737: How to Make Decisions Smarter and Faster with Ralph Keeney

Pete Mockaitis
Ralph, welcome to How to be Awesome at Your Job.

Ralph Keeney
Thank you very much. It’s a pleasure to be here.

Pete Mockaitis
Well, I’m so excited to chat with you, and you consulted on many decisions. Can you share with us one of the most, I don’t know, unique, or funny, or zany, or, in some ways, standout decisions that you consulted on? What’s the story?

Ralph Keeney
Well, in a sense, some of the biggest and maybe zany ones are usually for governments or large agencies.

Pete Mockaitis
Those zany governments.

Ralph Keeney
Did a lot of work on evaluating sites in the United States for a nuclear waste storage site, and that was quite a while ago. And once, I’m looking at long-term energy policy for Germany where we involved many, many stakeholders in Germany. And that included talking to leaders in both the Catholic and Protestant churches, and in many of the organizations that were big companies in Germany as representatives of them, and then to just normal citizens about what they wanted from the entire energy policy for all of Germany.

Pete Mockaitis
And were there any breakthrough moments that really were pivotal?

Ralph Keeney
I think there were some important ones because we had a lot of people evaluate some of the alternatives intuitively. And then we helped them systematically break their evaluation into parts and put them together. So, we had two kind of evaluations from many of the participants and we pointed out the distinctions between kind of their intuitive in the head judgment of the whole thing, what was the best thing to do, versus the more carefully thought out.

And then we said, “So, now that you know both of your responses, choose what you think is appropriate.” And most of them ended up about two-thirds of the way from their intuition to their more systematically thought-out judgments. And I think that spirit holds for a lot of personal decisions. We use intuition all the time, and we should. But if we think about it a little more carefully on decisions worthy of thought, we often come up with something different. And I think it’s often closer to when they put the parts together and decide what to do to follow their well-thought-out judgments and decisions.

Pete Mockaitis
Well, that’s intriguing. And I’d love it if you could maybe share, is there a particularly surprising or fascinating consistent discovery you’ve encountered about decision-making that has come from your many years of working through them?

Ralph Keeney
Well, I can share a simple thing that came through some of that and it’s very basic. The only purposeful way you can influence anything in your life, at work, or your personal life, is through the decisions that you make. Now, a lot of people, when I say that, they say, “Well, I don’t think that’s true. If I decide to eat much more responsibly, that’s going to improve my life,” or, “If I exercise routinely, I’ll get in a little better shape, that will certainly improve my life.”

And I say, “All those are correct but none of that will happen unless you make the decisions to think about it, choose to do what is done, and then follow through on doing what you need to do to complete it.” So, it is the decisions, and that’s basically the thing that enables you to have some control over your life and offers you that control.

Pete Mockaitis
Yup, absolutely. That adds up to me. Well, cool. So, we’re going to talk a little bit about your process. And I’d love it if maybe we could start with a story in terms of someone who was struggling with a difficult decision and then they put a few of your particular suggestions or process or skills to the test, and came out with a cool outcome. Could you share such a story?

Ralph Keeney
I can but I’ll just start with one comment. How did we learn to make decisions? And the point is none of us learned how to make decisions. We just picked it up. We started very, very young. You’re hungry, so how do you communicate that? You holler. It’s maybe not such a conscious decision, and obviously the words are not known, but those were many of our actions when were very young. And decision-making is a skill but most of us have never learned it as a skill. In fact, we’ve never learned how to make decisions. It’s all picked up and it comes with some useful techniques that we all use. And it also comes with a large number of cognitive biases and shortcomings that we take that degrade the quality of our decisions.

So, to get to your point, let me give a rather simple decision but important that all of us probably have faced. It could be you have an opportunity to have a dinner with somebody very important in your company that might even help your job, or with somebody in another company where you might be interested in a job, and you’ve never met them,.

You’re excited. You think about, “What do I hope the dinner is?” And it’s, well, convenient restaurant to the hotel the guest is in, quality food and local cuisine, and you go to the hotel and ask the concierge, “Do you have a restaurant like this nearby?” Well, of course, they do, two blocks away, so you make a reservation. The important person comes, you’re excited, you meet them at the restaurant, you go in, the food is tremendous, but the evening is a disaster. It was way too noisy, you couldn’t have a good discussion, you didn’t learn much about them, and they hardly know who you are.

