CHAPTER 23 How to Choose Between Bad Options by David Maxfield Imagine this: Youre a general manager for a manufacturing company and orders are up. The strikingly different responses reveal that people are risk averse when a problem is posed in terms of gains (barges saved) but risk seeking when a problem is posed in terms of avoiding losses (barges lost). But when we think in terms of could, we stay open-minded, and the trade-offs involved inspire us to come up with creative solutions. Description: Boston, Massachusetts : Harvard Business Review Press, [2020] | Series: Harvard Business Review guides | Includes index. While no one can rid his or her mind of these ingrained flaws, anyone can follow the lead of airline pilots and learn to understand the traps and compensate for them. Creating a Consequences Table Before you can begin making trade-offs, you need to have a clear picture of all your alternatives and their consequences for each of your objectives. Basically, if after a moment of hesitation, a best course of action wasnt apparent, I would always have my team of men move left, he says. The second condition relates to the type of decision youre making. : To Solve Your Toughest Problems, Change the Problems You Solve, Buy 10 - 49 Were not suggesting they should know in advance what decision will be made. You might speak directly to the people who will be affected by your decision, or ask a member of your team to role-play the outsider or victim as persuasively as he or she can. Not by following her gut instinct. The last two chapters in the section challenge you to change the way you think so you can generate more creative alternatives. I believe the path to getting unstuck when faced with a daunting, possibly paralyzing decision is embedded in McNealys comment, and it involves a fundamental reorientation of our mindset: Focusing on the choice minimizes the effort that will inevitably be required to make any option succeed and diminishes our sense of agency and ownership. Difficult issues need to , by You make decisions every day--from prioritizing your to-do list to choosing which long-term innovation projects to pursue. They can be as insidious as a stereotype about a persons skin color, accent, or dress. How will the monetary costs and benefits of this option translate into bottom-line results as measured by net present value? Special editions, including books with corporate logos, customized covers, and letters from the company or CEO printed in the front matter, as well as excerpts of existing books, can also be created in large quantities for special needs. A Six-Part Tool for Ranking and Assessing Risks, 14. Knowing the purpose of the estimates, each department slanted its forecast to favor building more carsjust to be safe. But the market planners took the numbers at face value and then made their own just to be safe adjustments. FIGURE 6-3 Solutions to power line problem We dont know for sure whether using BrainSwarming would have helped Pacific Power & Light come up with an effective solution more quickly. As an executive I greatly respect once told me, We really want someone or some rule to tell us what to do. This is free download HBR Guide to Making Better Decisions by Harvard Business Review complete book soft copy. Eliminating Dominated Alternatives Once youve defined and mapped the consequences of each alternative, you should always look for opportunities to eliminate one or more of the alternatives. But even the best-laid plans can have some resistance. It gives you a clear framework for making trade-offs. Better yet, build the counterarguments yourself. In judging distance, for example, our minds frequently rely on a heuristic that equates clarity with proximity. Maybe you hired the wrong person, took a job that wasnt a good fit, or launched a new product line that no one seems to want. When Solving Problems, Think About What You Could Do, Not What You Should Do Youll come up with more creative options. Get someone you respect to play devils advocate, to argue against the decision youre contemplating. Our bonus policy hasnt effectively differentiated between high and low performers. What rights would you believe you had? Kees van den Bos, Ril Vermunt, and Henk A. M. Wilke, Procedural and Distributive Justice: What Is Fair Depends More on What Comes First Than on What Comes Next, Journal of Personality and Social Psychology 72, no. Dont stew alone about the choices in front of you. Dont cultivate a failure-fearing culture that leads employees to perpetuate their mistakes. Decision making in business has long been more art than science. Erfahren Sie, wie wir und unser Anzeigenpartner Google Daten sammeln und verwenden. . Developed during World War II, CARVER (then one letter shorter and known as CARVE) was originally used by analysts to determine where bomber pilots could most effectively drop their munitions on enemy targets. All of the traps weve discussed so far can influence the way we make decisions when confronted with uncertainty. What