The Beginning: Buying a car.

I think buying a car is one way to talk about decision making, because obviously it is a large purchase and one that will have long term affects.

Each of us has a different decision making style.  Some people make decisions quickly.  Others make decisions slowly.  Some people like to make decisions by themselves.  Others like to make decisions collaboratively.

Some people seem to make good decisions all the time.  Others not so much.  Some people blame others when their decisions do not pan out.  Others blame themselves no matter what the reason things didn’t work out.

A lot of people take decision making for granted.  These people don’t think they need tools to help them.  Others read everything they can on decision making so as to make sure they don’t make a bad decision.

I see decision making as a 5 step process:

1. Decide on the goal
2. Find the right information
3. Reach a decision based on the right information
4. Implement the decision.
5. Evaluate the decision to determine if it achieved the goal. Identify next steps.  At a minimum one next step is to learn something.

I call this the TIDAL approach to decision making.

Target – Decide on the goal

Information – Find the right information

Decision – Reach a decision based on the information

Action – Implement the decision

Learning – Evaluate the decision to determine if it achieved the goal.  Identify next steps.  At a minimum one next step is to learn something.

While these steps seem obvious, it is surprising how few people actually follow them.  For many bright successful people the most important factor in making decisions is expediency.  Hence, decisions are often made on gut feelings based on personal past experiences.  Instinct is often the most relied upon process.  This often happens in buying a car.  And I am sure this is where the advertisers want you go be.

Furthermore, there is rarely any learning after the decision was made.  My experience is that the only time decisions are reviewed is if something goes wrong.  And then, the review is focused on finding someone to blame.

There are three basic reasons why people don’t use a formal process to make decisions and as a result often get decisions wrong.

1.      They believe there are time constraints where none actually exist.  They rush to make a decision and they don’t look for all the information they could.  They believe that our fast paced world demands fast decisions.  They believe they don’t have time to evaluate information objectively.  And they certainly believe they don’t have time to go back and review the decision after the fact.

2.      They don’t want to look at facts that could challenge their core beliefs.  Looking at information objectively and evaluating it honestly could force them to question some of their most dearly held paradigms.  In general most people don’t like change.  So they avoid information that might cause change.  Further they may have a huge investments in a particular paradigm and thus don’t want to risk losing those investments.

3.      They are more concerned with appearing decisive and in control than making good decisions.

When it comes to making decisions it seems that people simply react as best they can to the situation around them.  They often use instinct, common sense, and guesswork.  If they are lucky and they have some experience with the situation they might make a good decision.  However, the likelihood of success is usually more a matter of good fortune than the result of the process itself.  Thus, it is almost impossible to make good decisions in a consistent way and across the entire organization.

Put all these things together and we have a prescription for mass quantities of poor decisions.

The good news is that decision making can be improved by understanding how to make good decisions and implementing a formal process to help people learn to make better decisions.  Yes, it will be hard for many that don’t want to change or don’t want to give up control.  However, the benefits to both the individual and the organization far outweigh the costs.

Flexibility is the key

It is absolutely critical to note that while the TIDAL steps can be done in order – one step following the other, in most cases the steps SHOULD, be done concurrently.  The TIDAL process should not be seen as a rigid process that must be followed sequentially, rather it should be seen as a checklist of things that must be done at some point in the process.  For many, this will create tension.  Their personality requires that any activity follow a strict recipe, formula, and guideline.  For those individuals, deviation from the instructions could result in failure and hence must be avoided at all costs.

The problem with this linear approach to decision making is that it limits the ability to change course based on things learned by the process itself.

The best way to go through the TIDAL Approach is to jump back and forth between the steps.  For example, a target could be set but during the information gathering stage the target could be changed because of the information gathered.  Or as the target is being set, learning can take place which might force a change in target or a change in the information being gathered.

The actionable information from this discussion is that it is critical that people that demand order do not control the decision process.  People have to be flexible and realize that things could change half or three quarters the way through a project.

Personal Decision Making Style

Each of us has a style.  While not completely genetically hardwired like eye color or height, our decision making style does have a strong genetic component.  Each of us come into the world with a predisposition for a particular decision making style.  Of course our environment can influence our style, but that influence is limited to its impact.  Stephan Poulter described our individual styles In his Book “The Father Factor” as,” a software program installed a long, long time ago that undergoes constant updating.”

It is important for all of us to understand our own style for two reasons; first, to know are our strengths and weaknesses; and second, to fix any problems we have.

Here are some examples of our decision process style:

• Quick or Slow
• Individual or collaborative
• Analytical or intuitive
• Systematic or not systematic
• Rigid or Flexible
• Absolutist (there is Always a right answer) or Relativist (any answer may work)
• Ends justify the means or the ends never justifies the means
• Never challenge authority or always challenge authority
• There are right ways to do something based on some moral teachings or there are no right ways to do something.  You should do whatever works.
• Decisions are objective or decisions are subjective

Decision Making Universe

Think of a Chess match.  Each move enjoins other moves.  The point I am trying to make in terms of decision making is that some people play chess one move at a time.  Others think many moves ahead.  Common wisdom says that the most successful chess players think many moves ahead.  It is hard to win in chess thinking only about the current decision.  The same should be the case with our personal and business decisions.  The people that think ahead have a better chance of making good decisions.

