Decisive: How to Make Better Choices in Life and Work

March 25, 2013 3:44 pm

Decide and make your move

By Philip Delves Broughton

Good management is about nothing if not good decision making. Unfortunately, decisiveness has been seen as a character trait like courage: there are those who can pull the trigger – the great executives – and those who can’t – the armies of wafflers who are terrified of being forced to accept the consequences of their actions.

A new wave of social scientists, however, is upending this view by digging into the psychological and social factors that influence our decisions. By developing better processes, they hope to make decision making less like voodoo and more like carpentry.

Chip Heath, a professor at Stanford’s business school, and his brother Dan Heath, a fellow at Duke University’s Center for the Advancement of Social Entrepreneurship, have already written two excellent books of pop social science: Made to Stick and Switch . Their latest, Decisions: How to Make Better Choices in Life and Work digs into the latest findings on decision making.

“Being decisive is itself a choice,” they write. “Decisiveness is a way of behaving, not an inherited trait. It allows us to make brave and confident choices, not because we know we’ll be right but because it’s better to try and fail than to delay and regret.”

The Heaths identify four villains that obstruct good decision making: narrow framing, limiting the options we consider; the confirmation bias, our tendency to look for evidence which supports what we already think; short-term emotion, which will fade over time; and overconfidence.

They lay out a four-step process called “WRAP” that addresses each of the villains in turn. We must “widen our options” away from simple either/or decisions. We should “reality test our assumptions”, to ensure we are basing our decisions on fact rather than prejudice. We should “attain distance before deciding”, or sleep on big decisions rather than letting ourselves be carried away by the emotion of the moment. And we should “prepare to be wrong”, because there is a good chance we will be.

The Heaths make a convincing case that bad decision making is ubiquitous. Take job interviews. Rather than requiring candidates to perform the specific task for which we want to hire them, we sit them in a room and ask them questions about their ability to do the task. “Imagine if the US Olympic track coach used two tests in selecting the men who’d run on the 4×100 relay team. Test 1: get the man on the track to see how fast he runs. And test 2: meet him in a conference room and see if he answers questions like a fast runner would.”

We also often decide earlier than we need to, say the Heaths. What we should do, instead, is conduct small experiments to test our ideas before going in all the way.

Advice on choosing

Dennis Bakke’s ‘Decision Maker’ process

● The leader realises he is not the best person to make every decision.

● He chooses a decision maker who is close to the action and with sufficient wisdom, experience and respect to make a decision.

● The chosen decision makermust take advice from multiple sources.

● The decision maker must decide and the decision must be respected by the leader.

Tips for making good decisions

● Think “both/and” not “either/or” when deciding between options. Decisions are rarely as binary or as neatly framed as you think.

● Keep widening your perspective and your range of expert advisers.

● Repeatedly test your prejudices and emotions with facts. Ground your decision in reality, not bias.

● Prepare to be wrong.Chances are, you often will be.

Much of what the Heaths write is echoed by Francesca Gino, a professor at Harvard Business School, in her much wonkier book, Sidetracked: Why Our Decisions Get Derailed, and How We Can Stick to the Plan. She writes that if only we were more aware of the strange influences on our decisions, we could exercise more control over them.

For example, most of us tend to exaggerate our perceptions of our own competence and capabilities. Asked to rate our own qualities, ranging from decision-making abilities to physical attractiveness, most of us will rate ourselves well above average. We think we’re better than we are. Psychological biases such as these are the bane of good decision making.

Similarly, we tend to follow advice we pay for more than advice we receive for free, regardless of its quality. There is something about having paid for it that makes us credulous, a fact exploited by high-priced consultants.

But once you understand these tendencies in the human mind you can take advantage of them to persuade others. Hotels have found that guests will reuse their towels at a much higher rate if you tell them that other guests reuse their towels than if you simply tell them that it’s the environmentally friendly thing to do.

We all tend to do more of what we think people like us to do, whether good or bad. In some instances, it makes perfect sense to follow the lead of others we trust and respect. But experiments have revealed the worrying truth that even the slightest perceived similarity, regardless of its relevance, can influence how we act. If we learn that someone shares our birth month or our name, we are more likely to follow their lead. Forging common ground, however shaky, is a trick every good salesman knows.

