Tag Archives: inability to make decisions

The Ten Best Decision Making Books of All Time

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The Ten Best Business Decision Making Books Ever Written

Gaining insight into how the editors of AskTheManager.com chose the Ten Best Decision Making Books Ever can itself be a lesson in decision making. While the list of qualified books on this subject is quite long, we decided early on to exclude any and all that read like an encyclopedia, dictionary or college textbook. While many of these types of books do provide useful decision making information, we decided we wouldn’t feel right sending our readers in search of dull or boring reads.

And just as we did with our popular Ten Best Leadership Books Ever, we struggled more with where to place each of the Top Ten on our list than we did deciding which titles actually made our Top Ten. After several heated discussions and lots of backroom deal making, we decided on the following order for the terrific tomes topping our list of The Ten Best Business Decision Making Books Ever Written:

10. Predictably Irrational: The Hidden Forces That Shape Our Decisions; by Dan Ariely – A mostly fun read that details why we decide what we decide and when, Predictably Irrational immediately grabs your attention through a very strong and entertaining start. While this tome won’t necessarily turn you into a top decision maker overnight, it does offer insight into some of the most common and odd choices we make. From a purely social or behavioral economics standpoint, this book is nowhere near the read of Freakonomics, though its explanation and application of these economic principles detailing why people make irrational decisions easily earns it a spot on our Top Ten.


9. How We Decide; by Jonah Lehrer – Very much like Number 10 on our list, How We Decide introduces the reader to many concepts surrounding behavioral psychology and economics, and how these affect our decision making. Also like Number 10, this tome is loaded with entertaining information that will stimulate your thoughts about how we think and make decisions in response to the complex situations we face. While slightly more enjoyable than Predictably Irrational, this book still falls a little short at helping the reader uncover clear rules for making better decisions; and although both are very, very good and deserve their mention on this list, you only need to read one (you make the decision).

8. The 7 Habits of Highly Effective People; by Stephen R. Covey – Number One on our list of the Ten Best Leadership Books of All Time, Covey’s coverage of Habit 2: Begin with the End in Mind, earns him the right to crack this Top Ten list, as well. While not a primer on avoiding analysis paralysis or helping teams makes better decisions, the chapters covering Habit 2 in this book do provide a great lesson for anyone who’s known for making bad decisions. The best part about this title is it also provides the reader with a clear plan of attack for making and executing better decisions.

7. Blunder: Why Smart People Make Bad Decisions; by Zachary Shore – Using examples of some of the biggest blunders in history, Shore provides an entertaining, historical and hard-hitting examination of bad decisions. Probably due to Shore’s fantastic ability to tell a story, we fear we may have been too easily swayed by style and not substance in including this title in our Top Ten. That said, Shore provides enough practical thought (and some very concise causation theories) to carry this read.

6. Smart Choices: A Practical Guide to Making Better Decisions; by John S. Hammond, Ralph L. Keeney, and Howard Raiffa – One of the truest books ever to its title, Smart Choices is indeed a practical guide to making better decisions. Unlike some of the novel-like reads on this list, this book clearly outlines steps readers can take when faced with both minor and major decisions in their work and personal lives – and because the authors do so without sounding like academicians, it was an easy decision to add this to our Top Ten list. 

5. Why We Make Mistakes: How We Look Without Seeing, Forget Things in Seconds, and Are All Pretty Sure We Are Way Above Average; by Joseph T. Hallinan – As much as a title this long may make you want to skip to the last page just see how it ends, we advise against this because you’d miss a great read. Although Why We Make Mistakes takes us in a slightly different direction than many of the books on this list, it strikes a cord with us by proving that we are flawed and that internal changes aren’t enough to repair these flaws. (If nothing else, this read provides a classic example as to why so many books published in the last two years made this list: We are just now becoming aware of how we make decisions and what we can do to improve them.)

