Why Big Decisions Go Wrong
Is it sudden stupidity?
The news has been full of some big decisions lately. That’s not uncommon; big decisions are frequently what make the news. However, we rarely hear as much about good big decisions as we do about bad ones. Bad decisions are more interesting to us because we wonder what went into making them; what went wrong? But we also find bad decisions more interesting because we have been faced with big decisions ourselves, and we can easily imagine being the one who screwed up spectacularly, which we would obviously prefer to avoid.
We take solace in living vicariously, knowing that it wasn’t us this time, but it easily could have been. We look for the character flaws in the decision maker(s) and then look in the mirror to see if we might have the same shortcomings. We tell ourselves we don’t, or if we do, that we would be able to manage ourselves better than the person who fell flat, only to have salt rubbed in their wounds through public criticism and embarrassment. We love to second guess and tear others down; it’s a nasty habit that brings us guilty pleasure. Given an opportunity to opine, we’re glad to oblige.
What causes big decisions to turn out so badly in comparison to everyday decisions? It’s not that we suddenly become less intelligent, so something else is at play, and that something is cognitive stress and the impact it has on our thinking.
When faced with regular decisions, we are accustomed to them and have comfortable ways of going about making them. When faced with big decisions, the situation is new and we are aware of how much is at stake. We don’t have a routine to follow, but several behaviors automatically kick in. Paramount among these is to do everything we can to avoid making a mistake, since the consequences would be severe for the organization and for us personally. To avoid making a mistake, we go into “data collection mode,” learning everything we can about the situation and options available. During this period, it’s easy to become overloaded with contradictory information, as different parties offer perspectives, examples to learn from, advice from different authorities, and opposing facts. Big decisions are almost always complex decisions, with many angles and features that eventually need to be figured out and integrated to achieve a successful outcome. Coordinating the work of lawyers, financial analysts, third parties and others is time consuming and can be frustratingly difficult.
To cut through this, our intuition guides us to favor some information over other information, eventually crystallizing into an opinion about the right thing to do. Our focus narrows and we stop listening to suggestions that don’t support our point of view. We also stop taking in new information, since we feel pressure to make a decision and have developed a stronger sense of what we want to do. The more certain we become, the less inclined people around us are to dissent or offer an independent point of view. We become locked in our own echo chamber. The end result of all of this is, that in an effort to avoid making a mistake, we operate in ways that increase the likelihood that we will. Poor thought processes almost always lead to poor outcomes.
Meanwhile, around us, people are positioning themselves to influence the outcome in ways that benefit them. Coalitions form to put pressure on us to make something happen or stop something else from happening. In big decisions, there’s a lot at stake for others. Careers can be enriched or cut short. Investors see opportunities to cash in. Local politicians may see an opportunity to win points by securing agreements that will help the community gain jobs. These contextual forces are usually only associated with big decisions, and the bigger the decision the more powerful these forces will be. Since there are consequences for ignoring them, external forces can influence us to go in a direction we wouldn’t otherwise, sometimes to our benefit but just as often to our ruin. We can feel carried along by powerful currents that in the end take us to places we didn’t want to go.
Sometimes, big decisions attract the attention of media or competitors who may cause us to rethink our strategies entirely. If there is public resistance to building a new facility in a community (NIMBY!) or competitors accelerate strategies that make our moves obsolete, we can run into difficulties that threaten to delay or cancel our plans altogether. A desire to avoid this type of exposure may cause us to keep our plans secret, leading to reputational or trust issues later on. The more that is at stake, the more likely it is that we will be featured in a story on the front page that we hoped not to see.
In the period leading up to making a big decision, with all of this going on, we get less sleep and experience stronger emotions than in normal times. We may not allow ourselves the luxury of taking more time to make the decision so that we can rest and reflect before jumping in. The pressure mounts until it is almost unbearable, so we may make the decision before we are truly prepared to act. If we lack conviction, we don’t engage in execution as forcefully but instead remain alert and wary at the first signs of trouble. We give up before we can declare victory.
To overcome these threats to making good big decisions, it’s important to shift the focus of attention from you the individual leader to building a more effective decision-making process.
Rather than the weight being on your shoulders, form teams to work on various aspects of the problem and come back with alternative solutions rather than just one that you have to accept or reject.
Invite stakeholders into joint meetings rather than trying to pacify them one by one.
Slow the decision down. Break it into pieces and experiment with different approaches to see what works before you go all in. Decide what has to be decided immediately but keep your options open on other things for as long as necessary.
Stress test your ideas with neutral experts or peers who don’t have a stake in the outcome so that you get honest reactions rather than false consensus.
Build exit ramps for decisions that don’t turn out as expected. Don’t go all in with no way to reverse direction if things start going badly.
Lower emotions by putting things in context. There are times when big decisions are required and we should feel privileged to make them; but that doesn’t mean we need to lose our heads or sleep over them. Instead, we need to approach them thoughtfully and carefully, doing the best we can and learning from our efforts as we go.
When making big decisions, there’s no guarantee that you won’t wind up on the front page if things don’t go as you had hoped. But there are lots of things you can do to minimize the risks if you keep your wits about you.