Going back to our sleeping example, I would say most of us have lain in bed in the morning and thought, perhaps I should just go back to sleep.  But then we think that if we go back to sleep we will be late for work.  And if I am late for work how can I keep my job?  And if we can’t keep our job how can I feed my family.  Or the decision process could go like this.  If I sleep for 20 more minutes I might be late for work but since my boss will not be there today, that is ok.  See where I am going with this.

Another key point here is the notion of making decisions “By the Book.”  One way to manage the decision making process is to follow a documented set of procedures.  Again going back to our sleeping example, perhaps you were raised that early to bed and early to rise was not negotiable.  You were raised that you have to get up at 6 am every morning.  You don’t question that rule.  You just do it.  That is the way you were taught and there is no reason to think beyond that decision.

The advantage of doing things “By the Book” is that it takes away the responsibility of decision making.  Someone else has decided for you.

One of the most critical steps in decision making is the decision about when a decision should be made.  Many bad decisions are made either because they are made too quickly or they are not made quickly enough.

So how does a decision maker know when is the right time to make a decision?  The answer is simple.  A decision should be made only when 1 of the following 2 conditions exist:

1. All information is received and processed.
2. There is no more time to wait and a decision must be made.

All information is received

It happens rarely but it is possible for a situation to exist that all the information available has been gathered and processed.  This does not guarantee that a correct decision will be made.  Selective perception, hidden agendas, or forces outside of the decision makers control, may result in a wrong decision.  But gathering more information will not change anything.

A critical point here is before a decision is made the decision maker should have an idea of what information they need to make a good decision.

There is no more time to wait

Most often in business a decision has to be made before all the information can be collected and analyzed.  In that case the time for a decision should arrive only when the result of a bad is decision is worse then the result of no decision.

Of course if you don’t have all the information it is likely that you will not know when that time arrives.  However, there must be a conscious understanding of the ramifications of the decision.

The way to look at this is to weigh the lack of a decision against the probability of making a wrong decision.  If the risk of making a wrong decision is low, and you believe you have enough information than go ahead and make the decision.  If the risk of making a wrong decision is high then the decision must be put off until the last possible moment.

I see this as the biggest mistake decision makers make.  I see that often in business the decision to make a decision is not related at all to the facts surrounding the decision.  I have heard many decision makers say that it is best to appear decisive.  Hence they make quick decisions, not because it is the right thing to do, but rather because it is the way they think they should act.

One of the most frequent arguments I hear in support of the decisive decision maker is that the alternative is analyzing things too much.  This is called “analysis paralysis.”  So in order to avoid analysis paralysis they over compensate and just make decisions for the sake of not appearing weak.

In many decisions it really does not matter what decision is chosen.  We often hear this as “6 to one, half dozen to another.”  Essentially we are saying there is no wrong decision.  In this case a decision can be made at any time.  I often use the example of going to the store for my wife to buy toilet paper.  Absent specific instructions on what kind to buy, it really does not matter what kind I buy.

A key element of making a good decision is deciding who makes the decision.

In broad terms the decision maker can either be an individual or a group.

Group decision making takes longer but decisions made by the group tend to be better

Deciding who makes the decision is one of the most overlooked parts of decision making.  The decision maker could be the highest ranking individual.  It could be the Subject Matter Expert (SME).  It could simply be the first person on the scene.  Or it could be the individual delegated to make the decision.

Unfortunately, deciding who makes the decisions is rarely part of the decision process.  But it should be.

Let’s take a look at a few of the people that should make decisions.

The Project Manager

Often times the decision maker is the manager.  In this case the manager gets input from the staff and makes a decision.  This often required mediation between the staff.  If for example, different staff members are recommending different decisions, then it is up to the manager to mediate between the staff members and make a decision.  It could require that the manager make a decision and then spend time trying to convince the staff member that did not have their decision chosen why they were wrong.

The Subject Matter Expert

Often we simply defer to the SME.  When I go to the doctor or the mechanic I defer to their decisions.  If the IT staff says that something has to be done a certain way we defer to them.  They are the experts and we defer to the experts.

Consensus

In some cases we look to everyone to make a decision.  Discussion is held until everyone can agree.

Majority

In some cases we vote and let the majority make the decision.

The First person on the Scene

There are some situations where we give the decision making authority to the first person on the scene.  Police, Fire, or medical situations often use this approach.

The most senior team member on the scene

Again, this is often used with Police, Fire, military, or medical situations.  When the most senior team member arrives they assume all decision making responsibilities.

The person most sure of the answer

There are situations where someone that is not the manager, not the most senior, not the first person on the scene, but never the less is sure of the answer.  Perhaps they have seen the situation before.  In any case, the bottom line is the person most sure of the decision should make the decision.  But that person must take responsibility for making a bad decision.

An example would be useful here.  My wife is a better cook than I.  So when it comes to cooking I do not criticize her decisions.  I know more about cars than her.  So when it comes to fixing the car she does not criticize my decisions.  This is not to say that I don’t tell her what I want to eat.  And it does not say that she does not tell me what she wants in terms of the car.  What this says is that there is a division of decision making based on who is most sure they know the answers.

This is about is taking responsibility for our actions.  If I make a decision on the car and it is a wrong decision, then I have to take responsibility for making a wrong decision.

The highest ranking member on the scene

This is different than the most senior team member making the decision.  Because it is possible that the highest ranking is not the most senior.

This is used very frequently and is by far the easiest.

The 5 steps of decision making are:

1. Target
2. Information
3. Decision
4. Action
5. Learning

It is important that this not be a serial process.  Steps 1 and 2 have to be worked together.