Now, that particular case could’ve been changed dramatically with a little bit of clear-thinking about the decision and, particularly, this example can illustrate the three fundamental components of every decision that are worthy of thought. And you might’ve not just chosen that restaurant, you might’ve asked for three or four restaurants nearby and just gone and looked at them the day before, or two days before, and you would’ve noticed that was way too noisy and you wouldn’t have chosen it, but maybe you still have though you didn’t do that, so you got the one alternative.

Before that then, you should think, “What are the objectives that I would have for the dinner?” Well, you certainly wanted to meet the person, that was stated. And so, maybe you should’ve recognized, “I want a good conversation and I need it to be quiet enough to do that.” Had you done that, you never would’ve chosen that restaurant.

And the third thing is it was perhaps the wrong decision problem. It wasn’t to find a place to eat. It really was to find a place where we can have a quality discussion that serves food. So, knowing the major objectives to get to know the person would’ve led you to a different alternative too. So, any of those three things – clarifying the decision you should address, better identifying what you hope to achieve, i.e., your objectives, or coming up with a few more alternatives to compare – would’ve led to a much better decision. Any one of those things.

And each of those is a piece of information relevant to your decision. It improves your insight about it and your ability to make a better choice. And I refer to that using the word that the behavioral economists use – a nudge. Each piece of information nudges you to make a better decision. In their work, and Richard Thaler won the Nobel Prize for his work on that in 2017 for his book with Cass Sunstein, Nudge. But their nudges are when someone else nudges you in your decision. And these types of nudges that I just referred to are when you nudge yourself by giving a useful piece of information to make a better choice.

Pete Mockaitis
Yes. Well, that’s cool. So, we got three fundamentals there – clarifying, then identify the objectives, and having a few more options. The previewing or sampling the venues in advance, does that fit under of the three or is that under a fourth?

Ralph Keeney
Well, I think that’s kind of looking for alternatives. I think that’s one of the three.

Pete Mockaitis
Got you, part of the alternative-seeking process. Okay. Cool. Certainly. Well, yeah, that’s great in terms of what you didn’t anticipate. And I think about this, I think, my decisions a lot when it comes to just like purchasing stuff in, like, Amazon.com, “What am I ordering? And why am I choosing this thing over that thing?”

And I think of returns, I find returns kind of painful actually. It’s like, one, it’s just a little bit of a pain, but, literally, in terms of just spending the time. And, two, it just feels like, “This is an acknowledgement that I did not make the optimal decision I had hoped. This thing I got did not work out the way I was hoping for it to.” But it’s fine. It’s somewhat easy to return. You iterate and you try again.

But, yeah, I think that’s dead-on in terms of that previewing or sampling can tell you a whole lot in all kinds of things because sometimes you have no alternative but to try it on for size and do a little bit of a demo or a trial or a sample or an iteration to get you where you want to go a few steps away instead of in one giant leap.

Ralph Keeney
Right. That’s true. And the other thing is once you get your decision clear with those three steps, of course, you don’t know how well the various alternatives measure up in terms of each of your objectives. That’s the second part of decision-making. Often, some clear thought about it can help you a great deal, and that’s the case with buying products online.

You can’t actually see a lot of the detail, you don’t know how they might look from various positions, and the nice thing you want to look good, where it is in your kitchen or in your office, etc., and you want it to function in certain ways that might be mentioned but it doesn’t do what you want. And you can’t get that information unless you see it, so that you buy it knowing you can return it is fine.

Now, if you’ve signed up for a vacation that’s expensive and you can’t know everything that’s going to happen there, especially if it’s a group vacation, some kind of tour or something, you’re committed and there’s going to be, as with all important decisions, uncertainties about how well the chosen alternative will measure up, or any of the other alternatives that you didn’t choose. And we make those decisions with the uncertainties there, doing the best we can. And you can have, of course, a good decision but the outcome isn’t so great.

