Ever find yourself struggling to make a purchasing decision, because there are just too many options to wrap your head around? Maybe you’re buying a new car, or just deciding what movie to watch on your chosen streaming service. In today’s world of abundance, most of you reading this will likely answer, “yes.”
Take it a step further. When faced with a ridiculous number of options did you shut down, choosing inaction by avoiding a decision altogether? Or, if you did make an active decision, did you find yourself lacking confidence in what you decided to do? These are scenarios most people can relate to.
Whenever faced with a decision where you have to choose between multiple options, you experience cognitive strain. This strain is beneficial as it can focus attention and is requisite in the learning process. Brain power is limited, however. Too much cognitive strain can increase stress, slow down thinking, limit learning and reduce decision making abilities.
Just like a muscle, the brain can become overworked, overloaded and fatigued. Providing too much information and too many choices can lead to confusion and uncertainty, making it difficult to prioritize options and take action. As opposed to feeling empowered by multiple options, you are left feeling powerless. This state of powerlessness results in inertia – the killer of effective decision making.
Providing too much info & too many choices leads to confusion & uncertainty, making it difficult to prioritize & take action. This state of powerlessness results in inertia – the killer of effective decision making. @poedge (Click to Tweet!)
The good news is that there’s a series of steps anyone can follow to help them along the road to making better decision. Before we get to that, however, there are three rules you should know about decision making.
Rule #1: Don’t confuse multiple options with choice.
Let’s say you have the option of receiving a five-dollar bill, or five one dollar bills. Is there a decision to be made? Sure, you need to decide between the two options, but barring a compulsion to either maximize or limit the number of bills in your pocket, it doesn’t matter. Each option presents you with the same gain. Despite having options, you really have no choice, and deciding between the two is a waste of mental energy.
Ever find yourself sitting around with someone, trying to figure out where to eat dinner, but nothing sounds good? You then proceed to go in an endless circle, talking about all the options that don’t sound good. You’re wasting mental energy on unnecessary cognitive strain. You’ve established that nothing sounds good. Figure out what you want to get out of dinner – maybe speed and low cost – remove options that don’t fit the criteria and flip a coin.
When a decision can be based on flipping a coin, where each outcome results in the same value and degree of personal satisfaction, there is not a true decision to be made. All choices are equal. Identify options that achieve your goal, randomly pick one and move on.
Rule #2: Don’t waste time with lesser value options.
What if I offer you a choice of either $5 or $10? Unless you are claiming the money on your taxes and the extra $5 will push you into another tax bracket, or you do not feel it just to receive the additional money for some reason, there really isn’t a decision to be made. You may have options, but the choice to make is clear. Think of it like this: Why would you waste time deciding between multiple restaurants when one of them is clearly your favorite?
If one option provides more value and satisfaction than another with no additional risk, there is no decision to be made. Choose the option that has the most potential to increase your personal satisfaction.
Rule #3: Know the risks.
Let’s try this one. What if you are presented with two options: A) Receive a guarantee of $5, or B) Take a gamble where you have a 50% chance of receiving $2 and a 50% chance of receiving $8. How about now? Is there a decision to be made?
Finally, a real decision! In this example, there is a threat of loss, or, in other words, risk. Choose option A, the sure thing, and you lose out on the potential of receiving an additional $5 from the gamble. If you go with option B, the gamble, you could lose the 3 additional dollars you’d have received had you chosen the sure thing.
How you perceive and place value on risk is at the center of every decision. For example, if you choose to eat at a new restaurant over one that has proven to be good in the past, you risk having a bad meal when you could have had the certainty of a good one. If, instead, you eat at the restaurant you’ve been to and enjoyed before, you risk missing out on something new that you may like more.
Even though the restaurant example does not exactly represent a high-stakes decision, it does illustrate the nature of all decisions. In a decision, there is always something of value at stake. If something isn’t deemed valuable and there is no uncertainty, there is no risk.
Without risk, the potential for gain or loss, there is not a decision to be made.
Good news! There is a simple process anyone can follow to make better decisions.
- Establish what your decision is supposed to accomplish; i.e. your goal. (You want to get something quick and cheap for dinner.)
- Remove any options that will not result in achieving your goal, and do not provide new information that differentiates one option from the others. (You only need one pizza restaurant on your list.)
- Remove any lesser value options. (If there are restaurants you know you don’t want to eat at, stop talking about them.)
- Remove any options that will provide an equal degree of personal satisfaction and psychological value to others, but require more resources (time, energy, money), or more risk. (You enjoy a $15 pizza that will feed everyone as much as a $30 steak that will only feed you. Nix the steak option.)
- Break the remaining options into pairs, so you are only deciding between two things at any given moment. For example, let’s say you end up with three restaurants on your list: pizza, burgers or seafood. Start with deciding between pizza and burgers. If pizza wins out, then decide between pizza and seafood. Then go eat!
The list may sound like a lot of steps, but it really isn’t. The key is to simply remove all the distracting noise and focus on the information that matters. Then, group your list of options into pairs to reduce decision making cognitive strain.
How do you make difficult, high stakes decisions?
Matt Nelson is the owner of Performance Ownership Edge (POE), the result of his obsession with answering the question, “How do you best engage people in a way that helps them change their behavior, accomplish great things and transform their lives?”. The mission of POE is to help leaders drive innovation by creating Empowered Engagement cultures that maximize the potential of their greatest resource: their people. Matt has extensive experience leading organizational change, coaching leaders and managing and developing regional and national teams. He holds the CERTIFIED FINANCIAL PLANNER™, and Certified Professional in Learning and Performance designations in addition to an MBA where he studied finance. You can connect with him on Facebook, Instagram, LinkedIn and Twitter.
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