Decision Making: The Power of

Confidence
Decision making is a key aspect of exemplary leadership. You need to be effective at making
decisions, tough decisions that involve a lot of risk and uncertainty and that are very consequential
for your organization. But how does the emotional brain come into play when you are making those
decisions? How do you know when to pull the emotional lever and when to pull the rational lever?

By the end of this LEAD Preview, you will be able to:

 Explain the connection between emotion, decision making, and decision confidence.
 Describe the three phases of structuring a decision.
 Use techniques to structure a decision.

Journaling: How Do You Make

Decisions?
Record your answers to the following questions in the space provided below. You can move on to
the rest of the module once you have completed your journal entry.

Think about a tough decision that you had to make in the past, a decision that was consequential
either for yourself or your organization. How did you make the decision?

1. Were you more rational or emotional?

2. Were you decisive or did you tend to kick the can down the road?
3. After making the decision were you confident or were you second-guessing your decision?
4. Journal Entry: How Do You Make Decisions?
Use this space to capture your response to the questions above. *

I reckon I'm much more rational than emotional to make tough decision maybe because I'm a logic
person when to decide something. Though, sometime my conscious realize am I doing right
decision? Are they offense about my initiative? Am I good enough to take that road? Thus, I'm
overwhelming with my own dialogue in that issues. It'll will takes hours, days, sometimes it will
comeback regularly blowing in my mind. I'm rational person, but I'm not confidence enough literally
regret.
Is Emotion Good or Bad for
Decision Making?
Emotion and Decision Making

Through the ages, the consensus viewpoint has been that emotion is detrimental to decision making.
In the 1980s, researchers challenged this viewpoint by looking at evidence showing that loss of the
ability to experience emotion had a negative effect on decision making. We can begin to reconcile
these opposing viewpoints by understanding the difference between decision making and decision
confidence and why confidence is so important for exemplary leadership.

[00:00:01]
>> To frame the discussion, let's go back to a question that has been debated
for centuries. Go back to the time of Aristotle, Plato, Descartes and the
question is by and large is emotion good for decision-making, beneficial for
decision-making, or is it detrimental to decision making? The consensus
viewpoint to this question that has pervaded the ages is by and large emotion
is detrimental to decision making.

[00:00:28]
After all, it was the philosopher Rene Descartes who said that emotion is like
the white horse that needs to be reined in. Why? Because emotion will give
rise to a whole host of biases such as the first impression bias, the optimism
bias, etc. And as a leader making important decisions, you don't want to be
falling prey to biases which means that you need to keep emotion out of the
picture.

[00:00:58]
This consensus view was challenged from time to time. Jeremy Bentham for
example, who said that pain and pleasure are the sovereign masters. But the
first serious challenge to this consensus viewpoint came in the 1980s from a
group of researchers, notable among them being a husband and wife team,
Antonio Damasio and Hannah Damasio.

[00:01:22]
As an aside, I had the good fortune of working with both Tony and Hannah when
I was at the University of Iowa before I came to Stanford. Now what Hannah and
Tony began to document was compelling evidence of a diametrically opposite
viewpoint to the age old debate that emotion is actually beneficial to
decision making.

[00:01:44]
That without emotion we will simply be unable to make decisions. One
compelling piece of evidence of this diametrically opposite viewpoint takes us
back to the mid 1800s, the unfortunate story Phineas Gage. Phineas Gage was a
railroad worker, actually a foreman, a manager, very effective at managing up
and down, doing extremely well socially, doing reasonably well financially.

[00:02:15]
Unfortunately one day, he met with an accident. There was an explosion that
drove a tamping iron about an inch in diameter into his left cheekbone, and it
emerged out of his skull. Pretty gruesome if you think about it. But to
everyone's amazement, Phineas Gage actually survived the accident.

[00:02:38]
Now his skull is still preserved in the Harvard Medical Museum and was
subjected to a forensic neuroscience examination by a team of researchers led
by Hannah Damasio. In a forensic neuroscience examination, what you're left
with are the remains in this case Phineas Gage's skull. What these researchers
were trying to assess was which soft tissues might have gotten damaged because
of this accident?

