Fresh perspective for financial success

Being More Decisive: You’ve Got To Make A Decision, But Do You Trust Your Gut?

While at dinner one evening with a colleague and her spouse, she lamented about how recently she has not enjoyed her practice. While she is deeply committed to her patients and inspired by the trust her patients and families have in her medical decisions and technical abilities, she feels her practice of medicine is overshadowed by insurance forms, learning coding rather than reading journals to stay up to date, and negotiating with hospitals and insurance companies to medically justify the care she is providing–rather than actually providing it.

On top of this, she is worried about the small army of people that it now takes to run her practice. She cares for them greatly, but her expenses have gone through the roof. The difference between the revenue her office generates and its expenses seems to be narrowing. She is spending less time caring for patients and exponentially more time on the business of medicine. She then told me that she is considering closing her practice and becoming an employed physician at a local hospital. She then asked me, “What do you think?”

I provided her with advice after asking what I thought were a few pertinent, qualifying questions. Chances are that you would not have any trouble developing an opinion and providing advice either. But did I really help her? While well-intentioned, did I provide her the best advice?

When presented with a scenario like this and upon reflection, most of us offer advice without a second thought. We are presented with a set of facts, accept them, and begin to perform some sort of analysis and, finally, make a decision.

It turns out that most of us go through life making decisions, even really big ones, without any sort of systematic assessment.

In their book, “Decisive,” Chip and Dan Heath argue that we could all improve our decisions, even the ones we seem to take for granted, by avoiding common biases and applying a process in order to make better decisions.

Spotlight Effect

How do we make important decisions, but fail to consider all the areas that might be pertinent? Daniel Kahneman, a Nobel Prize winning economist and author of “Thinking, Fast and Slow,” points out “what you see is all there is.” In other words, we overly value the information directly in front of us and fail to consider or provide enough weight to other information, some of which may not be difficult to find—if we just looked. The Heath brothers call this the “spotlight effect.”

I made a conclusion and provided my colleague some advice based on a fairly narrow set of information.

Trust Your Gut

In the desire to make a better decision, I hear many colleagues say, “I just trust my gut and move forward.” While it sounds good, the reality is very different. Studies in medical decision making demonstrate that students who are certain of a patient’s diagnosis are wrong about 40 percent of the time. In one study where students thought there was only a 1 percent chance that they were incorrect, they actually made the wrong diagnosis 27 percent of the time. These results are in the face of years of clinical training and expertise.

As a more practical example, there were more than 45,000 tattoo removal surgeries in 2013 according to the American Society for Aesthetic Plastic Surgery. At one point these individuals thought a tattoo was a good idea and then had second thoughts.

Given the sort of decision my colleague is facing, I think she would be ill advised to go with her gut.

Analysis

Since it seems that our guts may not lead us to the best decision, many colleagues would say do an analysis. However, I have been part of many organizations that fall into “analysis paralysis.” With this syndrome, organizations (or individuals) analyze to the nth degree, but sometimes either never make a decision (paralysis) or do not necessarily make a better one. In “Decisive,” the Heaths reference a study by Dan Laval and Oliver Sibony that looked across multiple industries over five years and examined whether analysis or process led to better decisions.

When Laval and Sibony looked at the decisions that improved the financial bottom line of their companies, they concluded “process mattered more than analysis–by a factor of six.” It seems that a good process may improve analysis by identifying faulty logic or assumptions, but that good analysis does not necessarily lead to a good process.

Conclusions

It seems that a decision process improves not only the quality, but also the financial rewards of our decisions. But if that is truly the case, why do so many of us fail to apply a process to the vast majority of the decisions we make?

In future articles of this series, we will begin to look at decision processes that are currently available to us, biases that lead us to make bad decisions, and, finally, how we might improve the decisions we make every day.

Read the next installment here.

Dr. Pat Bass

Dr. Pat Bass is a physician, writer, educator and scientist that cares for both adults and children. Currently an Associate Professor of Medicine & Pediatrics at Louisiana State University Health Science Center in Shreveport, he participates in an active clinical practice, medical education activities and health literacy research. View full bio on authors page