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SELLING A BUSINESS

What If Your Gut Is (Gasp!) Wrong?
 

Chip and Dan Heath, authors of Decisive: How to Make Better Choices in Life and Work, on how to make better executive decisions

The Right Calls: The key to making good decisions quickly? Pretend you're someone else, says Dan Heath (right, with his brother Chip).

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An organization, like a life, is the sum of many choices. So a leader's most important job is to make good decisions, which--minus perfect knowledge of the future--is tough to do consistently. But there are ways to improve your judgment calls, say Made to Stick co-authors Chip and Dan Heath. In their latest book, Decisive: How to Make Better Choices in Life and Work, the Heath brothers explain how to navigate the land mines laid by our irration­al brains and improve our chances of good outcomes. The trick, as Dan Heath explains, lies in expansive thinking. --as told to Leigh Buchanan

Should you ever accept a decision at face value? Or should you always poke at it, look at it from different angles?
Among the most pervasive biases in decision making is narrow framing. That's our tendency to unduly narrow the number of options we consider and how we think about choices. Roughly two-thirds of executives only consider one option when making decisions. That's disastrous, because adding options increases the chance of a good outcome.

Why? Because there's more likely a good option in the mix?
There are a couple of reasons. By considering multiple options, we learn the shape of what's possible. If you're deciding whether to buy a particular laptop, it's easy to rig that decision to what your gut tells you. But if you compare three different models and an iPad and a netbook, you contrast across multiple dimensions in a way that makes you smarter about the problem as a whole. Adding options also makes us more honest about how we assess them. Say there's one house you want to buy. One job candidate you want to hire. As you evaluate that option, you rationalize away the negatives because you want it to work out. If you consider two homes or two candidates, you're much more likely to be honest with yourself about their strengths and flaws.

What are best practices for quick decisions?
One strategy involves a pair of questions. For personal decisions, the question is, "What would I tell my best friend to do?" The work equivalent is, "If I were replaced tomorrow and a wise successor took my place, what would he or she do?" Something profound happens when we see our dilemma from the outside like that.

With so much information available, how come we're not making better decisions?
There's so much information that it's easy to build a case for what we wanted to do all along. You have to wire opposition into your decision-making process. In a high-stakes situation like an acquisition, you should have a team preparing the case to do it and a team preparing the case not to do it.

How do you institutionalize good decision making in your organization?
You need a process whereby everyone can handle a decision the same way. There should be attention paid to disconfirming information. Attention to alternate ways to frame the problem. Attention to what will happen if things go unexpectedly well or poorly. The process doesn't guarantee a good outcome. But it sets guardrails to keep you from falling into the common decision-making traps.

What traps are entrepreneurs especially vulnerable to?
Entrepreneurs tend to be very optimistic, which makes them overconfident about how the future will unfold. The psychologist Gary Klein created a process called the premortem, where you say, "OK, team. We just made a decision. Let's imagine that it's a year from now, and it was a disaster. What went wrong?" Everyone assembles lists of fiasco scenarios and compares notes. Then you say, "Given what we've foreseen, how can we forestall as many of those outcomes as possible?" A premortem makes you humble enough to think, If I'm wrong, what then?

Last updated: Mar 14, 2013

LEIGH BUCHANAN is an editor-at-large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture.
@LeighEBuchanan




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