In business and in life, we make decisions every day. Most are automatic and unconscious so our brains are not overwhelmed.
The non-automatic type of decisions take energy and create what's referred to as 'cognitive load' on the brain. By developing good habits and heuristics we can greatly improve our decision-making, make our lives easier, and our brains less stressed.
Whether you're a new founder deciding when to start your business or you're Nintendo trying to decide if you should fire an employee for their personal views on child pornography, the process you use to make a decision needs to be both efficient and effective.
Throughout all of the obstacles I've faced as a founder and CEO, I learned that deciding what to do and how to do it in each situation is a complex series of problems. Even in cases where a part of the decision is clear--for example, an employee who steals needs their accounts suspended--the questions of exactly how to go about those decisions become very difficult.
There are four basic questions that I've learned to apply in these situations to make them easier:
1. What is the decision I need to make right now?
The first step is always to clarify the decision at hand. Often, this step is glossed over and leads either to "over-deciding" or "under-deciding" both of which can lead to problems.
In one case, I had an employee steal almost $15,000 from the company. Prioritizing the decision of turning off all access to critical accounts needed to be done immediately. Deciding whether to contact the police, however, was secondary and could wait.
This allowed us to gather some information and fully consider our options. Why did they steal? Should they be given counseling? Maybe they are in a personal crisis and they need emotional and temporary financial support?
It's a very different situation if the employee stole to pay for a drug habit than if they stole to pay for their child's chemotherapy.
2. When do I need to make this decision?
If you can refrain from making a decision right away, you leave room for new data or insight to surface that may help you make a better decision.
The trick here is figuring out the last responsible moment for making a decision. If I have time, I'll make a provisional decision and wait until I'm close to the final moment to finalize my decision.
In the case of the employee theft, we figured out we had to report the incident to the police within a week if we wanted to submit it the loss to our insurance company.
3. What are all the options at my disposal?
People tend to think of the two or three options that come to mind first and then they stop. This limits possibilities and outcomes. Once you've really clarified the decision you need to make, brainstorm all of the possible options you can think of and expand your options.
In one case, when someone plagiarized our job description, I took some time to consider my options. Rather than firing off a nasty email, I came up with the idea of reaching out to offer our services. This lead to a multi-million dollar project that lasted several years.
4. What criteria should I use to make the decision?
Once I have the decision clarified and the options created, I consider what criteria I need to apply, and in what weight and order.
After my divorce, when I was picking out a new place to live, I created a spreadsheet with several criteria. Then by monetizing factors such as how much a 10-minute reduction in my daily commute was worth in dollars, allowed me to compare different areas based on average rents.
While not all good decisions will always lead to good outcomes, applying these techniques can maximize your chances and allow you to be more confident in your choices. With practice, you'll become better at making decisions quickly and efficiently.