Smart Choices. Howard Raiffa
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the no-brainers are the exceptions. Most of the important decisions you’ll face in life are tough and complex, with no easy or obvious solutions. And they probably won’t affect you alone. They’ll affect your family, your friends, your coworkers, and many others known and unknown. Making good decisions is thus one of the most important determinants of how well you meet your responsibilities and achieve your personal and professional goals. In short, the ability to make smart choices is a fundamental life skill.
Most of us, however, dread making hard decisions. By definition, tough choices have high stakes and serious consequences; they involve numerous and complex considerations; and they expose us to the judgments of others. The need to make a difficult decision puts us at risk of anxiety, confusion, doubt, error, regret, embarrassment, loss. No wonder we find it hard to settle down and choose. In living through a major decision, we suffer periods of alternating self-doubt and overconfidence, of procrastination, of wheel-spinning and flip-flopping, even of desperation. Our discomfort often leads us to make decisions too quickly, or too slowly, or too arbitrarily. We flip a coin, toss a dart, let someone else—or time—decide. The result: a mediocre choice, dependent on luck for success. It’s only afterwards that we realize we could have made a smarter choice. And by then it’s too late.
You Can Learn to Make Better Decisions
Why do we have such trouble? It’s simple: we don’t know how to make decisions well. Despite the importance of decision making to our lives, few of us ever receive any training in it. So we are left to learn from experience. But experience is a costly, inefficient teacher that teaches us bad habits along with good ones. Because decision situations vary so markedly, the experience of making one important decision often seems of little use when facing the next. How is deciding what job to take or what house to buy similar to deciding what school to send your children to, what medical treatment to pursue for a serious illness, or what balance to strike among cost, aesthetics, and function in planning a new office park?
It’s true: there’s often very little relationship between what you decide in one instance and what you decide in another. That does not mean, however, that you can’t learn to make decisions more successfully. The connection among the decisions you make lies not in what you decide, but in how you decide. The only way to really raise your odds of making a good decision is to learn to use a good decision-making process—one that gets you to the best solution with a minimal loss of time, energy, money, and composure.
An effective decision-making process will fulfill these six criteria:
• It focuses on what’s important.
• It is logical and consistent.
• It acknowledges both subjective and objective factors and blends analytical with intuitive thinking.
• It requires only as much information and analysis as is necessary to resolve a particular dilemma.
• It encourages and guides the gathering of relevant information and informed opinion.
• It is straightforward, reliable, easy to use, and flexible.
A decision-making approach that addresses these criteria can be practiced on decisions major and minor—what movie to see, what car to buy, what vacation to take, what investment to make, what department head to hire, what medical treatment to pursue. And the more you use such an approach, the more efficient and effective it will become. As you grow more skilled and your confidence grows, making decisions will become second nature to you. In fact, you may find your friends and associates asking you for help and advice with their tough choices!
Use the PrOACT Approach to Make Smart Choices
This book provides you with a straightforward, proven approach for making decisions. It does not tell you what to decide, but it does show you how. Our approach meets the six criteria listed above. It helps you to see both the tangible and the intangible aspects of your decision situation more clearly and to translate all pertinent facts, feelings, opinions, beliefs, and advice into the best possible choice. Highly flexible, it is applicable to business and professional decisions, to personal decisions, to family decisions—to any decision you need to make.
One thing the method won’t do is make hard decisions easy. That’s impossible. Hard decisions are hard because they’re complex, and no one can make that complexity disappear. But you can manage complexity sensibly. How? Just like you’d hike up a mountain: one step at a time.
Our approach takes one step at a time. We have found that even the most complex decision can be analyzed and resolved by considering a set of eight elements (see below). The first five— Problem, Objectives, Alternatives, Consequences, and Tradeoffs— constitute the core of our approach and are applicable to virtually any decision. The acronym for these—PrOACT—serves as a reminder that the best approach to decision situations is a proactive one. The worst thing you can do is wait until a decision is forced on you—or made for you.
The Eight Elements of Smart Choices
Problem
Objectives
Alternatives
Consequences
Tradeoffs
Uncertainty
Risk Tolerance
Linked Decisions
The three remaining elements—uncertainty, risk tolerance, and linked decisions—help clarify decisions in volatile or evolving environments. Some decisions won’t involve these elements, but many of your most important decisions will.
The essence of the PrOACT approach is to divide and conquer. To resolve a complex decision situation, you break it into these elements and think systematically about each one, focusing on those that are key to your particular situation. Then you reassemble your thoughts and analysis into the smart choice. So, although our method may not make a hard decision easy, it will certainly make it easier.
There Are Eight Keys to Effective Decision Making
Let’s take a brief look at each of the elements of the PrOACT approach to see how they work and how they fit together.
Work on the right decision problem. What must you decide? Is it which health club to join? Or whether to join one at all as opposed to walking more or buying some home gym equipment? Is it who to hire to manage your company’s information systems department? Or whether you should even have an information systems department as opposed to outsourcing the function to an outside provider? The way you frame your decision at the outset can make all the difference. To choose well, you need to state your decision problems carefully, acknowledging their complexity and avoiding unwarranted assumptions and option-limiting prejudices.
Specify your objectives. Your decision should get you where you want to go. If you have to hire a new employee, do you want someone who’s a disciplined team player or a creative free spirit? Do you want a fresh perspective or solid experience? A decision is a means to an end. Ask yourself what you most want to accomplish and which of your interests, values, concerns, fears, and aspirations are most relevant to achieving your goal. Thinking through your objectives will give direction to your decision making.
Create imaginative alternatives. Your alternatives represent the different courses of action you have to choose from. Should you take sides in a family argument or stand aside from the rising tide of accusation and acrimony? Or should you seek a resolution palatable to everyone concerned? If you didn’t have different alternatives, you wouldn’t be facing a decision. But have you considered all the alternatives or at least a wide range of creative and desirable ones? Remember: your decision can be no better than your best alternative.
Understand the consequences. How well do your alternatives