It happens all the time in the market, but in everything in life. If there’s three different products you could invest in, and you carefully think about it and get all the information available then, no one knows for sure how well each of those products will do in the next couple of years, and yet you make a decision on, dead-on, which one will do better. And if you’ve made the decision with the best information available, and it doesn’t turn out to be the best one after the fact, you made the right decision, it’s just that it wasn’t the one that turned out to be the best.

Pete Mockaitis
Yeah. We had Annie Duke on the show and we discussed that phenomenon as well, is you may have made an optimal decision, even though the outcome is not what you desired.

Ralph Keeney
Yeah, there are just different things, and it happens to everybody all the time in life. And if it didn’t, you wouldn’t do a single thing because, with anything, there’s the chance that it doesn’t work out great. And I should say, as well as not doing anything has a lot of negative consequences.

Pete Mockaitis
Oh, sure. Doing nothing is a decision in and of itself even though we don’t maybe think of it as such. Well, maybe now, could you maybe walk us through a demonstration of your decision-making process, step-by-step, with an example?

Ralph Keeney
Sure. Now, I should say one doesn’t have to do all these steps. That’s important. Because if you get one nudge, sometimes, like for that restaurant decision, you figure out, “I need a quiet place where I can have a great conversation,” and then you walk in two or three other restaurants, and one just really clearly meets that, that’s going to be the best place. You’re done. You don’t need to figure out more alternatives or even too many more objectives. The price, you maybe care about a little bit, but it’s just swamped compared to the importance of having a great discussion.

So, you don’t have to do all of the steps. But the first step, you want to make sure you’re addressing the decision that you want to address. In this aft, there’s a lot of shortcomings just in this one. And the reason is decisions come, like your car might be in an accident and you didn’t cause it but it’s damaged badly, and it’s an old car. Now, a lot of people will say, “Oh, now I got to get the car fixed,” and the first thing they would think of is, “Where can I get it fixed?” and they maybe have a routine place or an alternative if they take it there, and they’re done.

But in that situation, maybe they should’ve thought, “You know, that’s an old car and it’s going to cost almost as much as it’s worth just to fix it. Maybe I should get a different car, a better used car, or a new car, or maybe I should even go without a car for a while,” depending where you live, “and rent a car only when I need it.” So, it could change the decision that you should address by thinking more clearly and not rushing to kind of get it over with because it is a problem.

And then the second thing is you want to think, “What are the objectives that I have for that?” And it’s surprising perhaps, but most people often don’t identify a large number of their important objectives. An important example, it’s certainly relevant to all the people with jobs, is a study I did some years ago with a couple colleagues with the entire MBA class in their first year at a university in the east, and there were roughly 300 students in the first-year class.

And in between their first and second years, they have an internship at a company. About 30% to 40% actually get their job out of their MBA in those companies but they want to check out new areas in the country, new types of businesses, all kinds of things. And so, when I went to give the seminar on some of the topics we’re talking about here, I said, “I’ll be very happy to do it, but I want to have some questionnaires that they fill out.” And they were asked to fill them out, and they’ve done this homework assignments so people really thought about them somewhat.

And one of them was, “What are the objectives you had for your internship?” And the students wrote their objectives down, and it’s like, to learn a lot about a new field, see another part of the country, learn special things about how businesses work, meet some people in this field, all kinds of things. The average number of objectives, or values could be the word, things that they would care about in selecting it, turned out to be about 6.5.

Independently then, my colleagues that I’m working with, we thought about the objectives from knowing a lot of MBAs and things, and we created what we thought was a pretty full list because we put everybody’s objectives in that they had. We had 32 objectives once we cleaned them up.

So, later on in the survey of the students, showed them those 32 objectives, and said, “Check any of these that matter to you,” and they checked, on average, 20 objectives. So, they got six on their own, which were six of the 32, and they added 14 more. And you might think that the importance of the six they got were much more important than the 14 that they then identified on our list. So, we had a later question that showed them everything that they either got on their own or came from the list in a different order.

