Every day, our lives are shaped by a multitude of decisions, each shaping our journey. Whether it’s a seemingly minuscule choice, like selecting a morning beverage, or a monumental one, such as exploring career paths, each decision carves out the path of our existence. The process we engage in during these moments of choice is what we refer to as the 6 step decision making process.
This process is inherent in our lives, observable even in an 11-month old’s innocent curiosity, as they decide between a squeaky rubber duck, a cuddly teddy bear, or a household gadget. This illustrates how integral decision-making, particularly the 6 step decision-making process, is to our lives.
Decisions, big or small, are the compass guiding us. You might wonder why we need to master decision-making when it’s something we do instinctively. But here’s the kicker – decision-making is a skill, and decision making is process. As with any skill, it can be honed and improved. The decision making process steps are crucial components in this learning journey. And when you have a model for decision making you’ll get much better at it.
This guide aims to navigate you through a systematic, six-step decision making process that can be applied to any decision you face, from life-changing choices to daily dilemmas. It will help you tackle ethical decisions, business decisions, and everything in between.
Understanding these basic steps and the mechanics of decision-making can transform the way you live and function as a decision maker. By mastering this decision model you can steer through life’s choices and make more effective decisions. So, whether you’re deciding on your life partner, contemplating career options, making business decisions, or just debating whether to hit the snooze button, let’s dive into the art of mastering the decision making process steps.
Step 1 of The Decsion Making Process: Identify the Decision
At the starting line of our decision-making journey, we need to identify the decision that’s calling for our attention. This isn’t just a surface-level identification; it’s about diving deep into the heart of the decision, understanding its context, its potential ripple effects, and the forces that are nudging it in different directions. This first step isn’t a sprint; it’s more of a thoughtful, introspective stroll, setting the tone for the entire process.
Degrees of Impact
Decisions come in various forms and can have varying degrees of impact.
- Decisions with a Disproportionate Impact: These decisions, such as deciding on a career path or buying a house, significantly define our future and demand careful consideration.
- Decisions with a Negligible Impact: These are decisions we make routinely and have minimal consequences, like choosing between a coffee or tea.
- Decisions with Low Reversal Costs: Decisions like trying a new restaurant fall into this category. These decisions can be easily undone if the outcome is not favorable.
- Decisions with High Reversal Costs: These are more complex decisions, for instance, quitting a steady job to start a business. These decisions are not easily reversible and can have long-lasting consequences.
Understanding the nature of the decision at hand is the first step towards making effective decisions
Step 2 of The Decision Making Process: Gather Information
The second leg of our decision-making marathon is all about gathering information, one of the crucial steps in the process. No decision is made with full knowledge of all the variables at play. So, we’ve got to do some detective work, hunt down the clues, and piece together the puzzle. While we can’t expect to know it all, the aim is to bring as much clarity as possible to the blurry picture of uncertainty that comes with every decision.
Let’s dive into the world of poker for a moment, where information is the ace up your sleeve. In her book, The Biggest Bluff, Maria Konnikova unpacks the power of information asymmetry in poker and how it shapes decision-making. She nudges us to embrace uncertainty and gather as much relevant information as we can. In her words, “A great decision is the result of a good process, and that process must include an attempt to accurately represent our own state of knowledge.” It’s a gentle reminder that making the right call isn’t about striking gold every time; it’s about playing the hand you’re dealt as wisely as you can.
This rule doesn’t just hold the winning hand in poker; it’s a game-changer in life too. Let’s say you’re trying to decide which college to attend. You’d want to dig up all the dirt you can – the courses, the professors, the vibe on campus, the location, the cost. Doing your homework can turn a daunting decision into a calculated move and increase your odds of loving your choice.
In the same vein, if a business is debating launching a new product, they need to gather intel. They need to scope out the market demand, suss out the competition, crunch the numbers on production costs, and estimate potential profits. With this information in their arsenal, they’re more likely to make a business decision that catapults their product to success.
