How Decision Frameworks and Self-Reflection Lead to Better Decisions
Every problem has a solution, if not many solutions. But many leaders often stick to one-size-fits-all decision-making systems without fully considering the factors at play, placing too much pressure on themselves to make something happen without utilizing the bountiful resources at their disposal. This self-imposed pressure can lead to emotional barriers that make decisions more difficult than they need to be.
As organizations grow and their organizational structure and processes become more complex, it becomes more unrealistic for leaders to bear the sole responsibility of making every decision. It takes up too much time, diverts attention away from the bigger issues and vision, and removes trust and engagement from team members in whom the company should invest. Thus, to keep the company moving forward, some of that decision-making needs to be better managed and/or dispersed.
In order to speed up and boost the quality of decisions—and to cultivate more buy-in and engagement on our teams—it’s up to leaders to adopt thoughtful decision-making processes and to conduct an open and honest self-reflection afterward.
Where to start? By taking account of the many factors that affect your decisions.
Factors to decide how to decide
There are five significant factors worth considering when developing a decision-making process:
- Available options
- Size of uncertainty
- Opportunity costs
How soon must this decision be made?
Leaders should aim to make decisions quickly. When we don’t, these decisions stack up and create a wall that blocks you from being as effective as possible. Your mental energy gets spread and the quality of your decisions goes down.
What are the available pathways forward?
What is the cost of exploring more options?
You may have a few choices in front of you to decide today—but there may be more options out there. By deciding now, we increase decision-making speed, but we sacrifice making a potentially better decision if we were to gather more data. By delaying the decision, we have the chance to increase the quality of the options or increase confidence, but we also create more work and slow down the process.
Size of uncertainty
How confident are you?
The assumptions behind each option have a confidence band. You may be 100% confident about some, but less confident about others.
The consequences of the decision may also have uncertainty. You hypothesize your decision will drive a certain outcome—but it may not be a guarantee.
Can I “undo” this decision?
In a 1997 letter to shareholders, Jeff Bezos distinguished the difference between irreversible and reversible decisions:
“Some decisions are consequential and irreversible or nearly irreversible — one-way doors — and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that — they are changeable, reversible — they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.
As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention. We’ll have to figure out how to fight that tendency.”
What opportunities close by making this decision?
What opportunities open up?
By deciding one option over another, you close a door to an infinite subset of other possibilities. By saying “yes” to this option, consider what you might be saying “no” to as a result. Conversely, by saying “yes” to this option, you open up to a new realm of possibilities that may not have been available to you before.
Let’s walk through a simple example of a difficult decision business owners have to navigate sooner or later:
Should we replace all of our old systems with this new, integrated software platform?
It promises to connect all of our systems, such as CRM, finances, scheduling, delivery, HR, inventory, etc. It promises more profitability, more seamless workflows, and better data analytics around our entire operation.
The sales team at Vendor A is very convincing. They have great case studies and testimonials for clients like me. But I also know that “all-in-one” systems fail all the time. Nothing is truly “out of the box.” My business is unique, and I’m not sure if this new system will work for us.
How can I make this decision?
Let’s analyze this decision through the five factors.
- Urgency: How soon must this decision be made?
→ “There is no urgency. We’ve operated mostly fine without this software. Of course, things can be better and more seamless.”
- Available options: What are the available pathways forward, and what are the costs of exploring more options?
→ “One option is to do nothing. A second option is to work with Vendor A. The costs associated with this decision sound low because Vendor A has a low-cost monthly subscription model, but the aggregate cost of the time and attention from the entire team is high: data migration and cleansing, productivity costs as we learn the features, ongoing training costs, etc. It may make sense to explore Vendor B and Vendor C.”
- Size of uncertainty: How confident are you?
→ “What Vendor A promises is great, but I’m not confident in their post-sales commitment to us. I’m not confident in the team’s buy-in around moving forward here.”
- Reversibility: Can I “undo” this decision?
→ “Six months in, if we don’t like the software, we can switch, but not without having already spent significant costs and time into Vendor A’s software. We’ll have to fight hard against sunk-cost fallacy, but in the grand scheme of things, we can pivot away if it isn’t working. Ultimately, this decision is reversible.”
