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Decision Quality vs Outcome

TechExec Week 14 - Wednesday Edition

Author

Gaurav Singh
July 12, 2023

(Total read time: 3 minutes)

Hey there,

Welcome to Week 14 of TechExec - the newsletter that turbocharges your growth to become a Tech Executive!

As always, we are sharing a new set of BLTs this week

  • šŸ’¼ B - a Business concept / theory / story

  • šŸ’ L - a lifestyle advice

  • šŸ¤– T - a Tech explainer

Here is the schedule:

Monday ā€”>šŸ’¼ B - a Business concept / theory / story

Wednesday ā€”> šŸ’ L - a lifestyle advice

Friday ā€”> šŸ¤– T - a Tech explainer

This past Monday, we talked about the Osborne Effect! If you missed that, you can read it here.

Todayā€™s Lifestyle Advice is on Decision Quality vs Outcome!

šŸ’¼ L - Decision Quality vs Outcome

Think about the last big decision you made, like buying your house, choosing a partner, or deciding when to have kids. How do you know if it was a good decision? What are the makings of a good decision? And what differentiates a good decision from a bad one?

Here is the thing: ā€œYou canā€™t tell the quality of a decision from itā€™s outcomeā€ ā€”this was the key insight from the book Decisions Under Uncertainty: Drilling Decisions by Oil and Gas Operators, authored by C. Jackson Grayson. While the book was a mandatory read in business schools in the 1960s and 1970s, the man himself was a legend; just look at his resume:

  • dean of two business schools,

  • head of the U.S. Price Commission (1971)

  • FBI agent

  • founder of the American Productivity and Quality Center (APQC), a private sector, non-profit organization.

Now letā€™s come back to the big decisions you have made in your life. If the outcome was bad, does that mean your decision was bad? As our good friend Mr. Grayson said, the answer is NO! To actually determine the quality of your decision, you will have to ask yourself the following questions:

šŸ“° Did you make your best efforts to collect all the available information you needed to make the decision

šŸ¤” What assumptions did you make?

šŸ‘ Were your assumptions reasonable and justifiable?

āš–ļø How did you weigh known risks against potential returns?

If you had satisfactory answers for all of the above, then your decision making process was sound, and you should not be beating yourself up even if this led to terrible results.

Thatā€™s not how the real world works, though. While itā€™s fairer to reward executives for their decisionā€™s quality, as that is their key contribution, before fortune (or misfortune) weighs in, we tend to reward executives for their decisionā€™s outcomes because they are much easier to measure. But donā€™t let that deter you from improving the quality of your decision-making process. Because thatā€™s what you can control!

Takeaway: The quality of a decision cannot be determined solely by its outcome. When evaluating the quality of a decision, it is important to consider factors such as the effort put into gathering information, the assumptions made, their reasonableness, and the weighing of risks against potential returns. Even if the outcome is unfavorable, a sound decision-making process should be acknowledged. While the real world tends to focus on outcomes, individuals can still strive to improve the quality of their decision-making process, which remains within their control.

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