From the moment we open our eyes each morning until we close them at night, we are in decision making mode. Whether resolving a question, coming to a conclusion about something or directing a group, just one decision can determine if a company succeeds or fails. It is very easy to make a bad decision when under pressure.
Former CEO Mike Edwards of Borders Booksellers made a dreadful decision back in 2000 to allow Amazon control all of its online book sales. The first question that comes to my mind is why give a competitor this kind of leverage, and with your product? (Hint) He may have overlooked the risk.
Bank of America announced 2011 that it would soon begin charging its debit card customers a $5 monthly fee. That decision initially didn’t sit too well. The move set off a blaze of consumer protest and the bank was forced to back down. Can you imagine the bad publicity it encountered for this terrible decision of charging consumers to have access to their own money?
The global management consultancy Bain & Co. reports there’s a 95% correlation between companies that excel at effective decision-making and those with strong financial performance.
Though good business decisions can sometimes be tricky, as we can see, bad decisions can be dangerous. When under pressure you want your decisions to be driven by facts not fiction. At my company DecisionLab, our science-back strategies give leaders the resources for making better decisions and solving problems. I’ll share 3 quick tips here.
Be clear on personal values. You can make better decisions faster and be more confident when you know and understand what’s most important to you. Values and ethics play an important role here. With clear values you aren’t likely to ignore your instincts and make decisions that don’t feel right. Your gut will warn you. You will also steer from inquiring with people whose morals, values, and visions clash with yours. Clarity on personal values will help you to connect with people and organizations that are in alignment with those values so you can make adjustments where those that do not.
Avoid psychological bias. There are several psychological biases and I’ll write an article about them soon. But the trap that leaders can easily fall into when making decisions is, believe it or not, the overconfidence bias. I’ve been guilty of this myself. It’s hard to notice psychological bias in ourselves, because it often comes from subconscious thinking. Every decision making opportunity poses different options. You cannot rely on yesterday’s decision tools for today’s decisions. Overconfidence can trick you into making premature decisions because you’re led to believe you either know the answer, been there and done that or are certain that your answer falls within acceptable ranges. Be honest with yourself and others and don’t be embarrassed to say, “I don’t know.” It’s safer then to make decisions in a group process.
Train the brain for better decisions. I can hear you saying, “How am I supposed to do that?” By engaging in activities that are centered on wellness and flourishing. For example, the brain is strengthened as you become more self-aware, which means to not be in automatic mode, but rather recognize what you are doing as you are doing it. This supports your thoughts, emotions, and reasons for acting which are an important part of making better choices and decisions. Because we live fast-paced lifestyles with constant distractions, self-awareness is not something everyone readily realizes.
You may have noticed that these 3 tips center on your behaviors and emotions in some way.
Adam King is quoted, “There is no question whether emotion plays a part of decision-making. It plays a part of all behavior.”
Leaders should never make decisions when overwhelmed by negative emotions. Take this advice from Professor Barbara Fredrickson: Discard automatic responses and instead look for creative, flexible, and unpredictable new ways of thinking and acting by broadening your perspectives and actions through your positive emotions.
At DecisionLab, we are here to support you with operating an effective organization and reducing financial waste. We have worked with leaders at all levels to optimize performance, build strong leaders and modernize growth. You can start by identifying the causes of your own personal patterns. Download our free high-performance wellbeing exercises that build morale, improve communication, boost productivity and optimize growth.