Decision Making Series: Part 2 - Structuring the Decision

Decision Structuring, Timing, and Course Correcting

Jul 16, 2024

Game Plan:

Timing is critical when it comes to decision making. Both in making the original decision and course correcting the decision down the road. Now that you’ve audited and scorecarded some of your decision(s) in Part 1, it’s time to create a better decision making structure for actually making your decisions.

Let’s be crystal clear. There are no perfect decisions. If something is easy and obvious with little to no risk, it is NOT a decision. A decision requires risk. The higher the risk, the harder the decision. Even the best decisions can and should be “course corrected.” Course correcting can either mean fine tuning the outcome or what we otherwise might call “continuous improvement” or course correcting could mean a pretty strong detour or even stopping, turning around, and starting over.

If all decisions require course correcting, then when to course correct is the key (a.k.a. “timing”). As you structure your decisions, your focus needs to be on documenting your decision assumptions and defining your success or failure metrics for the decision upfront.

Defining and documenting these assumptions and metrics allows you to quickly assess your next decision (your next move) when the “decision actuals” come in vs your “decision assumptions.” We can call this “decision actuals vs plan.” As you graduate to your masters in decision making, you will begin thinking 3 steps ahead (like a chess player) and use your documented assumptions and defined metrics to “pre-wire” your course correcting decisions. Your PhD in decision making finally involves coaching the rest of your org to embrace this style of decision culture and agility.

Chalking the Field:

Principles vs Positions
Second Level Thinking
Go Faster - Try RAPID Decision Making
Create Structured Decision Options and Decision Criteria
Structure the Decision Voting process
Create Range Based Success Metrics to Evaluate the Decision
Pre-Wire the Future Course-Correcting Decision(s)
Document the Decision

A reminder from Part 1 of this Series: Perfection is Paralysis. 80% Data is enough: the 20% of unknown space helps the team stay agile and to turn any opinions or innovative decisions into data once the 80% decision goes live. Don’t get caught in the fear trap or the perfection trap where not making a decision is the decision while the importance and urgency surrounding the decision festers like a sore wound.

Cook’s PlayBooks

PLAY 1: PRINCIPLES VS POSITIONS

It’s critical when getting to the “best ideas win” to challenge only the assumptions and/or requirements of a decision. Never challenge the person making the assumptions. This is how listening stops and heels dig in. Only challenge assumptions. Never make it personal.

Everyone involved in the decision needs to come to the decision making table with a clear point of view or “position” with supporting assumptions, criteria, requirements, and success metrics.

Everyone needs to be willing to hear a “better idea” or a “better assumption” and be willing to change their position. If you see your team or the decision makers straying from this critical operating value of “best ideas” win, it’s time to remind them of these rules and to “chalk the field” with a leadership speech that principles always trump positions.

Here’s a “Best Of” I’ve curated from Rishi Jain’s great writeup of “1st Principles.” Read it here.

Play #1a: First-Principles Thinking

Ozan Varol, in his book “Think like a Rocket Scientist”, writes: “Process, by definition, is backward looking. It was developed in response to yesterday’s troubles. If we treat it like a sacred pact—if we don’t question it—process can impede forward movement. Over time, our organizational arteries get clogged with outdated procedures.

When necessary, we must unlearn what we know and start over. This is why Andrew Wiles—the mathematician who solved the centuries-old Fermat’s last theorem—said, ‘It’s bad to have too good a memory if you want to be a mathematician. You need to forget the way you approached [the problem] the previous time.’

What Ozan advocates is first-principles thinking. He writes:

‘The credit for first-principles thinking goes to Aristotle, who defined it as ‘the first basis from which a thing is known.’ The French philosopher and scientist René Descartes described it as systematically doubting everything you can possibly doubt, until you’re left with unquestionable truths.

Instead of regarding the status quo as an absolute, you take a machete to it. Instead of letting your original vision—or the visions of others—shape the path forward, you abandon all allegiances to them. You hack through existing assumptions as if you’re hacking through a jungle until you’re left with the fundamental components (or 1st Principles)

First-principles thinking should be deployed where it matters the most. To mop the mist collected on your mental windshield in those areas and expose the invisible rules governing your life, spend a day questioning your assumptions. With each commitment, each presumption, each budget item, ask yourself, What if this weren’t true? Why am I doing it this way? Can I get rid of this or replace it with something better?’

First-principles thinking is a problem-solving and decision-making approach that involves breaking down complex ideas and problems into their most fundamental underlying components or principles. Instead of relying on analogies, conventions, or past norms, first-principles thinking directs us to dive deep into the problem and understand its basic elements. Once identified, these fundamental principles can then be reassembled in a creative manner to devise innovative solutions. In essence, first-principles thinking prevents one from getting trapped in prevailing modes of thought and opens the door for genuine innovation by returning to the basics and building from there.”

PLAY #2: SECOND-LEVEL THINKING

Rishi also has a great summary on Second Level Thinking or what I call “Being 3 steps ahead like a chess player” or “Looking around corners.”

“Second-level thinking is a concept often attributed to Howard Marks. He calls it, ‘The Most Important Thing.’ In the context of decision-making, it refers to the ability to think beyond the immediate and obvious implications of a decision and to consider the next-level consequences and possibilities that might not be readily apparent.

