Monday Mornings with Madison

Analysis Paralysis: When Decision-Making Gets Stuck and How to Get Unstuck

Word Count: 1,656
Estimated Read Time: 6 1/2 min.

When Decision-Making Gets Stuck

The average person makes a lot of decisions daily.  Researchers Barbara Sahakian and Jamie Nicole LaBuzetta estimated that an adult makes about 35,000 decisions each day, while a child makes about 3,000.[1] This may seem impossible since that is about 24 decisions per minute or one decision every two to three seconds.  But most of those are ‘remotely conscious’ decisions.  That means we do them on mental auto-pilot and most are not that important.  For instance, Brian Wansink and Jeffery Sobal, researchers at Cornell University, found that the average person makes 226.7 decisions every day just on food.[2] Food decisions are made with little intentional thought and have little or no consequence.  The same is true for lots of other decisions.  What to wear.  What time to go to bed.   We scarcely think of these small choices as “decisions.”  But, mixed in with the myriad of tiny assessments we are constantly making are important decisions as well.  And, the higher a person’s position at work, the greater the quantity and consequence of those decisions.  As the saying goes, heavy is the head that wears the crown.

Making big decisions can be worrisome and even a little scary, even for the most capable and confident business professionals.  For a mid-level manager, it might be:  Should we buy this CRM software program or that one?  Should we upgrade our operating platform or wait another year?  Should we expand into this new market or that one, or should we even be expanding?  Should we hire remote employees to solve our department’s staffing problems or keep looking for local workers?  Do I promote Michael or Rachel, who are both awesome employees?  For a CEO or business owner it might be:  Do we sign a 10-year lease for a prime office location or look for some other space that requires less of a commitment?  Which CFO should we hire from the 100 who applied, the 12 we interviewed and the 3 finalists who impressed us the most?  Who do I terminate because layoffs have become economically necessary?  Which employee benefits do we cut to help stabilize the company’s finances?  Should we merge with one of our competitors?  Such decisions weigh heavily.  Behavioral psychologists call these Tier 1 decisions.  Tier 1 decisions need and are best answered using a combination of a person’s own expertise, research, consultation with subject-matter-experts, and strategic thinking.   These decisions often have big consequences… and the wrong choice can cost a company.  It is these types of decisions that can cause analysis paralysis.

What is Analysis Paralysis?

According to Investopedia, analysis paralysis occurs when an individual becomes so lost in the process of examining and evaluating various points of data or factors in making a decision that he/she is unable to make that decision.[3] Analysis paralysis can occur with many decisions, including those related to finance and government and it definitely occurs in business.  For example, companies often experience analysis paralysis when making hiring decisions, which is a source of great frustration for job seekers and recruiters and yet is a common problem.  Why?

To begin with, no one likes being wrong, especially at work.  But it’s more than that.  Leaders know that bad decisions could cost them their jobs or sink the company.  Think about the string of bad decisions made by Borders’ leadership that led them to turn over their online sales to Amazon which resulted in their demise.   The list is long of companies whose leadership can be credited for making bad decisions that sank the business.   Blockbuster passed on the offer to merge with Netflix and was never able to find its place in the world of entertainment streaming.  Commodore Computers killed off its most popular computer, the Commodore 64, in the hopes of forcing them to buy the next upgrade but lost all of its customers.  Kodak, the original inventor of digital camera, chose not to invest in developing the technology until it was too late.   And Lehman Brothers, which borrowed heavily to buy mortgage-backed securities and real estate in the years before the Great Recession, had a leverage ratio of 31-to-1 when the housing bubble burst and took the company down with it.  Enron.  Circuit City.  Toys R Us.   Woolworths.  No question that there is a lot of pressure to make smart decisions in an increasingly disruptive marketplace.

In addition to the fear of making the wrong decision, business professionals might also be deluged with so many options that he/she is unable to decide on one out of the many.  Information overload is real, and more research might only muddy the picture further instead of clarifying it.  Research is good but too much research can just overcomplicate a matter, especially if the difference in options is not that significant.  While it makes sense to want to carefully research and consult others when having to make such important decisions in today’s world, there is an infinitesimal supply of information available on any topic… on every topic.  Just trying to stay up to date with the latest viewpoints and updates on anything is akin to the human version of a hamster on an information wheel… run and run and run and never get “to the end”.

