There are high stakes to decision-making for those in leadership roles. In the workplace, the quality of your work and the success of your organization are directly proportional to the quality of the decisions you make.
Let’s take a look at how you can ensure that you make the best decisions in the most effective way possible.
Why You Need a Decision-Making Framework
The average person makes about 35,000 decisions per day, or one decision every two seconds. If you’re in a leadership position, there’s a good chance this figure is even higher. Yet, all decisions are not created equal, and some carry more weight than others, especially the decisions leaders make.
“Important decisions that involve multiple criteria should be based on logic, not intuition. They should not be made ‘in your head.’ We have too many cognitive biases. You need a high-quality process,” says Arootah Founder and CEO, Rich Bello.
One critical reason leaders need a decision-making framework is to mitigate the impact of cognitive biases. Cognitive biases are inherent in our decision-making processes and can cloud our judgment, leading us to make suboptimal decisions. As a leader, it’s essential you develop awareness of these biases, which may include:
- Anchoring bias
- Recency bias
- Bandwagon Effect
- Status Quo
- Sunk Cost bias
By learning to identify these biases in a clearly-defined process, leaders can begin to make consistently objective and rational decisions.
10-Step Process for Making Decisions
It’s essential to find a decision-making framework that works best for you and your organization.
1. Identify Criteria
In the first step of the Arootah decision-making process, clients define the criteria they need to make a decision by identifying the factors that are most important for them to achieve the results they desire. For example, cost, time, and resources are all common criteria. It’s important to limit the number of criteria to no more than 10 at the beginning of your decision-making process. Too many criteria can make the process overly complex and time-consuming.
In addition to defining the criteria, it’s also important to think about how you’ll define success. What are you trying to accomplish, and what is the optimal outcome in doing so? Defining success helps you ensure you make decisions aligned with your overall goals.
2. Identify Your Purpose
Once you’ve completed the first step, define the purpose behind each criterion you select. Each criterion should have a clear and specific purpose that supports the overall decision-making process. Take the time to study how each criterion affects the overall outcome of your decision.
3. Rank Criteria
Next, rank each criterion by assigning it a score on a 100% scale. The total weight should add up to 100%. For example, if you have five criteria, you might assign each one a weight of 20%.
By weighing each criterion alongside the others, you’ll develop a clearer understanding of which criteria are most critical to the outcome of your decision.
4. Review the Criteria
Getting feedback from others is an essential step in the decision-making process. When seeking feedback, it’s important to involve individuals who have expertise in the relevant areas and who can provide you with constructive criticism. They can challenge assumptions you may have made about your selected criteria and provide additional insights that can help you make more informed decisions.
5. Root out Cognitive Biases
Cognitive biases are blind spots in your decision-making that can lead you to make flawed judgments and poor decisions. For example, the sunk cost bias, can skew how you select criteria in the decision-making process. Developing an awareness of sunk cost and other biases is the first step to overcoming them.
Take time to reflect on how your biases might be affecting your decision-making process. Ask yourself if you’re making decisions based on facts and data, or personal biases and emotions. Then, ask for insight from others involved in the decision-making process. They can help you identify biases and blind spots you may not be aware of and provide you with a more objective perspective.
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6. Generate Options
By the time you’ve reached Step 6, you should have a clear understanding of the criteria, purpose, weighting, and potential biases that could impact your decision making. Take the time to generate at least three options for your decision.
This step will help you account for multiple perspectives and evaluate different outcomes in your decision making. Don’t be afraid to think outside the box and consider unconventional options. The goal is to consider all possible alternatives before making a final decision.
An example of generating options for a company trying to expand its market share by entering new markets might look something like this:
- Identify potential new markets: Research and analyze different markets based on various criteria such as market size, growth potential, competition, regulatory environment, cultural factors, etc.
- Speak to industry experts: Reach out to experts in the industries being considered to gain insights and advice on the challenges and opportunities of those markets.
- Find local partners: Search for potential partners, such as distributors, suppliers, or joint venture partners, who have local knowledge, networks, and resources to help enter the new markets.
- Utilize technology: Use various tools and platforms, such as market research reports, online databases, social media, and search engines, to gather data and intelligence on the new markets.
- Persistence: Leverage existing networks and relationships, as well as engage in targeted marketing and outreach efforts, to raise awareness and build interest in its products or services in the new markets.
- Out of the box idea: Explore innovative or unconventional approaches to entering the new markets, such as creating new distribution channels, partnering with non-traditional players, or developing unique value propositions that differentiate it from competitors.
7. Score Options
Now that you’ve generated several options, evaluate each one based on the weighted criteria you established earlier. Consider both the impact of each criterion for that option (and thus to the overall decision) as well as the probability of occurrence (what are the odds this consequence will occur.
One way to evaluate the options is to use a 100% scale, in which each criterion is weighted accordingly. This scale will help you compare and contrast each option and determine which one best aligns with your desired outcome.
8. Mitigate Cons
Each option will have its downsides, so it’s essential to mitigate the potential negative impacts. Consider what you can do to reduce any negative impact this decision might have. Mitigation might involve developing a contingency plan or identifying ways to minimize risk. It may also involve brainstorming creative solutions to turn a disadvantage into an advantage.
This is an important step that many leaders neglect. It takes persistence and creativity to work through the potential downsides of each option thoroughly, but by taking the time to devise mitigation strategies, you can make more informed decisions.
9. Do a Gut Check
At this stage, you should have assigned an initial score to each option. Use your intuition to assess whether the scores you assigned feel right to you.
If the scores feel accurate, proceed with the process. However, if the scores seem off, try to identify the reason behind this feeling. You might have overlooked an important criterion that should be added to the evaluation.
It’s essential to pay attention to your intuition because it can often provide valuable insights in your decision-making process that you may not capture through a purely rational analysis. However, it’s important to remember that intuition is also fallible, and it can be influenced by cognitive biases or other factors that may impact your judgment.
If you can’t pinpoint a specific reason your intuition disagrees with the decision, it’s best to continue with the process anyway.
10. Do Final Scoring and Make a Decision
Lastly, review the final scores and make your decision based on the option with the highest score. Move forward with that option decisively and with conviction.
The Bottom Line
As a leader, making high-quality decisions is fundamental to your success.
It’s crucial to utilize a decision-making framework to mitigate the impact of cognitive biases, which can cloud judgment and lead to suboptimal decisions. By following this 10-step decision-making process, leaders can make more objective, rational decisions that align with their organization’s overall goals.
Join us for our upcoming decision-making workshop on Thursday, March 30, to learn practical decision-making skills as a leader. Discover game-changing strategies and get first access to our brand new Decision Manager app to make better decisions, faster.