Episode: Anatomy of a Great Decision
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Michael Hyatt: Decision making may be the toughest thing leaders do. Most of the choices a leader makes involve risk. For political or military decisions, lives may hang in the balance. Even in the business or nonprofit world, we have to make critical choices that affect the welfare and livelihood of dozens or perhaps thousands of people, often using conflicting or incomplete information. How do you make a good decision, one you can implement with confidence?
Megan Hyatt Miller: On July 16, 1999, two minutes after sunset, a Piper Saratoga taxied out to the runway at Essex County Airport in New Jersey. John F. Kennedy Jr., his wife, and sister-in-law were headed to a wedding that was to take place the following day in Martha’s Vineyard. They never arrived. Although the 38-year-old was an experienced pilot, the summer haze and falling darkness made for difficult flying conditions.
Two days later, investigators found the wreckage and pieced together what happened. According to the National Transportation Safety Board, the accident occurred because Kennedy failed to “maintain control of the airplane during a descent over water at night, which was the result of spatial disorientation.” Spatial disorientation is when you can’t determine the position of your body relative to other objects. In other words, you can’t tell which way is up.
It can affect pilots, divers, and even children on merry-go-rounds. Kennedy lacked an instrument rating. Meaning, he didn’t have the training to maintain control of the plane by using instruments alone. He had to rely on his own sense of direction. When that failed, the plane crashed. That tragic event graphically illustrates that every leader must have solid, dependable data when making critical choices.
Michael: But is that enough? Ironically, Kennedy’s father, President John F. Kennedy, made a notoriously poor choice by relying too heavily on the information in front of him. Within weeks after his inauguration, Kennedy had to decide whether to go through with a plan to overthrow the Communist government in Cuba by backing an invasion by Cuban expatriates. The plan had been approved a year earlier by former president Eisenhower and was heavily supported by the CIA and a number of top advisers.
Kennedy looked at the facts and approved the plan. It was a fiasco. The Bay of Pigs invasion resulted in a resounding victory by the Communists and the loss of 106 lives, including four Americans. Critics later pointed out Kennedy was so convinced by the information provided to him he failed to hear objections raised by two top advisers. Had he heeded the counsel of those key advisers, he might have avoided one of the worst military blunders of the twentieth century.
Megan: When you face an important decision, what’s the key factor you rely on?
Michael: Here’s a tougher question…Is that enough?
Hi, I’m Michael Hyatt.
Megan: And I’m Megan Hyatt Miller.
Michael: And this is Lead to Win, our weekly podcast to help you win at work, succeed at life, and lead with confidence. In this episode, we’re talking about decision making, and I’ll show you three factors leaders must consider when making an important choice.
Megan: As a leader, you may be facing a tough choice right now. Overwhelmed by data and conflicting opinions, how do you decide? Based on decades of making real-life decisions in the business world, we’ll show you how to avoid making a poor decision or, worse yet, no decision at all and gain the clarity you need to move forward with confidence.
Michael: Before we dive into today’s content, could I ask you for a favor? If you like this podcast, would you be willing to leave a brief review? If so, just go to mh.fullfocus.co/reviewit. We’ve made it super easy for you, and it’ll help others have the same great experience you’re having right now. Thanks so much.
Megan: All right. Before we jump in, can we get real for a second?
Megan: Making decisions is really hard.
Michael: It is.
Megan: The truth is if you’re a leader, you’re not making easy decisions anymore. You’re basically left with all of the hardest decisions to make. It was probably years ago when they felt easy. Now they’re just hard.
Michael: We have to acknowledge they’re tough for a lot of reasons. Oftentimes, we have to make a decision when we have incomplete information. There are pros and cons to every choice. It’s rarely black and white. Plus, we also have our own internal fears and psychology to deal with. We don’t want to fail other people. We don’t want to make a mistake. Maybe we have a fear of failure, or whatever. As a result of that, it’s tempting to procrastinate or, worse, abdicate and just not make a decision, and then the decision gets made for us.
