Decision Making

I once finished a engagement with a company that had a difficult time with decision-making. Managers and directors would say to their employees, "I need you to get this this number, or change the system to do this." But they would offer no context on why they needed that number or change.

When employees would ask how the change should be implemented, the manager might respond with, "I'm not a technical guy; be creative," and then walk away. I remember sitting through meetings where we were trying to solve a "problem" without understanding what the problem really was. A rounding error in the price of an item might cause a customer to be billed an extra cent a month. It was a top priority to figure out a way to absorb the rounded error by only charging the customer the extra penny every second month. After four meetings with 6-8 people in the room, I asked how many customers this problem affected. "Twelve."

"Why not change all our rate sheet so that prices are an even number of pennies?" I asked.

"That's not acceptable," came the response. "The guy who put the rate sheet together did a lot of work on it."

The first step in decision making is identifying the problem that needs to be solved. In this case, there was no single clear problem. In my mind, the problem was to not bill customers for unnecessary pennies. For the managers in the room, the problem was not having to ask the guy who made up the rate sheet to change the prices by a penny. For the other technicians in the room, the problem was how to oscillate the rounding so that the customer would only pay for the extra penny every second month.

We make decisions everyday--so often in fact, that we can be excused for thinking that we're good at it. But we're not. In a study of 1000 decisions handed down by the United States Supreme Court between 1953 and 1993, when justices were writing for the majority decision, their opinions were less nuanced and complex. They considered fewer perspectives and possible outcomes. They let the fact that they were in the majority justify their decisions (Wethey, 2013, p. 17).

The first step in efficiently, effectively, and collectively making a decision is to converge on a definition of the problem that the decision is meant to solve (or the opportunity that the decision is intended to leverage). If we can't explain why we need to make a decision (or what will happen if we don't make a decision) then we're along from making one. "If we don't make this decision, it will cost this company $0.06 per year for each of our 12 customers affected for a total cost of $0.72 to our bottom line!" Not the best case for making a speedy decision.

Identifying and analyzing a problem sounds like hard work. For this reason, many managers instead rely on "spontaneous decisions". Politicians announce million dollar spending promises to end unemployment without understanding what is causing people to be laid off. Managers tell employees to "be creative" rather than actually taking the time to understand the impact of their decision.

As an activity, "problem solving" is about bridging the gap between the way things are/were, and the way they ought to be. It involves a great deal more time and effort than coming up with a good headline, soundbite, or policy initiative. It involves:

  1. Clearly understanding and articulating the problem or opportunity, including assessing its severity and impact, its ramifications, and identifying who is responsible for it.
  2. Identifying a desired "end state". As I like to say, "What does 'done' look like?" How do we know our solution is a valid one? All other things being equal, a good solution shouldn't cost more than the problem. Even if our rounding error affects 10,000 customers, a good solution should still cost us less than the $0.06 per customer per year.
  3. Assess whether the "end state" is reasonable. Until fusion energy is invented, it isn't a reasonable alternative to fossil fuels.
  4. Identify a number of options to get us from the current state to the target state. These are our implementation options.
  5. Choose the best available implementation option. This is the decision!
  6. Implement the decision.

Using this model, there is a lot of work that comes before a decision, and a lot of work that happens after the decision is made (namely the implementation of the decision). The best decisions clearly tie the problem to the solution and they are reasonable and cost-effective.


Wethey, David. Decide:  Better Ways of Making Better Decisions. Kogan Page Ltd. London. ISBN: 978-07494-66305