Every day we are faced with choices and have decisions to make. In business, effective decision-making is critical. A recent Bain research study concluded that decision effectiveness correlated 95-percent of the time with financial performance.
Because effective decision-making is so crucial, numerous books have been written on key processes and methodologies to follow in order to make better-informed decisions.
We all fight the fear of making a bad or wrong decision. However, not making a decision is, in fact, a decision, and delaying a decision simply diminishes choices. Additionally, avoiding a decision usually transfers our right to choose to someone else.
So how does one reconcile the need to make a decision with the fear of making the wrong one?
Recently, I was faced with making a critical decision regarding my business. The apprehension of making the wrong decision caused me to seek out strategies I could use to help me through the process. I stumbled upon a TED Talk by best-selling author Tim Ferriss, who spoke about how to make hard choices with a three-step exercise he calls “Fear-Setting.”
Rather than focusing on the path toward making a good decision, the “Fear-Setting” exercise forces you to consider the worst-case scenarios in three steps: define, prevent and repair.
To start this exercise, pinpoint the decision that has been weighing on you and work through the following:
—Define a bad thing that could happen as a result of your decision. List the negative outcomes.
—Write down what steps you can take to prevent or decrease the likelihood of a bad outcome from happening. How can you mitigate the unfavorable result?
—Determine what you can do to repair the situation if that worst case scenario happens. Analyze what the cost would be of not making a decision at all.
Following these steps provided me with greater clarity, and I was able to make a sound decision.
It might seem very basic to simply ask yourself, “What is the worst thing that could happen?” Fear, however, often distorts rational thinking.
By writing out each of the three steps, I was able to find ways to prevent those worst-case scenario fears from materializing and created a plan to act decisively.
The Roman philosopher Seneca said, “We suffer more from imagination than from reality.” Fear-setting forced me to look at the worst-case scenarios, which I realized were not nearly as troubling as what I had envisioned.
In business, we will be faced with difficult decisions. Theodore Roosevelt said, “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing and the worst thing you can do is nothing.”