Step 1 – Deciding on the Target & Step 2 gathering information should be iterative.  A target should be set and information should be gathered.  However, it is possible that as information is gather the target might change.

The image here is water going down a drain.  The water spirals downward in ever smaller circles.  So to should the process of gathering information.  This is based on the scientific approach where a hypothesis is made and then information is gathered on that hypothesis.  Based on the information gathered the hypothesis is either changed or it extended.

The first step is deciding on the goal or target.  Deciding on what is it you want to accomplish.

At first glance this might appear easy.  However, in most decisions there are usually multiple targets.  Therefore it is critical that a way be found to prioritize and weight the targets.

Let’s say you look at your gas gauge and notice you are almost out of gas.  Now you have to make a decision – When and where to get gas.  Following the TIDAL approach the first step is to decide on the Target or goal.  One goal could be to get gas at the closest location.  Another goal might be to get gas at the cheapest place.  Another goal might be to get gas at a place where you could also get a lottery ticket.  Or you might want to get gas at a place that has a good cup of coffee.  It is possible that one gas station might meet all four targets.  In that case the decision is easy.  However, in most decisions no one answer hits all targets.  Usually one gas station is the closest, while another is cheapest, another might have a good cup of coffee, and still another has the lottery ticket.

Thus we have to modify the goals with information.  Let’s further expand our example of getting gas.  Let’s say we gather all the information and decide to get gas at the gas station with the best coffee.  Let’s further say that as you are driving to that gas station we hear on the radio that too much coffee is bad for you and you decide that you no longer want coffee.  Now you have to change your decision.  You see what happened.  Even though you made a decision, you are still gathering information.  You have the potential to change the decision up until the last moment before the decision is executed and implemented.

Step 1 – Setting Priorities

The answer you finally come up with could be different depending on which of your targets is the most important.  Hence it is critical that priorities be set.

The way to deal with this situation is to list all the potential targets or goals.  In our example of  the need to make a decision to get gas, the goals are to get gas within the next 50 miles, save money, get a cup of coffee, and get a lottery ticket.  Then once you have all the goals identified you figure out a way to characterize those goals.

There are many ways to do this.  One way is to use the table below.  Obviously the critical goals have to be addressed.  And the Easy goals are just that Easy.  I wish there is a way to teach people how to pick the right mix of goals.  I think that is what sets successful decision makers apart.

1. Time frame
2. Importance
3. Difficulty making the right decision
4. Difficulty implementing

There are two ways you can pick which is the right mix of goals.  Have the team vote, or have one person pick.  My suggestion is to have one person pick.  That person should be the team leader.

The difficulty in correctly identifing the problem is the most significant obstacle to effective decision making.  Unfortunately there is no simple way to overcome this obstacle.

There are millions of examples.  And this is so very obvious.  Yet it is often difficult to do because we are often trying to solve multiple problems at the same time.

Decisions can be made in a group, or individually.  They can be made quickly or after careful study.  If the decision is to be made by a group, the group can use a very formal method like voting or informal like discussion.

The situation should dictate what method is used.

One way to address this is to create a Consequences Table.

Step 2 – Gathering Information

This is actually a pretty easy step.  The big risk is from distortions and biases.

Here you want to identify cause and effects.  You want to distinguish between “Facts” and “Conclusions”.  You can use observation, personal experience, expert advice, or empirical research.  I just remind everyone that an important factor is decision making is understanding the difference between cause and effect and correlation.

Part of the information stage is looking past the actual decision to the implementation of the decision.  Often times implementing a decision is more difficult than making the decision.  For example, let’s take a decision to go to college.  Making the decision to go to college is pretty easy.  However, actually going to college and getting a degree is very hard.

What this means is that you have to look at how hard a specific decision might be to implement.

Step 3 – Making the decision and implementing that decision

While this is the most important step, it actually could be pretty easy given a good job with steps 1 and 2.  Using the example of the gas station making the decision is hard part.  Implementing the decision is the easy part.  However, in most cases making the decision is the easy part, while implementing the decision is the hard part.

A critical element to decision making is to honestly evaluate the decision after the fact and learn from it.  There are two broad learning’s: 1) the outcome could not have been better and nothing needs to change, or 2) the outcome could have been better and something needs to change.

If the learning is that everything went as expected and nothing needs to change than great!  You can move on to the next decision with the confidence that you are doing what you need to do.

If, however, the learning is that the outcome could have been better then you should evaluate what could have been better and work to make it better.

Remember that you decision could have a positive outcome but still require changes.

Bad decisions come from “distortions and biases – a whole series of mental flaws – that sabotage our reasoning.” (HBR The Hidden Traps in Decision Making, John S. Hammond, Ralph L. Keeney, and Howard Raiffa)

• Anchoring – Giving disproportionate weight to the first information you receive.
• Status quo – Favoring alternatives that perpetuate the existing situation
• Sunk Costs – Making choices in a way that justifies past, flawed choices
• Confirming evidence – Seeking information that supports your existing point of view
• Framing – Structuring the situation in ways that favor one solution over another
• Estimating and forecasting – Being overly influenced by vivid memories when estimating
• Overconfidence – Not being honest about our abilities
• Over Cautiousness – Too much prudence or too much fear of failure
• Recallability – The risk of being influenced by what is top of mind or what is easily recalled.

There are 6 levels of Actions in any activity:

1. Determining the objective
2. Determining the strategy to achieve the objective
3. Determining the tactics to achieve the strategy.
4. Performing the actions that are established by the tactics.
5. Evaluate the actions to see if the objective was achieved.
6. Learning from the process to see if we could do it better next time.

