What is Your Decision-Making Process?

Making a Decision When It Counts

As a leader, either in your personal life or professional one you will be called upon to make numerous decisions. Having a effective decision-making process can prove invaluable.  An Army instructor of mine once summed up what was expected of a leader. “The leader is the person who tells the convoy which way to go when they come to a fork in the road.” So simple. Now add in some rain, nighttime, a lot of fatigue, and an outdated map, and it becomes less simple. But even under challenging and at times unclear conditions, it is the leader who is ultimately responsible for making the decision as to which way to go.

Financial Decision

Several years ago I was agonizing over a financial decision. It was more of a financial strategy decision on how to manage my family’s investments in relation to paying down our mortgage debts. I knew what I wanted, but how to get there was less clear. The execution of this chosen strategy would take upwards of a decade. I had built it up to be a big decision. I had spreadsheets with multiple tabs, had read books and online articles, watched countless YouTube videos, and was still left feeling uncertain.

After a period of time collecting, reviewing, and understanding the numbers, I was ready to move forward. I weighed my options and made a final decision. That decision was made over 5 years ago. Although it hasn’t always been easy and there have been times of struggle the decision still stands.

Simple or complex decision are best made by having a solid approach. There are times when we need to be decisive and quick. But rushing to a quick decision can sometimes cost you time and money. Having an effective decision-making process can be invaluable and set you apart from others.

Effective Decision-Making Process

1. “Begin with the End in Mind”

One of the most dynamic leaders I have ever worked for used to say this all the time. He would say it at the start of big projects or even short meetings. He was always thinking about what the desired end result was in order to bring focus to the discussion. What is the desired outcome? He was at times making decisions that impacted lives and had a dollar value of into the Billions.

Having a clear picture of the outcome will help bring everything into focus. This may also eliminate a few options right from the start helping you get to a decision sooner.

Hint: It may be helpful to develop a list of requirements. These are the nonnegotiable requirements. Example, when buying a car: 4 Doors, 4 wheel drive, under $25,000.

2. Collect Data

Collect all of the information you can on the decision you are needing to make. If you are someone who likes to over analyze make sure you give yourself a time frame for this step. One of the keys here is to collect information that runs counter to your bias.

Most people will have a bias leaning in the direction they want to go or decision they want to make. Investigate your assumptions by learning about all the options – even the options you view as weaker or less effective. You never know what you might find out.

3. Narrow Your Choices

Find a way to narrow your options down to 2-3 choices. A good way of doing this is by identifying some of the key requirements you have. If an option doesn’t fit one of those key ‘nonnegotiable’ requirements, you can eliminate it as an option.

4. Run Simulations

On most smart phones these days, if you plug an address into the map application it will give you a few options and time estimates. This is a simulation of how to get from point A to point B. There is something about actually seeing the data you collected in step 2 come to life through a simulation.

For my financial decision, I used spreadsheets to run the numbers over time. It brought to life what the outcome would be 4, 5, and 6 years down the road. Using simulations you are able to compare results of the 2 or 3 options that are still on the table.

5. Make a Decision

If you are in a rush to make a decision, you may need to go right from your simulations to making a decision. At this point, you need to weigh what you established in step 1 “begin with the end in mind” with the results of step 4 “run simulations.” Don’t forget that list of nonnegotiable of requirements.

Remember to keep in mind that there may not be a perfect solution. Your final decision may not satisfy every desire but should meet what is truly important to you.

There are times when you need to be decisive and others when you can step back. If time is on your side, consider taking a step back to let it all sink in before making that final decision.

Sticking to Your Decision

Once you have made a decision you will undoubtedly be tested on your choice. You may be questioned directly by a co-worker or spouse or even just hear something on the news that makes you doubt yourself. Have the courage to own your decision. If you did your homework through the process, you should feel confident in your decision.

Oftentimes what we hear doesn’t account for all the information being considered. Maybe what you are hearing is one of the stronger arguments for an option that you simply didn’t pick. It doesn’t mean your decision is wrong. Don’t be swayed. Know that you have made a good decision.

Remember, “The leader is the person who tells the convoy which way to go when they come to a fork in the road.”

What have you learned from decision making in the past?  Any other tips?

Please note: I reserve the right to delete comments that are offensive or off-topic.

8 thoughts on “What is Your Decision-Making Process?

  1. Great post! I like that you start with the end in mind. So crucial. Regarding #2 tho, it is possible to have too much information, leading to analysis paralysis. But using your following tips helps avoid this.

  2. Not only should you own your decision, but unless logically you can prove your on the wrong path, stay on it. Investing often fails because people abandoned their plans in relation to news or other things.

    I also like to pilot and test before I roll out, if I can do so safely beyond simulations.

    • abandonment of a plan is absolutly one of the reasons people fail.
      I like the ‘pilot and test’ thought after simulation. that’s a good one.
      thanks for the feedback.
      RtC

  3. I usually have to wait and get a peace about the decision before I make it. Sometimes I get one right away and other times I have to wait. The times that I’ve rushed through without getting that peace have been the worst decisions I’ve ever made. Here’s looking at one of the used cars that I bought and ended up hating. Not to mention buying Chipotle stock when it was a falling knife 🙂

    • agree. For me i love going for a run to ponder what the choices are. i find lot of clarity that way. Luckily for me the only Chipolte choice I’ve had to make is which burrito to get.

  4. I think more important than any of the individual steps is having a process that works for you and that you use consistently. It is easy to get overwhelmed if you don’t have a process. But if you have internalized a decision-making process, you can apply it to any situation. No matter how difficult or overwhelming the situation, you can take a deep breath and start from step one.

    Really useful article. I really like your direct approach and am reading through your earlier articles now. Welcome to the personal finance blogosphere!

    • thanks for visiting and your comment. i think as long as you have an approach you might just be ahead of many other folks out there who have none. what i wrote works well for me.
      will be posting two new articles a week for the foreseeable future.

Comments are closed.