Evaluate the options

From Shane Parrish’s book “Clear Thinking”

How do you evaluate the options?

• “You’ve worked out some potential solutions in detail. Each suggests a course of action that might work. You now need to evaluate the options and pick the one most likely to make the future easier. There are two components here: (1) your criteria for evaluating the options and (2) how you apply them.”

You must decide what criteria you will use to evaluate options.

• Each problem has its own specific criteria. Some of the more common ones include opportunity cost, return on investment (ROI), and likelihood of the desired outcome, but there are many others. When you understand the problem, the criteria should be apparent. Recently I undertook a renovation. Some of my criteria included experience of the crew, availability, demonstrated pace on past projects, and quality of craftmanship.
  
  
• If you find yourself struggling to determine specific criteria, it’s a sign either that you don’t really understand the problem, or that you don’t understand the general features that criteria are supposed to have. Those features include the following:
  
  
• Clarity: The criteria should be simple, clear, and free of any jargon. Ideally, you should be able to explain them to a twelve-year-old.
  
  
• Goal promotion: The criteria must favor only those options that achieve the desired goal.
  
  
• Decisiveness: The criteria must favor exactly one option; they can’t result in a tie among several.” (p. 156)

What mistakes do people make when thinking about criteria?

• “Criteria that fail to satisfy these conditions often lead to decision-making errors. When criteria are too complicated, people have trouble knowing how to apply them. When they are ambiguous, people have a green light to interpret them in whichever way suits them. As a result, people end up applying criteria in different ways based on what they want or how they feel at the moment. Their decision-making process becomes a playground for the emotion default.” (p. 156)
  
  
• “When deciding at work, criteria that are ambiguous or jargon-laden lend themselves to endless debates as to their meaning. We assume that everyone has a shared understanding of what these words and phrases mean. They don’t. We assume that our own definitions won’t change. They might. What a word like “strategic” means to one person is often different from what it means to another. As a result, ambiguous criteria rob decision-makers of their ability to distinguish who’s right from who’s wrong, and force debates about semantics instead of which potential solution is the best.” (p. 156)
  
  
• “Other times the criteria don’t promote the goal. This is often the social default’s doing. One common example is when leaders make decisions about hiring or promotion based not on someone’s qualifications but on their likeable personality. Being nice is not the same as being good at your job. Using niceness as a criterion in personnel decisions frequently doesn’t promote the goals of the organization.”(p. 156)
  
  
• “Sometimes criteria can promote the wrong goal—steering a team toward what it can do soonest, perhaps, instead of what’s best for the company in the long run. A tragic example happened in January 1986”. (Space shuttle Challenger crash)
  
  
• “Criteria can also fail to be decisive. If they don’t help you narrow the options, they’re not useful. Indecisive criteria are another sign that you don’t fully understand the problem and are operating out of fear that you’ll be wrong. The social default preys on people who don’t want to take responsibility for outcomes or who don’t have clear ideas of what they want.” (p. 158)
  
  
• “Think of choosing a restaurant for dinner with a group of friends. Someone will make an initial suggestion—like eating Mexican—and inevitably someone else will say, “I just had Mexican last night.” Then you’ll hear, “What about salads?” and someone will say, “I’m too hungry for salad.” On and on ad nauseam: people say what they don’t want until the group is so hungry they pick whatever is most convenient. I’ve seen this situation play out the same way so often it’s comical. (Pay attention the next time it’s happening to you!)
  
  
• The problem here is that in many cases, purely negative criteria aren’t decisive: they don’t narrow the field of options down to one. As a result, people end up leaving the ultimate choice up to chance or circumstance. As the old saying goes, “If you don’t know where you want to go, any road will take you there.”
  
  
• Suppose, by contrast, that when you and your friends were deciding where to eat, each of you stated not what you didn’t want but rather what you did: “I want somewhere that serves salads within ten minutes’ walking distance.” “I want somewhere that serves burgers.” “I really don’t care; I just want to eat soon.” Making the decision would be much faster, and it would be more likely to get more people what they wanted.” (p. 158)

Defining the Most Important Thing

• “Not all criteria are the same. There might be a hundred variables, but they are not equally important. When you’re clear on what’s important, evaluating options becomes easier. Many people are shy to pick out the most important thing because they don’t want to be wrong.
  
  
• When you don’t communicate what’s most important, people are left guessing about what matters. They need you to solve the problem for them. While you feel needed and important, you’re also busy making all the decisions that your colleagues should be making.
  
  
• A lot of managers secretly enjoy being the bottleneck. They like the way it feels when their team is dependent on them. Don’t be fooled! This is the ego default at work, and it puts a ceiling on how far you will go. It tries to convince you that you’re the best; that you’re so smart, so skilled, so insightful that only you can make the decisions. In reality, you’re just getting in the way of the team performing at its best.” (p. 126)

Example of Shane not having a clear criteria as a leader.

• “Yes,” I replied, “but due to the operational nature of our job, if I’m not around, they have to make decisions in the third box without me. That’s where we’re running into the biggest problems. They seem incapable of doing that.”
  
  “Do they know the one thing that’s most important?” he probed.
  