4. Sway: The Irresistible Pull of Irrational Behavior; by Ori Brafman and Rom Brafman – Probably the quickest 224 pages you’ll ever read, Brothers Brafman deliver some very compelling arguments regarding our innate irrationality. Though very similar in content to Predictably Irrational, Sway stands on its own by never bogging the reader down in too much detail (while delivering enjoyable detailed analysis throughout). Overall, Sway does an excellent job of showing us how to make better decisions by understanding the irrational forces that want to sway us otherwise.

3. The Goal: A Process of Ongoing Improvement; by Eliyahu M. Goldratt and Jeff Cox – A business classroom classic that was originally published in 1984 as part organizational management and part production operations management; this novel was one of the very first to use fiction to illustrate a business point. While the decision making lessons delivered here are often veiled in other concepts, the fictional factory turnaround that is engineered by the book’s protagonist provides a step-by-step plan for managers in crisis to follow when faced with difficult decisions. A must read for anyone in business. (Editor’s Note: We’re often asked which book would rank at Number 11 on our list of the best leadership books ever, and The Goal is clearly the favorite for that spot.)

2. Overcoming the Five Dysfunctions of a Team: A Field Guide for Leaders, Managers, and Facilitators; by Patrick M. Lencioni – It’s one thing to rant about what’s wrong, it’s quite another to detail how to make things right. In Overcoming the Five Dysfunctions of a Team, the master at team dynamics Lencioni offers specific, practical advice for overcoming the five dysfunctions he details in his earlier book. And while many will argue this is strictly a book about leadership or team dynamics, we say then you’ve never really read it. Among other things, Lencioni’s advice expertly helps teams become more effective by making better decisions. Clearly the best book for improving team decision making and effectiveness ever published; earning it our Number 2 spot.

1. Blink: The Power of Thinking Without Thinking; by Malcolm Gladwell – You either love this book or you hate it; there is no middle ground with Blink. By naming this the Best Decision Making Book Ever, we know we’ve probably lost half our readership – of course, had we not named it Number One, we would have lost the other half. (Because we read Blink, we went with our gut and named it Number One.) On a serious note, Blink is one of those “must reads” for anyone in business… end of story. Not only because it explains the power and accuracy of first impressions, but because it also provides data and examples to prove that over-thinking our problems is often the problem. Analysis paralysis and self doubt are the greatest enemies of management decision making today and Gladwell cuts to the quick better than anyone ever has (or likely ever will). Read Blink, it will be the best decision you ever made.

…

On the bubble: Tipping Point; Freakonomics; Execution; and Gut Feelings.

Never even in the consideration set: Nudge and The Paradox of Choice.

The Death of Data-Based Decision Making

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Why Does My Industry Refuse to Use Data?

True story – of course, whenever anyone says or writes this it generally means that everything else they’ve ever told you is BS – anyway, true story: a highly compensated colleague wrote to a group of fellow highly compensated colleagues and asked “does anyone have any data on whether this widget produces results?”

The emailed responses from two of his highly compensated colleagues were shocking:

  • “I understand they’ve shown good results in Orlando and Tampa.”
  • “This widget really moves the needle in Dallas.”

These were their complete responses. Did I miss something? Where is the data?

This brief exchange of emails is merely a sample of what’s happening in my industry (and probably happening in other industries, though I don’t have any data to back up this claim): We’ve decided that actual data is unimportant.

This is sad, especially as technology has provided us easy, quick and painless avenues to gather data about nearly every aspect of our business. Gathering data and making data-based decisions (AKA: using business intelligence reports) should be one of the greatest benefits of technology we enjoy, yet we still rely heavily on gut feelings and opinions to determine where we spend our money, whom we hire, and what initiatives we pursue.

Data vs. Opinion

Having had my fill of opinion-based decision making where good data is available, I challenged the two highly compensated colleagues to send me some proof to back up their claims about the effectiveness of this particular widget:

“Sounds great, can you send me the data to back this up?” I replied, and waited.

