The “decision diary”: How to make better decisions

We make numerous decisions every day.

For many people, decisions are the main product or output of their work. Success or failure in business depends upon the decisions that someone made, or failed to make.

The decisions that we make largely determine our career choices, where we live, who we live with, how long we live for and the quality of that life. And yet most of us receive little or no training on how to make good decisions.

What is decision-making?

Decision-making is a key non-technical skill. Most training courses in non-technical skills include a module on decision-making. It has been defined as “diagnosing a situation and reaching a judgement in order to choose an appropriate course of action” (IOGP, Report 501, 2014). It can be decomposed into three key stages:

1. Identifying and assessing options
2. Selecting an appropriate option and communicating it
3. Taking action – implementing and reviewing decisions.

Given the number of decisions that we make, and the variable conditions under which we must perform, it is inevitable that some decisions will be poor. Errors of judgment in the workplace may lead to serious accidents. I have written elsewhere how investment decisions are influenced by our emotions and cognitive biases.

We know that certain factors influence the quality of our decisions, such as time pressure, fatigue, distractions, high workload and group dynamics. There’s a wealth of information on cognitive biases and plenty of discussion on “fast and slow” thinking, but how do you go about improving your decision-making?

In my article on Stockmarket Psychology, I provided some guidance on making a good investment decision:

Decisions, decisions . . .

In many aspects of our professional and personal lives, we rely on feedback in order to improve. The feedback that we receive on presentations, reports, driving, or cooking helps us to understand our strengths and weaknesses. However, we may not receive feedback on the quality of our decisions. If we do receive feedback on decisions, it’s often on the outcomes of our decisions, not on the mechanics of the decisions themselves.

In an uncertain and complex world, we can make great decisions, but still obtain a bad outcome. As there are so many variables, not all of them under our direct control, sometimes we don’t get the outcome we wanted. And for the same reasons, we can sometimes achieve a great outcome, even after making poor decisions. Therefore, we would benefit most from feedback that helps us to understand what aspects of our decision-making process we need to improve, rather than feedback on the outcomes of our decisions.

If only you could look back and learn from past decisions!

Enter – the “decision diary”

In the Stockmarket Psychology article, I emphasized writing down proposed financial decisions and your assumptions, together with the reasons for and against. I’d like to take that guidance a step further and suggest you keep a diary of all your important decisions.

A “decision diary” is simply a record of your more significant decisions, together with any assumptions that you made and how you felt when you made the decision. You can add more content, but don’t make it so complicated that you give up on the process.

In this diary, you might include:

• an outline of the decision
• the date and time of the decision
• the planned outcomes
• your reasoning (‘the why’)
• the assumptions you made
• how you felt physically and mentally (e.g., tired, stressed, happy, sad, anxious, excited)
• your confidence in the decision
• the alternative options (i.e., what else could you have decided?)
• why any alternatives were not chosen.

Your decision diary could be a paper notebook, a simple electronic document, or notes on your phone. The key is to make notes as soon as possible after the decision – and include sufficient detail to be able to review the decision later.

At the start of your diary, write down how you currently rate your decision-making skills and describe the areas where you feel that you can improve. Then start small – work through a recent decision to test the approach.

Why keep a diary of your decisions?

This diary can be used to assist you in making a current decision, as it forces you to make your options and assumptions explicit. Writing down these factors helps to slow down your thinking and make you less susceptible to cognitive biases (that tend to apply when we think quickly and automatically).

However, the primary purpose of a decision diary is to enable you to reflect on your decisions at a later date and refine your decision-making process. This reflection will help you to identify opportunities to improve your decision-making ability. By reviewing your previous decisions, why you made them – and under what conditions – you can see where you may have gone wrong and make better decisions in future. Without such a formal review of your decisions, you may miss out on these insights.

The process of recording decisions is often used in major projects. They may be written in a document such as a Key Decision Log (KDL), which helps to keep track of the decisions, justifications and who was in agreement. A decision diary records similar information, but the main purpose is to improve your decision-making skills. This review will help you to assess whether unwanted outcomes were the result of bad luck, or a bad decision-making process.

This diary will help you to think about how you make decisions. It won’t always be easy – you may have to admit that you have weaknesses in order to improve. If you have a mentor or coach, you may wish to share your decision diary with them.

On reflection, how do your important decisions turn out?

For example, you might ask yourself:

• Are the outcomes of decisions as you planned?
• Are your assumptions usually correct?
• Do you often suffer from the same cognitive biases or mental shortcuts?
• Do you make poor decisions under certain emotional states?
• Are you more anxious or confident about certain types of decisions?
• Are your poorest decisions made at certain times of the day?
• Did you have access to all the required information?
• Were all options considered?
• Were you feeling at your best when you made each decision?
• Was a decision based more on intuition, or data?
• Does the quality of a decision always equate to the quality of the outcome?
• Do you always act on your decisions?
• What might you do differently next time?

Summary

Even though we may have good intentions, sometimes we make poor decisions. And good outcomes do not always mean that a good decision process was used! There are several limitations and biases that can influence our ability to make a good decision. By writing down the key aspects of a decision in a diary, we create an opportunity to revisit that decision and reflect on the quality of our decision-making process.