Chip and Dan Heath are the brothers who study human behavior and break it down so that we can understand ourselves. They are both business professors (Chip at Stanford Graduate School of Business and Dan at Duke University’s CASE center, which supports social entrepreneurs.) I recommend their first book, Made to Stick, often for people who want to understand how to get messages to resonate with audiences.
In their latest book, Decisive, the brothers explore why most of the decisions we make are flawed – and how to correct the biases, mistakes and emotions that screw up the process so often. As always, the pair offers a solution to help you make better decisions, whether you’re considering which dessert to order or which job offer you should accept.
The first few chapters break down what’s wrong with our decision-making process. And there’s a lot wrong with it. The problem is that knowing we don’t use a good process doesn’t help us, any more than knowing that you’re short-sighted doesn’t help you see better. The first problem with our decision process is that most of us frame the choices too narrowly. For instance, I’d bet that the vast majority of your decisions in a given week consist of “whether or not” options. Should I buy the shoes that are on sale, or not? Should I go to the party or not? Should I break up with my girlfriend or not? The Heaths say that “whether or not” should be a big red flag that you are not looking at alternatives that will produce a good decision.
In fact, one study conducted on teenage girls found that 65 percent of their decisions were simply an up or down vote on only one option. Should I go to the party with my friends or not? (The Heaths call this “spotlight behavior;” one option is highlighted while other viable alternatives remain hidden. In reality, there are many more options to consider. The teen could go to the movies, attend a game, and then drop by the party for a few minutes. There is almost always a way to get to “and” instead of “or.”
But of course, you’re thinking, that’s about teenage girls. By the time I get to be an adult in business, I am smarter than that. Not so much, as it turns out. A study conducted in 1993 looked at business decisions (product launches, mergers and acquisitions, etc.) after the fact and rated them good or bad based not just on the opinion of the decider (who almost always thought he’d been brilliant), but also based on senior managers who watched the process and evaluated the aftereffects. To the researchers’ great surprise, he found that only 29 percent of the teams making decisions considered more than one option. (The teenage girls actually considered more options 30 percent of the time.) In addition, the researchers found that found that “whether or not” decisions failed 52 percent of the time over the long term, while decisions based on two or more options failed only 32 percent of the time.
When a manager only considers one option, such as whether to acquire a company or adopt a new policy, they spend their mental energy thinking about “How can I make this work?” instead of “Is there a better way to do this?” “What else could we do?” The Heaths suggest that whenever you hear “whether or not,” you stop the process right there; you’ll need to widen your options in order to make a really good decision.
They suggest that the easiest way to increase your options is to consider what economists call “opportunity cost.” Shane Frederick, who studies decision science for a living, ran a simple study with a cross section of consumers to understand the impact of considering opportunity cost. Here’s what they asked.
“Imagine that you have been saving some extra money on the side to make some purchase, and on your most recent trip to the video store, you see a special sale… on a new video by your favorite actor in your favorite genre. This particular video is one you have been thinking about for a long time. The special sales price is $14.99.”
What would you do in this situation?
a.) Buy this entertaining video.
b.) Not buy this entertaining video.
75 percent of the consumers chose to buy the video; only 25 percent resisted temptation.
When researchers added just a few words (highlighted below), the results changed dramatically.
a.) Buy this entertaining video.
b.) Not buy this entertaining video. Keep the $14.99 for other purchases.
Really? Did we need that reminder? If we don’t buy the video, we get to spend the money on something else? Apparently, we did need the reminder. With that opportunity cost reminder, 45 percent decided not to buy the video the percentage of people who resisted temptation doubled.
If you can’t think of more options, simply remind yourself of what you could do with the time, money or energy you expend on your choice.