Megan: The truth is making tough calls goes with being a leader. In some ways, it’s the most essential part of being a leader. That’s what your job is. Very often, you’re making a decision between two difficult and imperfect choices. Sometimes that means somebody is going to lose, and that makes it all the harder.
Michael: That’s right. That’s why in this episode we want to talk about embracing this vital part of leadership, because it’s not easy for any of us. We may be tempted to procrastinate or abdicate or just kind of put it off, but we really have to do this, and we can get better at it, and that’s what we want to talk about in this episode.
Megan: Right, because there are consequences to not deciding or deciding too rashly. What we’re talking about today is how to make great decisions. We’re assuming you already have some kind of an internal compass around your vision for your organization and who you are and your values, but that doesn’t mean it’s going to be easy on a day-to-day basis to figure out how to implement those things through decision making. That’s really how they get lived out in your organization, through one decision at a time, but that’s harder than it looks. So that’s what we’re going to dig into today. You, Dad, have three elements in making a great decision, so let’s get into the first one.
Michael: Element #1: Information: get the facts. Sometimes we want to avoid the facts or we wish the facts were different.
Megan: Or they’re complicated to figure out. Right?
Michael: Right. Sometimes it’s hard to get to the facts, but it’s absolutely essential. As we were even talking about in the last episode, there are facts and then the story that builds around the facts. We want to separate those two things and get right back to the facts, because, as I think a friend of yours has said to you, the facts are your friend. Or sometimes I say, “The facts are friendly.” Even if they’re bad, the facts are friendly, because if you’re acting on bad information or facts that aren’t the facts, you’re going to make bad decisions.
Megan: The truth is we have greater access to information than ever before. Right?
Michael: Right. We have probably better customer information, sales information, web traffic, financials. In a sense, we’re drowning in data. It’s important to get to the facts, but it’s important to get to the relevant facts and not be sidetracked by the irrelevant ones.
Megan: It’s also really critical that we face the facts and then, honestly, that we rely on them even when we don’t like them. Sometimes our own confirmation bias, what we would like the facts to say or what we want to build a case using facts to support… That’s a dangerous thing for a leader, so to the best of our ability we need to try to strip ourselves of that confirmation bias and just listen to what the facts have to say on their own.
Michael: Directly related to that is our assumptions. These are facts that may have been true at one time, but over time they’re not facts so much anymore. They’re just kind of an opinion or a story that’s built up. I’ll give you an example.
Years ago, when I was the CEO at Thomas Nelson Publishers, there was this huge trade show we used to go to every year. Everyone, even everyone in my own company, assumed it was absolutely essential, but then we dug into the facts and discovered 120 of our retail customers accounted for 90 percent of our revenue. That was fact one.
Fact two: we were spending half a million dollars a year to attend a show to meet with hundreds and hundreds of retailers, including those same 120, but in a highly distracting environment where we had to share attention with all of our competitors. This was highly inefficient, very expensive, and in the middle of the recession when we were trying to cut the fat and trim it down to the essential.
So we had to go back and look at our assumptions and reassess the facts. We decided as a result of that to create our own event where we brought in those 120 customers at our expense for a two-day event with our best authors. It was 20 percent of the cost and was a hundred times more effective, because we didn’t have to do it in this distracting environment. So that’s a case where looking at the facts led to a completely different conclusion.
Megan: So on the one hand, we have to face the facts and be reliant on them, and on the other hand we have to be aware of the limitations of data, because it doesn’t always tell us what we think it’s telling us. Right?
Michael: Right. We have to be aware of the limitations of data. Data is not everything. Fact is a provable reality, like we’re broke or we’re out of cash or our audit revealed six violations. Data is a set of facts that suggests but doesn’t prove a conclusion.
Megan: Oh, that’s a good distinction.
Michael: You can arrange the facts to support the argument you want, so you have to be aware of that as well. You have to try to get to the facts. Let’s get the facts on the table before we start assembling these into a conclusion and then become guilty of the confirmation bias.
