How to Use Feedback to Make Better Decisions

From entry level to the most senior executive, today’s employees
are being forced to make complex decisions and make them faster and far
more often than their 20th century predecessors.  Most of
all, business people have become a lot more aware of the importance of
making good decisions.  Yet all of us are bombarded with opinions in the
form of proposals, estimates and predictions.  Most of us know that we
need to suspect the certainty with which these beliefs are stated. 

So how can we improve our decision making?

One of the very best ways to improve our decision making is through
timely, accurate, and clear feedback.  The work in deliberate practice,
shows that quality feedback is the most essential ingredient for
developing expertise.  Getting quality feedback, however, is not always
very easy.  

In some decision making, like long-term investing, business strategy,
or even software installations, the feedback comes with a time lag and
is often ambiguous.  As a result, the learning is not as successful.

Much to my surprise, research shows that the best and most accurate
decision makers are weather forecasters.  In one study, when U.S.
Weather Service forecasters predicted a 30% chance of rain, out
of 15,536 predictions, it rained almost exactly 30% of the time.  That
superb accuracy holds along the entire range of probability, except at
the highest levels.  When a 100% chance of rain was predicted, it
actually rained only 90% of the time.  What makes weather forecasters so
accurate is precise, timely feedback about repeated judgments.  And, of
course, they’re held very accountable by their supervisors, their
colleagues and the public. 

The decision-making journal. 

If you’re really serious about improving your decisions and are open
to feedback, there’s a simple, inexpensive technique with a great deal
of value:  a decision-making journal.

Whenever you make an important decision, take a few minutes to write
down what you decided, how you went about making that decision, and what
you expect to happen.  Get your decision down in specific, concrete
statements.  That’ll keep you from conjuring up ways to defend your
decision choices, and unduly preserving your self-image.  The lesson: 
even good feedback is not useful if you don’t use it.

————–

When you first learn that weather forecasters are the best, most
accurate decision makers, you may want to discredit that research.  The
study makes it very clear and obvious that most of our decision making
is pretty inadequate.  Suck it up, and deal with the truth, as painful
as it really is.  Then, when you make an important decision, learn from
it by using the decision journal. 

A well-kept journal makes it possible for you to audit your
decisions.  It also can illuminate your decision-making patterns.  You
may see, for example, relationships between your moods and your
decisions.  When you’re in a good mood, you may be more overconfident. 
I’ve noticed that when I’m in a slightly pessimistic mood, I make better
decisions.  Since I can’t always determine my moods, I’ve built my game
on other strategies.

Useful references:

Russo and Schoemaker, Managing
Overconfidence
.

Michael Mauboussin, Think
Twice
.

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