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Every day, leaders make decisions with incomplete information. Move now or wait? Stick with what’s working or try something new? Give people more options or simplify the path forward?
In Episode 3 of Performance Guaranteed, Teira Gunlock and Elena Gambon sit down with Hylant Client Executive Dave Holden to explore choice architecture and how the way choices are designed can influence the decisions we make.
Choice architecture sounds complex, but the idea is surprisingly simple: how choices are presented matters.
The options we include, the order we present them, the defaults we establish and even the amount of effort required to make a choice can influence the outcome. As Dave points out, there is no truly neutral choice environment. The question for leaders is whether that environment is thoughtfully designed to help people make good decisions for themselves
More Choice Isn't Always Better
Giving people more options can feel empowering. But more choices can also create more complexity. One example? Defaults.
When an option is already selected, people are more likely to stick with it. In employee benefits, that could mean automatically remaining in the same medical plan from one year to the next. Leaders might look at that behavior and assume employees prefer the plan, when in reality, they may simply be following the path that requires the least effort.
It's an important distinction: behavior isn't always evidence of preference. Sometimes, it's a reflection of the environment surrounding the decision.
Not Making a Decision Is Still a Decision
The same thinking applies to leadership.
Change often requires a business case, analysis and justification. Staying put can feel neutral by comparison. But maintaining the status quo has consequences, too.
Dave draws an important distinction between patience and avoidance. Waiting can absolutely be a strategy, but there should be a reason behind it. What information are you waiting for? What needs to happen in the meantime? What would ultimately cause you to make a different decision?
As Dave puts it, “not yet” can be a strategy. Without a reason, plan or expiration date, however, it starts to look a lot more like inertia.
Good Decisions Don't Require Perfect Information
Perhaps the biggest takeaway for leaders is that good decision-making doesn't mean predicting the future correctly every time. A thoughtful decision can still produce a bad outcome. A poor decision can get lucky.
Effective leaders make the best decision they can with the information available, understand the trade-offs, own the outcome and remain curious enough to change course when new information emerges.
And sometimes, better decision-making starts by making the better choice a little easier.
Watch Episode 3
Watch the full conversation with Dave Holden to learn more about choice architecture, decision-making under uncertainty and how leaders can create environments that make better decisions easier.
Watch or listen to Performance Guaranteed on YouTube, Spotify and Apple Podcasts.
