The anatomy of a bad decision

I was talking about mistakes in my last post and I said I might look at bad decisions.

Thinking about thinking

I have made bad decisions because I did not wait to find out more information, but I also gone off to find more information, only to regret not making the decision early.

Oh dear, it sounds like deciding whether to make a decision is in itself is a decision, so even avoiding a decision involves making a decision to avoid the decision. The only way to avoid that is to avoid deciding to avoid the decision, but that means …. I guess you get the idea.

But there are actually 3 choices when we come to a “decision opportunity:”

• Make the decision now, based on what we know
• Seek more information
• Ignore the decision for now and defer thinking about it

Each option has a cost (or risk) and each has a benefit. So I am sometimes surprised that someone will say:

We are risk adverse here, so we always want to gather more information before we make a decision.

Unknown client

Error 1 – not deciding because you fear a mistake

But what if the risk of delaying is greater than the risk of making the wrong decision? What if the cost of analysing the decision is greater than the cost of guessing wrong? What if the benefit of deciding now is nothing and the benefit of some analysis is great?

Based on these questions:

• Decide now if the cost of making a dumb decision is less than the cost of analysing or relaxing. This includes when you want to avoid a decision but know you will keep stressing about it
• Just relax and decide later if there is time to spare and better information will come along, or record a trigger point if you think there is a logical time when you need to decide. Neither make a decision, nor do any analysis.
• Stop to analyse if there are things you can learn without delaying the decision too much, or if there is real value in improving your confidence. But “analyse” does not mean collate meaningless data and then delay thinking. Instead generate questions that would help you form a better decision and seek answers to those. The cost of analysis is often a lot less than people think it will be, if it is done deliberately and with curiosity rather than fear.

Error 2 – mistaking a good outcome for a good decision

I was telling someone recently that I am lucky. In almost every project I take on, things come together really well because the stars seem to align.

This is great and I recommend being lucky wherever possible, but I have also been on some projects where things went to custard (a term meaning that the outcome was sub-optimal and that my reaction was one of sorrow).

But the outcome has not always correlated with the quality of the decisions I made along the way.

I have made excellent decisions, based on the available information and then found things out later that led to our demise. I also realise that there has been more than one opportunity when the decision I made was actually a poor one, but that we succeeded in spite of my foolishness.

A good decision and a good outcome are different things. You will learn the wrong lesson if you assume otherwise.

James King

I do retrospectives on my projects and on my ongoing work. I often start with the outcome and then say “was that good or bad.” This is useful if I want to identify factors and patterns that I can notice next time – but can be destructive if I then assume that the outcome dictated whether the decisions I made along the way were good or bad.

There are many instances where people have ignored risks and been lucky or spent a lot of money when they could afford to. They then assume that they did the right things and take the same approach next time – only to inevitable be unlucky once, or run short of money when they can least afford to.

Instead, if you want to create better decisions then try asking these questions:

• Knowing what I know now I might have done something different – but in a similar in the future, if I had the same information, would I make the same decision?
• Let’s say something went wrong – did I foresee the possibility?
  • If not, should I have?
  • If I did, then was my preparation proportionate to the risk – Ie if it was unlikely, was it reasonable to keep going? If it was likely and bad, should i have done something different?
  • Once I learned about the mistake, what happened? Could I learn from that and take both positive lessons (do ts again) and negative ones (don’t do that again)
• Let’s say things were tough but they turned out well. Do a pretend retrospective on different outcomes – what would we have done if Bill didn’t come along at the right time? Then ask what lessons you might have learned from that.

Techniques that might help

So, where does that leave us. One idea that comes to mind is to do retrospectives for decisions on the basis of what you new then – what would you do in a similar situation if you had similar information. Similarly, review what happened when new information came to hand – did you respond well, or did you try to negotiate with reality so that the original decision is right, when you know in hindsight that it is no longer correct.

Looking forward, try using pre-mortems (pro-spectives) where you guess different scenarios and then assess what you might do.