Decisive: How to Make Better Choices in Life and Work

by Chip Heath

Strange to think that when we make critical decisions, we do less objective research than when we’re picking a sushi joint.

This involves looking for, in statistics terminology, some “base rates” on the situation—data showing the record of other people in similar circumstances. Jack might learn, for instance, that 60% of restaurants fail in their first three years. From the outside view, the restaurant looks pretty risky.

Be careful what you ask them. As we’ll see in the next chapter, experts are pretty bad at predictions. But they are great at assessing base rates.

The point is that the predictions of even a world-class expert need to be discounted in a way that their knowledge of base rates does not.

incensed? The numbers can conceal the nuance.

Finally, for a book-length treatment of the ooching philosophy, see Peter Sims’s book Little Bets.

So if you’re scoring at home, what the data shows is that applied base rates are better than expert predictions, which are better than novice predictions. (And bringing up the rear are all the people who retreated into the woods in the days leading up to the year 2000, predicting the fall of civilization.)

Whenever possible, we should get out of the business of prediction altogether.

SARAS SARASVATHY, A PROFESSOR at the University of Virginia’s Darden School of Business, has found that entrepreneurs are the polar opposite of pundits. One similarity among many entrepreneurs, she said, was an aversion to prediction. “If you give entrepreneurs data that has to do with the future, they just dismiss it,” she told Inc. magazine. Entrepreneurs don’t seem to believe that forecasting is worth the bother: One survey found that 60% of Inc. 500 CEOs had not even written business plans before launching their companies.

Rather than continuing to debate, the team ooched and resolved the uncertainty. The ooch led to the founding of CarsDirect.com, which within three years of its founding was the largest auto dealer in the nation.

This entrepreneurial reasoning is beginning to penetrate large organizations. Scott Cook, the founder of Intuit, has become so convinced of the virtues of ooching that he now endorses what he calls “leadership by experiment.” Leaders, Cook believes, should stop trying to have all the answers and make all the decisions. In a 2011 speech he said, “When the bosses make the decisions, decisions are made by politics, persuasion, and PowerPoint.” None of those three P’s, Cook notes, ensures that good ideas will triumph. By making decisions through experimentation, the best idea can prove itself.

ooching has one big flaw: It’s lousy for situations that require commitment.

Ooching, in short, should be used as a way to speed up the collection of trustworthy information, not as a way to slow down a decision that deserves our full commitment.

The psychologist Richard Nisbett calls this the “interview illusion”: our certainty that we’re learning more in an interview than we really are. He points out that, in grad-school admissions, interviews are often taken as seriously as GPA. The absurdity, he says, is that “you and I, looking at a folder or interviewing someone for a half hour, are supposed to be able to form a better impression than one based on three-and-a-half years of the cumulative evaluation of 20 to 40 different professors.”

TO OOCH IS TO ask, Why predict something we can test? Why guess when we can know?

Intrigued by the concept, Phillips accepted the assignment. Soon afterward, he landed himself a job at a car dealership in Los Angeles that was notorious for high-pressure, high-volume sales. His account of the job appears in a piece called “Confessions of a Car Salesman,” which has become one of the classic insider accounts of the industry. In the story, Phillips recalls the first time he greeted some customers on the lot:

Phillips quickly learned that the art of car sales was getting customers to stop thinking and start feeling. A fellow salesman advised Phillips that, when he was walking the lot with a customer, he should watch carefully which car drew her attention and then cajole her to sit in the driver’s seat. See how good that feels? Then, not taking no for an answer, he should go grab the keys and insist she test-drive it. The salesman assured Phillips, “My friend, the feel of the wheel will seal the deal.”

IT WAS PRECISELY THE fear of being overcome by emotion that led Andrew Hallam, a Canadian high-school English teacher, to invent his own car-buying process. Hallam was no ordinary teacher. On his meager salary, he scraped and invested his way to becoming a debt-free millionaire in his thirties. In his book, Millionaire Teacher, he shared his secrets. Many of them involved truly pioneering ways of being cheap/frugal (half empty/half full). Tired of paying for gas to get to work, he started riding his bike for the 70-mile round-trip. In the winters, he’d live rent free by house-sitting for couples who’d gone south for the winter. He never turned on the heat—not even when his dad visited—preferring to walk around the house wearing many layers of shirts and sweaters.

Also, you can usually break the logjam on a tough decision by unearthing some new options or some new information. So if you’re facing a dilemma and you feel stuck, our first advice is to loop backward in the WRAP process, using some of the tools we’ve already encountered: Run the Vanishing Options Test. Find someone who has solved your problem. Look for a way to ooch. Occasionally, though, we’ll encounter a truly tough choice, and that’s when we’ve got to attain distance. It’s easy to lose perspective when we’re facing a thorny dilemma. Blinded by the particulars of the situation, we’ll waffle and agonize, changing our mind from day to day.

