Why sound decision-making is ultimately about how you deal with surprises

 We often focus on key decisions and are interested in how top performers, such as CEOs and top athletes, make decisions.

Apparently, all we need to do is to model their behaviour, glean into their secrets and then implement these in our lives.

Research into decision points in particular (what major decisions people have taken) seems to be of continuous interest because who would not want to improve their decision-making skills.

But the truth is that decision-making  is really about how we deal with factors that are not under our control.

Buying a house: what I did not see coming

I have been in the process of thinking of buying a house since last February when my flatmates told me they were going to buy a house of their own.

Eventually they did find a place, got their finance in order, and moved in.

It all seemed so simple (I did see lots of the hurdles and paperwork too) but they achieved their goal: owning a property in a beautiful area.

So I thought it was time too for me as well.

I had been saving up for my deposit, had attained my permanent residency that enabled me to get better loan terms, and I finally after months of searching found a property that seemed to tick most of my boxes.

I could not get the seller to agree on a price that made sense to me given that this place would have to be renovated before moving in.

I left it for a month, only to find out that the place had not sold, and they were open for a new offer…

I made one and suddenly they accepted. I thought they just needed to get it off the market and was very pleased.

I signed my contract and started arranging my finance happily oblivious that although I had done all of my due diligence, there is such thing as “things you cannot control”.

Things that we cannot control are those external things and factors, which come into our lives because of what other people do.

This, as you will find out if you are ever in a relationship or parenting, is very common. You think you are in control and oops you are not.

Turns out the person who sold me the house had not been exactly honest about his situation.

Now, when I was informed, I had nothing to say except to be amazed. This factor (which also cancelled my sale contract) was not anything I had prepared myself for.

So I was back in state 0, with no contract, having paid for different technical inspections, and having consulted both the Internet and my contacts about everything that had to do with buying a house.

I thought I had all the necessary information, I had even checked the flood maps (yep of course I did!), got the roof checked, and I was committed buying this house.

Except that one thing, which is and was completely out of my control. No decision process or decision tool could have ever prepared me to even consider such a factor that could derail the whole process.

What does this say about decision-making processes?

It has made me think about how we make decisions and has led to two important insights.

Decision-making is not about a single “decision point”.

The truth is most of our decision-making is a continuum of small incremental decisions, which, overtime, result in a major decision.

But you need all of those small incremental decisions to even start getting where you want to be and to make that big decision.

This same applies to leadership: if we want to become better leaders, we need to start taking incremental decisions towards that end while knowing that we don’t know what opportunities or failures life throws at us in the process.

The same thing applies how we adapt to climate change: adaptation at least for now is a set of incremental decisions (small steps) that we take in order to be better off now and hopefully at some point in the future.

Yet, some of the adaptation will be drastic once we reach particular adaptation limits and thresholds.

But again, those drastic decisions are not a sudden outcome but a series of decisions we have made along the way about how we want or have to live our lives and how our context (climatic conditions) are changing.

Second, there is no such thing as “enough information” because there are always external factors that can mislead or surprise even the best prepared person.

Gathering information is hugely important but we have to, or should, accommodate for such things as people’s behaviour and impact.

It is those moments that really dictate how we learn.

These Black Swans of decision-making are therefore in many ways a blessing (although that’s not say that they are not stressful).

Learning Loop with Black Swans

In Morten Hansen’s book Great at Work, he introduces the concept of the learning loop in which an individual starts tracking in how they make decisions, then observe the outcomes, and then do it again.

I completely agree that this is inherently vital for strategic/deliberate skill building: understanding where we are at, understanding how we can improve, and then use the real life context to give us immediate feedback in how to do things better.

But the real life context where the rare but certain surprises loom large, how do you maintain your loop in a way that it supports your goals especially when unforeseen and unexpected factors come into play?

In the end, I am still in the process of negotiating about the house but I have learned more about this decision process than I bargained for. And for that I am thankful (albeit not necessarily less stressed…).

 

 

 

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