Good decisions are measured by the process, not the outcome: a good decision is one that was sized and assessed rationally, where we’ve made reasonable judgements on all options, and their probabilities of occurring, and then made the rational call based on that. We too often conflate the outcome (good or bad) with the quality of the decision. Outcomes are probabilistic.
What matters more in decisions? Analysis or Process? Both matter, but process matters more. Poor analysis and amazing process will by default weed out poor analysis.
The goal is not to make perfect decisions, but rather to make better decisions than average.
Improving the odds of making good decisions is the ability to distinguish between decisions within our competence, and those that aren’t.
Remember that often your role is to manage a coalition: “a manager is usually portrayed as a great decision maker — the scientific decision maker. She’s got her spreadsheet and she’s got her statistical tests and she’s going to weigh the various options. But in fact, real management is mostly about managing coalitions, maintaining support for a project so that it doesn’t evaporate”.
Decisions are part of a larger context of management. They have externalities, and offer opportunities:
Communication of decisions is highly undervalued, under-leveraged, and often poorly handled.
Mental model: an explanation of someone’s thought process about how something works in the real world
Decision: a conclusion or resolution reached after consideration; a choice made between alternative courses of action in a situation of uncertainty.
Risk: something you can put a price on.
Uncertainty: risks that are hard to measure.
This second describes a high level model for how I think about decision making. Before using it, identify the following:
Does this decision affect/influence any goals? If so, what are they? List by priority and impact.
How big is the blast radius of this decision? List how many people it can possibly affect, and by how much.
List the people I can include in the decision making process to improve the chances of my decision being the best one.
List the people most likely to improve the truthiness of the decision making context.
Decide if this decision matters. Exclude decisions in the ‘zone of indifference’. If the effect is small, go with your gut. Else, continue.
Identify the primary goal that will be used to measure the outcome of the decision.
Identify the correct measurement of the goal, ensure this measurement is/can be built.
This measurement will be used to assess the largest risk/reward payoff, and will also be used to continually monitor the decisions progress towards the desired outcome.
How to Measure Anything: (https://www.amazon.com/How-Measure-Anything-Intangibles-Business-ebook-dp-B00INUYS2U/dp/B00INUYS2U/)
List out all the possible decision making options. For each of these options, be sure to calculate the things to the right.
You are assessing and sizing risk and reward here.
Does this change the probability distribution?
All options, and their assigned probabilities of success and risk will be influenced by the assumptions we make. How certain am I about these assumptions, and how can I reduce that uncertainty?
Ways you’re being fooled:
Try changing the goal and seeing what affect that might have on the options available to you. It’s also a good opportunity to clarify why you’re pursuing the goal.
Ask others (peers, people you trust) to help you generate extra options.
Go back to ‘What are all the possible decision options’, reassess.
Choose the option with maximum reward for minimum risk. This calculation should be done with most of the focus on the dominant goal (and should integrate any other goals you care about too).
Decide when I need to execute this decision. Move to next card.
After the decision has played out, do the following:
[Removed for example]