Process Based Decision Making vs Outcome Based Decision Making
In addition to owning IT Assurance, I also work pro-bono as a small business advisor for the Entrepreneurs Organization accelerator program. I’ve participated in the program for the last 7 years.
In my role helping small business owners (usually $250k – $900k in revenue and between 2 – 10 employees) I see the same sorts of experiences repeatedly and today I want to talk about one of the most common – outcome based analysis.
Outcome based analysis is the very common mental though process of – “I had an outcome I wanted, therefor I made a good decision.” Some common examples I see of this thought process include –
- “I made record profit last year, I must be doing something right!”
- “After I fired that employee, I found they were stealing from me! I knew I was right to fire him.”
- “I went to court to argue against a speeding ticket, and won! It sure was clever of me to think to do that.”
The problem with outcome based thinking is simple – many things happen by chance or luck, and it’s easy to make an ill conceived decision that ends out with an outcome we desire.
Lets look at some extreme examples –
- “I bought a lottery ticket, and I won a million dollars! From now on, I’m spending all my money on lottery tickets.”
- “I got super drunk and fired the person whose desk I passed out on, after I fired them, I found out they were stealing! So, getting drunk and passing out is a good way to make decisions.”
- “After I opened my bottled water store, there was a huge earthquake! I am a brilliant investor.”
In those we see the problem with outcome based thinking. It leads to inaccurate assumptions about our abilities. The person who wins the lottery once and then thinks they have it figured out will find themselves broke in short order. The same for anyone who fires based on their drinking.
So what works better? I prefer and teach process based thinking. For myself I judge the success of a decision by the process used to make the decision, not the outcome. I know that I can’t ever control the outcome of any decision precisely but I can control how I make the decision.
When I’m judging a decision I’ve made, I look at these factors –
- Bias/Emotion – Did I consider my biases and emotions? Did I ask others to point out biases and emotions to me, and their own?
- Data – Did I gather all the relevant data before making the decision? Did I understand the data?
- Speed – Did I act faster or slower than the situation required? Did I let things burn too long or did I make a rash decision when none was needed?
If I’ve done those things, I feel satisfied with my decisions, regardless of the outcome. I know that if I make decisions in a managed, thoughtful, data driven way that I will get the outcomes I desire a majority of the time. I also know, when I get an outcome I didn’t want, that if I made the decision well, sometimes that happens too. Decisions are all probabilities, never certainties. I can’t guarantee any particular result, all I can do is control the way in which I make the decision in the first place.
Thanks for reading!