Humans are simply terrible at rationally evaluating risky decisions and reward. Our default state over-emphasizes fear of loss, amplifying the worst case scenarios or best case scenarios, and misjudging options to recover. We are overly content with single points of failure when we’re overconfident. We’re unreasonably scared of taking action when there is a possibility of failure.
Every choice and decision carries some risk or loss potential. Even deferring a decision is making a decision. Leaders must develop the skill of considering options and making decisions.
When I was 14 my Scoutmaster gave me a simple framework for thinking through a difficult decision. I’ve used it successfully for many situations in the decades since. Write out a table like this one on a sheet of paper:
Begin by listing out all the bad things that might happen if you make a decision and go forward that way. Being human you will likely have a bunch of these, like “losing money,” “wasting time,” “lose my job,” etc. You don’t need to share this with anyone else, so it’s ok to list out things like “I will look like an idiot” and other fears.
Next, for each bad thing, consider options to mitigate the risk. Maybe you commit only X amount of effort or money to limit the downside loss. Perhaps you can engage someone with better skills to make sure that part of the program goes well. Develop an alternative method for key steps so you can keep going if the first approach collapses.
Finally, list out your recovery options if that bad thing were to actually happen. Laugh with the people who laugh at you. Kill the project and start another approach entirely, now knowing what to avoid in the future. Go to stakeholders, own the results, and explain your next steps. Tap into your emergency fund until you locate another job.
The point of this exercise is to help you position risk appropriately relative to the rewards, and think carefully about your planning. I find this simple process works because I can step away from my emotional attachment to the reward or risk. Once I am detached, then new mitigating options become apparent.
This framework is also a very good way to help other people think through decisions they need to make. Don’t make a decision for them – guide them by asking questions and helping them fill out a table like this. It’s a great way to coach another person and give them an opportunity to develop more confidence in their decision-making ability.
Leaders who avoid all risk lose in the end. There’s no adventure, no upside, no growth, and only a twittering life of amplified fears.
The word decide comes to the English language from the Latin word cidre, which means “to cut off.”
Homicide is cutting off a human life. Regicide is cutting off a king. Fungicide is used to cut off the life of funguses. Insecticide is used to cut off the life of insects. See the pattern?
Test your decision: did you cut off something? If not, you may not have truly made a decision.
Everyday leadership is full of decisions. Great leaders get the opportunity to make the tough decisions. Tony Blair correctly states “The art of leadership is saying no, not saying yes. It is very easy to say yes.”