And so, we said, “Rate the importance of these on a scale from 1 to 9.” And the average importance of the ones they got on their own and the ones they missed and later picked up was almost identical, 6.21 compared to 6.28. That result happens all the time. It’s very hard to come up with all your objectives. If somebody asks somebody, “Write down your objectives,” they’ll be done writing in two minutes for a decision that they have.

And on decisions that are important, like that one certainly is, it’s worthwhile thinking about it a little bit over time and coming up with a better set because just recognizing one or two more objectives could eliminate an alternative that you might’ve chosen because it’s just not going to be good on something that you hadn’t thought of but is important, or it might suggest an alternative that you hadn’t thought of that would be great on that, and then, of course, it’s going to help you choose the best of the ones that are competitors.

Pete Mockaitis
Well, that is intriguing. So, we have smart MBA students and thinking about a decision that matters a lot to them, career-related – MBA students tend to be into that – and we can list, on average, 6.5, unprompted from our own, generating it from our own thoughts, versus when selecting from a list, we would select 20. So, it’s like a third. It’s like we only get, can generate about a third of what matters from our own heads. That’s kind of startling.

And so then, I’m thinking, “Boy, what’s the antidote to this? Is it just like we need to have directories of checklists for all sorts of various and sundry decisions we might need to make?” It’s like, “When you’re considering your career, think about this. When you’re considering a product, think about that,” because, in some ways, it’s hard to anticipate every objective or value in advance but, apparently, we need some help and some prompts to get a full list.

Ralph Keeney
You’re absolutely right. And there are a lot of those prompts and you certainly want to use them.

Pete Mockaitis
Where can I go to get them?

Ralph Keeney
Well, there are two places that I know. One is I wrote a book on a lot of details on these three things called Give Yourself a Nudge: Helping Smart People Make Smarter Personal and Business Decisions. And things in there, I mean, one chapter is on how to really do a better job getting all the objectives you want. And I should say I missed some of my objectives on decisions too even though I do this, but I do a better job than I would if I was not aware of what can stimulate ideas that will help a lot.

And things that can really help you include, think of what emotions and feelings that you have relevant to this decision. And then from those emotions, kind of pursue, “Well, why do I care about that?” Because a way to stimulate the thinking is not necessarily, I don’t use the term objective then. It sounds technical. I say, “What do you care about concerning this decision? And anything you care about matters. Write it down.”

And then there’s no definition that’s kind of narrow to care about so they don’t think, “Oh, I’m not sure if this thing is something I care about or not.” They know. Whereas, objective, they might say, “I’m not sure that’s really an objective.” You don’t want to worry about technicalities then. So, any feelings matter. And then you think of any alternatives, just a few, and think of a terrible alternative. And then, “Why is it terrible?” There’s got to be something you care about. Think of what would be a perfect alternative, hypothetically, if it just existed. People can describe, “Why is it perfect? What makes it so great?” Those are going to suggest things too.

And then you can think of what might be goals or constraints, either one. Ask, “Well, what constraints do you have here?” And somebody might say, “Well, I wouldn’t want to pay more than a thousand dollars for that.” Well, that suggests that one of their concerns is the cost of the product, which is true for many things if you’re purchasing. You don’t want to use the constraints to say, “No alternatives over a thousand dollars,” because if you got one that’s fantastic for $1,010, and the $970 one, which met that constraint, was really much inferior, likely you would pay the $40 more. So, it indicates what’s important but you don’t want to use them inappropriately.

And then you think of disappointment and regret, “What could really disappoint me here?” Well, why would that disappoint you? What’s the mechanism? And how does it get back to, again, characteristics of the product or whatever it is that you’re going to purchase?” So, all these things can stimulate your mind to think a bit more clearly about what’s there. You want to do your own thinking first.

And then, for certain decisions, like important work decisions, or if you were thinking of moving divisions in an organization or something, once you thought about what was important to you, makes a lot of sense to talk to some of your colleagues there about what they think might be important to you, and, separately, about what would be important to them if they were making this decision, because each of those comments kind of stimulates them to think a little differently and anything they come up might help you think of something that’s important to you that you had missed.

