As you know, I have been working for over 25 years to help people make better decisions, whether through strategic and competitive intelligence or life, leadership, and business coaching. I even call myself The Decision-Making Maverick™.
Over the years, I have found four key areas that impact decision-making the most:
- Heavy internal focus
- Decision Fatigue
- Shallow Brains
- Learning how to do new things
So when a colleague – Shane Parrish from Farnam Street – recently posted about one aspect of decision-making that’s rarely talked about – how to avoid making bad decisions – I had to share it with you.
Here are his suggestions (including some additional comments based on my experience) for five of the biggest reasons we make bad decisions:
1. We’re unintentionally stupid
We like to think that we can rationally process information like a computer, but we can’t. Cognitive biases explain why we make bad decisions but rarely help us avoid them in the first place. It’s better to focus on these warning signs that signal something is about to go wrong.
Warning signs you’re about to do something stupid unintentionally:
- You’re tired, emotional, in a rush, or distracted.
- You’re operating in a group or working with an authority figure who thinks they know it all.
The rule: Never make important decisions when you’re tired, emotional, distracted, or in a rush.
2. We solve the wrong problem
How many times have we come across this? The first person to state the problem rarely has the best insight into the problem. Once a problem is thrown out on the table, however, our type-A problem-solving nature kicks in, and we forget first to ask if we’re solving the right problem.
Warning signs you’re solving the wrong problem:
- You let someone else define the problem for you.
- You’re far away from the problem.
- You’re thinking about the problem at only one level or through a narrow lens.
- You don’t have a clear enough question about the problem.
The rule: Never let anyone define the problem for you. And never proceed if you are not clear on which problem you are trying to solve. Go back to the decision you are trying to reach around the problem.
3. We use incorrect or insufficient information
We like to believe that what we read is correct and that people tell us the truth. We like to believe the people we talk to understand what they are talking about. We like to believe that we have all the information.
Warning signs you have incorrect or insufficient information:
- You are not speaking to the right people.
- You’re reading about it only in the news.
- You are not looking at multiple sources to collect and verify the information you need.
The rule: Seek out information from numerous sources – don’t be lazy – a lot is riding on making a better decision.
4. We fail to learn
You know the person that sits beside you at work that has twenty years of experience but keeps making the same mistakes over and over? They don’t have twenty years of experience—they have one year of experience repeated twenty times. If you can’t learn, you can’t get better.
To truly learn from our experiences, we must reflect. Reflection has to be part of your process, not something you might do if you have time. Don’t use the excuse of being too busy or get too invested in protecting your ego. Only reflection allows us to distil experience into something we can learn from to make better decisions in the future.
Warning signs you’re not learning:
- You’re too busy to reflect.
- You don’t keep track of your decisions.
- You can’t calibrate your decision-making.
The rule: Be less busy. Keep a learning journal. Reflect every day.
5. We focus on optics over outcomes
Our evolutionary programming conditions us to do what’s easy over what’s right. After all, it’s often easier to signal being virtuous than to actually be virtuous.
Warning signs you’re focused on optics:
- You’re thinking about how you’ll defend your decision – and you don’t share what you already know.
- You’re knowingly choosing what’s defendable over what’s right.
- You’d make a different decision if you owned the company.
- You catch yourself saying this is what your boss would want.
The rule: Act as you would want an employee to act if you owned the company.
As some of you would know from my many presentations, I have talked about these very issues. Avoiding bad decisions is just as important as making good ones.
Look at the warning signs, reflect, set some rules for your decision-making processes, and you will never need to rely on luck to get good outcomes.
Here is the link to Shane’s original article and many others – https://fs.blog/2021/03/avoid-bad-decisions/
I would love to hear how you have learnt to avoid making bad decisions.
At MindShifts® we offer a range of coaching programs, and competitive intelligence services to support individuals and businesses. If you’d like to get in touch, or would like to arrange a 45 minute complimentary ‘discovery session’ please contact us via our contact page.