While the first thing is to determine the objective, sometimes you determine the tactics and strategy based as much on the actions that you can perform.  I was watching the Angels play the Yankees on TV.  The announcer was saying that the Angels have a lot of injured players.  And that the Coach, Mike Sosia, was a good coach because he has been able to change his game plan (Game plan here means his strategy and tactics) to fit the team that he has on the field.  The announcers said that some coaches only have one game plan and use it no matter who is on the field, but the great coaches can change depending on what they have to work with.

A fundamental activity for all of us is Decision Making.  Think about all the decisions you make in a given day.

I think you can divide people up by how they make decisions.  Here are just a few types.  And to make it easier to describe them, let me use the first decision I make everyday as the talking point.  I am going to use the decision to get out of bed as the reference.

The first one is to decide to get out of bed.  Those of us who think the person that invented the snooze button should get a Nobel Prize can really appreciate how hard this decision is every morning.

Buying a Car

Obviously the first thing you have to do is buy a car.  This is often a major purchase.  I am actually going through the process right now.  My wife quit her job that came with a company car and so we have to replace it.

The TIDAL Approach to Decision Making

Each of us has a different decision making style.  Some people make decisions quickly.  Others make decisions slowly.  Some people like to make decisions by themselves.  Others like to make decisions collaboratively.

Some people seem to make good decisions all the time.  Others not so much.  Some people blame others when their decisions do not pan out.  Others blame themselves no matter what the reason things didn’t work out.

A lot of people take decision making for granted.  These people don’t think they need tools to help them.  They are wrong.  Even the best athlete or artist uses tools to maximize their abilities.  So why shouldn’t business people use tools to help them make better decisions.

The following approach to decision making is a tool to improve our decision-making.

Overview of the TIDAL Process

Decision making is a 5 step process.

1. Decide on the goal
2. Find the right information
3. Reach a decision based on the right information
4. Implement the decision.
5. Evaluate the decision to determine if it achieved the goal. Identify next steps.  At a minimum one next step is to learn something.

I call this the TIDAL approach to decision making.

Target – Decide on the goal

Information – Find the right information

Decision – Reach a decision based on the information

Action – Implement the decision

Learning – Evaluate the decision to determine if it achieved the goal.  Identify next steps.  At a minimum one next step is to learn something.

While these steps seem obvious, it is surprising how few people actually follow them.  For many bright successful people the most important factor in making decisions is expediency.  Hence, decisions are often made on gut feelings based on personal past experiences.  Instinct is often the most relied upon process.

Furthermore, there is rarely any learning after the decision was made.  My experience is that the only time decisions are reviewed is if something goes wrong.  And then, the review is focused on finding someone to blame.

There are three basic reasons why people don’t use a formal process to make decisions and as a result often get decisions wrong.

1.      They believe there are time constraints where none actually exist.  They rush to make a decision and they don’t look for all the information they could.  They believe that our fast paced world demands fast decisions.  They believe they don’t have time to evaluate information objectively.  And they certainly believe they don’t have time to go back and review the decision after the fact.

2.      They don’t want to look at facts that could challenge their core beliefs.  Looking at information objectively and evaluating it honestly could force them to question some of their most dearly held paradigms.  In general most people don’t like change.  So they avoid information that might cause change.  Further they may have a huge investments in a particular paradigm and thus don’t want to risk losing those investments.

3.      They are more concerned with appearing decisive and in control than making good decisions.

When it comes to making decisions it seems that people simply react as best they can to the situation around them.  They often use instinct, common sense, and guesswork.  If they are lucky and they have some experience with the situation they might make a good decision.  However, the likelihood of success is usually more a matter of good fortune than the result of the process itself.  Thus, it is almost impossible to make good decisions in a consistent way and across the entire organization.

Put all these things together and we have a prescription for mass quantities of poor decisions.

The good news is that decision making can be improved by understanding how to make good decisions and implementing a formal process to help people learn to make better decisions.  Yes, it will be hard for many that don’t want to change or don’t want to give up control.  However, the benefits to both the individual and the organization far outweigh the costs.

Flexibility is the key

It is absolutely critical to note that while the TIDAL steps can be done in order – one step following the other, in most cases the steps SHOULD, be done concurrently.  The TIDAL process should not be seen as a rigid process that must be followed sequentially, rather it should be seen as a checklist of things that must be done at some point in the process.  For many, this will create tension.  Their personality requires that any activity follow a strict recipe, formula, and guideline.  For those individuals, deviation from the instructions could result in failure and hence must be avoided at all costs.

The problem with this linear approach to decision making is that it limits the ability to change course based on things learned by the process itself.

The best way to go through the TIDAL Approach is to jump back and forth between the steps.  For example, a target could be set but during the information gathering stage the target could be changed because of the information gathered.  Or as the target is being set, learning can take place which might force a change in target or a change in the information being gathered.

The actionable information from this discussion is that it is critical that people that demand order do not control the decision process.  People have to be flexible and realize that things could change half or three quarters the way through a project.

Personal Decision Making Style

Each of us has a style.  While not completely genetically hardwired like eye color or height, our decision making style stems does have a strong genetic component.  Each of us come into the world with a predisposition for a particular decision making style.  Of course our environment can influence our style, but that influence is limited to its impact.  Stephan Poulter described our individual styles In his Book “The Father Factor” as,” a software program installed a long, long time ago that undergoes constant updating.”

