I once finished a engagement with a company that had a difficult time with decision-making. When employees would ask how a mandated change should be implemented, the manager might respond with, “I’m not a technical guy; be creative,” and then walk away. I remember sitting through meetings where we were trying to solve a “problem” without understanding what the problem really was. A rounding error in the price of an service seemed to be causing some customers to be billed an extra cent a month. It was a top priority to figure out a way to absorb the rounded error by only charging the customer the extra penny every second month. I wasn’t sure what customer would be upset about a bill for an extra 12 cents a year but management was certain that there would be some. After four meetings with 6-8 people in the room and the hourly rates and expenses of all involved, it was becoming clear that the solution would probably cost about $80,000. I asked how many customers this problem affected.

“Twelve,” was the reply.

“Why not change all our rate sheet so that prices are an even number of pennies?” I asked.

“That’s not acceptable,” I was told. “The guy who put the rate sheet together did a lot of work on it.”

The first step in decision making is identifying the problem that needs to be solved. In this case, there was no single clear problem. In my mind, the problem seemed to be that we should not bill customers for unnecessary pennies. For the managers in the room, the problem was not having to ask the guy who made up the rate sheet to change the prices by a penny. For the technicians in the room, the problem was how to implement a change to the system so that the customer would only pay for the extra penny every second month—and to make the changes while not falling behind on other tasks and system enhancements.

We make decisions everyday–so often in fact, that we can be excused for thinking that we’re good at it. But we’re not. In a study of 1000 decisions handed down by the United States Supreme Court between 1953 and 1993, when justices were writing for the majority decision, their opinions were less nuanced and complex. They considered fewer perspectives and possible outcomes. They let the fact that they were in the majority justify their decisions (Wethey, 2013, p. 17). We just don’t make good decisions unless we’re held accountable for our reasons and our conclusions and this doesn’t happen very often in life.

The first step to efficiently, effectively, and collectively making a decision is to converge on a definition of the problem that the decision is meant to solve (or the opportunity that the decision is intended to leverage). If we can’t explain why we need to make a decision (or what will happen if we don’t make a decision) then we really shouldn’t be making it. We may want to make a decision because it seems like the right thing to do, but we need to spend the time considering the business case or thinking through the consequences. Spending $80,000 to fix a 72 cent problem doesn’t seem like a good decision but maybe there are other factors at play: legal regulations, or corporate reputation.

Identifying and analyzing a problem sounds like hard work. For this reason, many people rely on “spontaneous decisions”. Politicians do this all the time when they announce million dollar spending promises to end unemployment without understanding what is causing people to be laid off. Managers tell employees to “be creative” rather than actually taking the time to understand the impact of their decision.Remember asking your parents, “Why?” and their only answer was, “Because I said so”? Those spontaneous decisions too.

As an activity, “problem solving” is about bridging the gap between the way things are/were, and the way they ought to be. It involves a great deal more time and effort than coming up with a good headline, soundbite, or policy initiative. It involves:

1. Clearly understanding and articulating the problem or opportunity, including:
   1. assessing its severity and impact,
   2. its ramifications and consequences,
   3. and identifying who is responsible for it.
2. Identifying a desired “end state”. As I like to say, “What does ‘done’ look like?” How do we know our solution is a valid one? All other things being equal, a good solution shouldn’t cost more than the problem. Even if our rounding error affects 10,000 customers, a good solution should still cost us less than the $0.06 per customer per year.
3. Assess whether the “end state” is reasonable. Until fusion energy is invented, it isn’t a reasonable alternative to fossil fuels.
4. Identify a number of options to get us from the current state to the target state. These are our implementation options.
5. Choose the best available implementation option. This is the decision!
6. Implement the decision.

Using this model, there is a lot of work that comes before a decision, and a lot of work that happens after the decision is made (namely the implementation of the decision). The best decisions clearly tie the problem to the solution as well as being reasonable and cost-effective.

References

Wethey, David. Decide:  Better Ways of Making Better Decisions. Kogan Page Ltd. London. ISBN: 978-07494-66305