

Mastering the Art of Decision-Making in Uncertain Times: Part Two: A Practical Guide
Issue 197, January 30, 2025
Last week we explored how to understand how we make decisions in uncertain times. We said that uncertainty has become a certainty, challenging leaders to think differently when it comes to managing change and transformation. Today, we are tackling the issue with a practical guide for improving decision-making skills that is relevant to our disruptive personal and professional environment.
Our guide is a suggested framework for your own strategic action plans, whether they are personal or organizational in focus. We caution our clients that trying to oversimplify a framework may limit its success. There are traps we all fall into when leading change, imprinted by cognitive, emotional and psychological factors. Understanding the underpinnings of our decision-making process unlocks forward progress and transforms stress into success.
Cognitive and Psychological Traps
By human nature, we operate within cognitive traps. Human brains are hardwired for certainty, reinforced by evolution as a tool for survival. Psychology Today explains, “When people are put in a familiar situation, their decisions are often fast and automatic, based on longtime experience with what works and what doesn’t.” When faced with ambiguity, our natural response is to seek clarity, even if that means oversimplifying complex scenarios. Psychology Today adds that when we encounter a new situation, we weigh the potential benefits and risks when choosing a course of action and are often likely to make mistakes and face negative consequences. This tendency often leads us into cognitive traps that can derail our decision-making process.
Critical thinking is key to making good decisions without becoming a victim to mistakes or bias. That said, there are three key cognitive and psychological traps that can easily trip us up.
- Confirmation Bias
At its core, confirmation bias is about what makes us feel comfortable with others who echo our decisions. For instance, consider a manager evaluating a project’s success. If they’ve championed the project from its inception, they may unconsciously prioritize positive feedback from team members and disregard any objective questionable performance data. This narrowing of perspective can blind us to critical insights and alternative paths.
- Overconfidence
Overconfidence can convince us that we have a firm grasp on all the variables, even when the data suggests otherwise. An all-too-frequent example is when entrepreneurs launch new businesses. While confidence is essential, overestimating market readiness or customer interest often leads to early failures that could have been avoided with more thorough research. The numbers don’t lie: 90% of all startups fail. If one needs a history lesson, just look back to the early 2000’s and the slew of businesses and innovative concepts that failed miserably despite the overconfidence of entrepreneurs and the markets.
- Loss Aversion
The fear of loss is a powerful driver. Neuroscience tells that the pain of losing something is psychologically twice as impactful as the pleasure of gaining something of equivalent value. For instance, during volatile market conditions, investors often hold on to declining stocks longer than they should, driven by a hope to “recover losses” rather than cut losses and reallocate resources to better opportunities.
Recognizing and encoding these cognitive and psychological traps into self-recognition and how they influence our thought processes are the first steps to overcoming them. When we are aware of the mental shortcuts our brains take, we can actively challenge our assumptions and reframe our thinking.
The Role of Emotions in Decision-Making
Emotions are an integral component of how we process information and can play a negative role in decision-making that subverts results. In uncertain times, emotions play an even greater role, shaping not just how we interpret situations but also how we respond to them. To navigate uncertainty effectively, integrating emotional responses with deliberate, reasoned analysis unlocks success.
- Acknowledge Stress
Stress is inevitable in any high-stakes situation. Ignoring or suppressing it doesn’t make it go away — it amplifies its influence on your decision-making. For example, a CEO facing declining revenues might feel paralyzed by the pressure to act quickly. Taking a step back to acknowledge the stress and assess it can open pathways to clearer and more strategic actions.
- Cultivate Empathy
Decision-making is a team sport. Considering the perspectives and needs of others enriches an understanding of the problem and fosters stronger collaboration. For example, a product manager prioritizing a product’s featured benefits can better identify their potential success by empathizing with end-users and aligning decisions with business goals and user needs.
- Control Optimism
Optimism can propel perseverance and creativity, but unchecked optimism can lead to unrealistic expectations. Consider a nonprofit organization launching a fundraising campaign. Optimism may drive them to aim for ambitious targets but tempering this with a grounded analysis of donor capacity and market trends ensures a strategy that is realistic and achievable.
It’s key to accept that no decision exists in isolation. Every choice we make contributes to a larger narrative, and reflecting on our past decisions is crucial for growth. Dedicate time after significant decisions to evaluate their outcomes.