- Opportunity costs: What opportunities close by making this decision? What opportunities open?
→ “By deciding to work with Vendor A, we’re committing to this software implementation as a high priority in the next six months. As a result, we may not have time for other, high-priority objectives we’d previously planned for. But by not working with Vendor A, we may miss an opportunity to streamline our workflow and reveal better insight around our operation in the long term.”
As expressed earlier, for entrepreneurial teams to move quickly and to cultivate a sense of ownership of work, alignment, and buy-in, it’s important for leaders to articulate an organizational decision-making process. “Team, we have a problem. How is the decision going to be made regarding what to do?”
As a function of the five factors above, some decision-making frameworks become more appropriate than others. Here are the different frameworks and how they might be applied to the example above:
- Autocratic: “I alone decide.” This is decision-making without any outside input. It works best in situations where a leader doesn’t have much time, has ample information, and the team will accept your decision without hesitation.
- Consultative: “I gather input, then I decide.” This one’s similar to how a president might look to their most trusted cabinet members for advice before making a final decision. It’s best to inform the team ahead of time that their input will be valued, but the decision may not go in their direction.
- Consensus: “Everyone must agree unanimously.” Through candid negotiation, everyone gets a chance to lay out their thoughts and ideas; a decision can only be made if everyone is happy. This method maximizes buy-in and commitment, but it comes at the cost of speed, and the quality of the decision may suffer.
- Delegative: “Someone else decides.” When time is limited, one team member (not you) has the best information, and the rest of the team is ready to execute. The delegate may employ one of the other decision-making models and start the cycle over. Implementing this decision-making method is one of the most difficult for entrepreneurial leaders, but it may be an enormous opportunity to increase the organization’s overall speed and quality of decision-making.
- Democratic: “Majority rules.” This could be 51% agreement or a super-majority, like 75% agreement. This is another approach that’s usually successful when there are a few choices and everyone is in-the-know.
- Stochastic: “Flip a coin.” This method introduces random chance as the ultimate decision-maker. You can use this in low-stakes situations with clearly defined options that have similar outcomes. Here’s a trick: Sometimes, after flipping a coin to choose one of two options, you may experience an internal “gut reaction” to the result, telling you the decision you wanted all along. Go with your gut.
- Avoidant: “Let’s postpone or not decide.” This really only works if the situation is super ambiguous, there’s an underlying factor that might go away, or it’s a low-value decision that doesn’t need to be made at all. Another way to look at this: You’re delegating it to your future self, or you’re eliminating the need to decide entirely.
Ex: “I could unilaterally choose to work with Vendor A and inform the team. But I’m not confident they would be on board, and I’m counting on them to do the work of migration.”
Ex: “I could interview each individual team member, share the opportunity, and get their input. They’ll likely share their concerns, fears, and hesitations, which I can address, but they may also bring up objections that I’m honestly not willing to consider.”
Ex: “We could spend time debating the decision for the next few weeks—it isn’t urgent. But some team members may be harder to convince than others, and some may simply say ‘no.’ Do I want any one individual to have influence over this outcome?”
Ex: “I could give this decision to my #2 to analyze and report back what they do. I know this would maximize their buy-in because I’d be giving them the authority to act. But am I ready to cede my involvement in the decision and fully accept the decision they make?”
Ex: “We could host a debate to represent various perspectives, then ultimately vote to decide. This would give space for all opinions to be heard. But am I willing to honor the process, irrespective of the outcome?”
Ex. “We could flip a coin to decide ‘yea’ or ‘nay,’ which might show me where I stand on the matter. But do I really want chance to influence this type of business decision?”
Ex: “This decision isn’t urgent, and there’s no immediate need to decide now. We have other priorities on our plate. But could deciding to work with Vendor A improve our future trajectory, such that choosing now improves our operation and compounds over time?”
What happens when you don’t use the right framework
While building my previous venture, we needed to purchase a new computer for a new hire. Suddenly, three executives, one director, and one manager were all intimately involved in making a relatively small decision (a matter of $1,000).
