A decision-maker’s choice of an alternative strongly depends on how the decision is described and how the alternatives are presented and perceived rather than on the potential impact of the various alternatives.
Nudge yourself to make better decisions
Your decisions offer you the only way to purposefully influence anything in your life. Everything else just happens beyond your control.
When studying decision making two main focuses are on describing and prescribing.
In 1954 Ward Edwards wrote an article about decision making.
In 1970 Daniel Kahneman and Amos Tversky were working on that subject. The specific name for this research has evolved from decision research and behavioral science to behavioral economics. It was Richard Thaler who was responsible for behavioral economics to came into existence.
Some shortcomings in human decision-making habits have been identified and categorized in specific biases, called decision traps. Dan Ariely has been a leader in studying them.
In 1960 the prescriptive work on decision-making was led by Howard Raiffa.
Almost all personal decisions are made intuitively or using a self-developed thought process, rather than a systematic prescriptive evaluation.
A nudge is a presentation of the available alternatives to a decision-maker designed to improve the chances that the decision maker selects the alternative that best achieves his or her interests. A personal nudge is a modification of the choice architecture for your decision. Many of the nudges are based on clearly and thoroughly doing one or more of the following three tasks:
- defining the decision that you face;
- specifying what you want to achieve by making that decision;
- and creating better alternatives to consider.
There are two serious flaws in our intuitive individual decision processes:
- Our natural way of making decisions is backwards. Once we recognize a decision that we face, we naturally want to solve it, so our initial effort is often to identify the alternatives that may solve it.
- Most decisions that we end up facing are decision problems that occur beyond our control.
Even though you have the power and authority to nudge yourself, you need to develop specific skills to do this effectively. They focus on:
- Defining the decision.
- Clarifying why you care about a decision by identifying your values.
- Creating innovative alternatives.
- Identifying your own decision-meaning decision opportunities.
- Obtaining the authorization of others, when they control whether alternatives that you desire can be implemented.
- Providing a consistent guide for all of your decisions by describing how to identify, organize and use your strategic life values.
The quality of any decision depends much more on the quality of the front-end clarification and presentation of that decision than on the back-end evaluation of alternatives.
Your decisions and your life
Your decisions are critical in pursuing the life that you desire. The only way for you to purposefully influence anything in your life is by your decisions. We all learned to make decisions the same way: by trial and error. We didn’t develop fundamental skills of decision-making.
By the time we finish high school, most of us have developed ingrained habits for making decisions that do not provide a foundation for good decision-making.
Your crucial first step for any decision that you face is to identify what you want to achieve by facing that decision. Guided by your values, your resulting decision will be what author refers to as value-focused decisions.
Key concepts of good value-focused decision-makers are:
- Identify and understand your values
- Create alternatives
- Identify decision opportunities
- Influence decisions of others that influence your life
Learning and using the value-focused decision-making concepts and procedures will nudge you to improve your decisions. Unaware of the concepts and procedures most of us tend to be stuck with experience-based incremental improvements to our current decision-making habits that we developed earlier in life.
Identifying a decision opportunity begins by recognizing something, tangible or intangible, that you would like to occur and then defining your decision as how to make it happen.
Making value-focused decisions
If you don’t know what you want to achieve by making a decision, you cannot usefully think about how you might achieve it. Solving the wrong decision or a poorly or incompletely stated decision has little chance of providing what you want to achieve by facing any decision.
Once you understand your values for a decision, all of the subsequent effort of the decision-making process is to figure out how to best achieve these values.
The steps of a value-focused decision-making:
- Front end: define and structure the decision that you face
- State the decision problem
- Identify your values
- Create alternatives
- Back end: evaluate your alternatives and make your decision
- Describe the possible consequences
- Identify the pros and cons of each alternative
- Select an alternative
Very few personal and business decisions are informed by systematic evaluation of the alternatives.
Your decision statement provides the initial information to guide your effort to create the sets of values and alternatives in the other two front-end steps. Your objectives and the set of alternatives for your decision statement provide the basis for a precise description of your decision, referred to as a decision frame.
Be aware of the distinction between a good decision and a good outcome. You can make better decisions more easily when there are fewer uncertainties concerning your description of the decision you face.