It is important for all of us to understand our own style for two reasons; first, to know are our strengths and weaknesses; and second, to fix any problems we have.

Here are some examples of our decision process style:

• Quick or Slow
• Individual or collaborative
• Analytical or intuitive
• Systematic or not systematic
• Rigid or Flexible
• Absolutist (there is Always a right answer) or Relativist (any answer may work)
• Ends justify the means or the ends never justifies the means
• Never challenge authority or always challenge authority
• There are right ways to do something based on some moral teachings or there are no right ways to do something.  You should do whatever works.
• Decisions are objective or decisions are subjective

Decision Making Universe

Think of a Chess match.  Each move enjoins other moves.  The point is some people play chess one move at a time.  Others think many moves ahead.  Common wisdom says that the most successful chess players think many moves ahead.  It is hard to win in chess thinking only about the current decision.  The same should be the case with our personal and business decisions.  The people that think ahead have a better chance of making good decisions.

Going back to our sleeping example, I would say most of us have lain in bed in the morning and thought, perhaps I should just go back to sleep.  But then we think that if we go back to sleep we will be late for work.  And if I am late for work how can I keep my job?  And if we can’t keep our job how can I feed my family.  Or the decision process could go like this.  If I sleep for 20 more minutes I might be late for work but since my boss will not be there today, that is ok.  See where I am going with this.

Another key point here is the notion of making decisions “By the Book.”  One way to manage the decision making process is to follow a documented set of procedures.  Again going back to our sleeping example, perhaps you were raised that early to bed and early to rise was not negotiable.  You were raised that you have to get up at 6 am every morning.  You don’t question that rule.  You just do it.  That is the way you were taught and there is no reason to think beyond that decision.

The advantage of doing things “By the Book” is that it takes away the responsibility of decision making.  Someone else has decided for you.

One of the most critical steps in decision making is the decision about when a decision should be made.  Many bad decisions are made either because they are made too quickly or they are not made quickly enough.

So how does a decision maker know when is the right time to make a decision?  The answer is simple.  A decision should be made only when 1 of the following 2 conditions exist:

1. All information is received and processed.
2. There is no more time to wait and a decision must be made.

All information is received

It happens rarely but it is possible for a situation to exist that all the information available has been gathered and processed.  This does not guarantee that a correct decision will be made.  Selective perception, hidden agendas, or forces outside of the decision makers control, may result in a wrong decision.  But gathering more information will not change anything.

A critical point here is before a decision is made the decision maker should have an idea of what information they need to make a good decision.

There is no more time to wait

Most often in business a decision has to be made before all the information can be collected and analyzed.  In that case the time for a decision should arrive only when the result of a bad is decision is worse then the result of no decision.

Of course if you don’t have all the information it is likely that you will not know when that time arrives.  However, there must be a conscious understanding of the ramifications of the decision.

The way to look at this is to weigh the lack of a decision against the probability of making a wrong decision.  If the risk of making a wrong decision is low, and you believe you have enough information than go ahead and make the decision.  If the risk of making a wrong decision is high then the decision must be put off until the last possible moment.

I see this as the biggest mistake decision makers make.  I see that often in business the decision to make a decision is not related at all to the facts surrounding the decision.  I have heard many decision makers say that it is best to appear decisive.  Hence they make quick decisions, not because it is the right thing to do, but rather because it is the way they think they should act.

One of the most frequent arguments I hear in support of the decisive decision maker is that the alternative is analyzing things too much.  This is called “analysis paralysis.”  So in order to avoid analysis paralysis they over compensate and just make decisions for the sake of not appearing weak.

In many decisions it really does not matter what decision is chosen.  We often hear this as “6 to one, half dozen to another.”  Essentially we are saying there is no wrong decision.  In this case a decision can be made at any time.  I often use the example of going to the store for my wife to buy toilet paper.  Absent specific instructions on what kind to buy, it really does not matter what kind I buy.

A key element of making a good decision is deciding who makes the decision.

In broad terms the decision maker can either be an individual or a group.

Group decision making takes longer but decisions made by the group tend to be better

Deciding who makes the decision is one of the most overlooked parts of decision making.  The decision maker could be the highest ranking individual.  It could be the Subject Matter Expert (SME).  It could simply be the first person on the scene.  Or it could be the individual delegated to make the decision.

Unfortunately, deciding who makes the decisions is rarely part of the decision process.  But it should be.

Let’s take a look at a few of the people that should make decisions.

The Project Manager

Often times the decision maker is the manager.  In this case the manager gets input from the staff and makes a decision.  This often required mediation between the staff.  If for example, different staff members are recommending different decisions, then it is up to the manager to mediate between the staff members and make a decision.  It could require that the manager make a decision and then spend time trying to convince the staff member that did not have their decision chosen why they were wrong.

The Subject Matter Expert

Often we simply defer to the SME.  When I go to the doctor or the mechanic I defer to their decisions.  If the IT staff says that something has to be done a certain way we defer to them.  They are the experts and we defer to the experts.

Consensus

In some cases we look to everyone to make a decision.  Discussion is held until everyone can agree.

Majority

In some cases we vote and let the majority make the decision.

The First person on the Scene

There are some situations where we give the decision making authority to the first person on the scene.  Police, Fire, or medical situations often use this approach.

The most senior team member on the scene

Again, this is often used with Police, Fire, military, or medical situations.  When the most senior team member arrives they assume all decision making responsibilities.

