Forget Right Or Wrong: Decision-Making Is About Trade-Offs

Look at decision-making as optimizing between trade-offs to achieve a given objective.

Make your decision and choose your trade-off consciously, with your objective in mind, rather than solely by instinct.
Imagine for a moment that you have to make a significant business decision. Did you feel your stress level jump? Most likely, yes. After all, there’s a lot riding on some of the critical decisions we make. No wonder we tend to agonize during decision-making and second-guess ourselves afterward.

Here’s a different perspective that can really lower your stress when faced with a business decision: don’t worry simply about “right” or “wrong,” since the decision is probably a lot more complicated than that. Look at decision-making as optimizing between trade-offs to achieve a given objective. In other words, you’ll almost always have to give up something to get something. Purposefully choosing and embracing one trade-off over another provides a framework to make better – and less stress-filled – decisions.

Consider this scenario: you have an idea for a great new product. Do you make it standardized, so you can operationalize it and deliver it at scale for a lower cost? Or do you make it customizable – which is operationally more difficult, but delivers a higher value?

Whichever way you make the decision, you are going to gain something and you are going to lose something. Yes, I know. We’d all like a utopian world where there are no trade-offs and everything can be just perfect … do let me know when you find it! Until then, we’re going to have to make trade-offs and shoot for the best we can achieve. Here are three questions to ask yourself to help make better decisions by choosing trade-offs wisely.

Do you recognize and actively consider trade-offs in making a decision?

In decision-making, we often navigate the landscape by instinct and on autopilot, failing to consider either implications or unintended consequences. What is important is to recognize that every time you make a decision, you are also making a trade-off. Make your decision and choose your trade-off consciously, with your objective in mind, rather than solely by instinct.

Take the example of a project at work. A type-A personality will usually jump in and focus on getting to the end goal as quickly as possible. A methodical, deliberate personality will spend more time planning and strategizing upfront. What is the trade-off when these individuals act on autopilot? The type-A personality may not realize they are going off a cliff until they hit the bottom, whereas the deliberate personality may be stricken by a case of analysis-paralysis. Neither extreme is conducive to the success of the project.

Instead, both personality types need to focus on the objective of the project and adjust their behavior accordingly. If a project is looking to drive innovation, then quick action and time to market are critical: you may want to accept trade-offs that allow for a fast, first-fit solution. On the other hand, for a project involving major investment and long-term changes (such as a merger or acquisition), choose trade-offs that encourage a best-fit solution with sufficient due diligence to drive sustained benefits.

Are certain trade-offs being redefined by innovation?

Technological innovations can change the dynamics of certain trade-offs, redefining the parameters and potentially the decisions you might make. For example, in my own industry of disaster recovery, we have experienced major technological innovations within the past ten years.

Previously, organizations had to rely on slow, tape-based recovery solutions that could take days to restore a business. Decisions for business continuity were made based upon that reality. Today, new technologies have made possible near-zero recovery times – although at a cost. This has completely revised the whole decision-making landscape when it comes to business continuity. Now, decisions center on defining critical vs. non-critical applications. Critical applications need to be recovered with newer replication technology, while less-critical or non-critical applications continue to benefit from a more traditional disaster recovery approach.

Are you re-evaluating the trade-offs (but not often enough)?

Change is a constant. It is important to realize that past decisions may have made perfect sense at the time, but if the situation has changed (whether because of innovation or the environment), the trade-off needs to be re-evaluated.

For example, a software development company with a mature product where margins are most important may elect to use offshore resources because of the cost savings, despite the accompanying communication issues and high turnover rate. On the other hand, a company looking to drive innovation may find that it is more effective to hire onshore personnel who bring higher productivity and greater skillsets and adaptability – though at a higher price.

Another trade-off is the role of process where the trade-off becomes a “Goldilocks” problem of striking a balance between structure and flexibility. For a start-up that has grown quickly, there is typically a need to add more structured process to address problems of lack of alignment and visibility. On the other hand, for organizations that have down-sized or which are evolving to operate in a more dynamic market where flexibility is important, the process needs to be right-sized so that it does not become a barrier to progress.

The final word

Time is, of course, often the true litmus test of decisions. But without the benefit of 20-20 hindsight, we need a plan and a process to move forward. Viewing decision-making as navigating between trade-offs by consciously selecting a course of action that optimizes for a chosen objective can remove much of the stress associated with making decisions.

Then, the challenge becomes a trade-off between second-guessing yourself and steadfastly choosing to believe you’ve made a good decision!