The consequences that occur after choosing an alternative are referred to as outcome of that decision. To understand the meaning of a good decision, it is essential to distinguish between the concepts of a good decision and a good outcome of a decision.
The organization’s values should be the basis for any time and effort allocated to the activities for making a decision.
Many decisions do not need to be explained or communicated to others.
Defining your decision
For many decision problems, the time between the trigger and recognition is very short. Once you recognize a decision, you want to develop a clear and concise statement of this decision. A decision statement concisely defines the decision you face. To state the decision you intend to face, a simple rule is helpful. Begin any decision statement with the word “decide” typically followed by which, when, whether, how or if.
The decision statement for any decision faced by an organization requires careful articulation. This is important, because it provides the foundation for identifying the set of values and the relevant alternatives for that decision.
Identifying your values
Each decision that you face should have a purpose. Once you create your decision statement for a decision, your first critical thoughts need to focus on your values for that decision. For almost all of your decisions, more than one value is relevant, but you may not immediately recognize this. The values for your decisions must be specified by you.
Friedrich Nietzsche said: “Forgetting our objectives is the most frequent stupidity in which we indulge ourselves.”
To address the difficulties of expressing a complete set of values for a decision, four simple-to-follow steps help you identify your values.
- Step 1: Wish list
- Step 2: Value Stimulation Techniques
- Emotions and feelings
- Alternatives
- Consequences
- Goals and constrains
- Different perspectives
- Strategic values
- Disappointment and regret
- Generic values
- Step 3: Ask others for suggested values
- Step 4: Using previously identified values to identify additional values
To clarify the meaning of each value, state it as an objective, using a verb followed by an object. An objective indicates what you want to achieve regarding that value by making that decision. The objectives also promote the creation of innovative alternatives, the recognition of useful information worth gathering and thorough appraisals of desirability of alternatives.
Means objectives are important only for their implications for achieving fundamental objectives. Only the fundamental objectives should be used to evaluate alternatives.
Specifying detail of objective. One objective is a component of a second objective and specifies in more detail what is meant by that second objective.
There are two general values that should be considered as being potentially relevant to each of your decisions worthy of thought. These values are learning and flexibility. Benefit of learning you can see in repeated decisions. The benefits of flexibility pertain to the decision you are currently making, when the consequences accrue over time.
When a group is making a decision, the values of each member are relevant and should initially be identified separately.
Creating alternatives
Alternatives are defined such that only one alternative can be chosen from a set of alternatives for a specific decision. The alternatives that you consider for a decision should be realistic.
Your ability to achieve what you want from any decision will sometimes depend more on the quality of the alternatives that you have identified than on the quality of your choice between those alternatives.
Too often we do not push our thinking to identify some harder-to-find alternatives. The intent of constraints is to focus our thinking on the realistic alternatives. But constrains can also seriously limit our thinking.
You cannot effectively or efficiently look everywhere for alternatives. You need to focus your effort, since most of what is outside the box would be a terrible place to look for alternatives for a specific decision.
Creating alternatives requires hard thinking, creativity and sometimes soul searching. If you believe that better alternatives exist, you have a better chance of creating them.
Brainstorming is a well-known approach to create alternatives, based partially on the idea that two or more people should have more ideas than one. Value-focused brainstorming first identifies the values for the decision. It enhances participation and creativity by having individual brainstormers identify alternatives prior to having the group work on creating additional alternatives together. Steps of Value-Focused Brainstorming:
- State the decision to be solved
- Identify the values of the decision
- Individually generate alternatives
- Collectively generate alternatives
After identifying a preferred alternative, but before implementing it, consider how well you expect it to satisfy each of your objective.
After any alternative is chosen, but prior to its implementation, it is often worthwhile to look into how to improve this alternative.
For most organizational decisions, more than one individual should contribute effort to try to create alternatives.
Identifying decision opportunities
There is a big difference between decision problem and decision opportunity. Decision problems are situation where you need to make a decision as a result of other’s decisions or circumstances beyond your control. Decision that you create for yourself is a decision opportunity.