The person most sure of the answer

There are situations where someone that is not the manager, not the most senior, not the first person on the scene, but never the less is sure of the answer.  Perhaps they have seen the situation before.  In any case, the bottom line is the person most sure of the decision should make the decision.  But that person must take responsibility for making a bad decision.

An example would be useful here.  My wife is a better cook than I.  So when it comes to cooking I do not criticize her decisions.  I know more about cars than her.  So when it comes to fixing the car she does not criticize my decisions.  This is not to say that I don’t tell her what I want to eat.  And it does not say that she does not tell me what she wants in terms of the car.  What this says is that there is a division of decision making based on who is most sure they know the answers.

This is about is taking responsibility for our actions.  If I make a decision on the car and it is a wrong decision, then I have to take responsibility for making a wrong decision.

The highest ranking member on the scene

This is different than the most senior team member making the decision.  Because it is possible that the highest ranking is not the most senior.

This is used very frequently and is by far the easiest.

The 5 steps of decision making are:

1. Target
2. Information
3. Decision
4. Action
5. Learning

It is important that this not be a serial process.  Steps 1 and 2 have to be worked together.

Step 1 – Deciding on the Target & Step 2 gathering information should be iterative.  A target should be set and information should be gathered.  However, it is possible that as information is gather the target might change.

The image here is water going down a drain.  The water spirals downward in ever smaller circles.  So to should the process of gathering information.  This is based on the scientific approach where a hypothesis is made and then information is gathered on that hypothesis.  Based on the information gathered the hypothesis is either changed or it extended.

The first step is deciding on the goal or target.  Deciding on what is it you want to accomplish.

At first glance this might appear easy.  However, in most decisions there are usually multiple targets.  Therefore it is critical that a way be found to prioritize and weight the targets.

Let’s say you look at your gas gauge and notice you are almost out of gas.  Now you have to make a decision – When and where to get gas.  Following the TIDAL approach the first step is to decide on the Target or goal.  One goal could be to get gas at the closest location.  Another goal might be to get gas at the cheapest place.  Another goal might be to get gas at a place where you could also get a lottery ticket.  Or you might want to get gas at a place that has a good cup of coffee.  It is possible that one gas station might meet all four targets.  In that case the decision is easy.  However, in most decisions no one answer hits all targets.  Usually one gas station is the closest, while another is cheapest, another might have a good cup of coffee, and still another has the lottery ticket.

Thus we have to modify the goals with information.  Let’s further expand our example of getting gas.  Let’s say we gather all the information and decide to get gas at the gas station with the best coffee.  Let’s further say that as you are driving to that gas station we hear on the radio that too much coffee is bad for you and you decide that you no longer want coffee.  Now you have to change your decision.  You see what happened.  Even though you made a decision, you are still gathering information.  You have the potential to change the decision up until the last moment before the decision is executed and implemented.

Step 1 – Setting Priorities

The answer you finally come up with could be different depending on which of your targets is the most important.  Hence it is critical that priorities be set.

The way to deal with this situation is to list all the potential targets or goals.  In our example of  the need to make a decision to get gas, the goals are to get gas within the next 50 miles, save money, get a cup of coffee, and get a lottery ticket.  Then once you have all the goals identified you figure out a way to characterize those goals.

There are many ways to do this.  One way is to use the table below.  Obviously the critical goals have to be addressed.  And the Easy goals are just that Easy.  I wish there is a way to teach people how to pick the right mix of goals.  I think that is what sets successful decision makers apart.

1. Time frame
2. Importance
3. Difficulty making the right decision
4. Difficulty implementing

There are two ways you can pick which is the right mix of goals.  Have the team vote, or have one person pick.  My suggestion is to have one person pick.  That person should be the team leader.

The difficulty in correctly identifing the problem is the most significant obstacle to effective decision making.  Unfortunately there is no simple way to overcome this obstacle.

There are millions of examples.  And this is so very obvious.  Yet it is often difficult to do because we are often trying to solve multiple problems at the same time.

Decisions can be made in a group, or individually.  They can be made quickly or after careful study.  If the decision is to be made by a group, the group can use a very formal method like voting or informal like discussion.

The situation should dictate what method is used.

One way to address this is to create a Consequences Table.

Step 2 – Gathering Information

This is actually a pretty easy step.  The big risk is from distortions and biases.

Here you want to identify cause and effects.  You want to distinguish between “Facts” and “Conclusions”.  You can use observation, personal experience, expert advice, or empirical research.  I just remind everyone that an important factor is decision making is understanding the difference between cause and effect and correlation.

Part of the information stage is looking past the actual decision to the implementation of the decision.  Often times implementing a decision is more difficult than making the decision.  For example, let’s take a decision to go to college.  Making the decision to go to college is pretty easy.  However, actually going to college and getting a degree is very hard.

What this means is that you have to look at how hard a specific decision might be to implement.

Step 3 – Making the decision and implementing that decision

While this is the most important step, it actually could be pretty easy given a good job with steps 1 and 2.  Using the example of the gas station making the decision is hard part.  Implementing the decision is the easy part.  However, in most cases making the decision is the easy part, while implementing the decision is the hard part.

A critical element to decision making is to honestly evaluate the decision after the fact and learn from it.  There are two broad learning’s: 1) the outcome could not have been better and nothing needs to change, or 2) the outcome could have been better and something needs to change.

If the learning is that everything went as expected and nothing needs to change than great!  You can move on to the next decision with the confidence that you are doing what you need to do.

If, however, the learning is that the outcome could have been better then you should evaluate what could have been better and work to make it better.

