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A framework for decision making

As a former COO with 3 different mergers under my belt, i think that one of the most important characteristics of strong leadership is effective decision making. But I don’t think many people have a teachable or repeatable framework for decision making, i think for most of us, its almost an instinctive reflex, we look at our options and decide the one we want the most. we assume that we know what we want, and we assume that we are most likely right.

but as the responsibly and stakes for making the right decision increase, as the impact on others is magnified, we need a more systematic way to making decisions. After all, if a broken clock can be right twice a day, we don’t want to be broken leaders that are right 2 out of every 24 decisions.

so here are some of the principles that form a framework.

  1. first you need to assess the impact and risks of a particular issue – how important is it that you need to be right? how irrecoverable would the situation be of you made the wrong decision? how much of a problem would it be if you did not make a decision? is it really your problem to solve? is it really a problem you can solve? is it even a problem to begin with or simply an effect of the environment? – assessing the impact is about trying to figure out how seriously you need to consider the problem and related options and data.
  2. impact and risk magnitude are directly proportional to your need to spend time on research, hypothesis verification, evaluation of options. the bigger the impact, the higher the risk, the more you should be treading carefully and really digging into the problem, the data and the more detail you’ll need to assess your options.
  3. when you start to assess the options in front of you, it’s all about opportunity cost (time, money, effort, impact of moral) and context, and trying to look for the 2nd and 3rd degree implications. there is no right decision and every decision comes with ‘side effects’ so assessing options is about how effective the option is at addressing the issue compared with other options, as well as how impactful may any side-effects be compared with other options.
  4. finally, after shortlisting the options you’re most confident with, you should spend time assessing your fall-back plan, if the situation is severer, what will you do as a back up if your initial strategy fails. how much will you have ‘lost’ if it fails, and how much are you willing to lose before reverting to your fall-back option. think of this as your ‘stop-loss’ option.
  5. an optional step is that if the issue you’re dealing with is especially large, then you also want to break up the issue into smaller, more manageable sub-issues. this helps make the problem more digestible, but also allows you to manage stakeholder expectations and continue to progress in a more steady manner.

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