if you were asked this question: Would you prefer to keep your checking account balance of $2,000 or to accept a fifty-fifty chance of having either $1,700 or $2,500 in your account? Everyone seems to have ideas to offer about packaging and how a change there might improve sales. Begin with a blank flip chart page or a clean white-board. This served the firm well during the 2008 financial crisis. When others recommend decisions, examine the way they framed the problem. The restated consequences (a $10 million profit and a 24% market share) are equivalent in value to the original consequences (a $25 million profit and a 21% market share). When those conditions arent present, questions tend to be constrained or, worse, crushed. You have two key objectives for the coming year: increasing profits and expanding market share. At work, of course, the what could we do person is also the one who is seen as slowing things down. In this scenario, George did not successfully engage the team in generating alternatives. Likewise, the decision to sell your product in a new market can be analyzed quantitatively, but the final outcome will be affected by the new customers feelings about the productsomething a computer cannot predict. My colleagues and I did an experiment in which I gave participants difficult ethical challenges where there seemed to be no good choice. Try these techniques: Seek out and listen carefully to the views of people who were uninvolved with the earlier decisions and who are hence unlikely to be committed to them. From the Magazine (November-December 2021) Mattia Balsamini. As a manager you have to make decisionsfrom daily choices about team priorities to deciding which long-term innovation projects to pursue. REASON 2: I DIDNT TELL YOU BEFORE, BUT IM TELLING YOU NOW. Someone who wasnt ever confident about the decision decides to speak up after its been made. These checks are important because emotions affect creative energy. Dont get stuck. Most websites had a comparison tool, but it only allowed people to compare options on a few dimensions. But in todays highly matrixed organizations, closure in the absence of consensus can be an enormous challenge. While your answers to both questions should, rationally speaking, be the same, studies have shown that many people would refuse the fifty-fifty chance in the first question but accept it in the second. (And how do others in the group feel about it?) Write down what was decided, as well as why and how much the team supports the decision. In a question burst session he led with others, it dawned on him that he had been making a big assumption: that the founders of his division had chosen its unique compensation scheme to create a culture of internal rivalry. They should focus on what is best for the company, using all the available information. We may have refused, for example, to sell a stock or a mutual fund at a loss, forgoing other, more attractive investments. To grapple with these questions, you must rely on the best information and expertise available. Some of these choices feel particularly big because they involve selecting one option to the exclusion of all others when the cost of being wrong can be substantial: If Im at a crossroads in my career, which path should I follow? Risk. Not only was this not a culture they had aimed for, but they were dismayed to learn it existed. The Pros and Cons of Pros-and-Cons Lists, 11. Want to buy more than 1 copy? Although it would be a straightforward, inexpensive proposition to sell those shares and put the money into a different investment, a surprising number of people dont sell. To this point, we have been talking about fairness as if it has a single definition that can be applied to either the process or the outcome of decision making. You may find that elements of the current situation act as barriers to your goals. And second, emotions play a critical role in determining a successful outcome to a trade-off decision. As a simple example, imagine assigning workloads based on a flip of a coin. To fix the problem, the company gave buyers the D on how much space product categories would have. Descriptive questions (whats working? SECTION THREE Evaluate Your Options CHAPTER 9 To Make Better Choices, Look at All Your Options Together by Shankha Basu and Krishna Savani We make thousands of decisions every day. Many people worry that theyll make the wrong decision, but as executive coach Ed Batista says in chapter 16, you should worry less about making the right choice and worry more about ensuring the choice youve made turns out right. I then asked participants either What should you do? or What could you do? We found that the could group were able to generate more creative solutions. One interesting side note: Research has suggested that the relative importance of the fairness of the outcome versus the fairness of the process depends on which an employee hears about first.1 The research looked at a hypothetical hiring process in which some applicants were evaluated with a fair process and some with an unfair process: The difference was whether the evaluators scored all nine parts of the assessment protocol or only one of the nine. To paraphrase Einstein, this framework is as simple as possible, but not simpler. 