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by
Chip Heath
Started reading
October 14, 2020
‘Should I do this OR that?’ instead, ask yourself, ‘Is there a way I can do this AND that?’
But instead of choosing a winner, Cole ran a “horse race.” He shrank down the scope of the work so that it covered only the first step of the project, and then he hired five different firms to work on the first step independently.
Cole is fighting the first villain of decision making, narrow framing, which is the tendency to define our choices too narrowly, to see them in binary terms.
And when all of those five firms know that there are four other shops involved, they bring their best game.”
intellectually he might have realized that the people he likes personally aren’t necessarily the ones who are going to build the best products, he would have been tempted to jigger the pros-and-cons list in their favor.
Our normal habit in life is to develop a quick belief about a situation and then seek out information that bolsters our belief. And that problematic habit, called the “confirmation bias11,” is the second villain of decision making.
This brings us to the third villain of decision making: short-term emotion.
Ben Franklin was aware of the effects of temporary emotion. His moral algebra wisely suggests that people add to their pros-and-cons list over several days, giving them a chance to add factors as they grow more or less excited about a particular idea.
the fourth villain of decision making is overconfidence. People think they know more than they do about how the future will unfold.
If you think about a normal decision process, it usually proceeds in four steps18: You encounter a choice. You analyze your options. You make a choice. Then you live with it.
You encounter a choice. But narrow framing makes you miss options. You analyze your options. But the confirmation bias leads you to gather self-serving information. You make a choice. But short-term emotion will often tempt you to make the wrong one. Then you live with it. But you’ll often be overconfident about how the future will unfold.
1. You encounter a choice. But narrow framing makes you miss options. So … → Widen Your Options. How can you expand your set of choices?
2. You analyze your options. But the confirmation bias leads you to gather self-serving info. So … → Reality-Test Your Assumptions. How can you get outside your head and collect information that you can trust?
3. You make a choice. But short-term emotion will often tempt you to make the wrong one. So … → Attain Distance Before Deciding. How can you overcome short-term emotion and conflicted feelings to make the best choice?
4. Then you live with it. But you’ll often be overconfident about how the future will unfold. So … → Prepare to Be Wrong. How can we plan for an uncertain future so that we give our decisions the best chance to succeed?
If he saw a brown M&M, he’d demand a line check of the entire production. “Guaranteed you’re going to arrive at a technical error,” he said. “They didn’t read the contract….
COULDN’T WE ALL USE a few tripwires in our lives? We’d have a “trigger weight” that signaled the need to exercise more, or a trigger date on the calendar that reminded us to ask whether we’re investing enough in our relationships. Sometimes the hardest part of making a good decision is knowing there’s one to be made.
INTRODUCTION AND CHAPTER ONE IN ONE PAGE The Four Villains of Decision Making 1. Danny Kahneman: “A remarkable aspect of your mental life is that you are rarely stumped.” Should Shannon fire Clive? We form opinions effortlessly. 2. What’s in our spotlight = the most accessible information + our interpretation of that information. But that will rarely be all that we need to make a good decision. 3. Our decision “track record” isn’t great. Trusting our guts or conducting rigorous analysis won’t fix it. But a good process will. Study: “Process mattered more than analysis—by a factor of six.” 4.
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Why do “whether or not” decisions fail more often? Nutt argues that when a manager pursues a single option, she spends most of her time asking: “How can I make this work? How can I get my colleagues behind me?” Meanwhile, other vital questions get neglected: “Is there a better way? What else could we do?”
In other words, if you’re smart enough to get into Yale28, it doesn’t really matter (from an income perspective) whether you go there or instead choose your much cheaper state university.
is not “What’s the highest-ranking college I can convince to take me?” Rather, it should be “What do I want out of life, and what are the best options to get me there?”
“Opportunity cost” is a term from economics that refers to what we give up when we make a decision. For instance, if you and your spouse spend $40 on a Mexican dinner one Friday night and then go to the movies ($20), your opportunity cost might be a $60 sushi dinner plus some television at home. The sushi-and-TV combo is the next-best thing you could have done with the same amount of time and money.
This study presents very good news for all of us. It suggests that being exposed to even a weak hint of another alternative—you could buy something else with this money if you want—is sufficient to improve our purchasing decisions.fn3
Focusing is great for analyzing alternatives but terrible for spotting them. Think about the visual analogy—when we focus we sacrifice peripheral vision. And there’s no natural corrective for this; life won’t interrupt our focus to draw our attention to all of our options.
What if we started every decision by asking some simple questions: What are we giving up by making this choice? What else could we do with the same time and money?
Below, we give you a generic form of the Vanishing Options Test, which you can adapt to your situation: You cannot choose any of the current options you’re considering. What else could you do?
CHAPTER TWO IN ONE PAGE Avoid a Narrow Frame 1. Teenagers get trapped in a narrow frame. They are blind to their choices. “Should I go to the party or not?” 2. Unfortunately, most organizations tend to make decisions like teenagers. Quaker lost $1.5 billion in three years on the Snapple acquisition. Nutt research: Only 29% of organizations considered more than one alternative (versus 30% of teens). 3. Often our options are far more plentiful than we think. College-selection counselor Price helps students explore their full range of options. 4. Why do we get stuck in a narrow frame? Focusing on
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Lexicon has learned that the best names emerge from what we’ll call “multitracking”—considering several options simultaneously.