So, it’s a lot of things you could do, and people would develop their own techniques. And then, for certain decisions, if you have an important medical decision, you know the basis of what you want, “Well, I want to get well. I’d like to minimize time where I’m incapacitated in some sense,” and the cost might be important there. But there might be some aspects, or consequences in the future about aspects of your health or your functionality of your body that you wouldn’t have any idea to even think mattered.

So, you might need to talk on some problems that are more complex from a particular field to experts in that field, but you’re going to have to ask them what the objectives are. Just to show you how important, and one simple example is a medical one. On many important medical decisions, like if somebody has a cancer case or anything like that, I think, partly because of the responsibility and role of decisions, they would say the objectives is to increase the chance that you live or perhaps that you live longer. But what they don’t include is what affects many people, the quality of their life when they’re living longer.

If somebody were 70 years old, and it looked like you could go through all this treatment but it was so horrendous and you had to follow things, but you’d live an average of 12 years, or you could not go through the treatment and have a much better time and your average expected lifetime was 10 years, a lot of people, and I’ve asked this question, would prefer 10 years of a quality life, from a basis of 70, to 12 years of a really degraded life. That’s important.

Pete Mockaitis
Oh, Ralph, so much good stuff to chew on here. And I very much like your approach better than having an endless compendium of checklist that I need to reference, but rather generating your own ones emotionally, “What do I care about? Why? What would be a terrible alternative? Why is that a terrible alternative? What will be the perfect alternative? Why is that a perfect alternative? What are the goals?”

This reminds me of some of like the best coaching questions, really drive at these sorts of things, like, “What do you really want? And what else? Or, what does wild success look like? Or, imagine we’re looking back at the end of this, and it was a smashing victory or a smashing defeat, what happened and why?” That begins to surface it. And then I love it, once you get a nice list to start from, you can check in with somebody else and they can build up and develop it. And I like that question a lot, “What would be important to you if you were thinking through this?” and that very well could be something completely different.

I guess I’m thinking a lot of times with career decisions, I think there’s some research, maybe you know better than I, Ralph, there is some research that suggest that we could sometimes be shortsighted in terms of thinking about this one opportunity as opposed to what pathway does it lead us down into the next job, or the next, next job, or the next, next, job, over five, ten years in progression and pathways. But that’s something someone else, who’s been in the game, may very well flag for you, and so that’s cool.

And, Ralph, is there a magic number? Like, let’s say if a decision really counts big time, I imagine we’re going to be getting some diminishing returns in terms of if we talk to, I don’t know, two people, five people, 20 people, to get their input. Is there a sweet spot or point of diminishing returns you recommend when it comes to advisors or counselors?

Ralph Keeney
Well, sure, but it might depend on what the decision was. There are two things related to that one. You don’t want to make perfect decisions, whatever that would be. It would take you way, way too long. Or, I should even say always try to make the best decision. If that just means, “I do my best given the time available and appropriate for the decision,” that’s fine. But if it means, “I’m going to search till I find the best alternative,” it’s usually nutty. It takes way, way too much of your time, and it’s the same issue I just mentioned.

You degrade the quality of your life because all you’re doing is procrastinating and worrying about this decision and trying to do better. Whereas, if you would’ve just made the decision earlier with what you knew, it might’ve been a pretty good decision, and then you have time to enjoy your life. It’s worthwhile breaking life, with this point, into two things. The time you spend making decisions and the time you spend enjoying life as a result of your decisions.

And enjoying life could be doing work on problems in your company too because that’s interesting and it’s stimulating, etc., but, per se, that’s just getting useful information. The decision per se, you don’t want to spend everything making decisions. You want to spend, the overall thing is to have a productive and enjoyable life that contributes to you, your family, friends, and country, and whatever your objectives are. And that should guide all the uses of your time.

Now, there’s one other really key thing a lot of people don’t think of or that have a lot of control, and you think, “Where do decisions come from?” Well, a lot of them come from problems. And the easiest place to put it is personally, “If I get sick, I have a decision problem. I have to do something about it. If my car is an accident, I got a decision problem. I need to do something. If I’m not doing very well at work, I got a decision problem. I need to deal with it.” And all these are basically a consequence of other’s decisions or circumstances, like you got sick or a car wreck or somebody assigns you something. And often they’re problems.