What would be different if you were a proactive decision maker? Creating a decision opportunity is a powerful nudge, because pursuing that decision opportunity can have a positive influence on the quality of your life.
If you have a personal problem with someone you care about, defining decision opportunities to address the situation is the only way you can improve the situation for them or for you.
We each face some decision problems without any particularly appealing alternatives. Adding and objective about learning in any decision problem converts it to a decision opportunity.
Make sure that you understand that you have the exclusive power to identify your own decision opportunities. Allocate time and effort to consciously identify appealing decision opportunities. Use decision opportunities regularly in your personal and professional life. In business being proactive and routinely identifying and pursuing decision opportunities promotes creativity and innovation.
Obtaining authorization to select alternatives controlled by others
There are important decisions for which you do not have the authority to implement some alternatives that have great appeal to you. Someone else, who author refers to as the authorized decision-maker, controls whether the alternative that you prefer for a particular decision can be implemented.
Prior to implementation, you need to create a specific alternative that includes the general features of your desired alternative and additional features to make that specific alternative attractive to the authorized decision-maker. The process of creating and proposing an alternative that can’t be refused is what author calls a phantom negotiation.
If someone else has the authority over whether the alternative that you desire can be implemented, use the authorized decision-makers values to modify your desired alternative to please both of you.
In order to create an un-refusable alternative, you need to know the values of the authorized decision-maker. And in order to know them, someone needs to articulate them (values). You, the authorized decision-maker him (her)-self or others. If your negotiation partner has a value that you do not care about, you should.
Sometimes you can try to combine decisions, especially if one is such that the positive result for you can be a negative one for the authorized decision-maker.
Becoming a value-focused decision-maker
In order to routinely use value-focused decision-making to nudge yourself to make better decisions, you need to develop skills to apply its four key concepts:
- Identifying values
- Creating alternatives
- Generating decision opportunities
- Designing alternatives that satisfy others
There are some decisions for which it is not useful to create alternatives. For these decisions, it is easy to identify all possible alternatives.
It is only by individuals that value-focused decision-making can be introduced and implemented in the organization.
Enhancing the quality of your life
Most of us would probably like a high-quality life, but we do not have a clear understanding of what that personally means. It is important to understand the concept of life objectives.
A strategic plan for an organization often includes implementing major alternatives that cannot easily or quickly be changed or adapted.
We can talk about life objectives in two ways:
- Means life objectives:
- Pursue worthwhile activities
- Pursue worthwhile relationships
- Maximize freedom of choice
- Minimize constraints on freedom of choice
- Minimize constraints on opportunities for choice
- Strategic life objectives
- Enjoy life
- Be intellectually fulfilled
- Have enriching experiences
- Contribute to society
Your life objectives provide a roadmap to guide you to live the life that you desire. They should not change a lot over time.
Your strategic life objectives provide a succinct summary of what your desire for your life and your means life objectives are a basis for suggesting numerous alternatives to fulfill your strategic life objectives. Means-end relationship indicate how objectives influence each other. Strategic life objectives are identified by following a series of means-end relationships to their logical end.
Being aware of the potential of decision opportunities, you will develop the ability to naturally create them. There are three separate categories of decision opportunities: single decision, coordinated classes of decisions and personal policy decisions.
There is a key distinction between creating the life objectives of an individual and the organizational objectives of an organization. With strategic life decisions, only one decision-maker is involved, even though the impacts of his or her decisions on others may be significant. With an organization, many different individuals and sometimes groups of individuals make decisions.
Useful perspectives on decision-making
There are two categories of activities in your life. Experience and decisions.
Good decision making must be objective. Objective is defined as “a process based only on hard facts and void of any subjective perspectives concerning feelings and opinions”. A good decision is one that is logically consistent with your values, the alternatives you have identified and the information that you had at the time you made the decision.
The time to make a decision is the total time spent consciously thinking about that decision and selecting an alternative.
Once you have a few of the consequences in the consequence table for your decision explicitly described, you can often make an informed decision with systematic reasoning. To evaluate alternatives, you need to weight the pros and cons of the possible consequences of each of your alternatives. This is a second step of the back end of the value-focused decision-making process.
