Years of experience need to count for something, right? But is your instinct on what decisions to make regarding the path forward for your business really sending you in the right direction?
By Nature, Humans are Poor Decision-Makers
At a basic level, we process information very quickly and seek out only the information required to validate our thinking. In the book, “Decisive”, Chip and Heath explain how we are often fooled into believing our own way of thinking without appropriately testing our hypothesis.
“We’re wrong more often than we think. A study quoted in “Decisive” showed that when doctors reckoned themselves “completely certain” about a diagnosis, they were wrong 40% of the time.”Decisive – Chip and Heath
They tell us that “we can’t deactivate our biases but we can counteract them with the right discipline”. And the right discipline is the basis for an effective insight strategy. It is the foundation whereby data-based decision making is a mindset, embedded in the culture of the organization. Where all major decisions are put through a vigorous process to test and validate assumptions. Where everyone is asking “Why?” as often as “Why not?”
Making Better Insight-Based Decisions
The first step to making better insight-based decisions is to clarify the key business questions we are trying to answer; today and tomorrow. Once defined, functional leaders must agree on who owns which question and how they will actually utilize the answer. Any question without a clear call to action based on its answer should be removed. Too often we ask for information that seems “interesting” but does not actually lead to any change in behaviour.
Once we clarify the questions we are trying to answer, the next step is to develop a hypothesis about the answer. Often, this is the last step before a decision is made, but instead of moving forward with our best guess, how can we now seek out the data to validate or reject our hypothesis?
This can actually be hard to execute. If data demonstrates that perhaps we are not on the right path, it can be difficult for employees to share back with leadership and challenge their hypothesis. It is critical for leadership, therefore, to allow failure and reward the rejection of a hypothesis. This is how you can help enable sound, fact-based decisions.
We Don’t Always Have All the Facts and Data
Ultimately, a decision based on the gut is still sometimes necessary in the corporate world. We don’t always have all the facts and data to validate or reject our theories. This is often true when we venture into unknown territory. To see a great example of a gut inspired decision, check out this YouTube link where Jeff Bezos explains how he decides to get into online shopping.
So although your gut might help you along the path, we also know that many times your gut can get in the way of making the best decision. To ensure that you are making the right decisions, be clear about the questions you are asking and to allow your hypothesis to be tested and/or rejected. Only then should we truly trust our gut.
Reach out to us if you want to make better decisions.