7 steps to decision-making

tamaraharold
6 hours ago
3 min read

We make decisions every day—some small, like what to eat for breakfast, and some big, like purchasing a new header or expanding to new farm areas. When the stakes are high, having a clear process will help to make decisions that are ‘more right, more often’.

There are many management guides that all describe similar steps to effective decision making. The steps are described below are inspired by Annie Duke’s “How to decide”.

1. Identify the decision

First, clarify what decision you actually need to make. Try to clearly define the problem that needs to be solved, and what goal you want to achieve. When you define the goal, it’s easier to find the right solution. Decisions are likely to vary for a grower whose primary goal is to maximise profit, versus a grower who wants to increase time spent with family.

2. Identify the possible outcomes

Outline the reasonable decisions and outcomes that could arise. What would the set of possible futures look like? Include a best-case and worst-case scenario (for example, at different rainfall deciles or prices). Also, and importantly, include a counterfactual—what would happen if you don’t make the decision.

Don’t settle for just one idea—come up with a few! Gather the relevant information to support your decision process. What scenarios are likely and unlikely? What could be the costs and benefits of those scenarios? Look for relevant data, past experiences, and expert advice from your agronomist, marketing consultant, your friendly scientist. Don’t just rely on what you already know. The more informed you are, the better your decision will be.

3. Identify your preferences

Once you have imagined a set of reasonable futures, think about your preferences for those different outcomes. Which future gets you closer to your goal? You can use tools for this, like:

A simple pros and cons list.
Ranking the possible outcomes from most to least desirable
Conducting a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
Or, as an economist would recommend, give each possible outcome different weights depending on your preferences. You may have a stronger preference for avoiding one outcome than your preference for gaining another (loss aversion).

4. Estimate likelihoods for each scenario

How likely is it that each of the future outcomes will unfold? Using the relevant information that you have gathered, your experience, and intuition, you can make an educated guess about the probability that different outcomes will eventuate.

Likelihoods can be expressed in words (highly likely, possible, low probability, unlikely, rarely) or with numbers. Tools like decision matrices can help with this step. Once you have expressed the probabilities for each scenario, you can compare them you’re your preferences. Comparing probabilities x preferences (or likelihood x likes and dislikes) will give you an idea of the upside rewards versus downside risks of each option.

5. Choose from the alternatives

After weighing the evidence, choose the option that seems to be the best one for you. Does that option align with your ‘gut feel’? If yes, fantastic. If not, you may wish to review the evidence that you gathered. Beware of any biases that may have crept into the decision.

6. Take action

Now, you are ready to implement the alternative that you chose. Create a plan, communicate it to everyone involved, and start putting it into action. Make sure to monitor progress as the season progresses, to help you evaluate what worked and what didn’t work so well.

7. Review your decision and its consequences

In this final step, consider the results of the decision you made. Did it solve the problem identified in Step 1 or bring you closer to your goal? What worked well, and what didn’t? Did you follow a structured, data-driven decision process? Did you overlook something or was the result pure luck/bad luck? If things didn’t go as planned, what can be improved for the next time?

Most of us seldom sit down to think deeply about how we make our decisions. Following a structured process can provide confidence and clarity. The seven steps described here increase the chances that you will choose the best alternative for you.