The art of decision making

By David Penney

In life, as in business, there are apparently three kinds of decisions that we have to make. 

There are those operational decisions that are taken multiple times a day to ensure that things run as smoothly as possible.

Then there are those tactical decisions – the decisions whose impact will be felt more over the medium term, something that needs to be planned for and factored into the future. 

And finally, there are those strategic decisions. These are decisions which will shape the long term, the ones that plot not just a direction of travel but also the desired destination.

The best way to come to those decisions has been a subject of conjecture and debate ever since we have been making decisions.

Clearly many of those decisions that we take every minute of every, from the words we say to what we have for breakfast, are so instinctive as to barely register on the decision-making scale, or certainly so we would imagine.

For those more tactical and strategic decisions that we make in our lives – those ones that we believe will have the greatest impact - one would assume that these are decisions that will be best made after a much more considered approach. 

It is an assumption that may not necessarily be correct. 

There are two points that should be considered here. Firstly around what part conscious decision making actually plays in determining the outcomes of our lives and secondly, does thinking differently about decision making depending on the situation actually make any difference to the overall outcome. 

A key point to recognise when considering our decision-making processes and capability is that our lives are actually dominated by decisions we take in almost complete ignorance.

Take having children for instance. We were of course all children once and most of us had the opportunity to study our parents growing up but we ultimately all become parents with no real knowledge of what it truly is to be a parent.

It is also a truism that many of those big decisions we make in our lives, those decisions that will have a profound impact on its direction and quality, are much easier to make than the smaller ones because very often they are not decisions in the most obvious sense at all. 

Many will have watched the film Sliding Doors where the life of the character played by Gwyneth Paltrow takes two fundamentally different courses dependent on whether she rushes to make it through the closing doors of a tube train.

The message of this film and ultimately the reality of life – and this is as true for business as it is for individuals - is that the decisions we make that have the potential to have the greatest impact are those multiple decisions we make every day without hesitation.

They are the decisions we take with little or no thought or consequence beyond the immediate even though every single one could have multiple unintended consequences that will shape the future direction of your life or your business.   

It is a liberating thought although it is not many of us who are prepared or mentally equipped to consciously leave our futures down to chance and so there remains value in having a better understanding of how and why we make the decisions we do. 

Whether it is a conscious process or not, what is clear is that we all have our own way of making decisions. 

Whatever the decision that needs to be made, some people like to react from the hip – it feels right, decision made. Others like to take a much more methodical and analytical approach. 

The second approach to decision making certainly seems like the most rational but does this necessarily lead to the best outcomes? The reality is that people often make decisions that are neither necessarily rational or even predictable and yet it doesn’t mean that those decisions they make are wrong.

If you dig a little deeper into the psychology of decision making, humans have a tendency to create mental shortcuts to simplify decision making using something called heuristics.

This can mean that decisions are influenced by a wide range of factors including how a question is framed, our tendency to ignore statistics and focus on stereotypes, our most recent experiences and our own prejudices, regardless or whether they are material to the matter at hand. 

So, when it comes to making the best decisions, which way is best?

Well the reality is that it actually both or neither – depending of how you frame the question!

What is clear is that if you understand heuristics and deliberately sidestep those mental shortcuts that simplify decision making, there stands a more than reasonable chance that the decision you make will be a better one.

However, there is also plenty of evidence that the brain is sufficiently evolved to process all the available information almost instantaneously to allow you to make a snap decision that will often lead to the most favourable outcome.

So, whether you are somebody who makes decision on the fly or likes to approach decision making in a much more methodical way, the most important thing ultimately is to make that decision.

If the decision turns out to be a poor one, that’s ok. It will immediately become part of your lived experience and will enter the psychology of your decision-making process in the future.

Procrastinating (as opposed to being deliberately thorough) undoubtedly has some advantages – it provides more time to gather evidence and it is said to potentially enhance creativity – but it can also become something of a habit.

In this one precious life of ours, taking action and living out the consequences would always seem a much more fulfilling existence than a lifetime of wondering. 

The Partner Practice is an Appointed Representative of and represents only St. James's Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group's wealth management products and services, more details of which are set out on the group's website www.sjp.co.uk/products The 'St. James's Place Partnership' and the title 'Partner' are marketing terms used to describe St. James's Place representatives.

Penney Financial Partners is a trading name of Penney Financial Partners Ltd. Penney Financial Partners Limited is registered in England and Wales, Number 09964340. Registered Office: Kensington House, Knights Way, Battlefield, Shrewsbury, Shropshire, SY1 3AB, UK