How can we make difficult decisions?

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make difficult decisions

How can we make difficult decisions?

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We make decisions all the time. Some decisions are easy while others are difficult.

Why are some decisions difficult to make?

It is because they involve a trade-off.

A trade-off is an exchange of something of value for another, usually as a compromise. Simply put, it is a situation that presents us with two or more desirable choices, but we can choose only one.

  1. Easy decisions – involve little or no trade-offs
  2. Difficult decisions – involve tough trade-offs

Naturally, there is a tension involved where you have to trade-off (or lose) something of value for another.

Consider these examples involving trade-offs.

In healthcare, a patient suffering from seizures is offered the choice of brain surgery or long-term medication. The brain surgery can cure the condition but has low probability of success and may impair some other function like speech or memory. Whereas the medication may or may not be highly effective and cause unintended side effects like excessive drowsiness.

It is a gut-wrenching trade-off.

In career, we want a high-paying job having future growth prospects. But it may require frequent travel to different time zones and odd working hours. The decision involves a trade-off between career and health. Moreover, the job comes with the pain of staying away from family.

Unfortunately, such situations are common in business.

In business, a CEO may need to choose between closing the loss-making plant (and firing hundreds of employees) and attempting a turnaround possibly incurring further losses (and risking the survival of the entire business).

Thus, a trade-off implies an opportunity cost, or a sacrifice, or a pain to gain something. And these things hurt. That is why, decisions involving a trade-off are painful and difficult.

A tough trade-off makes us freeze or flee in the face of tough decisions.

How do we resolve a trade-off?

There is an interesting aspect about how the human psychology works when forced to face a trade-off.

In deciding between two options, we like to choose the higher value option over a lower value alternative.

Likewise, we prefer picking the less risky option over the riskier one. This is because human brain equates uncertainty with danger and causes anxiety. So, it wants us to make such decisions quickly to minimize the anxiety and stress.

In short, both the rational brain (i.e., prefrontal cortex) and the emotional brain (i.e., limbic system) are in action.

In such a situation, the key is to listen to the rational brain.

When forced to face a trade-off, be fiercely rational.

This is easier said that done. Because it is extremely difficult to suppress the limbic brain. Only a well-defined process can help.

That is why, to make difficult decisions, we need a rational decision-making process that:

  • gives us the best value option (with higher probability of success),
  • is quick and efficient (saving the anxiety and pain), and
  • helps us achieve the organisation’s purpose and vision.

In business context, the need for such a methodical decision-making process is vital. The analytics based decision-making process fills this space.

Analytics based decision-making process

This process satisfies all the above criteria:

  • It gives us the best value option. Analytics uses tools like classification and decision trees. These tools evaluate a quantitative value for each decision option. We can compare these values to better assess the trade-offs. We can weigh cost and benefits of each decision. Overall, this process helps us choose the best value option.
  • It is quick and efficient (and saves from anxiety). Analytics employs proven techniques and frameworks applied on data. These techniques are time-tested and use data as factual inputs. This brings objectivity in the decision-making process. As a result, the process takes away the emotional anxiety and appears unbiased.
  • It helps achieve our long-term vision. Most importantly, analytics makes use of statistical algorithms based on probability. This entails assessing each decision with the likelihood of achieving organisational objectives.

Thus, analytics based decision-making process helps in achieving organisational objectives in a facts-based, timely, and efficient manner.

More benefits

There is an additional yet understated benefit in using analytics for decision making.

The approach helps in communicating and justifying the decision to all the stakeholders. The pyramid principle made popular by Barbara Minto uses analytical reasoning to communicate a decision. It enables managers to get buy-in from the shareholders and employees for successful implementation of decisions.

In sum, analytics helps make, communicate, and justify difficult decisions.

What approach do you take to make important decisions?

Cover Photo courtesy: Vladislav Babienko on unsplash

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