Question for you.
When was the last time you made a “big” decision that went wrong, and wondered, after making it, what you were thinking? Or avoided a tough decision until you couldn’t anymore?
“Time is like a river that carries us forward into encounters with reality that require us to make decisions. We can’t stop our movement down this river and we can’t avoid those encounters. We can only approach them in the best possible way,” Ray Dalio said in his book Principles.
Whether in difficult times, big moments of transition or even just sudden changes in perspective, it’s challenging to make important decisions thoughtfully and consistent with who we are. Sometimes we don't even realize something is a big decision, perhaps because it's a longer-term decision (like deciding to save a certain amount for a home or child).
This article is about how to make thoughtful big decisions - no matter the context.
[Don’t have time to read the full article? Here’s the lightning summary]
My Own Decision (Process) Regret
My senior year of high school - I made the decision to only apply to 2 universities, 2 good, but not top-tier schools. And then in senior year of college, I found myself again deciding between two polar-opposite options. These were perhaps 2 of the most consequential decisions in my life, and looking back, I wonder what could have been had I applied to at least one of my “reach” schools. While I am happy with the decisions themselves, I wish I had explored more options, created clear criteria and used more research to make a more “complete” decision.
What Went Wrong?
Perhaps I was too young to understand my agency; too immature to realize how important these decisions would be far down the line; and/or too lazy to take more time looking at other options. No one taught me to reflect and think about what I wanted for my life - so instead, I waited to see what options fell on the table, and chose the best from what was coincidentally available. This was the opposite of using my agency - it was like floating in the ocean hoping the tides brought me to any shore.
What Does the Research Say About Decision-Making?
The Pew Research Center said in a 2018 study that 81% of Americans primarily rely on their own research when making important decisions, while to a lesser extent, they rely on family and friends (43%) or professional experts (31%). This feels to me like we are limiting ourselves and opening our decisions to a lot of bias.
Ness Labs pointed out the unexpected high influence of emotions on our decisions: “studies found that ‘fearful people made pessimistic judgments of future events whereas angry people made optimistic judgements.” Hm…another risk when making decisions ourselves.
There's more research, but you get the idea - we're vulnerable to making suboptimal decisions for a multitude of reasons.
Back to Me - This Time was Different!
In 2019, I chose to leave an organization I loved, take out over $100K in loans for an MBA in Spain, with the intention of changing career direction (and possibly moving to Europe). It was the most risky decision I've ever made - but the agency I exercised and the thoughtful agonizing process of applying to business school, set me up to take every advantage of the extraordinary adventure I chose. I was clear that my reasons for choosing this school were far beyond the typical reasons that most MBAs get their degree (prestiguous job and ROI). And while I’m digging myself out of debt, you can see from my smile below that there's not a day I regret it.
From my experience and the literature I’ve read on decision-making, here are steps I would recommend for you to make a robust decision, consistent with what you really want in life.
Recommendations for Big Life Decisions
First, a McKinsey article recommends “double down on process” - one that gets you a clear picture of what’s important to you, what the reality of the situation is, and which options best fit the criteria. Also consider the benefits, costs and risks of your decision, and check your blindspots and biases. The below process is not perfect, but it has multiple checks in place - and remember that this process is iterative; not fully linear.
I’ll use the example of finding a job after a layoff to illustrate.
1. Recognize: Identify when a big decision is ahead and confront that decision boldly. When we place importance on something, we put more thought and effort to the process. Sometimes we shy away, anticipating decision-regret, but that will disempower us from making the best possible decision. Along these lines, clarify if this decision is reversible, and if so, the cost of reversing that decision. While this might complicate your satisfaction with the decision (more on this later), reversibility will lower the anxiety of decision regret, and help you frame whether you can “experiment” by trying something, versus a commitment that is extremely hard to undo (compare the choice of your next job vs. a house).
Note: If you see a decision as more of an "experiment" (impermanent, reversible), I would not think about my decision process the same way and would spend more time designing a low-cost experiment. Future article to come on this.
Example: Recognizing your next job is an important decision, as it would set the stage for where your career went next. However, the choice is reversible, so you could see this next step as an experiment that if it went badly, at the worst you can pivot again. More likely, you learned a bit more of what you liked and didn't.
