Am I getting better at making decisions in my life? How did you make your last big decision? Did your make a pro and con list, ask your friends or did you just follow your gut?
If you want to get better and making effective decisions that creatively utilise the resources at your disposal and move you in the direction you want to go, learn to use a process and be aware of the 4 villains of decision making according to Chip & Dan Heath in their book Decisive: How to make better decisions in work and life using their 4 stage W.R.A.P process to defeat them!
To test the faith people put in analysis, two researchers, Dan Lovallo, a professor at the University of Sydney, and Olivier Sibony, a director of McKinsey & Company, investigated 1,048 business decisions over five years, tracking both the ways the decisions were made and the subsequent outcomes in terms of revenues, profits, and market share. The decisions were important ones, such as whether or not to launch a new product or service, change the structure of the organization, enter a new country, or acquire another firm.
The researchers found that in making most of the decisions, the teams had conducted rigorous analysis. They’d compiled thorough financial models and assessed how investors might react to their plans.
Beyond the analysis, Lovallo and Sibony also asked the teams about their decision process—the softer, less analytical side of the decisions. Had the team explicitly discussed what was still uncertain about the decision? Did they include perspectives that contradicted the senior executive’s point of view? Did they elicit participation from a range of people who had different views of the decision?
When the researchers compared whether process or analysis was more important in producing good decisions—those that increased revenues, profits, and market share—they found that “process mattered more than analysis—by a factor of six.” Often a good process led to better analysis—for instance, by ferreting out faulty logic. But the reverse was not true: “Superb analysis is useless unless the decision process gives it a fair hearing.”
I have a simple rule with business and thinking books. If it comes from Stanford university it’s probably good. And if it comes from Chip & Dan Heath – I read it!
Head over to their site to download a summary of the process; the entire first chapter of the book which identified the 4 villains and outlines the WRAP process of decision making; as well as 12 examples of decisions following the steps. There’s also other goodies like a workbook and discussion guide if you want to do a book club.
Here are 4 videos with Chip or Dan Heath (i never know which is which!) explaining each step in the process:
World.Hatch Learning 