Today I write about Mindsets in Decision Making, what I do consider to be the most important competence. Some people may argue it's all about intensive preparation and crunching numbers, data and facts. Others think it's all about listening to your gut feeling. About time to explore this a bit further...
By the way
Don't get me wrong: The ability to make cognitive and intuitive decisions is fundamentally important and understandably many people think that it's the key skill. Depending on your area of expertise, you will tend more towards the head or more towards the belly. Your decision making skills are most likely shaped in one direction.
A short look back
In the last article about my 4-Stays decision strategy, I talked about the Choice Overload. This describes the dilemma we face in many situations when choosing from a very large number of alternatives. Since our capacity to think is limited, we increase our decision making competence if we keep the number of alternatives low. Too many alternatives often result in a refusal to decide (#4 in the 4-Stays strategy). So the first step is to limit the decision problem to a size we can handle well.
Pre-Decision Mindset (PrEM): Thinking through
To be able to make an important decision as a next step, most of us want to work on it in a well-considered way. Especially with larger investments such as buying a car, an apartment or a large financial investment, it can make sense to stay in the thoughtful mindset for a few weeks. In this phase we have an increased capacity for:
- New information
This car has all those features; nearby the apartment a new wholesale market will open next year; "experts" assume a V-shaped recovery of the economy...
- Weighing up the pros and cons, costs and benefits
This car is fuel-efficient, but the driving pleasure is reduced; in this one I have an electric engine, but high one-off costs...
People whose home base is a thinking through mindset tend to stay in this phase for too long.
How about this type of analysis and that useful comparison before I move on…
People who rush through the PrEM phase know about the exact opposite problem. They often skip important considerations, so that their decision making rests heavily on the quickly available System 1 evaluation.
This car is so stylish and blue, I want it now...
Post-Decision Mindset (PEM): Pulling through
Depending on the range and time horizon of the decision, the amount of time spend in the pull-through mindset differs. In this phase, we have an increased receptiveness to the core concerns of implementing a decision we made:
Our focus in this mindset is on getting things done, not weighing up arguments. We want to turn a decision we made into reality - a decision that has so far been only made in our heads. Nothing has happened at this point. This phase either leads to an implemented decision, a jump back or a termination of the decision making process.
Clever questions from System 2
Let’s assume we have the financial requirements and a driving license. We've just decided to buy a new car. We weighted the decision emotionally (system 1) and cognitively (system 2) against alternatives to buying.
So far so easy... until we reach the point when we put our drive to implement to the test:
- Do I really need a new car?
- Doesn't it make much more sense to buy a used car?
- Shouldn't I better put the money aside?
- What if I have an accident with the new car?
Fast & slow Decision Making
To keep things simple, let's differentiate two types of Decision Makers at this point. Both can be found out there, nevertheless most of us are somewhere between these two extremes.
The first one is of slow nature - I call him the everlasting thinker. He considers all details and aspects of a big decision making process. And that takes time...
The second one is of fast nature - I call him the speed decider. He is known for decision making without much thinking, but in a very fast fashion...
Back to the questions
Critical questions will save a couple of speed decision makers out there from a potentially painful decision. Either thanks to his own system 2 or maybe thanks to friends who asked the right questions to challenge the decision making. Regardless of the source, he switches back to the PrEM mindset and gets to think about the case in more depth.
Unless of course, his drive to implement is so strong that even the natural intervention of System 2 or the critical questions of friends do not work. Then he is off to the car dealership...
On the contrary, the everlasting thinker has got an answer to all the challenging questions. She has done all her homework in advance.
To implement her decision she only needs to stay in the PEM Mindset and implement her decision by taking action. Unless of course, a question makes her think even harder and she jumps back to the PrEM phase.
Maybe I should compare possible insurance packages before moving on, I have only compared eight providers so far…
The core competence of decision making
And here we are. Looking at what matters so much in the cycle of decision making, implementation and closing.
The Oscar goes to… Our ability to perform self-serving mindset shifts
An old saying goes: "Think first, then act".
For a workout of our own decision biceps, the better recipe is: "Think first, then act, then think again". The ability to make these shifts from thinking through mindset to pulling through mindset at the right moments makes all the difference.
And if you think you can act in both mindsets at the same time, research would disagree. Multi-tasking does not work. At least not when the activities compete for the same limited capacities of our brain. In addition, our attention is polarized differently in both modes. The scientific phrase here is cognitive tuning, for those who are interested. Especially for complex decision making this tuning is important. That’s because we need to tune from thoughts to actions several times. I have summarized the core idea in a small table for both phases so it's easier to understand.
Decision relevant information
Information about How? When? Where?
Characteristics of the two basic Mindsets in decision making processes
For simple decision making, you might just have to make one jump from PrEM to PEM and it’s done. For other decisions, you will have to make multiple jumps to reach the final PEM phase.
The quality of these shifts from Thought to Action will determine how well you'll be able to master a decision making cycle.
Shifting from Thinking through to Pulling Though is easy to read, but it's hard work on yourself to get better at it...
By the way: In the next article, I will use a practical example to illustrate what the ability to shift quickly between these two mindsets looks like. As an example I chose the game of Golf, where a various such shifts are needed to succeed...