  “I’m not sure what you mean,” I said. “What’s most important differs for each decision.” I listed off a few different types of decisions and how the variables were different.
  
  “That’s not what I mean,” he replied. “Do they know what you value most?” I hesitated. He looked me square in the eye. “Shane, do you know what you value most?” I stared at him blankly. He sighed. “The problem isn’t your team. It’s you. You don’t know what’s most important. Until you do, your team will never make decisions without you. It’s too risky for them to figure out the most important thing. Communicate that to your team, and they’ll be able to make decisions on their own.”
  
  “What if they make the wrong decision?”
  
  “As long as they make a decision based on the most important thing, they won’t be wrong.” He paused, then said slowly, “A lot of people reach their ceiling in this job because they can’t figure out this one thing.”
  
  “I learned three important lessons that day. First, I couldn’t expect my team to make decisions on their own unless I told them how I wanted them to make those decisions. That meant focusing on the single most important thing and not inundating them with hundreds of variables to consider. Second, if they made the decision with the most important thing in mind, and it turned out wrong, I couldn’t get upset with them. If I did that, they’d never make decisions without me. The third lesson was perhaps the most revealing: I myself didn’t know what the most important thing was. That’s why I couldn’t tell them.” (p. 161)

How to Safeguard the Evaluation Stage

• “There is only one most important thing in every project, goal, and company. If you have two or more most important things, you’re not thinking clearly. This is an important aspect of leadership and problem-solving in general: you have to pick one criterion above all the others and communicate it in a way that your people can understand so they can make decisions on their own. This is true leadership. You need to be clear about what values people are to use when making decisions. If I tell you the most important thing is serving the customer, you know how to make decisions without me. If you make a bad judgment call, but it puts the customer first, I can’t fault you. You did what I wanted.” (p. 161)

Here is how to identify the most important thing.

• But identifying what’s most important is a skill. It takes practice. Here’s how.
  
  
• I recommend using sticky notes for this exercise. First, on each sticky note, write out one criterion—one thing that’s important to you—in evaluating your options.
  
  For example, before I decided to invest in Pixel Union—one of the largest and best design agencies in the Shopify universe—I wrote down some criteria that were important to me.
  
  They included:
  
• A win-win for employees, customers, and shareholders
• Growing rather than shrinking the business
• Working with people I trust
• Not having to manage people or add more to my plate
• Not borrowing money
• A high probability of a decent return on investment
  
  There are many more, but you get the idea. Place only one criterion on each sticky note because next, we’re going to make your criteria battle.
  
  Choose whichever criterion you think is the most important to you and place it on the wall. Then grab another criterion. Compare each and ask, “If I absolutely had to choose between only these two, which matters more?”
  
  So to return to my example of investing in Pixel Union, the first battle might be this: earning a return on investment versus not having to manage people or add more to my plate.
  
  If I could have only one of these—if either earning a return on my investment required managing people, or not managing people entailed making less money—which would it be? I’d choose earning more money even if it involved managing people. So I’d move that criterion higher.
  
  Of course, I’d be willing to manage people only up to a point. If doing that became too time-consuming, I might have to reverse the order. That leads us to the next step: adding quantities. As your criteria battle one another, you’ll find quantities make a difference. Add them to each criterion as they battle.
  
  Suppose I find that I’m willing to spend five to ten additional hours per week managing people or being hands on, so long as my ROI is at least 15 percent per year. If I’d have to invest ten-plus hours per week, my ROI would have to be at least 20 percent per year, and if I’d have to invest twenty-plus hours per week, it would no longer be worth it to me—regardless of anticipated return—because of the opportunity cost of that time.
  
  When you’ve finished ordering these two criteria, go to the next pair. Move from top to bottom, make your criteria battle one another for priority, and add the quantities that matter to you along the way.” (p. 162)
  
  
• “When people do this exercise, they often look at a pair of criteria and think, “I don’t necessarily have to choose between those two.” Make them battle anyway! The point isn’t really to compare them, it’s to find out which one is more important. Maybe in real life you can satisfy both criteria—maybe, for instance, you can get a high ROI while investing in a socially responsible company, or you can get in shape while still eating out three times a week, or you can buy a house in a great location that fits your budget. But often, when we actually start pursuing an option, we find that we have to rank one criterion above another—even if only slightly. Most of the time, making your criteria battle is about calibrating shades of gray. It’s a mental exercise that takes you out of reactive mode and moves you toward deliberative thinking.” (p. 163)
  
  
• “Assigning quantitative values to your criteria often helps at this point. When you start comparing things and thinking how much you’ll pay for them—and whether in a currency of time, money, collective brain power—you gain clarity about what matters most to you and what doesn’t. You’re forced to think in terms of benefits and risks, and you start to see things you didn’t see before—previously invisible costs become visible. For all of these reasons, making your criteria battle moves you toward objectivity and accuracy, and helps reveal what you think is most important.” (p. 163)
  
  
• “Once you’ve settled on your criteria and their order of importance, it’s time to apply them to the options. Doing so requires that you have information about those options that meets two conditions: it’s relevant, and it’s accurate.” (p. 163)