Opinions expressed by Entrepreneur contributors are their own.
According to the 2019 Nobel Prize winner in economics, Daniel Kahneman, all decisions are made with partial information due to the systemic cognitive biases people bring to the decision-making process. However, decisions don’t require perfection to be effective. For corporate leaders bearing the pressure to make tough calls, asking the right questions is a systematic approach to gathering information that avoids the pitfalls in pursuit of perfection.
In a decade-long longitudinal study of over 2,700 leaders, Harvard Business Review (HBR) found that too many leaders were shrinking from making difficult decisions, and delays often did more damage than they sought to avoid. The bigger an organization gets, the less decisive it becomes.
Even the most brilliant leaders can demand too much data before deciding. While it’s well-known that executives have to make crucial decisions with limited information, it’s less evident that those who require all the possible information slow their team’s ability to execute.
The difference between the two groups shouldn’t be confused with comparing the merits of a fast decision and a more calculated one. There is a better formula to weigh the information that first helps discern which — a rapid or slow decision — is required: First, ask who, what, when, where, why and how.
Related: These Decision-Making Tactics Can Help You Formalize Your Process and Make Better Choices
Backing out of the rabbit hole
Nine times out of 10, when people start working with me, they present roughly 20% of the relevant information needed to make a sound decision. I always request they go back and uncover the answers in at least 60% of the available data — that carves a clearer path to a quality decision.
Typically, senior leaders don’t have the time to drill into the day-to-day details of presenting issues, so streamlining information helps avoid the analysis paralysis of multiple possibilities popularized by psychologist Barry Schwartz.
Schwartz found that, with voluminous options, consumers find it challenging to choose because they are left wondering if one of the options not taken would have been better. Schwartz theorizes a presumed alternative leads people to question their decisions. If even good choices are subject to 20/20 hindsight, it becomes more important to put a pin in the cycle of seeking more data.
Related: These Decision-Making Tactics Can Help You Formalize Your Process and Make Better Choices
When to act fast and when to think slow
In “Thinking, Fast and Slow,“ Kahneman divides our brains into two metaphorical systems: System 1 thinks fast and System 2 thinks slow. The first system operates automatically and intuitively. The second requires reasoning and focus. Intuition, he warns, is frequently wrong and needs to be backed by experience and analysis for it to lead to effective decision-making.
Because people are inherently judgmental, I’ve witnessed leaders make decisions only to “back into the facts” to support why they made that decision. It’s a categorically wrong approach to critical thinking.
The reasoned analysis of Stoicism offers another model. Sometimes mistaken for being coldly analytical, this ancient philosophy also engages curiosity. Many people want to solve a problem immediately rather than get curious about why it happened. But, they might be trying to solve the wrong problem or failing to consider the adjacent challenges that will come up after that problem.
As leaders, we must look at organizational impact through a broad lens. If the blast radius of a poor decision is going to be big, slower decision-making is required. If the effect is likely minor, a faster decision is ideal.
Related: How to Make Better Decisions
Five Ws and an H: Asking the right questions
When I have a decision to make, asking who, what, when, where, why and how offers the minimum information needed to make an informed decision while avoiding data overkill.
- Who?
- Identifies all the parties involved, impacted stakeholders and who will carry out any action. Asking this question reveals who needs support and who has further information or insight. This can also highlight the relevant managers for other delegations.
- What?
- This question offers a summation of the issues presented, not a long narrative. It describes the event or chain of events leading to the problem and shows what type of decision is necessary.
- When?
- This offers a timeline of events and a timeframe for a needed outcome, displaying whether a fast or slow decision is required.
- Where?
- Identifies the location of the issue or bottleneck within the organization and whether a decision crosses international borders or relates to just one set of laws. The “where” provides a snapshot of the blast radius of any decision.
- Why?
- This helps us understand the necessity of choice by briefly deconstructing the problem and the context of events. It also illustrates the chain of responsibility for the problem and the solution.
- How?
- Reveals what circumstances culminated in bringing the issue about and why it made its way to the executive level. This step may offer the cause and effect of the problem and the solution.
These questions also help remove the anxiety of how a decision might impact individuals personally. In the HBR study, leaders often delayed decision-making for fear of upsetting others or losing status. Fear clouds judgment. Like an excellent Stoic, if we can stay within the intellectual sphere, we can make a logical decision.
Related: 7 Tips for Making Quality Business Decisions
A decision-making template
I’ve encountered leaders who will ask for copious amounts of data before even risking a decision. It becomes an endless cycle. But determining the who, what, when, where, why and how is a very simple, practical and valuable tool that can save businesses time and resources. It avoids the cognitive laziness of fast thinking and the overwhelm brought to bear by an abundance of choices that characterize slow thinking. In the language of Stoicism, this framework helps leaders lean into the virtues of wisdom and temperance to make decisions that lead to more substantial, positive outcomes for both individuals and organizations.