2. Stakeholders: Consider if your decision involves other stakeholders and whether or not they have decision-making power. If your decision impacts others in your life, clarify what place they have in this decision and make sure that is agreed with them. Make sure you are taking into account 2nd order and 3rd order affects of this decision on stakeholders that matter.
Example: If you have a partner and you both are living in New York, you will need to involve your partner in terms of potential geography, hours, remote work and other factors that impact your partnership (and children). Perhaps one 2nd order effect might be that moving farther away from the office means less office time, which means less strong relationships at work, but more time with family (and 3rd order effects from there).
3. Framing: Craft the right questions and clarify your goals to frame your decision-making (this is NOT your criteria). These questions, often pretty existential, help you identify your criteria in the first place. This step helps you to understand the lens and perspective by which you see the decision, and sometimes helps you realize you need a reframe.
Example: Think about why you work and what role work plays in your life. Are you a work-to-live only-for-the-salary person? Or do you find purpose and meaning in work? If you think the latter, the purpose of the company and the type of work you do will matter more to you relative to other factors.
4. Reality: Clarify the reality surrounding this decision - the context, environment, resources available, yourself and your situation. And identify your knowledge, your ignorance and blindspots on the topic. As Bill Burnett said, “You can’t know where you are going until you know where you are...People fight with reality. They fight it tooth and nail, with everything they've got. And anytime you are arguing or fighting with reality, reality will win.”
As much as you can, learn the space of information (1) you know, (2) you know you don’t know, and (3) you don’t know that you don’t know (borrowed from my Landmark Forum seminar) relevant to your decision. How? Go outside yourself; research credible sources in the form of books, articles, podcasts, etc. and talk to experts or people that you trust that made similar decisions or would have relevant insights.
Example: Perhaps if you are using this opportunity to switch job function or industry, you realize that you need to learn more about it, and position your experience to be attractive to recruiters. Also, if you have been out of the job market for a bit, perhaps you should talk to others about blindspots in your career search plan, like use of LinkedIn.
5. Criteria: (5a) Create the criteria that’s right for you and your stakeholders if applicable. This criteria should be grouped into: (1) non-negotiables - literally if the option does not fit this criteria, you remove the option; (2) important - these are the 2-3 other most important factors, but not deal-breakers, (3) nice to have’s - these are used ONLY when at least 2 options meet all non-negotiable and important criteria.
(5b) If there are probabilities and risk involved in the decision, make sure you are estimating an expected value of your decision, i.e., by multiplying the “value” of the event (positive or negative) by the probability of that event (then add all the values together).
Example of 3 criteria levels: You will likely have a minimum salary as a non-negotiable, as well as benefits, remote work and/or geography of job. Important criteria might be culture, diversity and learning opportunities, while a nice-to-have could be perks.
Example of expected probability: If you are thinking of starting your own business, think about the required investment, the most likely salary you’ll have should the business be “medium” successful and the industry probability of being a successful startup. Through this, you can create an expected ROI versus pursuing a full-time role.
6. Options: Identify a limited number of most likely options. Make these options each a yes/no decision, rather than a spectrum of choices so that you’re removing decision-paralysis (too many options). From Design Your Life: “When we make a decision in the face of many options, or just while perceiving that there are lots of other options that we don’t even know about, we are less happy with our choice.” In a famous experiment with selling jam, more jars were sold when there were only 6 options, as opposed to 24 - the paradox of choice (see Barry Schwartz’s TED Talk).
Example: Rather than say you are pursuing “HR roles” or the “green energy industry”, cut down your options to very distinct options, such as “technical recruiter at a green energy company” or “HR Business Partner at an EdTech firm", so as to create a short list of options you definitely want.
7. Noise & Bias: Anticipate potential noise and bias in decision-making and practice “decision hygiene”. Noise, as quoted from the book Noise, is “unwanted variability in judgment”, often a result of personal (mood) or environmental factors (like negative news stories), while bias is a pattern of misjudgment (perhaps consistently overestimating probability of something). Think noise as missing a target in random ways, while bias you are always shooting above the target. Decision hygiene, also from the book Noise, includes techniques that remove unwanted influence, such as the sequence by which you examine information, using averages to predict success, educating yourself on bias, and more.
Noise examples: A more risky decision is made because the sun is out or you just read an inspiring article about a successful entrepreneur.
