making as relying on it without further investigation.
    Secondly in some of the most important decisions that we have to make we often don’t have all the knowledge we need to make a completely informed decision. This may be that obtaining this information would take so long as to be counterproductive, that the information does not exist, is contradictory or ambiguous. I have witnessed a lot of people not make a decisions for fear that it will be wrong; may will continue to research long after a rational decision should have be made; analysis paralysis.

    Hadrian

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