Sunday, May 03, 2015

Mind & Spirit -> "Decision Making Part I"

 

What is a decision?

imageThink about it for a minute.  We all make decisions every day, but do we really think about what a decision actually is?  Yet, there are only two things that define who we are.  

1. The decisions that we make.

2. The discipline to follow on those decisions.

If we are to really think about it, there is nothing more important for success in this life or the afterlife other than these two things.  Yet, although life is made up around these two aspects, we spend no time thinking about these aspects.  You have never been trained in making decisions.  Chances are, you have never taken a course in discipline.  This is a massive cognitive hole in the world wide psyche.  The cornerstone of all progress is something we don't talk about or teach people about.

This is not to say that there hasn't been a ton of research and thinking about this.  In previous blog entries, I have touched on discipline, and did a review on “habit,” and the ability to continue to stay to a given path.  In the old days, somebody that had discipline was considered to have fortitude, which means courage, because all discipline requires this.  As much as I would like to focus on discipline because it is a rich subject and much more could be written, today we are going to be thinking about how we make decisions.

As we have many times in the past, we will pull from wikipedia.  The article on decision making starts off by calling out that there are three modes of study when we think about decisions.

They call out the first mode of making decision has to do with the psychology of making decisions.  What do they mean by this?  Our brains are wired in a wonderful yet often confusing fashion.  If I ask you, "How do you make a good decision?" you will probably answer back something like this:

1. Gather information

2. List the options and figure out what the risks versus gains

3. Act on the decision, and communicate it to other people if necessary

I recently asked my team how to make a good decision, and the feedback was exactly as the three steps up above.  Really, if you think about it, this seems so simple.  Ironically, if all you do is list the three steps and ask yourself ,"Have I done this?"  you will probably catch a lot of your own mistakes.  

Yet, we need to think about this a little bit more.  The problem is that what sounds so simple is actually incredibly difficult because the amount of information that we need to deal with is overwhelming.  I have written this before, but the amount of information that you are able to cognitively process is around 19Kbits per second.  All of your senses is flooding you with information at somewhere in the neighborhood of a 1Gbit per second or more.  If you gathered all the information coming to you at any second, you would be information overload because you'd be cramming and overstuffing your 19Kbit input pipe.

We have all had this happen to us about a relationship, something that we were going to buy, or other decision that we needed to make.  The more that we think about something, the more that we slow down.  

This leads to the wonderful poem "The Centipede's Dilemma"

A centipede was happy – quite!
Until a toad in fun
Said, "Pray, which leg moves after which?"
This raised her doubts to such a pitch,
She fell exhausted in the ditch
Not knowing how to run.

I have heard so many times that it almost hurts, "Analysis Paralysis."  Now, I don’t want to suggest that some of the things said with this phase is completely false, but most times I hear this thrown out by a senior manager to express displeasure about how fast something is moving.  “They aren’t making a decision,” is said, but they really are saying is “they don’t know how to make a decision.”

This compounded by the glorification of the snap decisions.  All your life, you have been told that leaders are "decisive."  From stories about sports, war and business, we talk about the leader that "made a decision with his gut" and saved the day.  We are all encouraged to move fast and make our decisions.

So, we are now stuck.  Is decision making a process, or do we go with our gut. 

Dilbert helps here nicely with showing what often happens in the business place.

Let me inform you that analysis paralysis does not exist, and substituting “your gut” for logical problem solving is just asking for disaster.  Instead, we need to peel back the onion, and find out what is going wrong.

If you remember the blog post on Kahneman, we as human beings either do things in type 1 or type 2 thinking.  Type 2 thinking is when we are using our brain power and analyzing the issue.  What most people call "analysis paralysis" is actual simply bad habits.  It is people that simply dawdle over stuff without the discipline needed to make the decision.

The problem is procrastination.

The very first thing to do when making a decision is to simply say, "how fast do I really need to make this decision?"  This is a massively important issue to think through.  What is often termed "analysis paralysis" is simply "procrastination."  It turns out that most people will simply put stuff off if given the ability to put things off.  A popular experiment is to take classes and give students a deadline or have no deadline other than having in the work by the end of the quarter.  It turns out, which should be a surprise to absolutely nobody who has been in a class, having deadlines are incredibly important.  When we allow students to simply turn in work "any old time," we find out that people delay the turn in.

Image(1)Ironically, it turns out that self imposed deadlines are almost effective as teacher imposed deadlines.  It turns out that having any deadlines, external or internal, results in much higher performance.  The word to capitalize on is "precommitment."  This is a term used by Nobel Prize winner Thomas Schelling.  The idea behind precommitment is basically setting out a path first and limit your options, then you will naturally tend to go down that path rather than procrastinate.  