In hindsight, we would have benefited from establishing a Delegative decision-making process here. We could have done better to hand full ownership to our director or manager, and either were fully capable of making decisions on this level. Ultimately, what started as a $1,000 decision turned into a company computer procurement policy—eventually fully owned by these leaders.
Using a decision-making process in a growing company allows leadership to engage more of their teams—expanding the collective brainpower across all decisions—resulting in more optimal decisions without the constant need to step in. And it empowers team members to work through current initiatives and next steps confidently—an important dynamic that allows leadership to focus on an organization’s vision of the future.
How to get out of your head and acknowledge emotions
In our minds, we might have all of the information to make a decision—we’ve gotten the data, managed uncertainty, learned the cost, and we know which decision-making framework to use—but fear still stands in the way. We don’t know if we’ll be wrong, and we want to make sure that we’ve spent our time wisely.
Enter the “Internal Board of Advisors” exercise. The goal of this exercise is to explore and understand the various voices in your head—a.k.a. this invisible “board of advisors” of the mind that may cause us to go back-and-forth in our decisions and erode confidence.
Here’s the exercise:
Imagine you’re sitting at the head of a boardroom in front of your “advisors.” Every advisor in the room is there to give you valuable and helpful information in order for you to make an informed decision. Each of these advisors gives voice to a particular emotion you may be feeling with respect to making this decision. Going around the room, give each one a moment to express their thoughts about this decision, and acknowledge and thank them for sharing their perspective. At the end of the exercise, reflect on all of these “characters” and write a letter to the board with your decision and why you made it.
By doing this, leaders can unwind the emotional pressures of decision-making, replacing fear-driven decisions with abundance-driven decisions.
Let’s run through our example:
What does Fear need to share with me about this decision?
→ “I’m afraid of making the wrong decision, or that I’m not confident enough in my own decision-making to simply choose. I’m afraid the team will be unhappy with a decision. I’m afraid people will leave.”
What does Guilt need to share with me about this decision?
→ “I feel guilty for not being further along in this business. I feel guilty for not investing in creating the best experiences for our customers. I feel guilty it’s taken me this long to get our operations working better together.”
What does Excitement need to share with me about this decision?
→ “I am excited about the prospect of this opportunity. I’m excited that this could take us to the next level. I’m excited that this could be the missing piece to help us in the long run.”
What does Uncertainty need to share with me about this decision?
→ “I feel uncertain about how well this will work and how the team will respond. I also feel uncertain about Vendor A’s commitment to us in getting the outcomes we want.”
What does Anger need to share with me about this decision?:
→ “I’m angry at my team for not performing better, which has led me to this software decision. I’m angry I don’t have more time to work on other things.”
What does Gratitude need to share with me about this decision?
→ “I’m grateful we’ve been able to get this far, and that I have the option to think strategically about this. I’m also grateful that I have a committed team doing amazing things.”
Letter to your advisors:
Dear Internal Board of Advisors,
Our goal is to drive growth in our business, create a great place to work for employees, and boost and sustain profitability. For this decision, I employed a Consultative approach to gather input from the team, but leaving me, as Founder/CEO, to make the final call. The team had good perspective on their hesitations, and some team members were unenthusiastic about the upcoming change.
I acknowledge that, even after collecting the requisite information, the decision has not been easy. To this Internal Board of Advisors, thank you for your time today in sharing your perspectives.
We will decide to work with Vendor A and implement the new, integrated software system. I believe this is the best move forward for the company.
Decision = made
Here’s the bottom line: We can reduce the burden of decision-making with a thoughtful process and honest self-reflection. The results will increase decision quality and speed, and cultivate more buy-in and engagement on our teams.
The last thing a leader wants to do is to become paralyzed, careless, or avoidant because of fear of doing the wrong thing or looking bad. Luckily, the variety of frameworks and exercises outlined above fit different leadership styles and can ease the stress of important decisions.
By internally reflecting on what holds us back, implementing decision-making processes across a team, and actively delegating certain decisions, we can make better decisions faster and move the company forward in real, tangible ways in alignment with our long-term vision.