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Is Your Decision-Making as Good You Think?

February 24, 2017

Chances are, if you are like most people, your decision-making needs some work. We think we make our choices based on the highest degree of utility given our situation, but research found our decisions tend to be less than optimal—by far.  Bias tends to cloud decisions, especially when faced with stress. Simply put, when stressed about complex decisions, our decisions become unreliable. The problem? When our decisions matter most is when the “chips are down”; everything is counting on us to decide correctly. 

In their seminal work, Thinking Fast and Slow, psychologists Amos Tversky and Daniel Kahneman suggest that the traditional idea that people on the whole make predictable choices to maximize gain is not entirely accurate. They introduce a concept of system one and system two thinking, whereby our fast system one thinking patterns tend to be riddled with shortcuts—heuristics and biases—in order to speed efficiency of information processing.

One of the primary biases is the idea that “what you see is all there is.” This bias is a primary offspring of system one thinking. In environments where information is quickly emerging and the gravity of events requires a rapid response, system one—fast thinking—offers shortcuts based on a calculation of the limited available information. We make a rapid judgment and a best guess based on circumstances, available information, and experiences. We look for available information and typically only find that which supports our decision-making—also known as confirmation bias. We do so at the expense of other latent variables that may also be important to the process. Our rapid decision-making in system one masks a slower more methodic system two. This creates an environment where what we see is all there is. This is exactly why we rush into unstable environments without considering secondary hazards. Arguably, this is also the root of reactive governance; leaders make reactive decisions without considering long-term effects.

So if we’re all doomed to poor decision-making when faced with stress, what can we do?  Thankfully, the decision-making process works in the same manner as problem analysis:

Perceive -> Orient -> Act -> Evaluate

There are several strategies one can apply during the early hours of “crisis” to help arrive at better decisions. The first includes simply applying the above decision model.

Perceive (awareness):  In the earliest stages of a complex problem, understanding your biases, willingness to accept risks, capabilities, limits, et cetera is foremost. Meta-leadership is key to successful problem management and awareness is its sine qua non. As a leader, take time to reflect on evidence and your potential biases. It is vital to appreciate what you do know, but more importantly, recognize what you don’t. Harvard’s National Preparedness Leadership Initiative (NPLI) provides an excellent study on the principles of meta-leadership.

Orient: Understand what kind of problem you are dealing with. The Cynefin Framework, created by David Snowden, suggests there are four primary domains where problems fall. The four domains can be further defined by their ability to be distilled into recognizable patterns of experiences. The ordered domains include the simple and complicated domains, meaning that order and pattern can be discerned from the emergent event; cause and effect is apparent. The un-ordered domains are neither ordered or comprise disorder but rather are in a state between order and disorder, which has no immediately recognizable pattern. These are the black swans and wicked problems. A description follows:

Chaotic domains—In chaos, there is no discernable cause and effect. Information fidelity is scarce. The fog of war is evident in this domain, which obfuscates reliable information. Decisive action to stabilize the situation and minimize risk is best in this domain. Here, it is best to take action, assess the result (information input), and adjust future actions accordingly.

Complex domain—In the complex domain, patterns are not readily discernable and there is no “right answer” for the response; therefore, novel practices are fully applicable here. Sun Tzu's, The Art of War, observes, “There are no set rules. The rules can only be established according to the circumstances.” This succinctly defines the domain of the complex. Flexibility and establishing an environment of creativity and experimentation is essential. See Stanford’s post on design thinking.

Complicated domain—The complicated domain includes those problems falling outside the scope of daily operating procedures. These problems usually include other agencies or players that are interconnected to the problem, making finding mutual solutions more complicated. Collaborative processes that maximize a unified effort and vision are key here.

Simple domain—Here, standard operating procedures suffice as a solution for managing problems that might emerge. Problems ignored in this domain have a tendency to shift to other domains.

Act: Taking action is essential to moving from reactive to proactive efforts. For a variety of reasons, many well-intentioned leaders fail to act when stress is high. Other leaders march headlong into the fray without checking for bias and heuristics. Equally as important, make sure to create a team to challenge conventional wisdom. The best organizations recognize that when faced with challenges to status quo, it is important to think outside the box. Establish a team to challenge status quo.

Evaluate: Be prepared to be wrong.  As Kahneman and others suggest, our first bet is often poor. Don’t be the leader who is too inflexible to change.

I am fully aware opinions on addressing complex problems are the stuff of popular magazines and leadership seminars. Speaking from a place of experience as a career crisis manager, there is no one solution. The model above is a generalization of what I believe are some of the better theories about how to think about complex problems and our relationship to them. Having awareness of our own biases and tendencies, being able to correctly identify the complexity of the problem, and following through with subsequent action and re-evaluation are the basic ingredients of success. Models will vary, but some variety of the above will almost always exist. What is certain in any case: given enough time, a crisis or complex problem will occur under your command. How you respond, especially as the situation unfolds, will make the difference. 

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