Hi friends 👋,
Decision-making is a fundamental skill that can make or break an organisation.
Every choice a leader makes has far-reaching consequences, affecting the bottom line, the people, the culture and reputation.
This article will delve into the art and science of decision-making and how to ‘kill your darlings’. Today we’ll explore:
- How We Make Decisions: The Neuroscience Behind Choices
- 4 Leadership Decision-making Styles
- 10 Common Leadership Mistakes (That We All Make)
- 3 Biases to Avoid
- 4 Decision-making Tools to Make Better Decisions
Let’s dive in!
How We Make Decisions: The Neuroscience Behind Choices
Decision-making is not a purely rational process; it’s deeply rooted in our brain’s intricate mechanisms. Understanding the neuroscience can provide valuable insights into why we make the choices we do.
The brain balances physical, mental and emotional systems. There are two main systems known as Red (energy) and Blue (clarity) that are needed to balance decision-making.
When under pressure we may become out of balance, meaning that too much emotion may cause us to fight, flight or freeze. Or, too much analysis or reflection may cause overthinking and paralysis.
Recognising we operate using both Red and Blue systems is crucial to improving decision-making.
4 Leadership Decision-making Styles
All leaders are responsible for making great decisions. These four styles are commonly used:
1) Autocratic Leadership
Autocratic leadership involves a single leader making quick and unilateral decisions without input from others. It’s suitable for urgent situations or when the leader possesses essential expertise.
2. Participatory Leadership
Participatory leadership entails leaders actively seeking input from team members before deciding. It’s valuable for complex problems or when team collaboration benefits the decision.
3. Democratic Leadership
Democratic leadership involves team members voting or reaching a consensus. It fosters inclusion and is ideal for important, non-urgent decisions.
4. Consensus-Based Leadership
Consensus-based leadership requires unanimous agreement among team members. It’s used for significant, long-lasting decisions when ample time allows for thorough discussions.
Two factors drive the choice of leadership style:
1. Urgency: Urgency determines whether to use autocratic or participatory leadership for swift decisions or democratic/consensus-based when time allows.
2. Impact: High-impact decisions benefit from participatory, democratic, or consensus-based approaches, while low-impact ones can use autocratic leadership for quick resolutions.
10 Common Leadership Mistakes (That We All Make)
Research from IESE Business School Professors Miguel Angel Ariño and Pablo Maella highlight the ten most common decision-making mistakes:
- Holding out for the perfect decision (analysis paralysis)
- Failing to face reality (we tend to see things as we wish they were)
- Falling for self-deceptions (how facts are presented may influence decisions)
- Following the crowd
- Rushing and risking too much (rushing is seen as efficiency, but it is often risky)
- Relying too heavily on intuition (intuition should not outweigh analytical thinking)
- Being married to our own ideas (it’s hard for us to change a prior decision)
- Paying little heed to consequences (for example, the titanic ignoring warnings of icebergs)
- Overvaluing consensus (no one in the Kennedy administration questioned the Bay of Pigs invasion to avoid appearing ‘dissident’)
- Not following through
3 Decision-making Biases to Avoid
There are over 150 unconscious biases that can cloud our judgment and lead to poor decisions. It’s essential to recognise and mitigate biases such as:
- Confirmation bias is the tendency to seek, interpret, or remember information in a way that confirms one’s preexisting beliefs or opinions. People often give more weight to information that aligns with what they already think or believe while downplaying or ignoring information that contradicts their views.
- Outcome Bias is the tendency to judge the quality of a decision based on its outcome rather than the quality of the decision-making process itself. Even if a decision was made using sound reasoning and information, if the outcome is negative, people may wrongly perceive the decision as poor.
- 3. Hindsight Bias, also known as the “I-knew-it-all-along” phenomenon, is the tendency to believe, after an event, that the outcome was predictable or that one would have predicted it correctly all along. It makes people overestimate their ability to foresee events or outcomes after they have happened.
4 Decision-making Tools to Make Better Decisions
Now that we’ve learned how difficult making good decisional, here’s some practical and useful tools for making better decisions:
1) PMI (Plus-Minus-Interesting): PMI is a straightforward yet effective exploration and evaluation tool. When faced with a decision, create three columns.
In the “Plus” column, list all the positive aspects of the decision. In the “Minus” column, identify the negatives. Lastly, in the “Interesting” column, jot down any intriguing or unexpected aspects related to the decision.
You can also, weight or score the aspects you’ve come up with to help arrive at an overall tally to help inform the decision.
This structured approach helps you slow down and assess a decision from multiple angles, promoting a more comprehensive understanding.
2) Six Thinking Hats: Developed by Edward de Bono, the technique encourages individuals to approach a decision from different cognitive angles. Read this post for a detailed explanation.
3) Second-Order Thinking: This tool involves thinking beyond the immediate consequences of a decision.
To apply second-order thinking, consider the primary outcomes and the potential secondary and long-term effects.
Delve into the ripple effects and unintended consequences that the decision might trigger.
First-order thinking is fast and easy.
Second-order thinking is more deliberate.
4) Post Implementation Review: In a Post Implementation Review, you evaluate the outcomes after a decision has been executed or a project has been completed (helps mitigate outcomes bias).
Categorise the evaluations as – what to keep, what to stop, what to add or act to change.
This assessment helps identify lessons learned, areas for improvement, and best practices for future decisions and projects.
⚡️ The Short of it
Decision making is a complex beast. Don’t leave it to chance.
For optimal decision-making:
- Realise that the brain uses two systems (emotions and analysis) that must work in balance to be effective.
- Choose a leadership style to suit the urgency and impact of a decision.
- Recognise that there are 10 common mistakes and 3 biases that leaders should avoid when making decisions.
- Leverage the 4 decision-making tools to make better decisions.
Did you enjoy this week’s newsletter?
DON’T MISS THESE 👇
🎁 Resource Hub:
- 📺 More on the power of decision-making in this TEDx video from Benedikt Ahlfeld
- 🤓 9 cognitive biases that stop innovation. Read this article.
- 🔥 How to solve problems and innovate fast. Design sprint guide.
- 📈 Want to level-up your design thinking skills. Sign up for the bootcamp.
- 🧠 My friend Adriana helps people future-proof their business with strategic marketing. Highly recommend her newsletter.
✍🏻 VB's Journal
I’ve completed the last FREE 45 minute design thinking coaching session this week.
One thing that struck me from the three sessions was the diverse nature of problems that design thinking can help with.
There was a customer experience service design issue, a new social enterprise startup idea and a complex health system project.
From a practitioner view, the common themes were:
- How do I get started?
- What do I do?
- How do I find the answer?
These align with my experiences when I started out and those of the masters student on the innovation by design course.
Fundamental truth: Answers emerge from applying action to a good process.
That’s all for today friends! 👋
If you learned something useful, would you share the newsletter with a friend?
And if you have an idea for a future issue, send ’em my way.
Thanks for reading and I’ll catch you next week.
Keep future-state thinking,