So, because we know that human beings tend to lean toward getting stuck, you say, "Guess what everbody, we have a deadline."  Sometimes, there are other precommitment devices that are very powerful.  Sometimes you simply need to limit future paths.  

This is a very old concept, and Aesop wrote about this in his fable the Cat and the Fox.  I clipped this from the web:

A Fox was boasting to a Cat of its clever devices for escaping its enemies.
"I have a whole bag of tricks," he said, "which contains a hundred ways of escaping my enemies."
"I have only one," said the Cat; "but I can generally manage with that."
Just at that moment they heard the cry of a pack of hounds coming towards them, and the Cat immediately scampered up a tree and hid herself in the boughs.
"This is my plan," said the Cat. "What are you going to do?"
The Fox thought first of one way, then of another, and while he was debating the hounds came nearer and nearer, and at last the Fox in his confusion was caught up by the hounds and soon killed by the huntsmen. Miss Puss, who had been looking on, said:
Moral of Aesops Fable: Better one safe way than a hundred on which you cannot reckon

Options are good, but too many options drive you crazy.

There are two different paths to precommitment:  change reward and change decision options.

image

It turns out that one of the most powerful precommitment devices for reducing decision points goes back to the Michael Porter, the most influential business strategists in the world.  His ideas were extended by Treacy and Weirsema in their book "The Discipline Of Market Leaders."  Although they did not recognize the precommitment device or reference Schelling, they understood that successful companies tended to be disciplined.  This discipline came from precommitting.  It turns out that the most power precommitment is to a strategy.  Porter lays out the strategy options.

I like the Treacy and Weirsema refinement of the options for precommitment.  The point is that to be successful, you need to limit your options.  You need to figure out a way of not procrastinating.  The best way of making sure that you commit to a path is deciding upfront the paths that you won't go down.  This then allows you to make smart decisions.

When we start up a business, we need to figure out want we want to stand for.  What will be our rallying cry.

The three generic strategies for a business are show in the following diagram:

Image

Product Leadership:  You will have the biggest, the baddest, the best thing in the market.

Customer Intimacy:  You will customize your solution for whatever your customer wants.  You will listen to all of their concerns and aim your company at making whatever minor tweaks necessary to fit their strange needs.

Operational Excellence: You will deliver a lot of product at the best possible quality.  You aim for the bulk of the market, and you are willing to sacrifice the other two areas if it means it is going to significantly impact your cost.

Now the key to the above is to recognize that you need to do a little bit of each one of these things, but on two of the axes, you are willing to draw a line and say, "this is good enough."  This is a powerful device to allow people to limit the options so they don't procrastinate.

To expand on this, even as individuals, we need to figure out how we want to approach our careers.  The person that is all about product leadership will be thinking about "how do I become a world class expert in whatever field that I am pursuing."  You will tend toward having your Ph.D.  You will go deep into any subject that you are call on.  I believe these are also the people that want to dream a little higher, or think a little bigger.  They enjoy striving to the unrealistic and seeing how close they can get.  If this gets out of hand, they construct ideas that overstretch and breaks the org.

If you determine that you will be customer intimate, you will focus on what niche you can fill inside of the company.  You will say, "here is an opening that nobody else is filling.  I will modify whatever I am doing so I can become the unique person that can fill this role."  This area can also see some bad habits.  People that are customer intimate can turn and start to focus on just their boss, and  become overly political.  Taken out of context, this means that they will be focused more on personalities rather than the company.

If you determine that you are going to be operationally excellent, you will say, "I will become known as being the person that simply gets things done."  You will constantly ask yourself, "How do I get more out of the resources that I have been given?"  You will focus on trying to create a system where people are always getting more and more with less and less required input.  However, this can turn badly also.  If not managed correctly, you can become heartless and unkind.  The Bible teaches that there is a time for charity and kindness, even if this means that you are not optimally efficient.

This blog posting has turned into quite a discourse.  Rather than expanding this post, we will return to the subject in future postings on making decisions.  However, let us summarize what we have discussed today.  

Decisions is one of the two fundamental pillars of our life.  Everyone thinks that they know how to make a decision, but decision making actually turns out to be very important.  In this blog post, I immediately warned that making fast decisions is not the best choice in many ways.  The first thing that we needed to worry about is making decisions within a deadline.  This deadline is to facilitate something called precommitment.  The most powerful precommitment device is to call out a strategy.  Then we covered the three main types of strategies as laid out by Treacy and Wiersema.  

We have a lot to cover in future post, including why making snap decisions is a really bad idea, and how to use tools like Analytical Hierarchy Process (AHP) to help us make better decisions.

I hope you decide to follow me in this journey.

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