[00:03:06]
What Hannah and her team concluded was that this accident destroyed a very
critical area of our emotion circuitry, and that is the ventromedial
prefrontal cortex. In other words, Phineas Gage had become the emotionless
white horse devoid of the ability to use emotion in decision making. As I
mentioned earlier, Phineas Gage survived the accident, but people began to
notice a marked change in his personality.

[00:03:36]
He was a gentleman, who was very effective socially, very respectful
authority, etc., before the accident. After the accident, as noted by his
physician, he was simply unable to make decisions. He would adopt a course of
action, only to quickly abandon it. Adopt other course of action, only to
abandon it as well.

[00:03:59]
Simply unable to make decisions. It was this along with other pieces of
compelling evidence that got Tony and Hannah to conclude the diametrically
opposite viewpoint, that emotion must actually be beneficial for decision
making. Because look at Phineas Gage, losing a critical area of the brain's
emotional circuitry translated to an inability to make decisions.

[00:04:28]
So what we have here are two contradictory viewpoints both backed by
compelling evidence that emotion is bad, because it'll give rise to a whole
host of biases. But emotion is also good because without emotion, as was the
case with Phineas Gage, we will be unable to make decisions.

[00:04:49]
How do we resolve this conundrum? The way we resolve it is by realizing that
Hannah and Tony inadvertently conflated two aspects of decision making. Making
a decision for which emotion is bad because it will give rise to a whole host
of biases, as a decision maker, we don't want to fall prey to biases.

[00:05:12]
Which is one aspect – making the decision. The other aspect is sticking to
the decision, being decisive, being confident about the decision for which
emotion is good, because take a look at Phineas Gage. He lost a critical area
of his emotional circuitry and was unable to make decisions.

[00:05:34]
Now let's take a look at why decision confidence is important for you as a
leader, making important decisions. Imagine that you're making a senior hire
or making a consequential investment decision. Why is it important that you
emerge from that decision feeling absolutely confident? What will happen if
you're not confident?

[00:05:59]
Well, if you are confident, your body language is going to tell. Remember that
a lot of our ability to persuade others comes not just from what we say, it
comes from how we say it. If you're not confident, your body language is going
to be stooped, your voice will quiver, others will sense it and you will be
unable to get a buyer.

[00:06:25]
So confidence is persuasive. Here's another reason. Remember that as a leader,
your job is to make decisions. Others, the troops so to speak, have to execute
on your decisions. If you're not confident, the troops will sense it and will
not put in 100% towards the successful execution of the decision.

[00:06:50]
So confidence is also inspiring. Finally, you need to be confident post
decision because that is when you will continue to be engaged, committed to
following through with your decision, throwing the right resources to ensure
the successful execution of the decision. While confidence is persuasive,
inspiring and engaging, it is also a double edged sword.

[00:07:17]
On one hand, confidence is important for the reasons just pointed out. But
confidence will also lead to a whole host of biases, notable among them being
the escalation of commitment bias. All the signals suggest that you need to
revisit the decision, but you will begin to throw good resources after what is
turning out to be a bad decision.

[00:07:40]
Therein lies the paradox when it comes to leadership decision making.

Decision Confidence

As you’ve just learned, emotion is critical for decision confidence. Let’s take a closer look at how
decision confidence works and how emotion—more than the rational brain—helps you resolve the
conflict inherent in making decisions and stick to the decisions you make.

[00:00:00]
>> How does emotion give rise to confidence? Imagine that you're deciding on
whether or not to enroll in a flagship executive program, a six-week senior
leadership Stanford Executive Program. Imagine that while making the decision,
you're faced with a conflict. You're inherently excited about enrolling in the
senior leadership program but something is holding you back, maybe the cost
– monetarily, time-wise, etc.

