Three ways to make better decisions

Intuition will only get you so far – businesses can learn a lot from the Catholic Church

In his 2005 book Blink, Malcolm Gladwell argued that many of the best choices are made in microseconds – snap judgements based on intuition. The application of this idea to business decisions has been controversial ever since. Can myriad variables be processed in the wink of an eye? Former Lehman Brothers president and self-styled in-house philosopher Joe Gregory was a fan. He’s even reported to have handed out copies of the book on the trading floor in the years before the bank’s collapse. And while it’s obviously unfair to associate Gladwell’s idea with Lehman’s failure, psychologist Daniel Kahneman has shown how poor humans are at making some decisions instinctively.

Our snap-judgement facilities evolved in a world very different to ours. They’re laden with bias, and ill-suited for weighing probabilities, he argues. Consultants and business school professors have spent years constructing formal processes and frameworks to help remedy this, but many are context-specific. Here are some of the more general tips from the literature.

1 GET THE RIGHT STRUCTURE

Getting the right people involved in the process is the first and most crucial step, according to the Vroom-Yetton-Jago Decision Model. All decision- making structures lie on a spectrum, from autocratic to democratic. Does the decision require speed? Are your team members or subordinates likely to accept your conclusions on faith? If so, the model recommends a top-down approach. If it’s a bigger question, with more riding on it, the model advises embracing the wisdom of crowds.

“Participatory decision-making”, as it’s called, has a solid academic pedigree. Plato famously philosophised in dialogue form, using Socrates’s interlocutors as sounding boards. And Nassim Taleb, author of The Black Swan and Antifragile, has argued that decentralised decision-making avoids catastrophic top-down errors, with the best ideas naturally rising to the fore. He contrasts Switzerland’s small scale, canton-based governance with the failures of top-down Stalinism.

2 PLAY DEVIL'S ADVOCATE

With wider participation, however, comes the danger of groupthink. It’s an issue organisations grappled with long before management theorists started studying it half a century ago, Babson College’s Thomas Davenport has argued. And there’s a lot firms can learn from the Catholic Church in this regard. The Promotor Fidei, jokingly called “the devil’s advocate”, was tasked with overseeing the beatification and canonisation processes, probing and taking issue with sainthood candidates to make sure only the most worthy were given such a status. Organisations today could adopt similar “formalised decision alternatives”, writes Davenport.

3 GO WITH THE GUT (SOMETIMES)

But let’s not discount Gladwell’s ideas too quickly. He tells the tale of the Getty Museum in the US, which bought a $10m (£5.9m) ancient Greek statue despite it being fake. The piece passed validity tests, but experts warned against the purchase, experiencing an “intuitive revulsion” that was ignored. While Gladwell touts this as an example of Blink instincts, Richard Posner (who has written about judges’ decision- making) thinks he misses the point. Rather than using some mystical gut instinct, the experts’ intuitive revulsion drew on years of study. “The expert’s snap judgment is the result of a deliberative process made unconscious through habituation.” Going with your gut, he argues, can effectively mean distilling years of experience into finely-honed instinct. If you know your field well enough, it may pay to go with your intuition.

Hone your priorities ChoiceMap Free

This app breaks down complex decisions into lists of priorities, and allows you to weigh them according to how they will affect your life. It then uses an algorithm to tie all this information together, and gives a score for each option. It comes pre-loaded with templates for academic, political, marital and other decisions, but you can also start from scratch.