The Weekly Buzz: Decisions
How do great leaders decide what to do in an efficient way? How do they assess whether their decisions were good?
Assess Process, Not Results
When things don’t turn out the way you hoped, it’s easy to overanalyze. But your results are not going to get better by bemoaning bad outcomes (or cheering for good ones). Take the focus off the outcome and instead look at your process. The better your process, the better chance you give yourself to get a good outcome. Check out the books on decision-making by poker champ Annie Duke for more on this approach.
Calibrate for Your Own Weaknesses
Ever heard of the Dunning-Kruger hypothesis? It’s the modern psychology equivalent of the Socratic paradox that wisdom is knowing how little you know. In other words, people who are largely ignorant about something can easily overestimate how much they know about it, while learning more about it improves your ability to assess what you know—but can reduce confidence. New management research suggests a fix for this dilemma. If you’re prone to overconfidence when making decisions, make the unknowns explicit. Subjects in a 2017 study who were told to “consider the unknowns” made fewer poor decisions based on overconfidence.
Nudge Your Chances
Edison Partners, a private equity and venture capital firm, puts out an annual list identifying the special characteristics of fast-growing start-ups. The top trait on the 2018 list stands out: Fast Growers “invest 70% more than peers in sales and marketing as a % of revenue.”
In other words, there are steps any leader can take that increase the chances of their decisions turning out well. Evidence-based, targeted investment in sales and marketing will make any decisions in the rest of the company more likely to result in increased revenue than taking those decisions in the absence of a good sales and marketing campaign.