[00:00:29]
When you're faced with a conflict, imagine that you contacted me to help you
with a decision. I help you in the following way. I present you information
about enrolling in the Stanford Executive Program versus not enrolling in the
program, one attribute at a time. And after each attribute information, I ask
you to tell me on a -5 to +5 scale, zero being an indifferent.
[00:00:58]
How much ahead is coming to Stanford compared to not coming to Stanford? The
first piece of information that I give you is, this flagship program of hours
features world class faculty. To which you give a rating of +2, which means
that Stanford has an advantage on that attribute I plotted on a graph.

[00:01:22]
The second piece of information is, the weather here is going to be fantastic.
To which you give a rating of +1. I cumulate the first and the second rating
and plot +3 on the graph. The next piece of information is, it is going to
cost you a lot of money.

[00:01:43]
To which you give a negative rating of a -3 which means cumulatively we are
down from +3 to 0, and so on. Now, pay careful attention to the conditions
that I'm spelling out. Imagine that you already had strong emotion towards
Stanford much before the decision or in the early stages of the decision
making process which is why first impressions matter.

[00:02:14]
Now, let's see what happens when the information that comes in favors the
emotional front runner that is Stanford, your brain will just amp it up. World
class faculty. Wow, this is once in a lifetime opportunity. The weather here
is going to be amazing. Well, I can imagine basking in the sun.

[00:02:36]
When the information goes against the emotional front runner that is Stanford,
your brain will just tamp it down. It is going to cost a lot of money. Well, I
will just treat that as an investment. It is because of this amping up and
tamping down that when you come to the fourth, fifth, sixth attribute, it is
no longer Stanford greater than not coming to Stanford.

[00:02:59]
Stanford would be so much greater that if you now decide in favor of Stanford,
you emerge from the decision feeling absolutely confident. Keep in mind that
this is a bias process where when your brain is faced with a decision
conflict, to resolve the conflict, the brain will put into motion a process
where the rational brain simply rationalizes in favor of the emotional front
runner namely Stanford.

[00:03:29]
Of course, there are conditions to be satisfied for this bias process to
ensue. One, you already have strong positive emotion towards Stanford before
making the decision or in the early stages of the decision. Second, you're not
becoming rational and we will get into what will make you rational
momentarily.

[00:03:53]
If any of these conditions are violated then what will happen is that, there
will not be much amping up or tamping down. So much so that when you have come
to the fourth, fifth, sixth attribute, you're still stuck with Stanford equals
not coming to Stanford. Now, if you make the decision, you're going to emerge
from the decision not being confident.

[00:04:16]
You will become like Phineas Gage, unable to stick to your decision. If one of
the conditions for decision confidence to manifest is that you're not becoming
rational, what are the factors that will surefire make your rational? Well,
let's go back to the information I provided you one attribute at a time.

[00:04:39]
Recall the first attribute information. The Stanford Executive Program
features world class faculty. The second attribute information, the weather is
going to be fantastic. If I had started with price, numbers, charts, etc., you
will have surefire turn rational. Which is why, if you are or have been in
sales, you know that even if you're having advantage of price, numbers, etc.,
never ever lead the chart with price and numbers.

[00:05:14]
You will be more effective by leading the chart by creating an emotional
connection with the customer. So that, once the emotional connection is made,
presenting price will get rationalized in your favor. Now for some
clarifications. First, I keep talking about emotion, emotion, emotion, but
remember that you cannot ignore the rational side.

[00:05:40]
You need to make sure that you're providing enough fodder for the rational
brain to rationalize. Second, if you think about the customer value
proposition, you can break it down into three components. Emotion, E, Vb
standing for value derived from the benefit side of the equation and Vp
standing for the price side of the equation.

[00:06:09]
And you have the beta weights. Beta 1, the weight assigned to E, emotion. What
does your intuition suggest? Is Beta 1 bigger in B2B, business-to-business or
B2C, business-to-consumer? Intuition will say that Beta 1 is bigger in B2C
than in B2B. But if you look at the actual evidence, what you'll observe is
that Beta 1 is bigger in B2B than in B2C.