These examples underline the power of information in clearing the fog of uncertainty that clouds decision-making. So, the next time you’re faced with a decision, channel your inner Sherlock Holmes, and get sleuthing!
The Role of Probability in The Decision Making Process
Grasping the role of probability in decision-making becomes crucial when the stakes are high. Think of it as a high-stakes game of predicting the future. You’re on a tightrope, balancing between your dreams and the harsh reality of statistics.
Imagine you’ve just kindled a passion for basketball and you’re fantasizing about the Olympics. You can almost hear the crowd’s roar, feel the weight of a gold medal, and see your face on cereal boxes. Just then, my friend Greg Hartle steps in, nudging you back to reality. He says, “Sure, it’s possible, but let’s talk about probability.”
Greg has a gift for grounding dreamers. He’d remind you that while your dream isn’t impossible, the odds of becoming an Olympic athlete are incredibly slim. He’d point out the thousands of talented athletes around the globe who share your dream, and only a handful will make it.
This reality check doesn’t mean you should ditch your dreams. Instead, it highlights the need to understand the difference between what’s possible and what’s probable. As Greg puts it, “You have to ask yourself, where is the probability of success likely? How can I increase that probability?”
So, instead of dreaming about becoming the next Michael Jordan, start by perfecting that free throw. As my Grandma used to say, “Rome wasn’t built on dreams alone.” Or something to that effect.
Step 3 of The Decision Making Process: Identify Alternatives
In the third step of our decision process we’re concocting a variety of alternative decisions. It’s like a brainstorming buffet, where more dishes mean more flavors to savor. This diversity helps you identify the best solution and evaluate your choices more effectively.
But here’s the twist – a smorgasbord of options, while tempting, can be a double-edged sword. Too many choices can leave you dizzy, like a kid in a candy shop who can’t pick a treat. So, the secret sauce is to cook up just enough alternatives to provide a broad spectrum, but not so many that you’re left with decision-making heartburn.
To whip up these alternatives, think of it as a mental free-for-all. Let your ideas flow, no judgment, no analysis. Let them simmer. Remember, life doesn’t offer one-size-fits-all solutions. Every decision is as unique as your grandma’s secret recipe, deserving the same level of care and consideration.
Step 4 of the Decision Making Process: Evaluate Alternatives
Step four of our decision-making quest is all about sizing up your options. You’ve got a buffet of potential paths in front of you, and now it’s time to take a deep dive into each one. It’s not just about checking if it’s doable or if it aligns with your ultimate goal. It’s also about pondering how each choice might make you feel in the future. After all, our future feelings and whether or not we’ve practiced ethical decision making often steer our decisions. This is where the assessment in step evaluation process comes into play.
Remember, don’t get stuck in the comfort zone of routine. This tendency can turn into a major roadblock on your journey to making the best decision. By challenging ourselves to think outside the box, we open the door to new possibilities and make decisions rooted in thoughtful consideration rather than just comfort or familiarity.
Visualizing potential hiccups is another crucial part of this step. By imagining potential obstacles or negative outcomes, we can devise strategies to prevent them or lessen their impact. This forward-thinking approach doesn’t just prep us for potential pitfalls, but it also injects a dose of confidence into our decision-making process.
You might find a decision matrix, a decision tree, or decision criteria helpful in systematically dissecting your options. These tools let you list out your options and the factors that matter most in your decision. You can then score each option based on these factors, painting a clear picture of your alternatives and their potential impacts. This is the benefit of step four, it allows for structured analysis using tools like a classic pros-and-cons list.
But remember, as Russ Roberts explains in his book Wild Problems: A Guide to the Decisions That Define us, “The rationality of a cost-benefit list of expected well-being from the decisions we make in the face of wild problems is actually an illusion.” Tools like a decision matrix or a decision tree can be a valuable sidekick, but they can’t completely erase the inherent uncertainty that comes with decision-making.