Megan: It’s kind of like when you’re looking at a financial report or some other kind of statistics. Those are going to be programmed with a certain set of assumptions that calculate the “facts” you see spit out. Very often I’ve been in the situation where I freaked out about some data that seemed to suggest something really bad was happening, only to realize later the programming was wrong and it was completely 180 from what I thought. It looked like it was bad and it was good, or vice versa, which is really no fun at all, when you think you’re fine and you’re not.
I think it’s always important with data to be a little suspicious and ask some questions about “How did we get there, and what’s that calculated based off of, and what are the underlying assumptions?” so you can test that data before you start drawing conclusions. Something about numbers in black and white makes you think it’s a fact when it’s just data.
Michael: I have a story that goes back, again, to my time at Thomas Nelson. I remember Sam Moore used to say to us… When we would come in with what we thought were the facts, he’d say, “Tell me the difference between what you know and what you think you know, and make sure I know the difference and you know the difference. I’m happy to have your opinion, but I want that separated from the facts.”
Megan: Very often we get those really confused.
Michael: We do. We have the accuracy of the data, which is an issue, but we also have to remember that all data, all statistics are a snapshot of the past, and the past is not 100 percent indicative of what could happen in the future. For example, you could say in a meeting, “Well, we tried that before.” How long ago was that? That was five years ago. Well, a lot has changed in five years. Maybe that same thing in this context would actually work. So there are limitations of looking at data from the past, and, again, you can also spin the data any way you want.
Megan: So you need it, but you need to be honest about it. You need to be a little bit skeptical about it before you put all your trust in it, is what we’re saying.
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Megan: Before you can move forward, you have to know where you are, which means the first element of a great decision is getting information. You have to face the facts. But what’s the second?
Michael: Element #2: Counsel: you have to get advice. I see leaders derail on this all the time because they feel like either the job requires or maybe their own arrogance compels them to make the decision without the input of others. The truth is we all have limited perspective. We’re only seeing it from our point of view, which includes our experience, our skill set, our education, and all the rest. Other people, when we solicit a wide array of counselors, are going to add to that image. They’re going to give us more of a 3D view of the situation. So you can’t make a decision on the facts alone.
Megan: You also need outside counsel. One of the things that’s true for leaders is that the higher up an organization you get, the greater risk you have of becoming disconnected with other parts of your organization. Your visibility into operations or marketing or customer experience, or whatever it is, is less and less, because you’re not on the ground executing in the way you may have been earlier in your career.
One of the ways you can overcome that and overcome your own decision fatigue, which is real (we should probably do a whole episode on that at some point), is to request recommendations from people you trust in the organization. So when you go to make a decision, asking people who are expert in their area of interest within the company to give you a recommendation of “If you were me, what decision do you think I should make?”
That doesn’t mean it will always be the right decision they suggest. It doesn’t mean they have the big picture, the full picture that you do when you’re going to make a final decision, but it sure is a lot more informed by the realities on the ground in your organization than you could ever approximate in your own thinking. It really speeds up the decision-making process. It also helps you get alignment with your team as you’re working toward a decision.
Michael: As you were talking, I was just thinking about another situation in which you need to seek outside counsel. Early in my career, I thought I had this superpower of being able to hire smart people, the right people.
Megan: Right. You get a few wins, and you think, “Man, I’m really good at this.”
Michael: So I would make the decision unilaterally, and I would do it without checking references. Then I went on a losing streak. It’s like everybody I hired was the wrong person. They didn’t last or they didn’t work out or I regretted it. There are two places in the hiring process where we really need the benefit of outside counsel.
First, absolutely always, always check references, because there’s no advice that will be more important to you than the advice of somebody who has had that experience with that potential candidate or that employee. Secondly, your own team. What happens to me, as the CEO of our company, is I get into a situation with a new employee and I start selling.
Megan: You should be the last person they talk to, not the first.
Michael: I should be the last person, because I’m not listening and I’m not paying attention to the clues like I know I should. People on my team will do that. People on my team will ask tougher questions. They’ll see things I won’t see. So our process at Michael Hyatt & Company is notoriously long, and that’s because we have so many people involved and because we seek outside counsel. In this sense, outside counsel of our colleagues and the people around us. We also do outside counsel in the form of tests, personality tests, strengths-based tests, the Kolbe, etcetera.