And when those happen, the quality of your life drops a little. No one wants to be sick or have your car wrecked or not doing well at work. And so, you try to make the decisions to improve them to get back to where you were before these problems occurred, but you typically don’t give above where you were. The only way to get a better life is through what I call decision opportunities, not decision problems. And these are the decisions you create for yourself rather than the decisions that are, in a sense, dumped upon you by others or happenstance.

And if you’re at work, you can think of, “How could I contribute more to the organization?” And you want to think of yourself because there are two objectives in any decision in the company, I think, or an organization, “How can I contribute more to the organization? And how can I contribute to my life?” And you, that’s your decision, you think of, “What could I do that would do both of these?”

And I’ve certainly been in a situation that works when I went to a consulting firm in San Francisco. I said to the boss, there are 700 people there, and I said, “I think my responsibilities are to contribute professionally and financially to the firm. And subject to that, there’s no other constraints on me. Is that a correct representation?” And my prospective boss, executive vice president in the organization kind of sat up straight and thought about it, he’s never heard that before, and he said, “Yeah, I guess that’s about right.”

Pete Mockaitis
And, in a way, the law, please.

Ralph Keeney
And I could do that because I could bring in work where I work on decisions so they’d make money, and I think I could do that work well, and publish it and contribute to the reputation and knowledge of the skills of the company. And I knew it and they knew it, and then I could do anything I wanted. Not stupid stuff. It’s not like I had hours where I couldn’t take a time off any time I wanted it, because I made sure that I was definitely contributing more than I was taking, which was the pay.

And so, these decision opportunities at work, you can go. And in this firm, sometimes I’d go. There are all kinds of tasks that need to be done in any firm, and some of them your boss might do or others, and you think, “Gee, I might like to learn how to do that.” You can propose to do a task that your boss maybe spends four hours on a week to do and it’s a little boring for him or her. So, you say, “I’m willing to do that,” and learn how to do it and do it well. They might be very happy and you can often get out of something that’s four or even six hours a week that’s less important to the firm and a lot more boring by making this proposal. It’s better for you and better for the firm.

And that’s what you want to do to figure out decision opportunities or something to be pursued that really help your life at work or personally.

Pete Mockaitis
That’s lovely. Well, now, I’d love to shift gears and hear a few of your favorite things. Could you tell us a favorite quote, something you find inspiring?

Ralph Keeney
I think what really inspires me is people who think about what they really want and put in very good efforts to achieve those things. And some of the simplest cases is when what people want are kind of straightforward.

So, people who basically think about what they want, put in the effort, do their best, and achieve a lot of what they want inspire me a great deal.

Pete Mockaitis
Okay. And how about a favorite book?

Ralph Keeney
Well, the ones that really influence me, a few books on decision-making by people really starting in the field. And I guess one was a while ago by Howard Raiffa called Decision Analysis but was really starting the movement away from intuitive thinking into prescriptive thinking. There was a lot of work done descriptively. And then descriptively, I think one of the best books is the one I mentioned called Nudge by Thaler and Sunstein.

Pete Mockaitis
All right. And if folks want to learn more or get in touch, where would you point them?

Ralph Keeney
An easy way to find out more about me is, and there’s things on there not about me, is just my homepage, so to speak, it’s RalphKeeney.com, no point in between Ralph and Keeney. It describes a lot of things. It has an awful lot of references there. And there’s one other thing that soon will be coming out by Oji Life Lab. OJI is Oji Life Labs, and it’s separate words that you can find at searching. It’s a product in beta testing that has an awful lot of the fundamental ideas to help people make better decisions at work.

Pete Mockaitis
Oh, cool.

Ralph Keeney
And it’s done in a unique way.

Pete Mockaitis
Oh, cool. Thank you. Well, Ralph, this has been a treat. Thank you and I wish you all the best in all your decisions.

Ralph Keeney
Well, thank you. I’ll work on it and I hope that you and some of your listeners got some useful points here, and also make some great decisions, or better decisions as a result of it. We can all do better, and I’m certainly one of those. So, thank you very much, Pete.