1. Across seven experiments, we asked the participants to make choices from options that were presented either sequentially or all at once. Other studies have shown that effective decision-making practices increase the number of good business decisions sixfold and cut failure rates nearly in half.1 But although theres great potential for using best practices to improve decision making, many organizations are not doing it. Are you more positive than you were four minutes ago? For each type of product, there were six models to choose from, each with varying attributes. We found that the bankers responsible for originating the problem loans were far more likely to advance additional fundsrepeatedly, in many casesthan were bankers who took over the accounts after the original loans were made. Adapted from content posted on hbr.org, October 29, 2013 (product #H00H49). It determines, for example, whether you can employ data and analytics, whether you should involve more people, whether you can study the issues thoroughly, and even whether you can sleep on the decision overnight. We can all learn from Palmieri. by It also allows me to have something to go back to and refer to later when I come up with a similar issue. The other helpful tool he has developed is an informal group of advisers that he regularly polls when he needs reassurance and advice. This is especially true when there is very little information with which to make the decision. By following each step, youll establish regular best practices, so youre consistently making better choices and reducing the time each decision takes. Even once you invest considerable effort in deciding fairly, thats no guarantee that your team will perceive it that way. Adapted from Harvard Business Essentials: Decision Making (product #7618), Harvard Business School Press, 2006. We set out with a clear objective: to restructure the bonus system to reward people relative to their contributions. The names and roles of the people involved in making the decision and why they were included. It is helpful to remember here that in the real world, perfect options are a myth. Why People Challenge Your Decisions and What to Do About It, 22. Mitigate or compensate for the harm. Chapters 18 and 19 explain how to share your decision with those who need to know, as well as how to explain your process, so they accept your choice and consider it fair. Though it was an issue the students cared about, they clearly felt uninspired by the ideas they were generating. Why is it that people make better decisions when they view options all together rather than one at a time? Time. Hopefully, youll find that your intuition has led you in the right direction over time and that even when you made mistakes, they were easily corrected. Research has established that creative problem solving flourishes when people work in positive emotional states. Step 2: Integrate Once youve defined the problem and the data you need, you must use that information effectively. His latest book, Step Back: How to Bring the Art of Reflection into Your Busy Life, will be published by Harvard Business Review Press in 2020. As a result, they offer larger settlements than are actually warranted. This may make it easier to stomach the harm youve caused, but it compromises your values. Similarly, an investor may view the details of one mutual fund at a time or visit a mutual fund comparison website. After considering outcomes, duties, practicalities, and values, you must decide what matters most and what matters less. All rights reserved. As in all brainstorming, dont allow pushback on anyones contributions. The CSO would rank criticality like this: 5Loss of the pipeline would stop operations 4Loss would reduce operations considerably 3Loss would reduce operations 2Loss may reduce operations 1Loss would not affect operations Obviously, the higher the number, the more detrimental the loss of the asset would be to the organization. More specifically, research by Florida State professor Roy Baumeister and others suggests that good decision making is tied to our ability to anticipate future emotional states. Decisions that you repeat regularly are also likely to generate data; capturing the inputs and the outcomes of the choice makes it possible to produce a model that optimizes positive results. Is there some magic about precisely four minutes and 15 questions? BY CONNSON CHOU LOCKE SECTION FOUR. Would we feel comfortable if other people knew that we were considering this option? While managers continually make such estimates and forecasts, they rarely get clear feedback about their accuracy. When Your Team Always Struggles to Reach Consensus, 24. If the business does have a good chance of coming back, thats a wise investment. The