This post is sponsored by Philip Morris International
Leaders often take a lot of pride in being able to “trust their gut” when it comes to making tough decisions. It’s true that a seasoned executive has years of experience and has encountered numerous scenarios that inform his or her ability to make good decisions.
However, research shows us the various ways in which simply trusting one’s gut, or making purely emotion-based decisions, can cloud our judgement.
Feelings of excitement can cause leaders to overestimate their chances of success, and anxiety can make one wary of taking even a reasonable risk. Further, emotion-based thinking can leave unconscious bias unchecked and allow it to seep through into the final choice.
That’s not to say there isn’t a place for leaders to incorporate their gut feeling, whether they are evaluating a new company policy, considering a merger, or weighing sweeping layoffs and budget cuts. But executives make better decisions when their gut reactions are placed in an evidence-based framework that uses research to evaluate and critique the options at hand.
There’s evidence to back that up. A series of studies published in the Journal of Personality and Social Psychology by Jennifer Lerner, a Harvard professor of public policy, decision science and management, and Christine Ma-Kellams at the University of La Verne found that managers more accurately evaluated an interviewee’s emotions when they used systematic thought rather than intuition. In other words: systematic thought delivered the greater empathy accuracy.
Enterprises risk significant costs when they have poor decision making processes: McKinsey estimates that the average Fortune 500 Company can waste $250 million in labor expenses due to ineffective decision making.
The good news is that data is more readily available today than ever before, making it relatively easier to collect internal and external information to inform and guide decisions. It’s possible that leaders relied more on gut-based thinking in the past because there wasn’t such easy access to evidence. But the wide availability of data has also created new challenges. Leaders must evaluate data to ensure that the information being used is trustworthy and relevant.
The first step in evidence-based decision making is to ground it in the best available research evidence. Ask key questions, including: What does the research say? What is the evidence base? Has such a course of action proven effective for others in similar situations? Draw on a variety of trusted experts and stakeholders to collect research, and confirm that the evidence is replicable, verifiable, observable and credible.
Next, bring in the gut to interpret that evidence. Use experiential evidence from the field to assess how the findings fit the specific scenario being evaluated. Weigh the information against relevant context.
Finally, apply the learnings to the situation at hand.
These systematic steps don’t have to take long, depending on the decision at hand, but walking through them ensures that the decision made is not driven by unproven theories or emotional bias. Even if the evidence-based decision making process only confirms one’s gut feeling about how to proceed, it is worth the effort because it provides rationale for the choice and should help with any approvals needed to execute the decision.
To learn more about the latest research on evidence-based decision making and how to apply it, take a look at these resources:
Evidence-based decision making (Lumen Learning)
Smart decision-making (Stanford Social Innovation Review)
Making evidence-based decisions (Quality Magazine)
The best headspace for making decisions (The Atlantic)
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