Megan: It’s a good example of getting data.
Michael: It’s also an example of getting counsel, because we want a 360-degree view of this situation before we make a decision on it.
Megan: Another area for leaders to pull in outside counsel is with consultants. I actually had this experience last week. I’m trying to develop an overarching compensation and titling schematic for our organization we can really grow into over the next five years. Well, this is not an area where I have particular expertise, nor do I really want to homeschool myself through a PhD in organizational theory to get there.
As it turns out, though, I was able to meet someone who is a total expert at this, has been doing it for 30-plus years, and can just kind of do it in his sleep. I can delegate the whole project to him, approve it at the end, make sure it’s consistent with our culture, but I could have wasted a lot of time and ultimately not made a good decision for the company because I just don’t have the necessary expertise to make that good decision within my own self.
Michael: Why do you think leaders are so reluctant to get that kind of outside help? They feel like they have to figure out themselves before they make the decision.
Megan: I think there is probably a fallacy in leadership that if you’re a good leader you can do all aspects of leadership, and that’s just simply not true. The truth is you’re probably good at one or two or maybe three things, and you’re probably not very good at all of the other things. I think there’s also a reluctance to spend money on consultants.
It’s like, “Well, I wouldn’t want to spend $10,000 or several hundred dollars,” or whatever it is in your circumstance, “to hire somebody to give input on this. I can just figure it out. I’ll just get a book.” Then that becomes 10 books. (I might be speaking from experience.) At a certain point, you realize this is a huge project you do not have time to become expert in, but you trade your time for dollars.
Michael: The worst part is we forget that if we make a bad mistake there’s nothing more expensive than a bad decision. If you hire the wrong person, it’s incredibly expensive. If you don’t solve this problem and you’re spending time trying to solve this very problem you articulated with the compensation schematic, that’s not really what we hired you to do, and that’s not going to really move the business forward. It’s important, but it’s much cheaper for our organization to pay a consultant than to use your time to solve that problem. You need input, and we want you to make the decision, but you don’t have to be the person who has the expertise.
Megan: Absolutely. But we need to issue a warning here. There’s a danger of paralysis by analysis. In fact, this can become a very sophisticated way of procrastinating, where you get stuck in consultation mode. You try to make decisions by consensus, where you want to have everybody agree that you ask for a recommendation from, or you keep meeting with consultants for too long or you just get stuck in this data storm. The truth is you’re never going to come to the end of that. At some point you have to act and make a decision. No adviser can make the decision for you.
Michael: I’m in a situation like that right now with another organization I’m advising, where the leader is stuck in this loop of he just needs a little bit more information. He won’t make the decision. Here’s the problem. If he’s going to do that, he’s going to miss the opportunity.
Megan: No doubt.
Michael: So, a very specific situation, but because he’s stuck in trying to get all the information because he’s afraid to make a mistake he’s going to lose the opportunity, which is going to be a big mistake all of its own.
Megan: Okay, so the first thing you need to do to make a good decision is to get solid information. You have to know the facts. The second element is to get advice. You need to get outside of your own head and outside your team’s heads to gain some perspective. So what’s left, Dad?
Michael: Element #3: Intuition: trust your gut.
Megan: This is my favorite one, by the way.
Michael: And it’s an important component. I don’t have any of these that are favorite. I sort of see all of them as equal. The data has to be there, the advice has to be there, and my gut has to be there, and when all three of those line up I have the confidence to move forward on my decision. I’m going to give you an example where I went against the data and the advice and it was one of the best decisions I ever made. I wanted to hire an executive, and he happened to take the Wonderlic test and came out really low on that.
Megan: That’s an IQ test.
Michael: If you know the limitations of that test… Measuring IQ is problematic anyway. It’s helpful. We use it ourselves, but it can’t be the be-all end-all, because there are other strategies people use to win besides just raw intellect. So the Wonderlic test came back low. In addition to that, the industrial psychologist who was advising me, who had evaluated the candidate, said, “I recommend you pass.”