There’s a tool we can use to accomplish this emotion sorting, one invented by Suzy Welch, a business writer for publications such as Bloomberg Businessweek and O magazine. It’s called 10/10/10, and Welch describes it in a book of the same name. To use 10/10/10, we think about our decisions on three different time frames: How will we feel about it 10 minutes from now? How about 10 months from now? How about 10 years from now?

For decades, psychologists have been studying this phenomenon, called the “mere exposure” principle, which says that people develop a preference for things that are more familiar (i.e., merely being exposed to something makes us view it more positively). One of the pioneers in the field was Robert Zajonc (whose name now feels strangely likable …). When Zajonc exposed people to various stimuli—nonsense words, Chinese-type characters, photographs of faces—he found that the more they saw the stimuli, the more positive they felt about them.

The researchers have found, in essence, that our advice to others tends to hinge on the single most important factor, while our own thinking flits among many variables. When we think of our friends, we see the forest. When we think of ourselves, we get stuck in the trees.§

What would I tell my best friend to do in this situation? It sounds simple, but next time you’re stuck on a decision, try it out. You’ll be surprised how effectively that question can clarify things. The two of us have talked to many people about thorny personal or professional decisions they were facing, and often they seemed flummoxed about the right thing to do. Then we’d ask them the “best friend” question, and almost always—often within a matter of seconds!—they’d come up with a clear answer. Usually, they were a bit surprised by their own clarity. When we’d ask, “Do you think maybe you should take your own advice?” they’d admit, “Yes, I guess I should.”

Now we’ll turn our attention to dilemmas like Ramirez’s, in which you find yourself torn between two options, both of which have long-term appeal. An agonizing decision like hers is often a sign of a conflict among “core priorities.”

This is one of the classic tensions of management: You want to encourage people to use their judgment, but you also need your team members’ judgments to be correct and consistent.

Maybe this advice sounds too commonsensical: Define and enshrine your core priorities. It is not exactly a radical stance. But there are two reasons why it’s uncommon to find people who have actually acted on this seemingly basic advice. First, people rarely establish their priorities until they’re forced to. Kim Ramirez didn’t decide hers until she confronted a job choice. Interplast had never resolved the tension in its mission statement until two values came directly into opposition. Furthermore, it’s easy to imagine how other organizational leaders, facing Interplast-style values conflicts, might escape without pinning down their priorities. A more egotistical CEO might have simply said, Here’s what I’ve decided, settling the issue by fiat without articulating anything about priorities. Or a more wishy-washy CEO might have resolved the issue politically, supporting whichever faction she needed to curry favor with that quarter. In short, while priorities are vital for making good decisions, they are also totally voluntary. You will never be required to articulate yours. Second, establishing priorities is not the same thing as binding yourself to them. In one series of interviews led by William F. Pounds of MIT, managers were asked to share the important problems they were facing in their organizations. Most managers mentioned five to eight problems. Later in the interview, they were asked to describe their activities from the previous week. Pounds shared the punch line ...

Coinstar’s second line of business was Redbox, a line of DVD-renting kiosks.

Excellent story

Penstock uses a method he calls “bookending,” which involves estimating two different scenarios: a dire scenario (the lower bookend), where things go badly for a company, and a rosy scenario (the upper bookend), where the company gets a lot of breaks.†

The psychologist Gary Klein, inspired by this research, devised a method for testing decisions that he calls the “premortem.” A postmortem analysis begins after a death and asks, “What caused it?” A premortem, by contrast, imagines the future “death” of a project and asks, “What killed it?” A team running a premortem analysis starts by assuming a bleak future: Okay, it’s 12 months from now, and our project was a total fiasco. It blew up in our faces. Why did it fail?

Gunther-Murphy introduced them to a technique called “failure mode and effect analysis” (FMEA), a precursor to the premortem that has been used for decades in the military and government. In an FMEA, team members identify what could go wrong at every step of their plans, and for each potential failure they ask two questions: “How likely is it?” and “How severe would the consequences be?” After assigning a score from 1 to 10 for each variable, they multiply the two numbers to get a total. The highest totals—the most severe potential failures—get the most attention.§

That’s why, in addition to running a premortem, we need to run a “preparade.” A preparade asks us to consider success: Let’s say it’s a year from now and our decision has been a wild success. It’s so great that there’s going to be a parade in our honor. Given that future, how do we ensure that we’re ready for it?

