Be Aware of the Decisions You Make
You make decisions all the time, even if you don't realize it:
Should I get up 15 minutes earlier to avoid the crowds on public transport?
Should I ride my bike or drive?
Which shirt will I wear this morning: plain or striped?
Should I talk to my supervisor about a dispute I'm having with a customer?
Of course, not all decisions are equal: some are easier, less strategic, or have little to no consequences. Others are the opposite.
It's Your Turn!
Ask yourself: what were the last decisions I made, and how did I make them?
Focus the above question on the past three months and identify three recent decisions. For each one ask yourself if the choices were:
Easy or difficult?
Thoughtful or intuitive?
Low or high stake ones?
What were your most | Easy or difficult? | Intuitive or thoughtful? | Low or high stakes? |
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Why is it So Hard to Decide?
After reflecting on your most recent choices, you may have realized that decision-making can be difficult sometimes. 😅 Don't worry! That's normal!
In fact, it's quite often the fear of making mistakes, or of causing catastrophic consequences, that makes this such a big deal. We live in a world that doesn't easily accept errors, which can feed into this fear. To make a decision, you need to know how to listen to what you want, motivate yourself and take action, all while avoiding the lure of over-optimism.
When faced with an avalanche of possibilities, choosing the right path can be mind-boggling. You may find yourself with many choices, ranging from trivial to important. Some may even have life-changing outcomes. The answers will either come instantaneously or with hesitation, and often when your life seems to depend on it.
Another element that makes decision-making difficult is the growing uncertainty about the world around you. The US Army War College uses the acronym VUCA to describe different types of uncertainty in today's world:
Volatility, or unpredictability and inconsistency.
Uncertainty, or the unexpected.
Complexity, or the growing number of interactions.
Ambiguity, or the inability to attach cause and effect.
This acronym can also be used to describe situations in the workplace. Imagine a large project with many collaborators and lots of different needs; or a presentation where your equipment malfunctions; or even an unhappy client who is reluctant to discuss why they're displeased. By identifying which type of uncertainty is present, VUCA can help you contextualize why something has occurred and then identify the best solution to resolve the situation.
Is it Possible to Make Decisions in Uncertain Circumstances?
Yes, but to make these types of decision, you must consider all the elements, dependencies, and relationships involved. There's always something that can potentially go wrong. 😬
How do you make a decision when everything is uncertain?
According to Frank Knight, an American economist and professor at the University of Chicago, you must distinguish uncertainty from risk. According to him, there are three types of risks:
The risk of a known future, where outcomes are known and risks can be definitively associated with a decision.
The risk of a future that is not known, where outcomes can be guessed and one can guess what the associated risks may be.
The risk of an unknown or even impossible to know future, where outcomes are not known, therefore risks cannot be properly associated with a decision; this is the "Knightian uncertainty."
Here's an example: if you decide to start working as a freelancer during the coronavirus health crisis, you'll experience "Knightian uncertainty" because there is no precedent for this.
It will be difficult to predict the outcome of this decision, and there is a high level of risk involved. You'll obviously try to estimate the risks as much as possible by carrying out market research and gathering as much information as you can, but there will inevitably be a lot of unknowns.
When making a decision, the goal is to reduce the unknowns as much as possible by educating yourself and reliably estimating the risks.
Since the world is complex and there are many things to consider, how can you be sure you're not making a poor decision?
It's not always easy; even the largest organizations can slip up. The processes underlying these counterproductive choices have been widely understood, as well as what you need to do to avoid them.
Here's a particularly shocking example. In 2018, H&M published an image that elicited strong reactions. It showed a black child wearing a hoodie that read, "Coolest monkey in the jungle." Next to him was a Caucasian child with the same hoodie reading, "Survival Expert." The backlash was immediate, and the brand was accused of being racist.
How do you explain this outcome?
We can't definitively state what their intentions were, but we can clearly see the outcome of their decisions and the errors in their decision making process. Several people saw this image; however, none of them reacted. When one is focused on their short-term goals, it is easier to forgot about ones peripheral ethical vision. It's what sociologist Christian Morel describes as a tunnel effect: "The actors will focus on a problem and its solution, and not see the negative connotations of their idea." In this case, you can see that it wasn't a problem to be solved, but a task to be executed: create an ad campaign within certain constraints. Think of a time when you experienced the tunnel effect when doing a task. What are the constraints that caused the tunnel effect? Check out the list of factors below that can lead to the tunnel effect and poor decision making and compare it to your experience.
The recipe for poor decision-making includes:
Short-term vision.
Lack of a comprehensive vision.
Rushing.
A lack of information.
Group phenomena.
Other effects play a role, such as group effects, authority biases, collective blindness. We will explore some of these elements throughout the course and look at ways of reducing their effects on our decision-making.
Let's Recap!
In this chapter we have learned:
that some decisions are more difficult to make than others because of different levels of complexity, uncertainty, and risk.
that we can use the Army's Volatility Uncertainty Complexity Ambiguity acronym (VUCA) to describe different types of uncertainty present in a situation.
that uncertainty and risk are two separate concepts and we can categorize risk using Frank Knight's three types: known future and known outcomes, unknown future but predictable outcomes, unknown future with impossible to predict outcomes.
In the next chapter, get ready to dive into how your brain works, and discover the cognitive mechanisms that enable you to make decisions.