Bias examples: Recency bias (the last option you considered is the most memorable and therefore preferable) or anchor bias (we orient ourselves around the first piece of information we receive). The first role we considered had an average salary of $100K, so we orient our salary expectations around that number.
Decision hygeine would include creating the criteria before listing the companies or roles you're interested in, so that you are not unwittingly being influenced by name prestige. Also, use average salaries for roles that interest you if salary were a criteria.
8. Rank: Rank your choices in terms of meeting your criteria, using a scoring system if you think necessary. Ranking does a couple things - it forces you to compare options against each other, and also gives you a chance to zoom out and evaluate if this process is getting you closer to what you want. When you rank, you’ll have an immediate reaction to the ranking (and scoring if you did that). Also, for something that involves chance, like getting into school or starting a company, you’ll have multiple backup plans.
9. Personal Check: Do a conscious “gut-check”. One option is to mentally choose your top choice for a week and try on how it feels, including reflecting on the implications of that decision on your life. Pay attention to your “internal signal of judgment completion”, as suggested by Noise - whether your choice “fit comfortably enough with the evidence”. In Design Your Life, Bill Burnett mentions to “integrate all your decision-making faculties, and to be sure you make space so your emotional and intuitive ways of knowing can surface in the process. In other words, don’t forget to listen to your knee or your gut or your heart, too.”
Then ask yourself - from the evidence , what level of uncertainty do I feel in my decision? You should feel more than 50% confident that this choice is the best among the available alternatives, and that the consequence of being wrong are small enough to justify the decision.
Example: Your top 3 options involve two job offers you’re not crazy about and going back to school. You’re less than 50% sure - the rational side of you is saying you need money, your intuition is telling you that these offers are not worth pursuing and it’s better for you to keep searching, even if that’s a hard road.
10. Community Check: Check this decision with people you trust. Don’t make a big decision alone - think “wisdom of the crowd” is always more accurate. They don’t have to know how you made your ranking and decision, they will just give you a quick gut check if they think it makes sense for you and share their thinking. Your people know you well, and might surface a question or reason that puts into question your potential choice, or perhaps consider a certain risk more heavily.
Example: You pitch your top 5 targets to your mentor, your partner and your close friends - might I say, your personal “Board” and see where they agree and disagree. You learn from your Board that they know you like working in teams as part of your job - and your top option doesn't score well there. That gives you pause to go back to your criteria.
Hidden Step 11 - Choose It
And once you’ve made a decision - choose it. From Bill Burnett: “Dysfunctional Thought: To be happy, I have to make the right choice. Reframe: There is no right choice—only good choosing.” And perhaps a more practical step from HBR: “taking steps to reframe your choice as final.” Choose the happiness that comes from exercising your power to make that decision and be glad you have the privilege to choose. Be proud of the process you went through, and trust that you’ve thought out the most reasonable alternatives. Even a sub-optimal outcome does not mean that you made the wrong decision, because we never know the full reality and what comes next. You will be fine no matter what if you chose well.
Quick Summary:
We all face big decisions, whether we recognize it, run from it, or face them, often using an unclear process or jumping the gun on the first attractive option.
Use a robust decision process where you have as clear of a picture of reality as possible, along with what is important to you, and risks of the decision.
While there is no one process, here is a 10-step (not fully linear) framework:
1. Recognize importance and reversibility
2. Identify Stakeholders
3. Frame the decision
4. Understand Reality
5. Set Criteria
6. List Distinct Options
7. Anticipate Noise & Bias
8. Rank options
9. Personal Check
10. Community Check
Hidden Step 11: Choose happiness.
Take the psychological step of choosing your decision, to reinforce your agency and ultimately make you happier with that decision.
I hope you found this article helpful! Your feedback is much appreciated, and don't hesitate to reach out if you want to chat through a decision.
For Learning and With Love,
CC
References:
Pew Research Article, “Most Americans Rely on Their Own Research…”, March 2020
Ness Labs Article, “The Science of Decision-Making…”
HBR Article, “Why Do We Try to Dodge Difficult Decisions?”, August 2021
TED Talk, “The Paradox of Choice” by Barry Schwartz
The Landmark Forum seminar
Noise by Daniel Kahneman, Olivier Sibony and Cass Sunstein
Principles by Ray Dalio
Design Your Life by Bill Burnett
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