Why we make bad decisions. And how to get better

When it comes to making decisions, most of us suck. This is the view that Dan Heath shared at the annual conference of STIMA (the Belgian Marketing Society), where I was also speaking on Grow the Core. Dan was sharing insights from "Decisive", the book he co-authored with his brother Chip.

Bad decisions happen in our personal lives. For example, Dan told us that 61,535 tattoos were reversed in the United States in 2009! But bad decisions also happen at work, sometimes with much bigger consequences. Most acquisitions by companies fail to add value, according to multiple research studies quoted here.

Here are what Dan calls three ’Villains of Decision Making’, and what to do about them.  

1. Narrow framing

The tendency is for us to define our choices too narrowly. In particular, we tend to get into "yes/no" decisions, such as "Shall I go to the party, or not?" or "As Quaker, shall we buy Snapple, or not?" (an example of an acquisition that didn't work out well).

Solution

Consider multiple options to open up your choices. An interesting example of this in action is a study looking at 2 sets of graphic designers working on an online ad, reported here. Half did one design at a time and got feedback. Half did 3 designs simultaneously before getting feedback. The second "multi-option" designs were voted more superior and got better click rates. 

2. Confirmation Bias

We tend to develop a belief about a problem or issue, then seek out information that reinforces that belief. We may look at options, but confirmation bias causes us to filter the information.

Solution

A way round this problem is to "reality test" your assumptions. The good old test market is an example of this, where you get in-market results to learn about an idea, rather than relying just on data. Interestingly, this is what most entrepreneurs do, testing their idea with a low level operation, according to a study reported here.  

3. Short Term Emotion

When a difficult decision needs making we can get emotional, and these emotions can lead to the wrong choice.

Solution

Dan recommends we attain distance before deciding. I was always told never to send an angry email straight away, but rather to leave it as a draft for a day then come back to it. Another couple of good questions to ask are: i) What would you tell your best friend to do? and ii) If you were fired, what would your successor do?

So, if you have a decision to make, why not try out the tips above, and let me know how you get on!