4 Surefire Ways to Make a Bad Decision

Bad decisions don’t stick – the issue get revisited again and again, people who agreed with the decision do something else, and resources get wasted on a bad idea. Here are four surefire ways to make a bad decision.

1. Make decisions too soon
Although books like the very popular Blink suggest that generally your first reaction is right, there is much proof to the contrary. Sure, if the house is burning and your first thought is to get out, that is a good thing. But, if your decision has many options, multiple factors to consider, or has the needed knowledge spread amongst multiple people, your knee-jerk decision is probably a poor one.

But, Paul Nutt in his book Why Decisions Fail, a study of over 400 business decisions found a leading cause of decision failure is “premature commitment”. One area where matching decisions to time is in Agile Software Programming which encourages “delaying commitments to the last responsible moment”. A great cartoon by Chris Matts that explains this methodology.

2. Ignore uncertainty
Any decision based on estimates about the future are uncertain and virtually all technical and business decisions are of this type. But, virtually all estimates suck. In an earlier blog post I told of the result of a simple experiment that showed people can’t even make simple estimates, much less real business estimates. There are no “accurate estimates” as an estimate is a distribution with a most likely value and uncertainty about that which is inherent in any real project.

If I ask you to estimate the time it will take to you to get to work, what will you tell me? You could say, “Oh about 15 minutes”, but is this the average time, the longest or the shortest. I wont know unless you give me more information. If I am planning on meeting you at work and I want to be 90% you will be there, then I need to know more about your commute than “15 minutes”.

3. Don’t itemize the important factors
It isn’t really clear how people naturally make decisions. One theory is that you use only the most important factor that can help you differentiate amongst the options. So, for example, if you want to buy a new car, and the most important factor is that it be red, then you choose the red car. If there is more than one red car available, then you use the next most important factor (e.g. cost or body style) and so on. This model is a little simplistic, but it does emphasize that you need to understand the factors to make a decision.

There are methods that can help a team, even a team with little agreement about what is important develop a set of factors that will help make a good decision .

4. Be blind to available information
A team might consider all the options and important factors to develop a robust decision. They write up their recommendation, send it to the ultimate “decider” and he ignores their results and makes a different decision. What a waste of time and money. One manager told me that he didn’t follow the recommendation because the team was not privy to all the information he had. This only compounds the sin.

Conclusion
Practice all four of these and you are just about guaranteed to make weak decisions. How will you know? Your decisions won’t stick - they will be revisited again, people will implement actions not chosen, or the results of the decision will be invisible next week.

If you have examples of these methods please share them.

If you know of other surefire ways to make bad decisions then please share these also, so they can be added to this list.

A Justification is Not a Decision

There are two kinds of decision-making: justification and selection. Justification occurs when the result is a foregone conclusion — the choice is made in advance of any argument or consideration. This often happens when the boss already has his favorite option in mind and wants information to "prove" that it is the right choice. I have seen this during my career in product design and the nation saw it in President Bush's decisions about Iraq. In Maureen Dowd's NY times Op-Ed on June 1 2008, "Cult of Deception" she says that "our president is a one-man refutation of Malcolm Gladwell's best seller Blink, about the value of trusting your gut."

In an earlier blog, I discussed Blink and how trusting your gut can be the wrong approach for complex decisions, because you can't include sufficient information or study alternative courses of action. However, managers that get that warm fuzzy feeling when they know the best course of action, before they have sufficient information, can be dangerous. Of course, they may be right. If they usually are, then they clearly have sufficient information and a good decision making style. But if these justifications often end up with later fire-fighting, then justification is not working in lieu of decision-making.

Actually, the CIA has a method that is supposed to short circuit justification-thinking. It is called Analysis of Competing Hypotheses and is in a downloadable book titled "Psychology of Intelligence Analysis." Basically, ACH prescribes the following steps:

1. Identify the possible hypotheses to be considered.
2. List the significant evidence and assumptions for and against each hypothesis.
3. Draw tentative conclusions about the relative likelihood of each hypothesis.
4. Analyze sensitivity of the conclusion to critical items of evidence.
5. Identify future observations that would confirm one of the hypotheses or eliminate others.

This differs some from the process I develop in Making Robust Decisions, but both begin with basic fact that — YOU MUST HAVE ALTERNATIVES TO MAKE A DECISION. I put this in bold because it seems evident that many Washington decision makers don't follow this basic truth. In fact, many business leaders don't follow this either. In the book Why Decisions Fail, Paul Nutt gives three basic blunders. One of these, "Premature Commitments" is the the same as the justifications we are discussing here.

So what do you do to stop this kind of ineffective decision-making. The only thing to do is to set up an environment that forces multiple decisions to be considered. Sometimes this is difficult from below, but if you are a manager, insist on multiple alternatives to consider.

Gut decisions don’t work well in many situations

There has been a recent spate of best-selling books that support the notion that you should go with your gut when making a decision (e.g. Blink: The Power of Thinking Without Thinking by Malcolm Gladwell, Gut Feelings by Gerd Gigerenzer and Gary Klein's The Power of Intuition: How to Use Your Gut Feelings to Make Better Decisions at Work).

The authors of these books state that for many decisions there is no need to formally identify the issue, develop multiple alternatives, and itemize criteria — just go with your intuition. Of course, they are right — for some decisions. We make decisions in two very different ways. Sometimes we reach conclusions unconsciously — our minds quickly and silently sorting through the available information and drawing an immediate judgment. This may be in a blink — so quickly and so far below our level of awareness that we may have no consciousness of where our conclusions came from. If we are trying to decide what to do in an emergency, how to walk through a doorway, or many other simple or no-time-to-think situations then this is the right approach.

One study of decision-making methods (see Payne, Bettman, and Johnson, The Adaptive Decision Maker) found that

1. People use a variety of cognitive strategies, dependent on task and context factors.
2. Given that people have limited cognitive abilities, strategy selection is a compromise between accuracy and the desire to minimize cognitive effort.
3. People are opportunistic; they change their strategies on the fly.

The study indicated that intuition follows a strategy in which we compare the first alternative solution for the situation to the most important criterion. If our evaluation shows that the alternative satisfies that criterion, we accept it and move on. If it doesn’t, we generate another alternative and try again. If there is more than one alternative that satisfies the most important criteria, we move to the next most important criterion to try to zero in on the one to choose. Of course, this strategy may be modified if we are out time, there are too many alternatives, or there are others involved.

Research I did in the early 1990s showed that designers who pursued their first idea generally ended up with concepts that needed much patching to make them work, if they could be fixed at all. Another study of design engineers showed that the quality of design results linearly improved with the time and effort spent on developing alternatives and criteria (this work is in an obscure German dissertation but the results can be read in a paper I wrote "The Ideal Engineering Decision Support System."