Can we make better decisions and if so how? There is a lengthy article in the May issue of Harvard Business Review that deals with decision making and its evolution. You may be forgiven if you are not up to the minute on the techniques and applications.
The article’s first sentence sets the tone and the purpose. “When we make decisions, we make mistakes.” It then points us to the current state of the art. Behavioural Economics, the offshoot of the decision theory based on “heuristics and biases.”
There have been, so far, three schools of thought in respect to decision making. The earliest traces back to Benjamin Franklin.
But time marches on and so does research. Newer and more complete studies of the Kahneman and Tversky material provides interesting insights. Gerd Gigerenzer, a German psychology professor, has a big group studying variations.
All good, but we face an inevitable conclusion and as addressed in the article, “When we make decisions, we make mistakes.” That does not imply that the negation works. When we make no decisions, we make no mistakes, is certainly wrong. Making no decision is a decision and few analyze it or learn from it.
In our everyday world, we know that decision making is not determinative. There are no guarantees. What we do know is that when we make a mistake we learn if we notice, and that makes future decisions a little better.
Academics and their research aside, we can never make all decisions correctly, so we should make decisions with a view to learning something when they fail. The other skill needed is to be able to determine when the decision is wrong and quit. Good managers do not make appreciably better decisions, but they stop poor decisions sooner than weak managers.
No one decision matters. Long lasting successes and short duration small losses evolve into a structure of success.
Make more decision and pay attention to outcomes.
Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.