Why is Decision Making So Hard? Unpacking 12 Methods for Effective Leadership Choices

Ego, emotion, distractions, lack of input, multi-tasking, analysis paralysis - these are all reasons we make bad decisions according to Harvard Business Review.

“Inevitably, we all make some poor decisions every single day. But if we are aware of these six enemies of good decision-making, and take steps to outmaneuver them, we can make better decisions that have a positive impact on the people we work with and lead.” 6 Reasons We Make Bad Decisions, and What to Do About Them by Mike Erwin August 01, 2019

So how do we outmaneuver bad decision making?

Effective decision-making is paramount for leaders. Here are some well-established methods and approaches that leaders can adopt for making the best decisions:

1. SWOT Analysis: Common in business strategy a SWOT analysis helps leaders identify external and internal factors that might affect a decision. By identifying Strengths, Weaknesses, Opportunities, and Threats, a SWOT analysis offers a comprehensive perspective, ensuring that no aspect of a decision is overlooked.

2. Decision Matrix: Visual thinkers rejoice! Lay out your options and weigh them against set criteria. This tool is a great way to see where each option stands quantitatively. It’s great for decisions with multiple options and criteria and provides a visual way to rank different choices.

3. Cost-Benefit Analysis: Keep an eye on the ROI. Cost-benefit analysis is widely used in economics and policy decisions and helps determine the financial viability of a choice. By weighing potential benefits against costs, leaders ensure that resources are allocated to the most promising ventures.

4. The Pareto Principle (80/20 Rule): Maximize impact. Recognize that often 80% of your outcomes can stem from 20% of your actions. By identifying these pivotal actions, leaders can drive results efficiently focusing on the most impactful tasks or challenges.

5. Group Decision-Making: Two heads are better than one, and sometimes even more! Embrace diversity of thought by incorporating team brainstorming sessions, consensus-building, or the Delphi method. While group decision-making capitalizes on collective intelligence be mindful that it can be time-consuming and may risk groupthink.

6. Scenario Planning: Prepare for tomorrow, today. Envisioning various future scenarios helps leaders craft decisions that stand strong and can be long-term strategies amidst uncertain environments.

7. Analytical Hierarchical Process (AHP): For those complex decisions, break things down. AHP helps prioritize elements by comparing their relative importance. It is effective for multi-criteria decisions but does require a deep understanding of the method.

8. Pro-Con List: Back to basics. A simply and intuitive list of the advantages and disadvantages of each option. It's a classic method that offers clarity, especially in simpler, straightforward decisions without many variables.

9. Gut Instinct and Experience: Never underestimate the power of intuition. Seasoned leaders often have a sixth sense that can guide decisions, especially when data is scarce. Be careful using this method as it can be subject to biases.

10. Feedback Loops: Refinement is key. Post-decision evaluations ensure that leaders continually hone their decision-making prowess over time.

11. Six Thinking Hats: Wear different hats, literally! By adopting varied perspectives—from optimistic to cautious—leaders can ensure comprehensive analysis. This method encourages diverse thinking and can prevent oversight but requires everyone's buy-in to the method.

12. Risk Assessment and Management: Navigate the unknown. By understanding potential risks and threats, leaders can craft decisions that are both informed and bold.

In Conclusion: Effective decision-making is an art refined over time, but it's also a science, aided by these structured methods. Incorporating these methods into a leader's decision-making toolbox can significantly enhance the rationale, quality, and effectiveness of decisions, ensuring that they align well with an organization's goals, priorities, and success.

Remember, the best leaders don't just make decisions; they make informed decisions.

——

Keywords: Decision-Making, Cognitive Biases, Risk Assessment, Analysis Paralysis, Accountability, Leadership, Effective Decision-Making, Decision-Making Strategies, Rational Decision-Making