Remember that you decision could have a positive outcome but still require changes.

Bad decisions come from “distortions and biases – a whole series of mental flaws – that sabotage our reasoning.” (HBR The Hidden Traps in Decision Making, John S. Hammond, Ralph L. Keeney, and Howard Raiffa)

• Anchoring – Giving disproportionate weight to the first information you receive.
• Status quo – Favoring alternatives that perpetuate the existing situation
• Sunk Costs – Making choices in a way that justifies past, flawed choices
• Confirming evidence – Seeking information that supports your existing point of view
• Framing – Structuring the situation in ways that favor one solution over another
• Estimating and forecasting – Being overly influenced by vivid memories when estimating
• Overconfidence – Not being honest about our abilities
• Over Cautiousness – Too much prudence or too much fear of failure
• Recallability – The risk of being influenced by what is top of mind or what is easily recalled.

Buying

Objectives

Information

Criteria

Strategy/tactics

Team Work

As with all actions the first thing to do is determine your objective.  So what is your objective for buying a car?  Is it fun?  Is it utility?  Is it safety?  Is it gas mileage?  Whatever it is, you need to determine your objective.

The last car I bought was for me.  One of the things I wanted was a fun car.  My kids were grown and gone to college so I wanted something I could enjoy driving.  I decided on a convertible.

Chapter 2 – Driving

Paying attention to Pot Holes and Rattles

There are those that suggest that the key to success is positive thinking.  And while positive thinking is critical, you also have to pay attention to the pot holes and rattles.

As you drive down the road of life there will be pot holes.  They will be things that get in the way of a smooth drive.  Sometimes we can see a long way up the road ahead and we can clearly see the pot holes and avoid them.  Sometimes however, pot holes just appear in front of us and we cannot avoid them.  Sometimes a pot hole appears on a road that was previously clear.  You could have taken the same road for years and one day, a pot hole just appears.

No matter how hard we may try we will at some times hit a pot hole.  Hopefully there will be no damage and hitting the pot hole is simply a bump in the road.  However, sometimes a pot hole causes damage.  It could be as small as spilling you coffee, it could be that you get a flat time, or it could be a serious as breaking suspensions.

Thinking positive by itself will not help you avoid pot holes or help you deal with the negative results of a pot hole if you hit one.  It is one thing to think positive, it is another thing to pay attention to the road.

There are 2 ends of the thinking positive continuum.  At one end you have someone that gets in the car and thinks positive and thinks they will never hit a pot hole.  On the other end you have someone that thinks negatively and thinks that they will hit every pot hole.

Rattles are important too.  It is critical to pay attention to rattles.  In a car, rattles are often the first indication that something is wrong.  A well running car has few rattles.  When a new rattle occurs you need to pay attention to it immediately because it could be very serious.  Breaks, bearings, transmission, steering, & suspension are just a few of the things that could be very serious.  When you hear a rattle you have to stop and figure out if the rattle indicates something could break and could cause a breakdown or worse an accident or even worse an injury.

Thinking positive, that nothing bad is going to happen, is bad if it allows you to avoid listening for rattles.  You have to pay attention to rattles.  You should not ignore rattles.  Thinking positive that nothing bad is going to happen, is not the best course of action.

The important elements of driving are:

1. Goal Setting
2. Focus
3. Practice
4. Experience
5. Distractions
6. The Dashboard
7. Controls

1.  Goal Setting

The first thing you have to do to drive is decide where you are going.  If you have more than one car, then where you are going might determine what car to take.  We have 4 cars, If I am going to work and it is a nice day I take the convertible.  If I have to take the dog to vet I take the Van.  If we are taking a trip to Florida with the whole family we take the Van.  If it is just my wife and I going to dinner we take the convertible.

Obviously if you only have one car you don’t have much of a choice what to take.  But never the less you might still decide not to take your car.

Deciding where to go can in most cases be easy.  I am going to work.  I am going to the airport.  I am going to visit my sister-in-law.  However, how you get there may not be that easy.  There could be multiple ways to get there and you have to decide which one

1. Focus.

After you have decided where to go and how to get there, you need to actually drive.

When you drive you focus on 4 distinct areas.

• Long term – where are you going.  You don’t see this goal.  It is beyond your field of vision.  Whenever you start driving you have a specific long range goal in mind.  And you have a pretty good idea how to get there.  If you don’t you consult a map or use a PND.
• the near term – the road up ahead.  You look at traffic lights, you look at congestion.  You make decisions based on these things.  You might speed up or slow down to make a light.
• The very near term.  This is the road right in front of you.  Pot holes, pedestrians, other potential hazards.
• The dashboard – gas, speed, temperature.

1. Practice

Experience

Interchanges

Dashboard

Information on the dashboard is focused on what is actionable.  In this case form follows function.  The designers ask, what information does the driver need and what is the best way to provide that information.

Controls

Controls are designed to be function.

Maintaining a car

Information

Paying attention

Team Work

OK you bought a car and you’ve learned to drive it, now you have to maintain it.  Maintaining a car well increases your enjoyment and reduces your cost.

But maintaining a car isn’t easy.  In the old days, people often maintained a car by themselves.  However, today, I find that cars are too complicated to maintain by myself for I have to rely on team work.  I rely on my mechanic to do much of the work.

Another important aspect of taking care of a car is paying attention.  And as with everything else paying attention is important in many things.

Roads

Stakeholders

Communication/Road Signs

Environment

Looking at roads can teach us a lot about life.

