Don’t get fooled by a good outcome (or deflated by a bad one)

In a world of 100% certainty, making decisions is simple: list the pros, the cons, and total up your columns. If the pros outweigh the cons, move forward. If not, don’t.

Unfortunately, the vast majority of business decisions are full of considerable uncertainty and situational factors. There is no sure thing, and waiting for more information might seem like a good idea, but oftentimes waiting to get more information is extremely costly in terms of time and money. And if you’re in a high-growth company, this is even harder.

In these situations, where uncertainty and variability thrive, decisions and outcomes can be more loosely correlated. Sometimes things work, sometimes they don’t.

The problem is, people will often assign more meaning to outcomes then they should. And the result of this association impacts their confidence (both good and bad) and skews their future decision-making process.

In some cases, people make a bad decision, but get lucky with the outcome. This gives them positive feedback (erroneously) and increases the chances they make a similarly bad decisions in the future. A little positive feedback for a bad decision can go a long way in rooting a destructive cycle.

In other cases, people make a good decision, but Murphy’s Law strikes and they end up with a bad outcome. Still licking their wounds, they tend to play it too safe in the future.

In my video, I give some examples of how outcomes work when variability is high using bets with dice roles.

Or, you can read my article on Inc.com which you can find here:

Not All Bad Outcomes Are The Result of Bad Decisions, Here's Why

Effective leaders have developed the skill and insight to know the difference between good and bad outcomes. They know when they screwed up and when they had a bad role of the dice, or when they got lucky with an outcome but shouldn’t take that path again.

Not sure how to figure this out? One of the best ways to uncover these situations is through a retrospective. I’ve written a lot about those. Here are a few links.

The Secret To Turning Your Mistakes Into Opportunities In 6 Simple Steps

We’re always looking for new ideas, insights, and opportunities for improvement. Retrospectives are the best place to find them.

And if you’re looking for help, check out my work as a facilitator of retrospectives…

http://www.eckfeldt.com/retrospectives

And if you have a specific challenge or decision you’re trying to make, reach out and let’s talk about it.

Bruce “Beat The Odds” Eckfeldt
bruce@eckfeldt.com

 

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