In my last blog post, we talked about how the quality of the questions that you ask impacts the quality of your decisions. We referenced this diagram to see the flow from questions to results.
Given the importance of your decisions to the results you get in your business and your life, it’s worth considering how you evaluate the quality of your decision-making after you’ve asked yourself the better questions.
One of the most common –and flawed – characteristics in decision-making is in being what can be called “Resultist”. What do I mean by that?
Being Resultist is evaluating the quality of your decision-making only by reference to the outcome or result. On its face, it makes a kind of sense, right? If the result was good, the decision must have been good. If the result was bad, the decision must be bad.
Not so fast.
Bill Gates once said “Success is a lousy teacher.” The fact that things worked out does not, in fact, mean that you are a great decision-maker. You may have been lucky. The variables in that particular decision may have been simple. It doesn’t mean the way you reached your decision was sound or reliable.
Being Resultist flows from the kind of binary thinking I referenced last time. It was either right or wrong, good or bad. Personally, when I hear people proclaim absolute certainty that something will work out, my risk antenna start to quiver wildly. The fact is, most of our business decisions are made within a fog of uncertainty that we can’t fully see through.
What that means is, we are playing a game of probabilities. There is risk in most business decisions. When we hire someone, when we introduce a new product, when we start a new marketing campaign, when we make investments, there is always some probability it won’t work out. So, if you make a decision with a 87% probability of working out, you’re acknowledging there is a 13% risk it won’t. If that 13% risk factor materializes, does that mean you made a lousy decision?
If you choose a course of action with a 13% chance of success and that 13% works out, did you make a wise decision? A lot has to do with your risk tolerance, your capacity to absorb loss and the nature of alternatives. But, I would venture to say, usually, this would not be great decision-making, even though it worked out.
Chris Hadfield, the former Commander of the International Space Station, in his book “An Astronaut’s Guide to Life on Earth” suggests that you “visualize failure.” This goes against some of the pablum peddled in some personal development circles about only visualize positive outcomes. But it is wise. It says to ensure you evaluate risk factors in your decision-making.
I had a client who organized very complex projects with large budgets. We introduced one step in their planning process that reduced their costs, increased customer satisfaction and drove down errors. It was this. After a plan was put together, another team came in and was asked to identify 7 ways the plan could fail. They would almost always come up with improvements.
Below is a very simple 2x2 that can dramatically help you in your decision-making. Consult it when you’re deciding between different courses of action, especially when resources or time is tight. Those that have a high probability of an important consequence (good or bad) occurring need to be addressed. Those with very minimal impact (good or bad) with a low probability of that impact occurring can be avoided. In between, you are balancing consequence with probability to determine where action is needed.
I hope this simple tool helps you make better decisions.