Make better decisions faster: 7-step checklist

To effectively shepherd their organizations into the future, leaders must be expert goal-setters. But to actually drive action, they must also be powerful decision-makers. At the executive level, the ability to make the right decisions fast is a critical skill.

Fortunately, there are tactics for making better decisions more consistently by employing best practices and technologies based on behavioral economics, according to an article in the Harvard Business Review by Erik Larson, founder and CEO of Cloverpop, a cloud solution that applies behavioral economics and collaboration to guide decision-making.

Using best practices during the decision-making process was associated with highly positive results in a three-month study of 100 managers, according to Mr. Larson. Those who made decisions using best practices achieved the desired result 90 percent of the time, with 40 percent of them exceeding expectations. Other studies have demonstrated that using decision-making best practices increases the number of good business decisions by six times and cuts failure rates nearly in half.

However, in a study of 500 managers and executives, just 2 percent regularly use best practices when making important decisions, according to Mr. Larson. There are a few reasons for this. One is because, until recently, leaders didn't have access to accurate information and decision tools to guide them. Another is because humans are "predictably irrational," Mr. Larson wrote. Behavioral economists say various mental shortcut and cognitive biases skew our perceptions and keep us from making optimal choices. Additionally, the collaborative nature of many business decisions can foster groupthink, which can lead us down the wrong path.

However, during the development of Cloverpop, Mr. Larson and his colleagues performed hundreds of experiments with thousands of decision-makers and came up with a checklist based on behavioral economics to guide successful decision-making.

1. Write down five preexisting organizational goals or priorities that will be affected by the decision at hand. This will help you avoid the "rationalization trap" of making up justifications for your decisions after the fact, according to Mr. Larson.

2. Write down at least three realistic alternative decisions. This might require some time and creativity, but expanding your choices can only help when it comes time to make a decision.

3. Write down any questions you have about missing information. "We risk ignoring what we don't know because we are distracted by what we do know, especially in today's information-rich businesses," Mr. Larson wrote.

4. Write down the impact you predict your decision will have on the organization one year down the road. Outlining the expected outcome of the decision will help you gain a useful perspective.

5. Enlist at least two but no more than six stakeholders in the decision-making process. Gaining more perspectives will help keep your bias in check and increases buy-in, but too many voices will impede the process.

6. Write down what was ultimately decided, why and how much the team supports the decision. This helps increase commitment and establishes a starting point from which to measure the results of the decision.

7. Schedule a follow-up meeting for one to two months later to check in and evaluate the decisions. "We often forget to check in when decisions are going poorly, missing the opportunity to make corrections and learn from what's happened," wrote Mr. Larson.

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