[00:06:38]
At the end of the day, it does not matter if it is B2B or B2C, it depends on
two factors that are often highly correlated. How important is the decision?
The greater the importance, the bigger is the Beta 1. Second, what is the
degree of conflict? The greater the conflict, the bigger is the Beta 1.

[00:07:03]
What this is telling us is that from an evolutionary perspective, what emotion
allowed us to do is to resolve decision conflicts in highly important context.
Imagine that I'm a caveman being pursued by a saber-toothed tiger, is survival
important? Of course, I come to a fork in the road.

[00:07:26]
I cannot be thinking about probabilities then. I have to rely on my gut to
take a particular path in the fork and I have to do it with confidence. If I
hesitate I can be eaten up alive. Thus, from an evolutionary perspective,
emotion must have been very critical to our very survival allowing us to
resolve conflicts and stick to decisions, a critical facet of decision making.

Structuring Decisions
While emotion is essential for decision confidence, it can also give rise to a whole host of biases that
can impact decision making. In order to be an effective decision maker, you need to be able to
balance both the rational and emotional sides of making a decision. Learning how to structure the
decision process is a valuable tool in achieving this balance.

[00:00:00]
>> What we've seen is that emotion is both detrimental and beneficial to
decision making, depending on which stage of the decision making process that
we are referring to. Emotion is detrimental while making the decision because
it will give rise to a whole host of biases. Which means that while making the
decision, we need to keep emotion out of the picture as much as possible.

[00:00:24]
However, in order to emerge from the decision being confident and decisive,
emotion is beneficial, which means that in this stage of the decision making
process, we need to invoke emotion as much as possible. Thus in a nutshell, to
be effective as a decision maker, one needs to know how to structure the
decisions and know how and when to pull the rational lever and how and when to
pull the emotional lever.

[00:00:54]
Structuring the decision involves breaking down the decision making process
into three phases – a pre-decision phase, which is the due diligence phase;
a decision phase; and a post-decision phase. In the pre-decision or due
diligence phase, do we pull the rational lever or the emotional lever? The
rational lever.

[00:01:19]
Keep emotion out of the picture as much as possible. How do we do that? By
converting everything into numbers using predetermined criteria which is
probably the most difficult task, figuring out the criteria on which to make
the decision. Once you have come up with the criteria, the next step is to
determine the importance weights.

[00:01:44]
One easy way to do this is to distribute hundred points across the criteria 1,
2, 3, et cetera. Say 30 points to criterion 1. 20 to criterion and 2, et
cetera. The bigger the number, the more important is the criteria. With the
criteria and importance weights in place, you're now ready to do the due
diligence on the various criteria.

[00:02:10]
You may have the finance team do the due diligence on the first criteria, the
upstream of the second criterion and so on, and what these teams need to do is
assign numbers to the various options on the predetermined criteria. Imagine
that on the first criterion, option A gets 25 points, option B gets 20 points
and so on.

[00:02:34]
You total the numbers for option A and option B and get, say 80 for option A,
and 85 for option B. The next step is to determine the threshold, which once
passed, will get the optional options into the consideration set. This is a
very important step because what leaders often do is look for the best option
that putatively exists out there.

[00:03:05]
But rarely can we get the best, so you need to set a threshold a bar that is
high enough so that we end up with at least two options in the consideration
set. You can go for more options than two but we need to remember that the
decision difficulty increases exponentially, as we add more options to the
consideration set.

[00:03:29]
With the consideration set in place, now is the time to decide and this is
where rules come into the picture. Let me explain. Imagine that your due
diligence process gave rise to two options A and B, and the decision structure
is, option A equals option B. In other words, Option A does better on certain
dimensions, but worse on certain other dimensions compared to B.

[00:03:59]
What do leaders do under these circumstances? I'm not asking what leaders
should do, what do they do? They will often postpone the decision. Let's get
more data. Well, very often, even with more data, you're likely to end up with
A equals B. Let's add more criteria. No, you can't do that, you need to have
the discipline to stick to the predetermined criteria.

