We can only decide those questions that are principally undecidable – Heinz von Foerster

HBR.org published this interesting article about decision making in organizations. The authors explain the Decision Analysis Framework that has the following elements:

• An approriate frame, including a clear understanding of the problem and what needs to be achieved.
• Creative, doable alternatives from which to choose the one likely to achieve the most of what you want
• Meaningful information that is reliable, unbiased, and reflects all relevant uncertainties and intangibles.
• Clarity about desired outcomes, including acceptable tradeoffs.
• Solid reasoning and sound logic that includes considerations of uncertainty and insight at the appropriate level of complexity.
• Commitment to action by all stakeholders necessary to achieve effective action.

The authors go on to explain that companies should implement a company-wide, rigourous decision-making process instead of hoping that enough individuals will apply the above principles.

One could get the impression that good decision making can be engineered. In practice, I haven’t seen that. Still, one should strive for improvement. I would like to offer some more background on thinking and decision making, share personal learnings, and explain what we are doing at XING.

How experts think about thinking and deciding

Daniel Kahneman said there are two ways or systems how our brain forms thought and decisions:

System 1: Fast, automatic, frequent, emotional, stereotypic, subconscious
System 2: Slow, effortful, infrequent, logical, calculating, conscious

While more thinking than we like or are aware of is happening in system 1, good decision making is concerned with system 2. After all, only conscious thought can be influenced in the moment it happens.

In his book ‘Thinking and deciding’, Jonathan Baron defines the act of conscious thinking as search and inference. We simultanously search for possibilities, evidence, and goals. From those three objects we infer a decision, that is a choice of action. In other words: Given a goal, based on the evidence we found we decide for one of the possibilities at hand. This is an iterative process! New evidence might lead to a change of goals or the creation of new possibilities. New possibilities trigger the search for more evidence or the desire for other goals. And any goal initiates the search for possibilities and evidence.

A pratical framework for thinking and deciding

Whenever I think about any problem, I go (more or less explicitely) through the following steps I coined the infinity loop of thinking and deciding:

I start by putting all my thoughts down on paper such that nothing gets lost. From that I pick all the input for a tentative goal. I try to understand my reasoning behind picking that goal and challenge myself whether there is a deeper WHY for that goal. I am aware of the fact that in this phase my goal might actually change based on thinking and new insights.

Next is an iterative process of jumping back and forth between opening up for associative ideas and narrowing down ideas by structuring. Once I have many ideas, it helps me to put those ideas into some order and categories. Out of this structuring, I identify missing pieces and get new ideas from a higher level of abstraction. All relevant stakeholders should be part of this process.

When there is a enough structure filled with ideas, it is all about generating and prioritizing possible solutions that define a wide enough solution space. Available data, information, and analysis help with this.

Now thinking actually meets reality. Rather than deciding for one option purely on a theoretical excercise and ‘bet’ everything on that option, I prefer to think about a decision as a hypothesis to test. That means to decide as little as possible in order to keep the highest flexibility for the future; it means starting with small tests, pilots, or experiments to find more real life data that supports the decision. These experiments in turn lead to new evidence that initiates a new cycle where either goals or solutions are changed.

How we try to improve product decision making at XING

At XING we don’t have a formalized company-wide process for decision making. We don’t want to become bureaucratic. However, we started to experiment with a very light-weighted tool that tries to get everybody on the same page before we start any bigger new product development. This adresses three points of the decision analysis framework: appropriate frame, clarity on desired outcome and commitment.

We call the tool Auftragsklärung. Surprisingly, there is no short English translation for this meanigful German word. We tell our non-German speaking colleagues that this tool is an ACE (assignment clarification exercise). It is a 1-2 pager that a product person should create in order to get approval from management and commitment from the team. You’ll find the structure of our Auftragsklärung in the picture. I will write another article about the tool in the future.

So far, our experience with the tool is quite positive. People realize gaps in thinking and differences in expectations upfront. Once an Auftragsklärung is done and the WHAT and WHY of a product initiative is clear, teams do have much more autonomy to work out the HOW.

Summary: Daily routines for better thinking and decision making

Decision making is not a mechanical process that can be engineered to perfection. It is a human activity and as such an art. Experience and tools help to increase the likelihood of a good decision.

There are a few things I try to do in my daily routine in order to improve thinking and decision making – at a personal as well as the company level.

• Use our tool Auftragsklärung to get everybody on the same page before we start something bigger
• Decide as little as possible and only as much as necessary. Under uncertainty there is a lot of value in keeping and increasing your options.
• Be aware of the moment. In particular before making a decision, double-check that system 2 thinking has been used sufficiently. At the same time, listen to your gut: if the decision at hand doesn’t feel right, find out why before you decide.
• Challenge your enthusiasm for your preferred solution. Make a premortem, that is: ask yourself ex ante for the most likely reasons if the solution was to fail.
• Make sure that all relevant stakeholders are heard before a decision. It makes any decision only better and increases the chances of commitment – even if stakeholders don’t agree with your decision.
• Get at ease with the fact that possibilities, evidence, and goals are objects that dance together. To a certain extent, everything is a moving target.
• Try hard to find solutions and evidence that everybody agrees to be right. Yet accept that you have to decide on the undecidable questions where there is no clear wright or wrong. Most of the times, thoseare the big and important decisions. The job then is to make them right.

 

HBR article: An organization-wide approach to good decision making