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Making great decisions: A first approach

We all make decisions all the time a decisions precedes an action. Evolution automated some of our decisions (instincts) while other decisions are subject to the full use of our prefrontal cortex.

The basis of decision making in the brain 

Our brain usually uses two available systems when making decisions. These are not to be understood as independent units, yet it can make sense to think of them that way. Why is this relevant? You can make better choices through a better understanding of your brain.

One brain - different decision making processes

System 1: The emotional decision-making system

If you are the type of person who makes quick and intuitive decisions, you mainly use system 1.

The more information and data you have available, the more rapid your assessments will be. This system of the brain is effortlessly able to deal with emotional evaluation non-stop. It is, by its basic evolutionary mandate, of the quick decision maker variety, because evolutionarily speaking, the quick decision maker was also the quick actor. Especially since conflict management seminars were not available in the wilderness.

System 2: The analytical decision-making system 

If you are one of those who make decisions deliberately and as rationally as possible, you will primarily use system 2. The more information and data available, the more can be analysed and compared. However, with a significant increase in alternatives, this ties up a lot of cognitive energy and time and often leads to a so-called “choice overload”.

Choice Overload in an ice cream café

What is a „Choice Overload“?

Choice overload is the inability to choose from (too) many alternatives. Imagine walking into a new ice creme café with the intention to order two spoons of delicious ice cream. Then you realize there are more than 25 great looking options to chose from. Luckily, most of us get used to this overload of alternatives and find their way through it. Even more so, most of us are able to make use of a large amounts of data and facts for a decision. And with the help of Artificial Intelligence (AI), this opens up unprecedented thinking power to make decisions.
Whether in a café or in a business context, the best decisions are often based on harmony between both systems. If you are faced with an important decision where your head (with or without AI in the background) and your gut feeling are pointing in different directions, it is well worth investigating what's going on.

The four decision-making types

When I am faced with a decision, something that helps me quite a lot is to keep the number of alternatives low so that I can choose more efficiently between different alternatives.

1. The first best decision

The first best decision is what comes to mind when I am faced with a decision situation question and do not have a lot of time to think.

2. The thoughtful decision

The thoughtful decision is what I would choose after spending some time thinking about it. The duration of the though process usually depends on the complexity of the case.

3. The no decision

No decision means that I decide not to do anything.

4. The crazy intuitive decision

The crazy intuitive decision is what comes to mind when intuition asks for something unusual that is often times against all odds. This can be a slightly different ("a little crazy") or significantly different answer ("outright insane").

How to align your decision compass

So much for theory.

The art of decision-making is now to develop a personal decision-making compass to find out in which situations you follow which of the four options. Easier said than done as in practice the most appropriate decision styles can change quickly in short time frames. Let us take a look at look at specific examples for the four types and how they merge into one another.

1. The first best decision in the game of golf

The chances of winning a prestigious golf tournament are very slim, even for most professional players. With a highly developed ability to switch between thinking and acting quickly and smoothly, the probability of winning increases. But what exactly constitutes this ability and what can we learn from the professional golfer for our own challenges?

Focus and overconfidence for optimal golf results

Ingredient 1: Overconfidence during action

For this purpose, the professional golf league (PGA) in the USA once looked at all of the approximately 11,000 putts (shots from short distance) in a year that were played from a distance of about 2 metres. Most pros assumed that at least 70% of these shots would be sunk. The facts, however, spoke a different language, because only about half of all putts were actually sunk. This shows that the pros are more confident here than the numbers indicated. 

Objectively wrong, psychologically right – because a high dose of self-confidence boosts one’s own performance.

Ingredient 2: Active focus during action

How does the club feel, how stable is my stance, how strong do I perceive the wind at one specific moment? All relevant sensory impressions stream in sharply, all irrelevant impressions (spectator noise, cameras, commentators…) are blurred. Getting into this mindset is purely a matter of practice. A player has arrived here when he acts “as if by himself”, thinks no thoughts and is “in the flow”. From a neurological point of view, the Direct Experience Network (DEN) is active here. Our autopilot, the so-called Default Network (DN), which tends to evaluate and interpret, is on pause.

Feedback loops in the game of golf 

2. The thoughtful decision in golf

After the shot has been made and the ball has taken up a new position on the green, the pro knows that it is now time for a mindset change. It is no longer about delivering the best shot in the here-and-now, but about analysing what has just happened and what it means for the next shot in a neutral way.

