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Advice from experts on how to make better business decisions
uYour brain makes hundreds of decisions every day. How do you ensure, in a work context, you’re making informed and better decisions that will drive your team towards success?
According to author Daniel Kahneman, your brain has two distinct systems for making decisions1:
System 1: The automated system
These are the decisions you’re able to make with little to no effort at all because you are performing routine activities or dealing with data that is ingrained in your psyche.
System 2: The calculated and careful system
This is when your brain requires more mental effort to make decisions, such as trying to parallel park your car in a tight space.
How do you know when to switch to System 1 or System 2 thinking? Here are three ways to improve your decision making, backed by research:
1. Use automated thinking to avoid decision fatigue
When you’re busy, you have more on your mind and face tighter time constraints. But the busier you are, the more decisions you need to make, which means you could experience decision fatigue. This occurs when the System 2 version of your brain experiences exhaustion.
The result of this? You choose to make easier but unwise decisions instead of making the right decisions.
Action: Cut down on the number of decisions you make in a day, conserving your mental energy for more important decisions. For example, decide what you’re going to wear the day before so when you wake up in the morning the decision has already been made.
2. Shift your perspective
A report from Harvard Business Review states:
“Taking an outsider’s perspective has been shown to reduce decision makers’ overconfidence about their knowledge, the time it would take them to complete a task, and their odds of entrepreneurial success.”
Ask yourself what someone else would do in your situation – what decision would they make? This will help you attain a more objective perspective and approach the decision more rationally. Even if you disagree with what someone else may decide, it may open your eyes to a viewpoint you haven’t considered.
3. Fewer options will equal better decisions
A study produced by researchers, Sheena Iyengar and Mark Lepper, proved that when you have fewer options you’re more likely to make a better decision. They presented two sets of participants with different types of jam. Out of the group that sampled 24 types of jam and the group who sampled only six jars of jam, the latter was 30% more likely to purchase jam.
You probably struggle to make informed decisions because you’re overloaded with too many options. Limit your options and spend your decision-making strength on the most important things.
What are you going to start doing today, to make better decisions for your business?
One of the most important skill sets for driving effect decision making in business is research and data analysis.
