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3 secret tricks to set criteria for decisions

 In Business decisions, Decision-making, Insights, Realizer Blog

How to set criteria

One of the important drivers of making a good decision is how you set criteria.

However, if you look at books on decisions, or google it – it’s hard to find advice on how to set criteria to make a decision. What makes a good combination of criteria?

The easy option is to list out many criteria so you’re being comprehensive. Trouble is, your brain can’t really deal with more than a handful, e.g. see this study on how picking a car is too complex, with too many criteria – and hence most people don’t buy the best car for them.

So, from my research and readings, what follows is a brand new guide to setting clever criteria. This will help you make better decisions, quicker.

Step 1: Embrace your gut feel

Bring in your values and your gut feel – just by asking, “what would the person I want to be do in this situation?” Often this criterion on its own will make the decision for you. But if not…

Step 2: Focus on outcomes, not features

Address the rational part of the decision – but instead of using features like price, colour, fuel economy – use future outcomes. More specifically, imagine yourself in the mode where you’ll be experiencing or using the results of the decision. What will be important then? These are the important outcomes.

An example: research shows that when we buy a new sound system we can get obsessed with tiny details like the thickness of the wiring and the accuracy of the noise reduction system. But when we end up using the sound system at home, without others to compare it to, we actually notice quite a lot what it looks like, and don’t notice the relative sound quality. So you should perhaps use the looks of a stereo as a realistic criterion more than the finer detail of its sound production – which won’t be an outcome that you really notice.

A second example: if considering two jobs we may be swayed by the higher salary when we see it annual terms, “an extra $10,000”. But that’s not what happens when you get the job. Your experience is that each month you get 1/12th of the amount, and then it gets taxed too. If tax was say 40%, that means the monthly outcome is just an extra $500. That’s 5% of the headline annual total.

In summary, you should use criteria to choose an option which reflect what will be valuable when you finally use or experience it.

Step 3: Cull

In the car study above, they found that 4 criteria works well, but 12 criteria means people make worse choices than if they used no criteria and just picked one at random.

The first step to culling is to make sure the criteria don’t overlap too much. If two are similar, eliminate one or combine them into one.

The second step to culling is to ruthlessly separate them into a maximum of 3 must have criteria. No more! You can have a couple of nice-to-have criteria as tie-breakers in your back pocket if you like – just in case!

So, at this point you should have a small number of criteria – probably 4 must have criteria, i.e. 3 outcome-based criteria, plus your original gut feel criteria.

Now you can go ahead and evaluate the options against your 4 criteria. Don’t just treat them hypothetically – in turn try and imagine you’ve really chosen each option and are now experiencing it. How does it feel? How can you imagine meeting your desired outcomes?

In summary

If you generate a clever combination of criteria and then apply them with an eye on what it will really feel like, you will quickly make great decisions.

Written by Rob Pyne