A 5-Step Process to Decision-Making

Leadership is all about making critical decisions—often when you don’t know the answers yourself.

It’s why so often we see leaders of organizations getting criticized over their decision-making. But experts say great decision-making boils down to two things: understanding our past decisions and taking a leap of faith.

Cheryl Strauss Einhorn is the founder and CEO of Decisive, a decision sciences company that uses her AREA Method decision-making system for individuals, companies, and nonprofits looking to solve complex problems. She recently explored the art and science of decision-making and offered a few tips on how leaders can examine their own decision-making process for the better.

THE POWER OF THE PAST

There’s a level of uncertainty that comes with making bold decisions. But, Einhorn says, bold decision-making doesn’t have to be so uncomfortable. In fact, we often have the tools right in front of us.

“To face down the discomfort of a leap-of-faith decision, we can take advantage of a revealing data set that we often ignore: our past decisions,” Einhorn says. “Every choice we’ve made offers information that can inform our future decisions. Looking back at our decision-making history allows us to see patterns that we might not otherwise notice — thus providing a crucial perspective for understanding (and solving!) complex and unique current and future problems.”

Einhorn has developed a planning tool to help leaders mine their own personal decision-making data set. She calls it the Bold Decision Barometer (BDB). It’s a simple five-step process that helps leaders identify and examine variables from previous decisions so they can reduce uncertainty, increase comfort, and take then next big leap of faith.

STEP 1: IDENTIFY THE DECISION

When solving any complex problem, we’re often tasked with combing through a lot of conflicting information. The first step to BDB is to clearly identify the decision that you need to make. Einhorn cites an example of Rhianna, the CEO of an international travel company, who was faced with a tough call: Whether or not to reorganize her board of directors—the entity she reports to and the group that could fire her.

Rhianna had inherited the current board from her predecessor. But within her first two years, the company had grown internationally, and Rhianna now needed a team to enhance a growing, dynamic organization and bring skills and knowledge that the current board didn’t have.

“On the other hand, she worried that proposing this to the current board could be a quick trip to a forced resignation,” Einhorn adds. “Of course, Rhianna had the option to keep the board as is, but not acting would be its own decision, with consequences. By assessing the implications of being cautious, rather than bold, you may assist your willingness to be bold.”

STEP TWO: EXAMINE THE PAST

When examining previous decisions, Einhorn says leaders should consider asking themselves two questions: What decisions were before you? And what actions did you take related to those decisions?

In the case of Rhianna, there were two bold decisions that she made to the organization: She had removed someone on her senior leadership team, and she had converted a for-profit part of the organization into a nonprofit.

“Looking back, Rhianna reviewed the steps she had taken prior to making each decision,” Einhorn says. “In the case of the senior team manager, she had heard hints of problems and suspected they stemmed from this person’s leadership. But she knew she needed to test her assumptions against evidence, so she conducted a financial review of the manager’s unit and spoke with key lieutenants about their oversight. When it came to making a decision about the business unit conversion, Rhianna recognized that she didn’t have the experience she needed with nonprofits. So she met with fundraisers, lawyers, and other experts to get herself up to speed.”

STEP THREE: LOOK FOR PATTERNS

Our past decisions tend to have a theme within them that can be helpful to create a sense of structure for future decision-making. Moreover, Einhorn says, recognizing the patterns in our decision-making can help us make more informed hypotheses— this not only cultivates our capacity for critical thinking and solving problems, but it also establishes a familiarity that strengthens our self-assurance to undertake novel or daring endeavors.

“Rhianna noticed that in making the prior two decisions, she reached out to people with specialized knowledge,” Einhorn says. “She also realized that she had spent time imagining the possibilities of what the organization would look like after her bold decisions were made. For example, she envisioned how making the change on her senior leadership team might introduce some short-term volatility, but in the long term, it would demonstrate her commitment to improving the organization’s culture. Finally, she recognized that in both of her prior decisions, she was willing to incur some short-term personal and professional instability in exchange for a long-term benefit for everyone.”

STEP FOUR: AVOID PAST MISSTEPS

When we make a bold decision and everything turns out well, we tend to look back at it with a sense of satisfaction, or what Einhorn calls “rose-colored glasses.” But it’s also important to take a second look and see if there were any mistakes or unexpected problems we missed. By looking for past missteps, Einhorn says, we can better understand what went wrong and prevent those issues from coming up again in the future.

“In revisiting her prior decisions, Rhianna realized that while she had consulted with other senior leaders, there were lower-level team members who would have had an easier time adapting to the big changes she made if she had consulted with or informed them sooner,” Einhorn says. “For example, when she fired the senior manager, she assumed that the three managers working under him could easily step into his role. But they didn’t have the experience or the comfort with his responsibilities to make a smooth transition. Rhianna recognized that while she could see the outcome of her bold decisions, others might have felt — or even been — left in the dark.”

STEP FIVE: APPLY THE LESSONS LEARNED

Looking at the past, Einhorn says, allows us to see what worked and what didn’t. Ultimately, our past decisions give us lessons to apply to our future decisions—and the courage to take another leap of faith.

“Rhianna made the bold decision to make the case that the existing board needed to change to better meet the current needs of the organization,” Einhorn says. “She shared that she wanted to hire an outside consulting firm to review the board and make recommendations for members’ professional development. While the board understood that the organization was growing and that Rhianna had made some big staffing changes, her presentation emphasized the need for a different kind of leadership from the board. Operations had become more complex, and crucial specialized knowledge and experience from board members would better complement the organization moving forward. After Rhianna made her case, the board enthusiastically signed off on her plans.”

Sources: Harvard Business Review, The New York Times