Lexicon refuses to single-track the process. In fact, in most of its naming projects, Lexicon forms three teams of two, with each group pursuing a different angle.
When RIM engaged Lexicon, Placek and his team knew that they were fighting negative associations with PDAs: They buzz, they vibrate, they irritate us and stress us out. He challenged the excursion team—again unfamiliar with the actual client—to catalog things in the world that bring us joy, that slow us down, that relax us. The goal was to discover names that might offset the negative PDA associations.
Later someone added “picking strawberries” to the list. Someone else plucked out the word “strawberry.” But one of Lexicon’s linguists said, “No. ‘Strawberry’ sounds slow.” (Think of the similar vowels in “drawl,” “dawdle,” and “stall.”)
Multitracking keeps egos in check. If your boss has three pet projects in play, chances are she’ll be open to unvarnished feedback about them, but if there’s only one pet project, it will be harder for her to hear the truth.
You can interview three job candidates rather than one, or if you’re shopping for a house, you can visit ten rather than five. After all, you can’t move into the dream home you never saw.
There’s no “right number” of houses to see or job candidates to interview. One rule of thumb is to keep searching for options until you fall in love at least twice.
candidate for a job, for instance, you’ll have the strong urge to talk yourself into hiring her, which is a recipe for the confirmation bias. You’ll start to make excuses for the flaws you see: She asked us not to call her old boss for a reference, bu...
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The State Department presented a memo to Nixon with three “options.” Kissinger38 noted that two options were obvious losers, leaving only one plausible choice:
If we’re thinking about installing wood floors in our house, for example, it will be natural to consider different types of wood flooring. If we’re really thinking out of the box, we might consider doing another home-improvement project instead. But truly distinct options—Use more rugs? Stain the existing floor and go to Hawaii on the savings? Forget the floors and buy a car?—are less likely to emerge, because they require greater swings of the spotlight.
play a role in almost every decision we make. One is triggered when we think about avoiding bad things, and one is triggered when we think about pursuing good things. When we’re in one state, we tend to ignore the other.
How you react to the position, in short, depends a great deal on your mindset at the time it’s offered. Psychologists have identified two contrasting mindsets that affect our motivation and our receptiveness to new opportunities: a “prevention focus,” which orients us toward avoiding negative outcomes, and a “promotion focus,” which orients us toward pursuing positive outcomes.
CHAPTER THREE IN ONE PAGE Multitrack 1. Multitracking = considering more than one option simultaneously. The naming firm Lexicon widens its options by assigning a task to multiple small teams, including an “excursion team” that considers a related task from a very different domain. 2. When you consider multiple options simultaneously, you learn the “shape” of the problem. When designers created ads simultaneously, they scored higher on creativity and effectiveness. 3. Multitracking also keeps egos in check—and can actually be faster! When you develop only one option, your ego is tied up in it.
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Throughout Walton’s career, he kept his eyes out for good ideas. He once said that “most everything I’ve done I’ve copied from someone else.”
Again and again in his career, Walton found clever solutions by asking himself, “Who else is struggling with a similar problem, and what can I learn from them?”
To see what we mean, imagine a manager who has a talented and ambitious employee, one who’s eager to advance and earn more responsibility. Unfortunately, there’s no obvious way the manager can honor the employee’s ambition—no clear promotion path, no easy way to boost compensation. How do you avoid dampening the person’s enthusiasm or, worse, losing them altogether?
Her list might include thoughts like these: Is there a way you can delegate some of your own higher-level work to the employee? Can you carve out a project that they can lead? Try to find ways to ensure that the employee is recognized publicly for their work.
What if the wisest minds in your organization had come up with a list of ready-made questions and issues that could help direct the budget cutter? • Is it possible the budget can be cut by delaying planned expenditures rather than by paring existing expenditures?
Have you exhausted other potential sources of income that might relieve the need for cutting? • Resist the urge to cut everything by a fixed amount. Think about ways to be more strategic with cuts. • Could you cut deeper than you need to in order to free up funds to invest in exciting new opportunities?
Playlists should be as useful as checklists, yet your organization has many checklists and probably zero playlists. A checklist is useful for situations where you need to replicate the same behaviors every time. It’s prescriptive; it stops people from making an error. On the other hand, a playlist is useful for situations where you need a stimulus, a way of producing new ideas. It’s generative; it stops people from overlooking an option.
CHAPTER FOUR IN ONE PAGE Find Someone Who’s Solved Your Problem 1. When you need more options but feel stuck, look for someone who’s solved your problem. 2. Look outside: competitive analysis, benchmarking, best practices. Sam Walton discovered an ingenious checkout solution by scoping out another store. 3. Look inside. Find your bright spots. Kaiser’s leaders found and scaled a solution for sepsis pioneered by one of Kaiser’s own hospitals. What can you learn from your own bright spots (e.g., the four days you went to the gym last month)? 4. Note: To be proactive, encode your greatest hits in
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Hubris is exaggerated pride or self-confidence that often results in a comeuppance. In Greek mythology, a hubristic protagonist often suffers humiliation.
As each of these three factors increased, so did the tendency of a CEO to pay a higher premium for an acquisition. As one example, they found that for every favorable article written in a major publication about the CEO, the acquisition premium paid went up by 4.8%. That’s a $4.8 million boost on a $100 million acquisition! Because of one flattering article! And a second article would inflate it by another $4.8 million.