The first thing is communication in road signs.  Road Signs tell us what to expect.  They control our behavior.  And provide us with valuable actionable information.  Could you imigian roads with out road signs.

http://www.fastcompany.com/1603160/strategic-planning-is-dead-long-live-strategy-execution

Strategic Planning is Dead – Long Live Strategy Execution

BY FC Expert Blogger Norman WolfeWed Mar 31, 2010

In a recent blog post, I declared Strategic Planning was obsolete.  The current approach for defining where an organization is going and how it will get there – the ubiquitous Strategic Planning Offsite meeting – can no longer produce the desired result.   Why? In our dynamically changing world, the environment where we execute is not the same one we originally planned for.

However, the underlying objectives of the Strategy Planning process still remain as important today as ever.  It is still critical to establish and communicate the strategic direction for the firm.  And it is even more critical to align all the elements of the living corporate body to perform in ways that ensure the organization achieves its desired results.

Since the key objectives of setting strategic direction and organization alignment towards those goals remain critical, the process by which these objectives are achieved needs to change. To better understand why this is, let’s continue to explore the analogy of the corporate body operating in a similar fashion to the human body.

We know that over 90% of our behavioral responses to our environment occurs semi-autonomously.  The nervous system determines the body’s response to thousands upon thousands of simultaneous inputs received from our environment.  The brain (our body’s central decision processing function) has little say in how our body responds most of the time.   And this is a good thing.  Imagine what life would be like if all decisions had to first go to our brains for a decision before any action would occur.  There are thousands, perhaps millions of choices being made between the many functional parts of our bodies in one of the most coordinated and collaborative team efforts one can imagine.

Think about what happens when you drive.  When driving on the freeway at 65 mph, how much of your conscious thought is actually focused on driving?  What percentage of your brain is coordinating your foot that is pressing on the pedal, with your arm that is controlling the steering wheel, while taking in the data from your eyes as they scan the environment around you?  It is quite amazing to realize that we get to our destination while our conscious thoughts are focused on everything but our driving.

Wouldn’t it be nice if our organizations can get us to our destination with the same degree of semi-autonomous behavior; where the corporate body could respond to the rapidly changing environment with the speed and accuracy of decisions that ensure our ultimate success, much as the human body gets us to our destination?

Like our human bodies, corporate bodies are driven by their own version of the semi-autonomous nervous system. Directors and managers comprise the corporate nervous system that guides the day-to-day decisions made by the hundreds or thousands of people (the corporate body’s cells) as they respond to the myriad of data inputs coming from the corporation’s operating environment.

With this metaphor in mind, let’s return to the challenge of strategy execution and the role of setting the strategic direction and aligning the forces within the organization to the desired results.

In the traditional approach to strategic planning, the CEO and executive team participate in a offsite planning session, where they evaluate strengths, weaknesses, opportunities and threats, (the classic SWOT analysis), set the future direction for the organization, and map out specific action plans to achieve the desired results.  They then go back and communicate these well thought-out plans to the rest of the organization with “marching orders” as to what the various functional departments will each carry out. So long as the environment remains pretty much as they understood it, this approach was likely to produce the desired results.

But herein lies the failing; the environment now changes at a rate faster than the planning horizon.  Said simply, the marketplace dynamics will have changed significantly before the organization has a chance to realize its planned results.

The current execution model relies too much on the executive team (the brain of the corporate body), being involved in the decision making.  Starting with the planning process and carrying over into the myriad day-to-day decisions, the executive team is the dominant decision makers.   When the environment moved slower this was acceptable, but at today’s rate of change this no longer works.  It is analogous to the brain guiding every movement while driving a car.  The driver would slow down to the same speed as that of a student driver trying to get everything coordinated.

The problem lies in the nature of decision making: every decision is made within a specific context.  This context holds the core reason for why we are here and what we are trying to do, and holds the core values against which we evaluate various alternative actions.  It also contains the framework which allows us to organize and make sense of the thousands of data inputs we collect.

In the current approach to strategic planning and execution, the Context of the organization resides with the Executive Team and little, if anything, is ever done to infuse this core Context throughout the organization.  Instead, what is usually communicated is only the “what and the how” of the plan, not the “where and why.”

Without the Context of Soulful Purpose, Values, and Desired Future and a framework for sorting and evaluating input, the corporate body will never be able to execute without continuous involvement from the executive.  Going back to our driving example, one could say that most organizations today operate like student drivers who are thinking about every move they make.

To operate at the speed of today’s business environment, organizations must have the corporate body operate in a semi-autonomous fashion, much like the human body.  This requires a different approach to strategic planning, with most planning focusing on establishing a strong Context; a Context which is not merely communicated but is infused throughout the corporate nervous system.  Additionally, a decision making process must be established that allows individuals (the cells of the corporate body) to quickly respond to the environment in a manner consistent with the Strategic Context.

To learn more about Context, the human body analogy to today’s corporation, and The Living Organization® model, please click here to download a free white paper.

Driving a Stick without a Tachometer

My daughter used one of our old cars when she was home on a visit.  I told her it wasn’t running great, but it should be ok.

After a couple of days she said to me, “You know dad, it’s funny that I don’t really need the tachometer anymore.”

“Oh Shoot!” I thought to myself. I forgot to tell her that the tachometer was one of the things wrong with the car.  But, her comment made perfect sense.

“Yeah, it’s interesting isn’t it.”  I said.  “Once you get comfortable driving a stick shift, you don’t really need the Tach.”