Take a minute and think about a good decision you made in the past year. Consider the factors that weighed into your decision and the process you used to make it. Now think about a bad decision and the factors and process that went into making it. Now ask yourself: To what extent did the outcome of your decision effect your assessment of the process that led to it?

In How to Decide: Simple Tools for Making Better Choices, Annie Duke argues that most of us are not very disciplined in making decisions and judge our efficacy based on results. A good outcome leads us to believe that we made a good decision; a bad outcome leads us to believe that we made a bad one. This bias causes us to repeat a bad decision process if the result was favorable and avoid a good decision process if the result proved disappointing.

We also fall prey to hindsight bias when the outcome proved less than stellar. Our inner critic (and perhaps friends and family) say: “How could you not have known that this decision would turn out so badly?” We may even lead ourselves to believe that we’d had a key insight but chose to ignore it. The bad outcome inevitably casts a shadow over what we actually knew (or could have known) at the time a choice was made. It makes it hard to see that some information was available before the decision and some revealed later.

Another form of clouded memory might be characterized as the inevitability bias. After the fact, we take a chain saw to our decision tree, leaving the lone branch associated with the outcome that came to pass. We forget about all the other ways that our decision might have panned out.

Finally, luck intercedes between decision and outcome. We tend to ignore good luck when the outcome is favorable and overplay bad luck when the outcome is bad. Just look at the words we use to characterize the influence of luck:

Albert Einstein famously said “the only source of knowledge is experience.” Annie Duke reminds us that we need clarity when reflecting on it to gain wisdom.

So, how would Annie Duke guide our decision process?

For consequential decisions, she recommends a 6-step process with a healthy chuck of recordkeeping for post-outcome assessment:

1. Identify the reasonable set of possible outcomes for a given choice under consideration.
2. Identify the payoff(s) associated with each outcome in terms of progress toward a goal, monetary impact, time, self-esteem, quality of life, relationships, or other vital metrics. Rank order them by preference based on what you’d like or wouldn’t like given your values. Be attentive to the size of the payoff.
3. Estimate the likelihood of each outcome unfolding. You may be tempted to use common language to express probabilities – e.g., almost certain, probable, likely, good chance, possible, toss-up, unlikely, improbable, doubtful, nearly impossible. If so, make sure you’ve defined what these terms means quantitatively, even if it’s just a range of values. This exercise is crucial if you are working with others as their interpretations may differ widely from yours!
4. Assess the relatively likelihood of outcomes based on what you like and don’t like for the option under consideration. Does the upside outweigh the risks?
5. Repeat steps 1 through 4 for other options under consideration.
6. Compare the options to one another.

With its focus on preferences, payoffs, and probabilities, this discipline encourages decision makers to think carefully about the range of options and all the things that might go right or wrong on the journey from choice to outcome. It also shines a spotlight on information – what you know, what you might be able to find out, and what will likely remain uncertain. It may challenge you to think: Would I be shocked if things turned out a far cry from what I might expect? If so, why might I be wrong in my assumption set? What information might I discover that would change my perspective? She admonishes us to be on the look-out for corrective information, and be open-minded to it.

Even with the best of intentions, we’re subject to bias when in the midst of our decision-making process. For instance:

• Our confirmation bias leads us to filter in information that affirms our beliefs and filter out that which challenges them.
• Overconfidence makes us prone to accepting what we believe without challenging it.
• Availability bias causes us to give greater weight to our direct experience than the statistically significant evidence from a broad cross-section of individuals.
• Recency bias makes us believe that our recent experience is likely to recur.
• The illusion of control causes us to give insufficient weight to external factors and luck in our probability calculus.

In short, we get trapped inside our own views and neglect the wealth of insights made possible by an external perspective. The outside perspective sees the scales more clearly. It can identify blind spots, information gaps, wishful thinking, and the like, and illumine the path to improvement. We lend balance to our inside view by:

• Educating ourselves on what is true for most people when facing this situation. Find survey data and get success rates for various endeavors. That data informs the assessment of the difficulty and opens our eyes to potential obstacles.
• Actively seeking out what others know without contaminating their assessments with our analyses and opinions. Make sure that they have a reasonable basis from which to offer information or render opinions. Go outside the echo chamber and listen to those with opposing views.

A final suggestion for improving decision quality would be to conduct a pre-mortem. imagine the day after a decision has come to fruition with an outcome that didn’t measure up. List up to 5 reasons why things failed. Then consider what you might be able to do now to remove obstacles, course correct midstream, or hedge bets to lessen the impact of an unhappy ending. Contemplating bad outcomes helps inoculate from an adverse reaction that could trigger an emotional (bad) decision. On the flip side, imagine a great outcome and list up to 5 things that contributed to success. That assessment emphasizes critical success factors necessary to reach the desired end game.