Foolproof Decision Making:
How to Make Better Decisions Faster
David Rippe, CEO, Celestia International
Have you ever had a stellar new hire that didn’t work out? You’re not alone. 40% of high-level hires fail to stick.
Were you ever convinced that a business initiative was destined to succeed only to have it crash and burn? According to a KPMG study 83% of mergers & acquisitions fail to deliver any value.
Have you ever made a decision you regretted? 60% of execs say their company makes bad decisions 50% of the time.
As you can see, poor decision making can lead to costly mistakes. Some of those mistakes are whoppers costing companies millions, even billions, of dollars. In fact, the Harvard Business Review estimates bad decisions cost U.S. businesses $1.3 trillion annually. That’s a mountain of money. The obvious question for you is; how much is bad decision-making costing your firm?
Other downsides caused by bad decisions that adversely affect your success, include implementation delays, the scrapping of important plans, stunted corporate growth, reallocation of resources, distractions from issues that matter, and the loss of competitive advantage to name a few.
It’s easy to make mistakes. People draw conclusions rather easily. We like/dislike people we don’t know much about. We trust/distrust strangers without knowing each other. We feel an enterprise is bound to succeed without analyzing it.
So, how do most people try to solve this decision-making deficiency? We analyze data. We find what we are looking for. And pull out the data to support our forgone conclusion.
It’s a matter that needs addressed. Fortunately, four root causes of flawed decision making have been identified that can be mastered with proven tools and techniques that will help you make better, faster decisions. These four root causes are:
- Narrow Framing
- Confirmation Bias
- Short-term Emotions
- Over Confidence
Let’s take a quick look at each.
Narrow Framing is caused by the Spotlight Affect. We put too much emphasis on what is right in front of us thinking that what we see is all there is, so we don’t consider what is outside our frame of reference. In other words, we don’t have all the facts (but believe we do).
“Every person mistakes the limits of their own field of vision for the limits of the world.” ~ Arthur Schopenhauer, philosopher
Confirmation Bias is the single biggest problem in business. Simply put, our natural confirmation bias causes us to seek information that bolsters what we already believe. We search out data and facts that support our position. To make matters worse, scientists have identified 160 known human biases that sway our decision making. See the Cognitive Bias Codex graphic below.
Short-term Emotions cause each of us to be heavily swayed by emotions that fade. As an example, we watch our favorite football team win a decisive victory over an opponent and proudly declare that our team is going to be national champions. Only, the next week, our team loses to an inferior opponent and our short-term emotions cause us to declare that the team is going nowhere.
Over Confidence is the fourth cause of flawed decision making. We place too much faith in our own predictions. It’s an ego thing. People think they know more than they do about the future. As an example, 40% of doctors who are convinced their diagnosis is correct turn out to be wrong. In other words, we don’t know what we don’t know—but think we know all we need to.
“The greatest enemy of knowledge is not ignorance; it is the illusion of knowledge.” ~ Daniel Boorstin
Research shows that a sound decision making process amplifies the results of the decision by 6X. You can learn to leverage this powerful process by using 28 tools that fall into 4 distinct categories called WRAP, which can help you and your team make foolproof decisions. Based on the work of Chip and Dan Heath, the authors of Decisive, WRAP stands for:
- Widen Your Options
- Reality-Test Your Assumptions
- Attain Distance
- Prepare to be Wrong
Implementing Foolproof Decision-Making tools will bring your team clarity, focus, mitigate your risk and provide a foundation for sound judgment for all future decisions.
David Rippe is a strategic consultant and growth expert who works with CEOs and C-Suite executives. He has assisted over 500 hundred companies generate $1.5 billion in revenue. David provides clear insight and alignment with a “wherever it leads, whatever it takes” approach to ensure his clients’ success.
He can be reached at firstname.lastname@example.org or 513-253-4854.