Moreover, sometimes being so engrossed in thinking through options and outcomes can make a decision a moot point if it’s too late to decide.  Tier 1 decisions often require not just a decision, but a quick decision.  And putting off a decision can be a decision.  U.S. President Harry S. Truman was very aware of the danger of “analysis paralysis” during his tenure as Commander in Chief.  He understood that sometimes even delaying a decision could result in an unintended decision.  When a staff member went to him with a matter that required a presidential decision, whether it was a problem or an opportunity, the first thing Truman asked was “How much time do I have to decide?”   He understood that the timing of a decision was as important as the decision itself.  A long lead time opened the door for extensive consultation and discussion while a very short lead time meant the President could only search within himself, however briefly, for an answer that would likely affect millions of people.

Ending Analysis Paralysis

So what is a person to do if caught in the “Analysis Paralysis” trap?

1. Establish a deadline.

In today’s interconnected world, decisions are seldom made in a vacuum.  The effects of a big business decision extend outwardly in all directions as well as internally within the organization.  Most times, teams or departments are waiting on a particular decision in order to make progress.  Lack of a decision therefore causes work to grind to a halt.  So analysis paralysis on issues meant to help a business can end up disrupting business.  To avoid that, it helps to determine the last possible time in which a decision can be made before it either must be removed from the decision-making table or becomes a fait accompli.

2. When possible, gather multiple viewpoints.

Seeking advice from key advisors is central to effective decision making.  Receiving guidance is often seen as the passive consumption of wisdom. But if the exchange is done well, people on both sides of the conversation benefit. A leader who is truly open to guidance (and not just looking for validation) develops better solutions to problems than if he makes the decision on his own.  Including others in the decision making process adds nuance and texture to the thought process and helps overcome cognitive biases, self-serving rationales, and other flaws in logic. It also serves as a coaching tool for up-and-comers and it builds diversity of thought.

3.  Don’t let curiosity kill the cat.

When it comes to knowledge, sometimes less is more.  Indeed, one of the biggest contributing factors to analysis paralysis is details.  The need to satiate the intellectual curiosity and the yearning for more information can put the kibosh on decision-making.  There will always be more to learn… more to know… more to understand, but all of that information is not essential to making an informed decision. To avoid that, determine up front what information is absolutely necessary for making the decision and what information would be nice to know in the future but not essential to reach a conclusion.  Then gather that info, digest it and decide.

4.  Accept that not all decisions will be perfect.

Just because a leader arrives at one conclusion doesn’t mean a change direction later, or even a decision to reverse course.  For example, if a decision is made to wait to upgrade software for another year, but after six months it is clear that delaying was a mistake, it is better to admit that it was a wrong decision and move forward with the upgrade.   When it is possible to reverse course on a bad decision, accept it and move on.  No one is perfect and mistakes are why there are erasers on pencils. Decisions are never final for the simple fact that change is never absolute. Rather, change is ongoing. To stay competitive and progress at the rate of change requires adaptive decisions that can be iterated and improved upon on the fly.  And, for bigger decisions that cannot be easily reversed, consider smaller yet actionable steps that can be made now and lead up to the bigger decision.

These small steps can help end analysis paralysis and get you unstuck and out of the decision-making quicksand.  Try it with any decision that paralyzes you.

Quote of the Week

“On an important decision, one rarely has 100% of the information needed for a good decision no matter how much time one spends or how long one waits. And, if one waits too long, he has a different problem and has to start all over. This is the terrible dilemma of the hesitant decision maker.” Robert K. Greenleaf

 


[1]2013, Sahakian, Barbara and LaBuzetta, Jamie Nicole, Bad Moves : How decision making goes wrong, and the ethics of smart drugs, Oxford : OUP Oxford©

[2] January 1, 2007, Wansink, Brian and Sobal, Jeffery, Mindless Eating: The 200 Daily Food Decisions We Overlook, Volume: 39 issue: 1, pages: 106-123. https://doi.org/10.1177/0013916506295573

 

[3] May 19, 2018, Chen, James, What is Analysis Paralysis?, Trading and Trading Strategy, Investopedia, https://www.investopedia.com/terms/a/analysisparalysis.asp

 

© 2019, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

WordPress Appliance - Powered by TurnKey Linux