In 1977, a small entrepreneurial company called Minnetonka found itself with a potential blockbuster on its hands. Minnetonka was known for niche novelty items such as bubble baths, scented candles, and flavored lip balm, but a new product was showing extraordinary potential. It was called Softsoap: a liquid soap dispensed from a plastic hand pump, intended to be used for hand washing at home.

Great story

Many engineers, for example, have learned to build a “safety factor” into their projects. Safety factors emerged from engineers’ healthy paranoia about defects, since their computations can have life-and-death consequences:

Other flavors of FMEA include a third question, “How likely is it that we’ll be unable to detect the failure if it happens?” and multiply the three variables together.

health.) The goal of a tripwire is to jolt us out of our unconscious routines and make us aware that we have a choice to make.

must. The company Eastman Kodak makes a fascinating example of this, because twice it succeeded, against the odds, at making critical transformations, only to fall short on the third.

Excellent example

when Kodak’s goose was being slow-cooked,

Great line

At some point, the virtue of being persistent turns into the vice of denying reality.

But it’s easy to forget that most of the deadlines we encounter in life are simply made up. They are artificially created tripwires to force an action or a decision.

In the terminology of the researchers Dilip Soman and Amar Cheema, the small bag acts as a “partition.” It breaks up a resource (chips) by dividing it into discrete portions. Soman and Cheema have found that partitioning is an effective way to make us more thoughtful about what we consume, because it forces us to make a conscious decision about whether to continue.

Boundaries are necessary because of people’s tendency to escalate their commitment to their choices.

The IHI observed that many patient emergencies could be prevented if early signs of trouble were addressed quickly, and to enable that quick response, it urged hospitals to create “rapid-response teams” (sometimes called RRTs). In a typical situation, a nurse who noticed something odd about a patient’s vitals could summon a rapid-response team, a diverse team of medical professionals who would convene quickly at the patient’s bedside to analyze the situation. The idea appealed to Leong because she knew that, while adults tend to decline gradually and predictably, kids often crater suddenly. As an experienced cardiovascular ICU nurse, Karla Earnest, said, “They hold on and hold on for a long time, then boom, they hit a wall where they can’t hold on anymore.” Often, by the time a nurse “called a code”—sounding an emergency signal that the kid’s life was at stake—it was too late to save them. The advantage of rapid-response teams, Leong knew, was that they encouraged action before it was too late, before it was necessary to call a code. She convinced her colleagues to give the idea a try. In the training sessions, the instructor passed out cards listing six tripwires that warranted calling in the RRT. Five of the tripwires involved objective measures such as acute changes in heart rate, blood pressure, or oxygen saturation. The sixth tripwire, at the top of the card, was the most important: Call the rapid-response team if you are worried about a patient.

By labeling a tripwire, you can make it easier to recognize, just as it’s easier to spot the word “haberdashery” when you’ve just learned it. Pilots, for example, are taught to pay careful attention to what are called “leemers”: the vague feeling that something isn’t right, even if it’s not clear why. Having a label for those feelings legitimizes them and makes pilots less likely to dismiss them. The flash of recognition—Oh, this is a leemer—causes a quick shift from autopilot to manual control, from unconscious to conscious behavior. That quick switch is what we need so often in life—a reminder that our current trajectory need not be permanent. Tripwires provide a sudden recognition that precedes our actions: I have a choice.

That’s why the initial slowness of bargaining may be offset by a critical advantage: It speeds up implementation.

That's the Japanese way. Go slow by US standards while negotiating but be ready to move quickly when implementation is needed. In the US we go fast on coming to an ageement and then have to "sell" it before we can implement it.

Researchers call this sense of fairness “procedural justice”—i.e., the procedures used to make a decision were just—as distinct from “distributive justice,” which is concerned with whether the spoils of a decision were divvied up fairly. An extensive body of research confirms that procedural justice is critical in explaining how people feel about a decision. It’s not just the outcome that matters; it’s the process.

The elements of procedural justice are straightforward: Give people a chance to be heard, to present their case. Listen—really listen—to what people say. Use accurate information to make the decision, and give people a chance to challenge the information if it’s incorrect. Apply principles consistently across situations. Avoid bias and self-interest. Explain why the decision was made and be candid about relevant risks or concerns.

We can’t know when we make a choice whether it will be successful. Success emerges from the quality of the decisions we make and the quantity of luck we receive. We can’t control luck. But we can control the way we make choices.

What a process provides, though, is more inspiring: confidence.

Being decisive is itself a choice. Decisiveness is a way of behaving, not an inherited trait. It allows us to make brave and confident choices, not because we know we’ll be right but because it’s better to try and fail than to delay and regret.

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