Step 5 of the Decision Making Process: Make the Decision
The fifth step in our decision-making journey is where the rubber meets the road. Here, we’re standing on the edge of choice, armed with a wealth of information and a collection of alternatives. This step is about turning the decision into an action plan, giving tangible form to our choices. It’s like the art of balancing – weighing up those alternatives and information, considering not just the immediate effects, but also the waves that our decisions could create.
In the words of the book “Thinking in Bets,” “Decisions are bets on the future.” Every decision we make is essentially a gamble on a future outcome, shaped by our assumptions about how it might make us feel and how it could potentially mold our lives.
First, Second, and Third Order Consequences
When making a decision, it’s crucial to consider first, second, and third-order consequences.
- First Order Consequences: These are the immediate results of our decisions, which are usually straightforward to anticipate. However, the decision-making process should not stop here.
- Second Order Consequences: These are the indirect results that occur as a result of the initial decision. They are essentially the domino effects triggered by our original action.
- Third Order Consequences: These are the outcomes that result from the second order consequences, further extending the chain of effects initiated by our decision.
It’s essential to consider all these layers of consequences when making a decision, as they provide a more comprehensive view of the potential impacts.
For instance, if you decide to stay up late binge-watching your favorite show, the first-order consequence might be a fun-filled night. However, the second and third-order consequences could include sleep deprivation, a productivity slump the next day, and potential health issues from consistent late nights. So, when you’re on the brink of a decision, remember to weigh your options and consider the broader consequences.
This step is about making the correct decision based on your analysis and turning it into a tangible plan of action. Without a plan of action, you haven’t made a decision. You’ve made a wish. This is why your plan of action is the most cirtical sub-step when you use the decision-making model.
Step 6 of the Decision Making Process: Evaluate the Decision
Step six, the grand finale of our decision-making saga, is a moment of introspection. This final leg of our decision-making marathon isn’t just about personal reflection but also about aligning our choices with our project goals, organizational goals, or business goals. We have crossed the finish line, made the choice, and now it’s time to reflect on the process for decision making. But here’s the thing – we’re not looking back to judge or criticize. We’re looking back to learn the basic components of decision making.
Sure, some decisions might leave a bitter taste. It’s easy to dismiss these as ‘wrong decisions,’ but they’re really just detours on our road to wisdom. Even these so-called ‘bad decisions’ have a silver lining – they spotlight the routes that are less likely to lead us to our goals from the previous steps.
Regret is a powerful teacher. It allows us to learn from the past and make better decisions in the future, especially in ethical decision-making. Each decision, whether it leads to a victory dance or a sigh of regret, packs a punch of wisdom that shapes our decision-making prowess. As the book “Thinking in Bets” points out, a great decision isn’t just about a great outcome. It’s about the decision model behind it. We must strive to accurately represent our knowledge and consider the potential consequences of our choices.
Life is packed with “wild problems” that don’t come with a simple solution. Decisions like who to marry or what career path to follow can’t be made with just data or logic. They need a deeper understanding of ourselves and the complexity of life. We might crave formulas or calculations to zap away uncertainty, but life isn’t a math problem. However having a model for decision making can make a big difference.
In the decision-making process, probability is a key player. It’s crucial to tell apart what’s possible and what’s probable. While chasing our dreams is important, we need to be realistic about the odds of success. Greg Hartle’s reminder to boost the probability of success in our chosen areas rings true here. By evaluating alternatives and weighing their potential consequences, we can make informed decisions that align with our goals and dreams.
Cooking up feasible alternatives is a key step in decision-making, but it’s a balancing act. Too many choices can lead to decision-making paralysis, while too few can limit our perspective. Each decision is unique, and we should approach them with the same care and attention as a cherished family recipe.
At the end of the day, the art of decision making is a never-ending journey. It doesn’t end with making a choice but stretches to evaluating the outcomes and learning from them.
Even decisions that result in regret offer valuable insights and guide us towards better decisions in the future. By applying the six-step decision process and embracing the complexity of life’s challenges, you can become a better decision maker.