status quo exerted its power even though it had been arbitrarily established only minutes before. Order within 21 hrs 7 mins Select delivery location In Stock Qty: 1 Buy Now Payment Secure transaction Ships from Amazon.com Sold by Amazon.com Returns February 11, 2020. The world Machiavelli described is unpredictable, difficult, and shaped by self-interest. Having been trapped by an escalation of commitment, they had tried, consciously or unconsciously, to protect their earlier, flawed decisions. The Estimating and Forecasting Traps Most of us are adept at making estimates about time, distance, weight, and volume. . The alternatives considered (and possibly a summary of the analysis in table form). Because the media tend to aggressively publicize massive damage awards (while ignoring other, far more common trial outcomes), lawyers can overestimate the probability of a large award for the plaintiff. This one may not be perfect either. Their subconscious beliefs or assumptions about problems guided their behavior, causing them to follow the same tired routine time and time again: Collect data, hold meetings, create strategy moving forward. And you engage others in the cause in a nonthreatening way. 5763 (2006): 10051007. The challenge now is to make the right trade-offs between them. But by moving forward, you can always adjust fire and redirect your efforts if need be. __________ Carolyn OHara is a writer and editor based in New York City. Download HBR Guide to Making Better Decisions by Harvard Business Review in PDF EPUB format complete free. Teaching with Simulations. Get Mark Richardss Software Architecture Patterns ebook to better understand how to design componentsand how they should interact. Merely selecting the best option doesnt guarantee that things will turn out well in the long run, just as making a suboptimal choice doesnt doom us to failure or unhappiness. Transformational ideas start out as exhilarating but turn vexing as unforeseen snags reveal themselves. Use these tests to reassess the costs and benefits of your different options. He writes regularly on issues related to coaching and professional development at edbatista.com, contributed to the HBR Guide to Coaching Your Employees (Harvard Business Review Press, 2015), and is currently writing a book on self-coaching for Harvard Business Review Press. But to really empathize, you must be willing to do what many of the best designers do: Step out of the corporate bubble and immerse yourself in the daily lives of people youre trying to serve. From choosing baby's name to helping a teenager choose a college, you'll make so many decisions along the way. In addition to simply auditing the companys books, analysts could perform a CARVER assessment to determine how close the competition might be to catching up to this technology, thus balancing the risk of the investment. In many cases, its possible to combine the best features of two or more existing ideas into a new and superior one. The traps weve reviewed can all work in isolation. For example, when deciding which job candidates to interview, a hiring manager may evaluate one candidates rsum at a time, form an opinion about it, and then move on to assess the next one. Are there likely to be additional expenses down the road? As a result, businesses cant see dramatic improvements in decision making by simply implementing more big data analytics software from the likes of SAP, Oracle, IBM, and Salesforce. Those who try to suggest solutionsor respond to others questionswill be redirected by you, the convener of the session. When Its Safe to Rely on Intuition (and When Its Not) Consider your expertise level, decision type, and time available. Another person then describes the packaging of a product that has sold particularly well in Latin America. In one experiment, lists of wellknown men and women were read to different groups of people. FIRST, DETERM INE THE CHANGE NECESSARY TO CANCEL OUT AN OBJECTIVE If you could cancel out the $15 million profit advantage gained by not franchising, the decision would depend only on market share. Adapted from Harvard Business Essentials: Decision Making (product #7618), Harvard Business School Press, 2006. Is the population of Turkey greater than 35 million? But the fact is, we all carry biases, and those biases influence the choices we make. Its not that you shouldnt make the choice youre subconsciously drawn to. If youre under time pressure, you may feel the need to skip careful analysis in favor of a gut reaction or your intuition. __________ Tanya Menon is an associate professor of management and human resources at the Ohio State Universitys Fisher College of Business. One of them, snails under the earth, is served as a soup. At every stage of the decision-making process, misperceptions, biases, and other tricks of the mind can influence the choices we make. Weve all made emotional decisions that we later came to regret.
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hbr guide to making better decisions pdf
