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According to the 2019 Nobel laureate in economics, Daniel Kahneman, all decisions are made with partial information because of the systemic cognitive biases people bring into the decision-making process. However, decisions do not require perfection to be effective. For business leaders under pressure to make tough decisions, asking the right questions is a systematic approach to gathering information that avoids the pitfalls of the pursuit of perfection.
That’s what Harvard Business Review (HBR) found in a decade-long longitudinal study of more than 2,700 leaders too many leaders shrunk of making tough decisions, and delays often did more damage than they tried to avoid. The bigger an organization gets, the better less decisive it will be.
Even the most brilliant leaders can demand too much data before making a decision. While it’s common knowledge that executives must make critical decisions with limited information, it’s less evident that those who need all the information possible slow down their team’s ability to execute.
The difference between the two groups should not be confused with comparing the merits of a quick decision and a more calculated one. There is a better formula for weighting the information that helps first to discern which – a quick or slow decision – is required: first ask who, what, when, where, why, and how.
Related: These decision-making tactics can help you formalize your process and make better choices
Table of Contents
Back from the rabbit hole
Nine times out of ten when people engage with me, they present about 20% of the relevant information needed to make a good decision. I always ask them to go back and discover the answers in at least 60% of the available data – that makes a clearer path to a quality decision.
Typically, senior leaders don’t have the time to delve into the day-to-day details of presenting issues, so streamlining information helps prevent the analysis paralysis of multiple possibilities popularized by psychologist Barry Schwartz.
Schwartz found that consumers with bulky options find it challenging to choose because they wonder if any of the options not taken would have been better. Schwartz theorizes a supposed alternative leads people to question their decisions. When even good choices are subject to 20/20 hindsight, it becomes more important to put a pin in the cycle of seeking more data.
Related: These decision-making tactics can help you formalize your process and make better choices
When to act fast and when to think slowly
In “Think, fast and slow,“ Kahneman divides our brains into two metaphorical systems: system 1 thinks fast and system 2 thinks slowly. The first system works automatically and intuitively. The second requires reasoning and focus. Intuition, he warns, often goes wrong and should be supported by experience and analysis to lead to effective decision-making.
Because people are judgmental by nature, I’ve seen leaders make decisions only to “get back to the facts” to support why they made that decision. It is a categorically wrong approach to critical thinking.
The reasoned analysis of Stoicism offers another model. This ancient philosophy, sometimes mistaken for a cold analytical attitude, also arouses curiosity. Many people want to solve a problem immediately instead of getting curious Why it happened. But maybe they are trying to solve the wrong problem or they are not considering the adjacent challenges that will arise after that problem.
As leaders, we need to view the impact of the organization through a broad lens. If the explosion radius of a bad decision will be large, slower decision making is required. If the effect is likely to be small, a quicker decision is ideal.
Related: How to Make Better Decisions
Five Ws and an H: Asking the right questions
When I need to make a decision I ask who, what, when, where, why and how provides the minimal information needed to make an informed decision while avoiding data overkill.
- Who?
- Identifies all parties involved, stakeholders involved and who will perform what action. Asking this question helps clarify who needs support and who has more information or insight. This can also highlight the relevant managers for other delegations.
- What?
- This question provides a summary of the issues presented, not a long story. It describes the event or chain of events that led to the problem and shows what type of decision is needed.
- When?
- This provides a timeline of events and a time frame for a desired outcome, showing whether a quick or slow decision is required.
- Where?
- Identifies the location of the problem or bottleneck within the organization and whether a decision crosses international boundaries or relates to only one set of laws. The “where” provides a snapshot of the blast radius of each decision.
- Why?
- This helps us understand the necessity of choice by briefly deconstructing the problem and the context of events. It also illustrates the chain of responsibility for the problem and the solution.
- How?
- Reveals what circumstances led to the emergence of the problem and why it made its way to the executive level. This step can provide the cause and effect of the problem and the solution.
These questions also help allay fears about how a decision may affect individuals personally. In the HBR study, leaders often delayed making decisions for fear of upsetting others or losing status. Fear clouds judgment. If we can stay within the intellectual sphere, like an excellent stoic, we can make a logical decision.
Related: 7 tips for making high-quality business decisions
A decision-making model
I’ve come across leaders asking for large amounts of data before even risking a decision. It becomes an endless cycle. But determining the who, what, when, where, why and how is very simple, practical and valuable tools that save companies time and resources. It avoids the cognitive laziness of fast thinking and the overwhelm caused by a plethora of choices that are typical of slow thinking. In the language of Stoicism, this framework helps leaders lean on the virtues of wisdom and temperance to make decisions that lead to more substantial, positive outcomes for both individuals and organizations.