Second-level thinking is about understanding the complexities and nuances of a situation, challenging the initial assumptions, and looking for deeper insights that might give one an edge in decision-making. It’s about trying to see things that others don’t, predicting how situations might play out based on a multitude of factors, and making decisions that account for these deeper insights.

Second-level thinkers double-think (and triple-think) every angle of every situation.”

PLAY #3: GO FASTER - TRY RAPID DECISION MAKING

Try RAPID Decisions to go faster and to help delegate decisions further down into the org and further down the risk curve.

PLAY #4: STRUCTURE DECISION OPTIONS & DECISION CRITERIA

In the example below, the decision in play is whether or not to create a new All Company Performance Bonus Plan.

Step 1: Define the most important criteria for which the decision will be made.

The team decided on four key criteria in order to evaluate the decision of paying a new performance bonus (Attract Talent; Retain Talent; Annual Cost; Cash Impact). The template I had created for this team had 5 criteria - so this column is left blank.

Step 2: Objectively provide %’s importance to each criteria (blue criteria % must add to 100%).

The decision team then needs to align on the various levels of criteria importance as the next step in weighting the decision.

Step 3: Create decision options (red font) and evaluate each option separately by scoring how it fits against each criteria (must also add to 100% vertically - black).

The team had discussed various options on how to implement creating the company performance plan (with one of the options being not to implement it this year).

I then led the team to evaluate each criteria separately working down each criteria column (vertically) against each option. It was important that I led the team to avoid “fitting to their biases” and to objectively and independently agree on scoring each option against each criteria (feel free to use different voting techniques here which I elaborate more on in the voting structure below).

Step 4: Now simply multiply each blue % Importance x black % to arrive at an objectively weighted score = RED “Total Weighted Score.”

PLAY #5: STRUCTURING THE “DECISION VOTE”

Use a Voting Scorecard

Above is a simple voting scorecard template that again puts the Decision Options on rows but this time puts the Decision People as columns. There are a few techniques to voting that can then be used here that I’m sure many of you have used in your past meetings. Pick the one(s) you like. Here’s what I like:

2 Rounds of Voting + Narrative

Round 1 of voting = blind or semi-blind voting. This can be as simple as folded slips of paper or the classic whiteboard exercise with those sticky dots for voting. If you want to connect with a digital tool in real time, Mentimeter is great.
Now “go around the room” and hear from everyone to defend their “vote.” Why did you vote for certain criteria and not others? It’s important you do not allow people to “pass” or to simple say “I agree with Jane.” A critical leadership skill is developing and verbally declaring your own point of view. Points of view can “rhyme” but everyone’s “spoken music” is unique and it’s critical every team members hears from every team member.
Now perform a 2nd round of voting; a final voting round after hearing everyone else’s reasoning allows for “best ideas win.” This allows people to change their original vote after being potentially influenced by other team members on their personal “whys.”

PLAY #6: DEFINE RANGE BASED SUCCESS METRICS FOR THE DECISION

For any specific decision, what is the range of success for that decision that can be measured? Define poor/fail, good/ok, great/exceptional.

The example template I created for auditing a decision can also be helpful in creating the initial decision metrics. This template I created shows the 5 primary criteria categories of how most decisions are evaluated (Quality, Quantity, Consistency, Speed, Cost). Most of you will recognize this as part of your own “personal decision making algorithms.” If that’s true, then structure what’s in your head and personalize your own decision making template for your team(s).

Here you will see the 3 columns for defining the range based metrics for “Great, Good, and Poor.” I also added more columns for scoring the priorities (the importance/urgency) of each criteria category. The 2 final columns are for defining problem areas post decision and course correcting actions to take. This type of decision template will be very helpful post decision in evaluating and course correcting the decision.

PLAY #7: PRE-WIRE THE COURSE CORRECTING DECISIONS USING IF / THEN LOGIC.

Ask these questions to the team or accountable decision person:

When (specific date/time) can the decision effectively be measured?
At that time, IF the decision is measured as good or great, THEN what specific actions should we do more of or double down on?
At that time, IF our decisions are measured as poor or fail, THEN what did we learn vs our original assumptions? What do we need to change to get our decision back on track toward good or great?

BOTTOM LINE: I highly recommend you use one or more of these lightweight “plays” to both help the team (or you) decide and to “pre-wire” future decisions by “deciding to decide” based on a time based decision scoring system and implementing IF/THENs.

PLAY #8: NOW DOCUMENT EVERYTHING IN ONE SHARED “DECISION FILE”

Document how the team (or you) made the original decision (the assumptions, the criteria, the voting scorecard)
Document how the decision success will be measured
Document the pre-wired “course correcting decision”

Next week is Part 3: Decision Communications

In the final part of the Decision Making Series, I’ll bring Parts 1 and 2 together and go deep on to effectively communicate your decisions. In Part 1, I stipulated your decisions are the currency of your leadership. In Part 3, I’ll stipulate that how you communicate your decisions will determine how much currency you have.

In Part 3, I’ll also provide links to the specific templates used as examples in this series. Subscribe and message me on Substack if you want me to send these templates to you.