[00:04:28]
What should leaders do under these circumstances? One is to set deadlines.
Otherwise, one can easily get into a state of decision paralysis, postponing
the decision. The second is to adopt rules to make the final decision. This
could be just flip a fair coin, or do a straw poll in a group decision making
context and go with majority wins, or simply go with your gut.

[00:05:01]
Keep in mind you can do this because all the options that you're considering
have passed the threshold. Here is a game plan that I would suggest when you
are making tough decisions. First, set a deadline. Let the public relations
department, or the corporate marketing office, or your admin, craft two
messages.

[00:05:28]
One in favor of A and the other in favor of B. Let them know that you will
communicate your decision on Monday morning. Take the weekend off. Allow all
the information from the due diligence process to percolate in your brain. Get
a good night's rest, you will wake up on Monday morning and your gut will tell
you which way to go.

[00:05:54]
If your gut is still not telling you which way to go, just toss a fair coin,
heads A tails B. Toss the coin and then listen to your gut. Your gut will tell
you, go for A choose that option and then further invoke emotion to emerge
from the decision feeling confident.

[00:06:18]
How do you do that? Imagine total success. The 10 years out, people are still
congratulating you for the decision that you made. In essence, fool your
brain, the goal being to emerge from the decision phase with a great deal of
confidence. Finally comes the post-decision phase. Here, do you pull the
rational lever or the emotion lever?

[00:06:48]
Well, that was a trick question, you need to do both. You need to pull the
emotional lever so that you remain confident about the course of action that
you've adopted, throwing the right resources to ensure the successful
execution of the decision. But from time to time, you will also need to pull
the rational lever, evaluate the decision based on criteria that were
determined before you made the decision.

[00:07:14]
This is important, otherwise the brain will cherry-pick the post-decision
criteria. Most leaders find decision-making to be highly stressful. In effort
to make the right decision they agonize and agonize. Let me take the stress
out of your decisions going forward with the following thought. Remember that
in the real world there's no such thing as making the right decision, after
all, you're dealing with too many uncertainties and ambiguities.

[00:07:52]
It is impossible to make the right decision, so don't fret about it, just make
the decision and then make the decision right. But to make the decision right,
you need to be confident about the decision and confidence is rooted in
emotion.

Assignment: Structure a Decision

Imagine that you have a promising career opportunity, an opportunity with its pros (e.g., a big
advancement in your career, a field that you dream about working in) and cons (e.g., relocation, a
longer commute). How would you go about structuring the decision about whether or not to accept
the position?

To begin, download the Decision Structuring Worksheet below. Then, answer the following
questions to complete your assignment.
Expectation: Completed worksheet and 200-300 words across all reflections.
Submission Format: Document upload and text entry in the rich text editor fields.
Privacy: Your submission will be shared with the rest of the class.

Career Reflection, Part 1

Think of a time in your career where you felt the most fulfilled in the work that you were doing. What
made it that way?
When I gain confidence to persuade our lender to follow our regulation. I start with our procedural,
talk with our legal, and then drafting argument with point of view of our regulation, also I did
emphasize with our reason why we took that decision based on other critical factor such as
considering legal opinion from the issuing bank. Finally, they granted to follow our rules.

Career Reflection, Part 2

Now, think of a time in your career when you felt the most unfulfilled or unhappy. What made it that
way?
I couldn't help my team, when my decision role not in my side. Our manager have the power and
then it was not doing well like we thought before.

Decision Structuring Worksheet

In your Decision Structuring Worksheet, enter the following information:

1. What criteria can you glean from your answers to the two questions above that you can use
to help to decide about this job? List those criteria.
2. Assign importance weights to each criterion (Maximum Points), and then determine how you
would score Option A (your current role or situation) and Option B (the new opportunity).
Your total number of points possible is 100.
3. Establish the point threshold above which the choice option can be added to the
consideration set.
4. List the rules that you will follow when making your decision.

Reflection
5. Below, reflect on what you learned about how you approach decisions and what is important
to you while completing this assignment.
I decide first the criteria that matters to me. Career change is a good thing, but the important
thing to consider with family first. If I don't take it, there always good opportunity out there, as
long as I continue to apply. Family comes first.