Four Habits To Help You Make Better Decisions Now

Decision

Warren Buffett told CNBC on Wednesday that there is no backup deal in place to replace the $143 billion failed Kraft Heinz (NASDAQ:KHC)-Unilever (UN, UL) combination. It’s just the latest example of how life is filled with uncertainty.

Now what? Well, Unilever (UN, UL) announced that it will undertake a comprehensive review of strategic options. The company says the “events” of last week led to the decision to speed up the process of seeking value.

But one might conclude that Unilever thought that having this merger was creating value. However, it could have been a preconceived notion, and perhaps it wasn’t the value creator they’d initially anticipated. The end result though is that the quick decision change on the merger doesn’t exactly inspire confidence.

So how can companies -and their executives- deal with uncertainty in a way that does inspire confidence and that gives shareholders and employees conviction that the path that the company has chosen may be a successful one? Is there a proactive way to work with, and work through, ambiguity to make thoughtful high conviction decisions despite our uncertain and volatile world?

I believe there is and have developed a decision making system called the AREA Method, an acronym that gets its name from the perspectives it addresses. At its core, AREA as a process can be boiled down to four simple steps that you can use immediately to help you and your company make smarter, better decisions when you’re facing a complex problem that you need to solve:

  1. Recognize that research is a fundamental part of decision making.
  2. Recognize that we are all flawed thinkers and fall prey to relying upon assumption, bias and judgments that may help us make many small decision well, but can impede clear thinking when making big ones.
  3. Address the critical component of timing head-on so that you don’t make rushed decisions, but instead have time for calculated and strategic stops in our work so that we can promote insight.
  4. Use a clear, concise and repeatable decision making process that works as a feedback loop in part or in its entirety.

First, recognize that research is a fundamental part of decision making. In reality, your ability to make a thoughtful decision is dependent upon the quality of the information you have. Therefore you need a good research process to be an integral part of a decision making framework. But keep in mind: Research is an umbrella term for a whole series of tricky steps that need to be carefully navigated and thoughtfully completed. Break down your research down so it’s manageable and organized.

Second, be aware that we are all flawed thinkers. Much has been written lately about how we are all prey to mental mistakes. Behavioral science research and books like Robert Cialdini’s Influence and Daniel Kahneman’s Thinking Fast and Slow explain that we rely on faulty intuition and are swayed by authority and public sentiment. This new research explores the many ways that we allow biases, snap judgments and assumptions to drive our decision making. Having a heightened awareness that we don’t see the world as it is, but that rather we see it as we are can help prevent mistakes.

Third, address the critical component of timing by resisting rushing to judgement. High-stakes decisions deserve time and attention but often we’re in such a rush to reach a conclusion that we never really take the time for deep reflection. We’re already over-programmed, answering emails late at night and waking to urgent texts. We struggle with the need to react when we also need to really think.

While we don’t know the specifics of how Unilever decided for, and then against the merger, somewhere in the decision making process the company might not have had a check and balance for their bias, and that’s why a thoughtful process like the AREA Method focuses on alerting you to disconfirming data. The idea is that when it comes to making big decisions we deserve the time needed for thoughtful reflection as well as tools for examining both our data and our thinking. Insight doesn’t come from collecting information alone; it comes from brainwork, so slow down and think about the meaning behind the information you are gathering and the work you are doing.

Fourth, recognize that good decision making needs a repeatable process that works as a feedback loop. Not all investigations are linear, nor should they be. At times you need to be driven back into earlier steps to do more work, collect more data or conduct more analysis.

As for the 48-hour decision change that both Unilever and Kraft Heinz made to undo the deal they’d just announced, we just don’t know whether some information was overlooked or whether new information came to light. But it does show that while we can’t control our luck, we can control our process and, in doing so, make smarter, better decisions.


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