What trajectory did the ball have, where did it land, what is the condition of the ground there, how far is the distance to the target, what is the difference in altitude, what are the wind conditions, which club is the most suitable, have I had a sip of water …? As you can see, the Pro is now actively thinking about his or her game.

Golf is a mental game, they say.

And a mental game is usually won by the player who has the best control over their nerves. With clear instructions on what is important in the action mode and what is important in the thinking mode and the active change during the game, the game can be mastered. And not only on the golf course, but everywhere where mindset changes increase overall performance.

I like to call the ability to smoothly and effectively switch between though-mode and action-mode as selfserving mindset switches. 

Slow and fast decision-making

Slow and fast decision-makers

To further enhance your understanding about the importance of mindset shifts, you simply have to imagine two types of decision-makers that actually exist out there in their purest form. Of course, most of us lie somewhere between these two extremes. The first type is of the fast variety, thus a speed decision-maker. This decision-maker makes short work of the process and simply decides without much slow thinking. 
The second type is the eternal thinker, which leads us right to...

3. The no-decision

He or she thinks carefully about all the details and options available. This thought process can then take so much time that the decision has become redundant.
This decision making style can quickly become costly.

The no decision as a decision to not act

After several years of working with various managers in companies, I am convinced that it is neither the pure speed decision-makers nor the eternal thinkers who are successful in the long run. Instead, it is those who have learned when they have gathered enough data, facts, ideas and opinions to be able to decide. And then commit to a constant feedback loop based on a focus on action, thinking, action, thinking and so on. Similar as described before when looking at the golf pros in action.

Let's now look at an example from the world of business in which a no decisions would have avoided a lot of bad press, negative comments and anger. This is an interesting example because it shows three important things about decision-making:

  1. There is a status-quo bias which tends to give no decisions an edge in the short run (in other words many people don't like change)

  2. Big decisions disrupt the status quo in a way that creates huge feedback loops that can be used to make new decisions to succeed in the mid to long run

  3. Decisions need to be evaluated both a) at the time of decision-making and b) looking back at the initial decision a few month or years later

Even bad decisions can beat no-decisions

Under the leadership of Roberto Goizueta, chairman and CEO of Coca Cola in the 1980s and most of the 1990s, the company launched several successful new products such as Diet Coke and Cherry Coke (both in 1982) as well as popular marketing slogans, e.g. "You can't beat the feeling". Despite these successes, Goizueta was also responsible for the decision to introduce a new coke formula in April 1985 - a product called "New Coke". The reason for this bold move was probably due to a constant loss of market share in the US for the traditional Coca Cola product from more than 60% post WWII to less than 25% by 1985. 
The new formula had passed all pre-product release tests such as group tastings with large amount of clients in different US states. Based on very positive feedback regarding taste of the new formula, Goizueta called the launch of the new product "one of the easiest decisions we've ever made". However, the story took a different direction...

In 1985 Coca Cola decided to change their formula

The outrage following the replacement of the "Old Coke" by the "New Coke" was huge and the Coca Cola company received tens of thousand of complains on dropping the old Coke product via letters and calls. The pressure must have been tremendous as on July 11th 1985 the company announced that it will return to the original Coca Cola formula. 
By the end of the year, the reintroduced "Old Coke" was outselling the New Coke and its main rival product Pepsi. A steady market share decline had been broken by unintentionally reminding client's of what it feels like to lose something they emotionally felt so connected to. 

4. The crazy, intuitive decision

Last but not least there is the category of crazy, intuitive decisons, both in business and in other domains of life. 
In the world of professional european football it was Liverpool FC that in May 7th 2019 won the second leg of their champions league semi final against FC Barcelona (total score 4:3) after trailing 0:3 from the first leg and advanced to the UCL final. The last goal of the game in the 79th minute by Divock Origi was the result of a corner kick by Trent Alexander-Arnold.

Intuitive decision-making in pro football 

The crazy thing about it: The player neither chose a classical cross nor a short pass as would be the case in more than 99% of all corners. Instead he chose a long low pass into the penalty area. The intuitive thing about it: Just before the corner, the defending players from Barcelona were standing around unorganized. Trend-Alexander-Arnold recognized it and reacted with the crazy, intuitive low pass. If the Barcelona players had only refocussed a few tenth of a second earlier, this corner would have probably gone down as the worst in the whole season. And not to forget, Origi deserves the same amount of credit for his skillful finish in front of goal. 

This is an impressive example of how close genius and naivety can be to each other when making these types of decisions plus the action that follows. 

Good luck and a lot of success for your upcoming decisions!

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