Decision Making Process for Effective Decisions

Updated
For Managers

We make what feels like a million little decisions each day. From the moment we get up and pour our first cup of coffee, we’re making decisions. There are obviously some decisions that require more strategy and contemplation than others, and business is riddled with complex decisions that have widespread implications. As a leader, you are called upon to make decisions that will affect not just you, but the people you lead. Effective executives know how to make these decisions and implement them. Decision making is an essential skill for executives, entrepreneurs, and consultants alike. Let’s create a structure for how to approach decision making, and then we’ll dive into a process for making the most effective decisions.

Decision Making Process for Effective Decisions
Decision Making Definition

Let’s start by agreeing on a simple decision-making definition: it is the act of choosing between two or more options. When you view decision-making through the lens of problem solving, we expand the definition to choose between various possible solutions to a particular problem. When making decisions, we tend to rely either on our intuition or a logic-driven approach. The most successful decision makers are able to combine both logic and intuition to form their approach – especially in more complicated decisions.

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Decision Making Process

In any area of life, decisions typically fail when we don’t take the time to investigate the best options available to us. Another detracting factor is a lack of clarity around priorities. A decision-making process will help prevent this by ensuring all of the necessary elements for success are examined.

There are typically at least seven steps in decision making that lead to an ideal outcome. Some of these steps may overlap or run congruently, but they are all a part of effectively making decisions.

  1. Identify the Decision

Take time to identify the type of decision being made and the possible ramifications. Use the Pyramid Principle to start with a hypothesis to make your decision-making process more efficient.

  1. Create a Conducive Environment

If your decisions will involve or affect others, create an environment of safety and collaboration. Make sure team members have an opportunity to voice their ideas for solutions. Also, consider which groups (internal and external) need to be represented in your decision and get their buy-in on the process.

  1. Investigate the Situation in Detail

Your problem may seem simple at first, but it’s likely there are a myriad of factors to consider. You can use tools to determine where the problem truly lies. Based on your Pyramid Principle hypothesis, conduct research and analysis that will either prove or disprove your thinking. Make sure your analysis is MECE and incorporates the 80/20 rule. If your hypothesis is disproven, start over with a new hypothesis. Finally, use Inductive Reasoning to draw sound conclusions from your findings.

  1. Identify the Alternatives

It’s important to identify alternatives even once you’ve arrived at your preferred needs. This covers the “no gaps” ethos that MECE preaches. Reverse brainstorming can be a key to do this well – reverse brainstorming is the process of identifying the opposite of the intended goal and how to accomplish it. This allows you to turn that fake “solution” on its head and find the solution you are looking for.

  1. Choose the Best Option

You can’t stay in decision land forever. Analysis paralysis is just as much the enemy of great decision makers as any outside force. It’s always good to take time to analyze the risks, benefits, and costs of the different options. But once that is done, it’s time to decide. If one option stands out above the rest, your decision is made. If it’s still unclear, you can use different decision-making models to create a more refined plan.

  1. Evaluate the Plan

Now it’s time to implement! This is a great point in the process to bring in stakeholders that haven’t been involved in the decision-making process to get buy-in or budget.

  1. Communicate Your Decision and Take Action

Be clear about what the decision and consequent implementation means to different stakeholders. Let them know clearly what is required of them, and what the intended benefits are for them as well. Then, assign workstreams to internal owners and set a clear timeline. As your team implements, you may run into roadblocks you didn’t anticipate during the decision-making process. This is not a sign of failure – it’s normal. Adjust as necessary to achieve the stated goal.

Challenges in Decision Making

One of the biggest challenges in decision making is that it can be easy to feel paralyzed by the wealth of options. When that happens, we can fall into a number of different traps. Find a list of decision-making biases below:

  1. Confidence Bias

Also called Confirmation Bias, this bias involves only considering or seeking information that confirms what you want to see. To avoid this, intentionally seek out feedback and people who challenge your views.

  1. Hindsight Bias

This occurs when we, in retrospect, genuinely believe that we predicted the outcome of a situation. This can be detrimental if you approach a situation thinking you know what will happen and don’t take time to consider other options.

  1. Anchoring Bias

Anchoring bias entails using one piece of information to create your system of belief about a problem. This is another reason that skipping the research/analysis piece of problem-solving can be detrimental.

  1. Escalation of Commitment

This bias occurs when we double down on our current direction despite growing evidence that we may have made the wrong choice.

  1. Availability Heuristic

The Availability Heuristic means using only information that is readily available to make a decision. For instance, if your colleague had a bad experience working for XYZ Firm and you determine the firm wouldn’t be a good fit based on that information alone.

  1. Survivorship Bias

This bias involves using other stories of success to determine your course of action. To defeat this bias, train your brain to ask questions and be skeptical.

  1. Halo Effect

This is the power of first impressions. If you find yourself partnering with someone without knowing anything about them, you are most likely caught in the halo. Be sure to ask yourself if you are making decisions based on first impressions.

Decision Making Skills

Now that your tool belt contains a sound decision-making process, let’s look at some decision-making skills that will help you navigate the process smoothly and effectively.

  • Problem Solving – This skill gives you the ability to look at a variety of different perspectives and find the best solution.
  • Leadership – You can motivate your people to take action after a decision is made.
  • Follow Through – The most beautiful plan in the world doesn’t mean anything if you don’t implement.
  • Teamwork – Great leaders are great team members. Your ability to work with a team will determine the level of success you have and the results you can achieve.
  • Creativity – Your creativity will allow you to combine the logical and emotional halves of your brain to come up with unique solutions for your team.

Conclusion

As you walk through the decision-making process lined out above, actively employ these skills and be aware of any biases you may be carrying with you along the way. As you grow and learn through your experiences, the process will become second nature. Decision-making is a muscle that grows stronger every time you use it. Don’t be afraid to step out, take the lead, and help your organization grow.

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Filed Under: Consulting skills, Corporate Training