Well, in my gut I thought, “This is a guy who has what it takes to succeed. He has unbelievable tenacity, and he’s completely focused on the mission.” He had a record of goal achievement, and I just felt like this was the right guy. So I weighed all that… I listened to it. I didn’t try to dismiss it, but I said to the psychologist, “You know what? I appreciate your advice. I see what the data says, but I’m going with my gut on this one,” fully willing to own the responsibility of that decision. If it didn’t work out it would rest on me.
That turned out to be one of the best decisions I ever made. That guy was enormously successful as we worked together. He has had an outstanding career. It just goes to show you the data and the advice aren’t everything. They’re a component. You have to factor in your gut.
Megan: I really like this, because I think it gets at the final step in making the decision, which is you finally just have to make a call. I’m reminded of a story from one of my favorite books in the last year, The CEO Next Door, which we included in our LeaderBox program some months back. There’s a story in there about a leader who basically said, “Once you’re 60 to 70 percent sure, you need to go ahead and make the call.”
In other words, you’re never going to achieve 100 percent certainty. The data and the outside input are never going to get you all the way to 100 percent certainty. At some point you’re just going to have to look inward and ask yourself what feels like the right call and go ahead and make it. The reason I like intuition so much is it gives us permission as leaders to just make the call.
You don’t have to wait for absolute certainty. You don’t have to look at the data to give you that certainty or perfection that maybe you think you need to make a really good decision. You just have to be reasonably confident in your gut that this is the right thing, after you’ve done some due diligence, and move forward. That’s all that’s required.
Michael: I agree with that. One of the things I’ve noticed is the lower you are in the organization, the more you tend to rely on the data and maybe the advice, but not so much on your gut, because you don’t have that much experience. But as you move up in the organization, you realize the limitations of data and you realize the perspectives of your advisers and you realize your gut is going to have to play a role, because things are never going to be as clear at the top as they were when you were down in middle management. It’s more gray at the top, and it’s going to require more gut instinct, and you’re just going to have to make the call.
Megan: And there are no perfect decisions.
Michael: Right. And sometimes the data is even contrary, but you have to make the call. According to Ralph Larsen, former CEO of Johnson & Johnson, middle managers tend to trust their decisions because they’re quantifiable, data-driven choices. As they rise higher, it’s harder for them to deal with more complex and ambiguous problems. Again, that’s where the three elements come in and why you need all of them.
Megan: So today we’ve learned the three critical elements in every great decision: information, advice, and intuition. As we come in for a landing, I just want to remind you that you can make great decisions. If you’ve been procrastinating on a hard choice, don’t be afraid to get the facts, talk to your advisers, and then trust your gut. Dad, do you have any final thoughts for us today?
Michael: Yeah, I do. I would use this as a framework for every decision you have to make, especially every significant decision. Tick these off. “Do I have the right data?” That’s number one. Secondly, “Have I sought the advice of people who are experts in this area or people I trust?” Then thirdly, “What does my gut say?” If you can get all of those in alignment, then move forward with confidence and make the call.
Megan: As we close, I want to thank our sponsor LeaderBox. It provides automated personal development in a box. Check it out at leaderbox.com. If you’ve enjoyed today’s episode, you can get the show notes and a full transcript online at leadto.win.
Michael: Thanks again for joining us on Lead to Win. If you like the show, please tell your friends and colleagues about it. Also, please leave a review of the show at mh.fullfocus.co/reviewit. We’ve made it super simple for you to leave a review.
Megan: This program is copyrighted by Michael Hyatt & Company. All rights reserved. Our producer is Nick Jaworski.
Michael: Our writers are Joel Miller and Lawrence Wilson.
Megan: Our recording engineer is Mike Burns.
Michael: Our production assistants are Aleshia Curry and Natalie Fockel.
Megan: Our intern is Winston.
Michael: We invite you to join us next week, when we’ll discover three questions that’ll transform your life and leadership. Until then, lead to win.