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How to pick the criteria for a decision?

 In Decision-making, Happiness, Realizer Blog

4 years ago I launched a business to help people make better decisions. Last week we stopped to take stock. What have we done that’s worked? What really helps people make better decisions?

It turns out it’s not easy to improve your own decision-making. Nobel prize winning decision expert Daniel Kahneman recently said as much in an interview:

40 years of work he’d done on how people make decisions had not made much difference at all on how he made decisions in his own life

Why is it so hard? Because it’s hard to spot the decision-making mistakes you make yourself and correct them. Just like the time I went through a robust decision-making process on what car to buy – but ultimately made all the data point to the car I secretly wanted, a metallic blue VW Golf.

The good news is that with a lot of persistence and trial and error, we’ve uncovered a number of tools which DO make a difference. Particularly when you use them in discussion with others. There’s ample evidence that other people find it much easier to spot the mistakes we’re making in decisions than we do ourselves.

So get yourself a decision buddy, and try some of the following tools.

3 of our favourite techniques

The 6 hats technique invented by Edward De Bono. We love this tool which is proven to aid problem-solving and decision-making with groups.

The pre-mortem technique devised by Gary Klein – this is a way of doing worst case scenario planning which is proven to surface 30% more real risks. And CEOs we work with, in particular, love this tool.

And finally the Clever Criteria technique devised by us here at Realizer, explained in the main image.

The development of Clever Criteria 1.0

For the rest of this article, I want to focus on the evolution of our Clever Criteria tool. This tool was developed based on research from Dijksterhuis. He showed that when humans buy cars, they are ultimately happier with their purchase when they only use 3 or 4 criteria to decide.

We turned this into a simple decision tool which asks you to long-list all the criteria which might help you pick between your options, and then combine and cull them until you could have just 3 criteria to evaluate your options against.

This basic version of Clever Criteria (version 1.0) has featured in our training workshops for the last few years, and is also a core element of coaching. You’re doing it when you ask, “what does success look like?” or “how will you choose between those options?”

Just this week, we’ve taken another leap forward. It’s fine to say “pick 3 criteria”. But which criteria?

The evolution of Clever Criteria 2.0

We wanted to focus on decisions that make people happy. It turns out humans aren’t brilliant at picking what will make them happy in the future (e.g. see Dan Gilbert’s excellent book, Stumbling On Happiness). For example, we may take a job for a big pay raise, only to discover a few weeks later that the extra few hundred dollars (after tax) in the bank account once a month does not offset the hideous commute and disengaged boss.

Why don’t psychologists have tattoos? Psychologists have studied how we think about the future. People believe that our preferences today will always stay the same. We’ll always love tattoos. But in reality, our preferences change much more than we predict as we get older. If you understand this, you are less likely to get a tattoo.

Luckily for us, there IS lots of empirical research into what really does make us happy in the long term. Things like expressing gratitude, being kind to others, creating memorable experiences, spending time with close friends and family, having a job with meaning.

Psychologist Dan Nettle split happiness into 3 levels.

Level 1: day to day, momentary pleasure and enjoyment. How happy are you right now?

Level 2: overall life satisfaction. How satisfied are you with your life?

Level 3: meaning. Are you living a meaningful life?

Each of these levels has proven strategies for making you happier in the future.

Combining happiness and decision-making

The science of how people predict what will make them happy in the future is called Affective Forecasting. So we decided to see if we could apply affective forecasting to help people make decisions that are more likely to make then happier in the future.

The diagram details how we suggest you do this. If you’ve got a big life decision, use the 3 levels of happiness to help you pick 3 criteria which are proven to make you happier in the long run – and ignore some of the factors (like money, ego, fear) which won’t make you happier in the long run.

An example of picking a career

Long before we developed Clever Criteria 1.0, I’d accidentally used this technique in deciding whether to start up a decision-making / training business. I gave myself 3 options: start the business, stay where I was in employment, or find a new job. And then I did a classic comparison of the 3 options on just 3 big criteria:

  1. What would use my strengths most?
  2. What would bring me the minimum amount I needed to pay the bills and stay afloat?
  3. What would align with my values most?

When you examine these three, it turns out that the first is a representation of day to day enjoyment (level 1 happiness). I enjoy running my business because it uses my strengths every day. And that’s proven to work not just for me, but for most people. Using strengths makes you happy.

The second is a basic measure of life satisfaction (level 2 happiness): have I taken the issue of money off the table so I don’t have to worry about it? Note that I didn’t specify I needed more money than before – a pay rise – or even the same money. Nope. I went for the minimum I needed to not worry. And there is research to back this up: beyond that level of minimum necessity, more money doesn’t really make you happier.

The third is clearly in line with level 3 happiness: it describes having a job with meaning, where I help others and deliver a service I feel is important in the world.

So without even knowing it, I’d made one of the biggest – and best – decisions of my life by using only 3 criteria, all with science behind them, and each matching to one of Nettle’s 3 levels of happiness.

When the levels don’t align

Of course, there are times when one option in front of you will bring you much more immediate pleasure (level 1 happiness) but less longer term life satisfaction (level 2) or less meaningful life (level 3). And humans have a well established preference for immediate benefit (scientists call it hyperbolic discounting). This might be the way we evolved: when times were tough and life expectancies low, it made sense to eat the ice cream now and not worry about the long term consequences – as you probably wouldn’t see old age anyway. But now we’re living to 80+, this focus on the short term pleasures might be something you want to avoid, or at least balance.

One example facing me recently has been whether to grow my business, or keep it as a smallish lifestyle business. I have really struggled with it. Viewed through the 3 levels of happiness, it’s a struggle between my desire to challenge myself and leave a legacy (level 3) and my desire for a relatively stress-free life, and time with my young family. In the end my decision on that one has been to try and have both. 1 day a week, I’ll act like a start up entrepreneur and develop scalable ideas. And 4 days a week I’ll run a more lifestyle friendly business (still a serious business mind you, but with less complications).

Ideally you’ll be able to find an option which does hit all 3 levels of happiness – like my career decision. But if you can’t, you’ll have to face up to your short term bias, and see if you can think more long term; more about level 2 and 3 happiness.

What do you think?

There is plenty of research evidence to back up Clever Criteria 2.0; the work of Maslow, Seligman, Ariely and more. Plus we have tested it in on a variety of life decisions: careers, cars, moving country, firing someone, picking a holiday. But we welcome your feedback if you test it. So, next time you’re faced with a chunky decision, pick just 3 criteria, and take note of the 3 levels of happiness. Let us know how you go.

Adaptation of Clever Criteria 2.0 to business decisions

We have drafted an adaptation of Clever Criteria 2.0 for business. It asks you to pick short term criteria, long term criteria and values-based criteria and use this to generate your top 3 criteria allowing you to balance the typical short term business focus with the longer term growth, and integrity of your business. More to follow on that topic once we’ve tested it more.

Thanks for reading.

For more on decision making  tools, see:-

How to think like a doctor to define your underlying problem

Written by Realizer’s Rob Pyne