And waited, and waited, and waited. After two days of waiting, I sent a follow-up email copying their direct supervisors:

“I know the Northeast Region really wants to get moving on this widget, and they’re excited to hear about the results you’re seeing in your markets. Can you send me some data that can prove the ROI? We’re struggling to show good numbers everywhere else with this widget and some good results would help save the project.” I wrote, and waited.

Amazingly, with their bosses copied and everyone on high alert to justify expenses, I received the following two messages from the highly compensated colleagues within 30 minutes:

  • “When we looked at the data, it seems it was inconclusive in Dallas. We’re thinking of canceling it.”
  • “Nobody in Orlando or Tampa could prove it works, but they’re sure it was helping sales. They’re going to measure the results this month and then make a decision.”




One claimed they examined the data (Dallas) and one still relied on opinion for now (Tampa/Orlando), but promised to examine the data next month. In the meantime, we’ve potentially wasted more than $100,000 over the past year because no one bothered to look at the data. This was just one product covering a small part of our business. What would we find if we stopped allowing opinions and held everyone to a “just the facts” dictum? Scary…

Data-Based Decisions are Easy

Our industry is one that has had to be pulled (kicking and screaming) into accepting that the Web is an important marketing channel. Now that we’re there, we refuse to demand data, information or business intelligence to help us make decisions. We rely on our collective gut, because our gut was good enough ten years ago, so it’s good enough today.

It’s a shame, really, because using only your gut to make decisions might appear to save you time. While using your gut to make a decision keeps you from having to gather data, it also requires that you continually reconsider the decision: using additional time to determine if you made the correct assessment. When you use your gut, you spend additional time second-, third- and fourth-guessing yourself. You are never certain you made the best decision.

When you use data, like an ROI report, you can quickly and easily decide to eliminate the low ROI widgets and increase your usage of the high ROI widgets. Then, you can put the data away until the next set of numbers (quarterly, monthly, weekly) becomes available. Give these new numbers a “once over” to validate you made a great decision last time or use these numbers to tweak your earlier decision, and move on. Nothing could be easier.

You Were Hired for Your Gut

The best part about using data to help you make decisions is that the data will never care if you also sneak in your opinion here and there. In fact, if not for your gut, your company could just hire a computer to do your job. It is precisely your experiences, history and opinions that make you a valuable commodity. You begin to lose your value, however, as soon as you fail to utilize all the tools (including data) made available to you to do your job.

 

Indecision and Analysis Paralysis

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I received the following question from a reader this week:

“My manager is a constant procrastinator, who seems to always fail at making decisions. It’s not that he makes bad decisions, he simply won’t ever make any decision. Whenever I approach him with a suggestion, he always wants me to go back and get more data. What do you suggest?” – Amy P. from Cincinnati, OH

I feel like Amy is not alone out there, so I decided to post my reply to her in this blog. Here is what I shared with Amy from Cincinnati:

Amy, wow, what a great question! If it’s any comfort to you, please understand that the situation with your manager is not unique. (I actually don’t take comfort in knowing that, because it means there is a rash of inaction stifling corporate America.)

It sounds to me like your manager could be suffering from a number of ailments, including unclear goals, low self-esteem and very little business acumen. While all of these present a great oppotunity for leadership development and management training, I can’t really teach business acumen via an email reply, nor can I deal with your manager’s “mommy” issues; I can, however, address his inability to understand your company’s goal (singular) and apply that knowledge to decision making.

What is the goal of Microsoft? How about your local dry cleaner? What is Home Depot’s goal? Finally, what is the goal of your company?

If you think the goal of Microsoft is to create innovative software solutions, you’re missing the big picture. If you believe the goal of your local dry cleaner is to get your shirts cleaned and pressed, you’re not seeing the forest for the trees.

There is only one right answer for all four companies. What is the goal? To make money for the owners of the company. (Amy, this is something that your manager probably struggles to comprehend.)

