Decision-making process

The 3 Step Decision-Making Process You Need to Know Before Worrying About Cognitive Biases

March 11, 2020

You are likely sabotaging the quality of your decisions if you lack a simple, repeatable decision-making process to ensure you approach decisions in a consistent way. When it comes to decision-making, much attention is given to the cognitive biases that cause you to make irrational decisions – and rightly so. Yet, jumping to a list of cognitive biases without assembling a repeatable decision-making process is a bit like studying calculus without mastering algebra.

You probably think of decision-making as a single step: the act of deciding. In reality, however, there are three distinct steps that come together to form a strong decision. These steps are simple, by design, so that you can use them consistently.

Step 1: Determine the Right Number of Options

Before you can decide, you must assemble the options from which you’ll pick. When doing so, make sure you have a real choice. For example, if you’re trying to decide whether you should invest in marketing your company’s product, the answer is undoubtedly “yes.” This isn’t a real decision. In contrast, how much or how to spend your marketing budget is a choice. Roger Martin, Dean of the Rothman School of Business, argues that many leaders spend time on strategies that don’t contain real choices. If you don’t have multiple, distinct options, avoid belaboring the decision and do what you need to do.

How many options do you want?

While there isn’t a magic number for every decision, too few options and you run the risk of missing important alternatives – and too many options and it becomes difficult to distinguish between options and make a sound decision. In short, you want to follow the Goldilocks principle when sourcing options: not too much or too little. Renowned computer scientist and professor of psychology and anthropology, Jerry Weinberg, offers a more specific recommendation in his Rule of 3: “If you haven’t thought of three possibilities, you haven’t thought enough.”

Psychologist George Miller proposed that as many as seven choices plus or minus two can work because your brain’s short-term memory can hold seven chunks of information at a time. Given that you can write down your choices and review them in print, you need not be limited by the capacity of your short-term memory. At the same time, being able to hold all options in your head at once when selecting an option using your intuition (see below) can be helpful. Research published in the Journal of Accounting Research in 1999 provides support for Weinberg’s small number of choices. It revealed that auditors who develop three hypotheses are more efficient, and just as effective, at identifying misstatements through the use of analytical procedures as those who develop more than three hypotheses.

To be safe, you want to have at least three options and fewer than seven.

What do you do if you have too few options?

If you have too few options, you’ve likely gotten stuck on what we call the Egocentrism Plateau. It keeps people from moving from the second phase of the Critical Thinking Roadmap Toolkit, synthesize, to the third, recommend. Egocentrism means that you can only see the world from a single perspective: your own. Those stuck in egocentrism gravitate toward the option that is most intuitive to them by default and struggle to see any alternatives.

To overcome the egocentrism plateau, you need to put yourself in the “shoes” of people or groups that differ from you. Consider the key stakeholders for your decision and think through what options they might offer.

The other way to generate more options is to expand your thinking. Oftentimes, your thinking is restricted by the question you’ve asked yourself. For example, if you asked yourself, “How do I get across town?” you would immediately think of one or a few answers. But, if you then asked, “What is the fastest way to get across town?” you would likely think of other options. Asking, “What different modes of transportation can get me across town?” would prompt yet additional thoughts, and “How will people get across town in town in the future?” would likely yield even more options. How you frame your decision sets guardrails in your mind for which options you’ll generate. Shift the guardrails and you’ll come up with more options.

What do you do if you have too many options?

Whenever you have more information or options than you can efficiently process, you need to identify patterns in the options and attempt to categorize them. This is called chunking and it reduces the number of items your brain has to consider at a single time. Psychologists have found that chunking can dramatically improve people’s memories of random strings of numbers or letters. Most people are hard-pressed to remember over 15 digits, but if those digits are assembled into five three-digit numbers, the task becomes feasible.

To chunk your options, look for similarities across them. Consider similarities in the following:

  • Features (e.g., can take pictures)
  • Characteristics (e.g., six inches long)
  • Sequence (e.g., Option A happens after Option B)
  • Relationship (e.g., Option A and C are effects of Option B)
  • Benefits (e.g., Option A and B produce the same benefit)

Chunking leaves you with a smaller number of categories of options to evaluate. You can then evaluate the categories as a whole before evaluating specific options.

Step 2: Select an Option Using Both Ways of Thinking

The process of selecting an option – what you likely normally think of as making a decision – involves two very different thought processes. Most people refer to these as your intuition and rationality. In his book Blink, Malcolm Gladwell calls intuition the “adaptive unconscious” and explains how to take advantage of it without letting it misguide you. Nobel Prize winner Daniel Kahneman provides a more in-depth review of the same topic in his book, Thinking Fast and Slow.

Both of these cognitive processes are critical to making good and fast decisions. Research out the Dutch Eindhoven University of Technology finds that using both together leads to better quality and faster decisions. The order in which you apply them matters too: Start with your intuition.

How do you engage your intuition?

Before you assemble pros and cons, ask: Which option(s) do I feel would best answer the questions? If you’re moving straight from idea generation into evaluation, take at least a minute-long break so your unconscious mind can reflect on the ideas.

Several other questions help to engage your intuition:

  • Which option stands out to you?
  • Which option do you want to pick?
  • Which option seems most attractive to you?

The goal of these questions is to engage your other senses in the decision-making process. Your intuition draws conclusions based on large amounts of information you pick up from your environment largely subconsciously. Asking questions that engage your senses enables you to tap into the information you’re receiving from your environment.

However, even as you ask yourself these questions, don’t put your answers into words. This may seem like strange advice, but in Blink, Gladwell explains that the act of describing an experience in words overrides part of the ability in the brain to remember feelings.

How do you evaluate your options?

The best way to compare your options is a scale of one to 10, right? Think again. Ideas at different stages of maturity require different evaluation processes.

Research from 2010 found that “simple rating mechanisms such as thumbs up/down ratings, or 5-star ratings do not produce valid idea rankings and are significantly outperformed by the multi-attribute scale.” If simple ratings don’t ask the right question, what’s the right question?

It depends on the decision. In a blog post, the late Harvard Business School professor Clay Christensen recommends: What job are potential users trying to get done that they would “hire” this idea to do for them?

That may not be your right question, but Christensen’s specificity is important. Determine what you need from your decision and orient your question around it – like which option would be most profitable, or which would most quickly solve a customer complaint.

Step 3: Track the Quality of Your Decision

You may have assumed that the work of decision-making is finished when you select an option, but this isn’t true because even the best decisions come with uncertainty. You can’t know if your decision is right until after you’ve made the decision. Too often, people make decisions without thinking through a process or method for assessing the quality of their decision. This inhibits learning, causing you to make future decisions with the same amount of information you made former ones.

Once you’ve decided, ask yourself: how will I know if this is a good decision? Then be proactive about tracking the data – qualitative and/or quantitative – to assess the quality of your decision. For example, if you decide to take on a stretch development opportunity when you’re already very busy, you will want to assess the following dimensions of your life:

  • Is my performance at work impacted?
  • Is my personal life suffering as a result?

Noting answers to these questions enables you to pivot and adjust your decision at times and make more informed decisions in the future.

The quality of your life consists of the sum of the quality of the decisions you make every day. Some decisions feel easier than they are, leading you to do only step 2 with overconfidence. Some decisions feel very challenging, causing you to get stuck on step 2. This simple decision-making process can help in both scenarios if applied with consistency and diligence, leading you to make sound decisions that boost your performance at work and improve your personal life.