Prof Gino’s solution to not getting sidetracked is, like the Heaths’, to depersonalise and objectify decision making. We need to keep our emotions in check and constantly adjust our perspective by taking advice, expanding our options and taking the other party’s point of view. We need to question the sources of our information and psychological biases. And we must always ask if a decision can be reframed to achieve what we want.

She cites the example of Theodore Roosevelt’s campaign manager in 1912. The campaign had just printed 3m brochures featuring a photograph of Roosevelt for which it hadn’t obtained permission. Rather than putting himself at the mercy of the photographer, the manager sent him a telegram saying: “We are planning to distribute millions of pamphlets with Roosevelt’s picture on the cover. It will be great publicity for the studio whose photograph we use. How much will you pay us to use yours? Respond immediately.” The delighted photographer replied offering $250. Problem reframed, happy outcome achieved.

Dennis Bakke, co-founder of Imagine Schools and former CEO of the power company AES, sees the devolution of decision making as a powerful managerial tool. All too often executives hog decision making because they feel it is what justifies their status and salaries. But in his new business novel The Decision Maker, he argues for letting more people up and down the company make decisions.

The setting for his book is an old school manufacturing company. The business is staggering along, its workers joylessly going about their work. When the new managers install a pinball machine to boost morale, the employees snigger.

The managers then decide on a radical solution: to give up their decision making power and introduce what Mr Bakke calls the “decision maker process”. First, the leader of an organisation must decide who is to make a decision. The decision maker must be someone close to the issue and aware of the context. If it is to do with a manufacturing process, it should be someone who handles that process every day, not some lofty executive who never visits the factory floor.

The decision maker must then ask for advice in order to ensure that the decision is supported by evidence and multiple perspectives. In the end, the decision maker must make the call.

As Mr Bakke describes it, implementing this process can be hair-raising . Executives tremble at the idea of losing control. Employees develop vertigo at being suddenly endowed with so much responsibility. But, over time, it leads to a greater feeling of ownership among employees, more sharing of knowledge and thus ultimately to better decisions.

All three authors reach the same point: we all have central priorities in our lives and work, and it is through our decision making that we either achieve them or fall short. The good news is that improving the process is something any of us can do.

Decisive: How to Make Better Choices in Life and Work [Hardcover]

Chip Heath (Author), Dan Heath (Author)

Book Description

Release date: March 26, 2013

Chip and Dan Heath, the bestselling authors of Switch and Made to Stick, tackle one of the most critical topics in our work and personal lives: how to make better decisions.

Research in psychology has revealed that our decisions are disrupted by an array of biases and irrationalities: We’re overconfident. We seek out information that supports us and downplay information that doesn’t. We get distracted by short-term emotions. When it comes to making choices, it seems, our brains are flawed instruments. Unfortunately, merely being aware of these shortcomings doesn’t fix the problem, any more than knowing that we are nearsighted helps us to see. The real question is: How can we do better?

In Decisive, the Heaths, based on an exhaustive study of the decision-making literature, introduce a four-step process designed to counteract these biases. Written in an engaging and compulsively readable style, Decisive takes readers on an unforgettable journey, from a rock star’s ingenious decision-making trick to a CEO’s disastrous acquisition, to a single question that can often resolve thorny personal decisions.

Along the way, we learn the answers to critical questions like these: How can we stop the cycle of agonizing over our decisions? How can we make group decisions without destructive politics? And how can we ensure that we don’t overlook precious opportunities to change our course?

   Decisive is the Heath brothers’ most powerful—and important—book yet, offering fresh strategies and practical tools enabling us to make better choices. Because the right decision, at the right moment, can make all the difference.

Editorial Reviews

Review

“A leader’s most important job is to make good decisions, which—minus perfect knowledge of the future—is tough to do consistently…The Heath brothers explain how to navigate the land mines laid by our irrational brains and improve our chances of good outcomes.” -Inc.

About the Author

CHIP HEATH is a professor at the Graduate School of Business at Stanford University. He lives in Los Gatos, California. DAN HEATH is a senior fellow at Duke University’s Center for the Advancement of Social Entrepreneurship (CASE). He lives in Raleigh, North Carolina. The Heath brothers are the bestselling authors of Made to Stick and Switch.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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