All “for profit” businesses share the same goal – to give their shareholders/owners a return on their investments. While this may seem insensitive or unfocused, I assure you, it’s not. The fact that Home Depot sells lumber is irrelevant – and it’s certainly not their goal. Selling lumber could be Home Depot’s profession, industry or expertise; but it’s certainly not their goal.

Why is it important to so narrowly focus the goal on only providing owners with a financial gain? Because placing your attention on the most important aspect of your business provides you and your team simplicity in making management decisions. By understanding that the goal of your company is to make money for the owners, your manager can begin to weigh all decisions against this standard, rather than trying to assess decisions against some key performance measurement (KPM). There’s nothing wrong with KPMs – they tell you how you’re doing in specific areas of the business that, collectively, are meant to drive dollars into the pockets of the owners. However, we’ve all witnessed examples of companies chasing a particular KPM only to see net profits decline.

Amy, have you ever seen a situation like this at your company?

Was there ever a time your company worked hard to reduce some inconvenience like customer support hold times, only to increase labor costs resulting in slimmer margins?

(Feel free to insert your own KPM in that question, I’m sure you can find plenty of instances where you chased some metric at the expense of profit.)

The reason that unilaterally driving down customer support hold times in this question drove expenses higher is simple: it was unilateral. The changes made only considered the relatively minor issue of customer support hold times, while completely forgetting about the overriding goal of making money for the owners. We could achieve a zero seconds hold time for customers if we hired a thousand operators, but that would be too costly. There is an equilibrium that exists where we can maximize profits and minimize hold times, but I assure you, we will still have customers on hold.

Using the goal of making money for the owners – whether it’s increasing share value or providing better EBITDA – to help you make decisions is so simple, it’s almost silly. Here’s how it works: take any decision, situation, problem or issue you’re faced with and ask yourself this question: Does deciding to do “Y” lead me closer to the goal of making money for the owners? If yes, then do it. If no, then don’t. If you’re unsure, then don’t do it or go back and get more data.

More data? Are you crazy? My manager is awash in data. It’s why he never makes a decision. (At least that’s what I assume you’re saying, Amy.)

If this is how you reacted to my call for more data, then your manager could be suffering from the clichéd “analysis paralysis.” Why does he do this? I’m not sure, though I do believe that most managers who require more and more data and still never make a decision suffer from a lack of understanding about the true goal of the company. The only analysis necessary is this: does it make more money for the owners versus the alternative?

The real harm with analysis paralysis is two-fold: first, decisions are put off until they become irrelevant; and second, the cost of perfect information is too great to require it for virtually every decision you’re faced with in your first twenty or so years of management.

At the end of the day, someone needs to sit down with your manager and explain that there are no perfect decisions, and that if we do “Z” we expect to make “C.” Fortunately for you, Amy, that person is you. You recognize the problem and you are the person most likely to solve it. (You cared enough to contact me, anyway.)

Don’t worry, take a breath and do the following with the next issue: do a little analysis on what the company can expect if you choose “A” or “B.” Take the findings to your manager and provide him with a recommendation. Here’s an example:

“Mr. Manager, I analyzed our problem with ‘X,’ and I think we need to either do ‘A’ or ‘B’ right away. If we do ‘A,’ we can expect a 10% decline in customer satisfaction and a long-term hit to our profitability. If we do ‘B,’ we expect to see no change in customer satisfaction and steady profitability. I think we should do ‘B,’ wouldn’t you agree?”

The tie down at the end of that statement is an old salesman’s trick that should work for you. You are, in fact, selling your manager on the decision. If your manager still tries to pause for even a second, say something like “I really think it will hurt us to wait on this, ‘B’ is clearly the right choice, don’t you agree?”

I would be surprised if he didn’t agree, though if he still can’t make a decision, I suggest you check out the following job sites:

http://www.monster.com/
http://www.careerbuilder.com/
http://www.6figurejobs.com/

:)

Best of luck,

TheManager