Decision-Making Guide
When the stakes are high and uncertainty is the norm, relying solely on intuition can be a gamble. Decision-making frameworks provide structure and clarity enabling you to navigate complexity with confidence. Frameworks are tools that can provide approaches to build on the emotional awareness and mitigation of cognitive and psychological traps as previously discussed
- The OODA Loop (Observe, Orient, Decide, Act)
Developed by military strategist John Boyd, the OODA loop is a dynamic process that emphasizes agility and continuous improvement. For instance, during a supply chain disruption, a manufacturing leader might use the OODA loop to monitor real-time data, adjust operations to reroute logistics, make decisions on production schedules, and act decisively to minimize downtime. Iteration ensures adaptability as conditions evolve.
OODA has been shown to be a highly effective framework and approach to use in a crisis as it helps to structure a situation and mitigate pressure, anxiety and other emotions that often increase during challenging times. Above all, leverage your patience, thoughtfulness, and critical thinking in each segment of the loop, scenario planning or risk analysis to ensure you are gathering the right and most important information/observation and solving the right problem. The building blocks of the OODA loop include:
- Observe: Use all your senses to gather information about the situation.
- Orient: Analyze the information you’ve gathered to understand the situation.
- Decide: Choose the best course of action based on what you know.
- Act: Carry out your decision and evaluate how well it worked.
- Scenario Planning
In uncertain environments, planning for a single outcome is insufficient. Scenario planning and simulations involve envisioning multiple plausible futures and preparing strategies for each. Scenario planning can be creative and substantive exercise that allows for uncovering influences, issues and consequences that may not have previously been considered.
Use scenario planning to be proactive in preparation for possible or plausible futures. Consider changes in markets, global trade, generational shifts as examples. For example, a university might use scenario planning to prepare for potential declines in enrollment that can be implemented if the potential situation becomes reality. Examples are developing flexible academic programs, online learning options, and partnerships with industry to attract nontraditional students
- Risk Analysis
As a classic and invaluable tool, cost-benefit analysis involves weighing the potential gains and losses of each option. While often associated with financials, spreadsheets, and qualitative factors—such as team morale or brand reputation – risk analysis should be practiced. For instance, an organization considering a controversial cost-cutting measure might weigh financial savings against potential damage to employee trust and customer perception.
Step-by-Step Progress
Take a deliberate approach to managing change and transformation with realistic steps that lead to positive action. All decision-making in uncertain times requires an objective, yet innovative perspective that inspires, motivates and rewards teams. Although some of these steps may seem obvious, they are worth remembering as a refresh in charting a path forward.
- Start with a Vision
Build your strategy on the backbone of a compelling vision for yourself or your organization. For instance, a small business might set an ambitious goal of doubling its customer base supported by clear strategies and incremental milestones. A strong vision acts as a North Star, providing clarity and motivation even during turbulent times.
- Celebrate Progress, not Perfection
Optimism thrives when we recognize and celebrate small victories along the way. For example, a team working on a long-term project could celebrate each successfully completed phase, reinforcing momentum and confidence in the ultimate goal.
- Reframe Setbacks as Learning Opportunities
Adversity is inevitable, and how we perceive it makes a difference. Consider Thomas Edison’s perspective on failure: “I have not failed. I’ve just found 10,000 ways that won’t work.” By adopting a positive growth mindset, you can approach setbacks with curiosity and resilience, transforming obstacles into stepping stones.
- Focus on What You Can Control
In uncertain times, it’s easy to feel overwhelmed by factors outside our influence. Redirect your energy toward areas where you can make an impact. For example, if economic conditions are unpredictable, focus on building stronger relationships with existing customers or improving internal efficiencies as safeguards
- The Power of Reflection
Reflection is not about dwelling on mistakes; it’s about learning from them. Over time, this practice will enhance your ability to navigate uncertainty with resilience and grace. Ask yourself what went well, identify the strengths of your approach and consider how to replicate them in the future. What could have been done differently? Constructive self-critique helps uncover blind spots and refine your decision-making process.
- Inspire Others
Optimism is contagious. As a leader, your positive outlook can energize your team and foster a culture of possibility. Share stories of past successes and highlight examples of perseverance and innovation to remind others of their capacity to overcome challenges.
Power to Action
Uncertain times are inevitable, and they don’t need to be paralyzing. By understanding the cognitive and psychological forces that influence decision-making and applying structured frameworks, you can navigate ambiguity with confidence. Remember, uncertainty is not simply a problem to be solved; it is a pervasive landscape to explore as it challenges us to think more creatively, act more decisively, and grow more robustly.
Building self-awareness and activating decision-making resources, such as consulting with trusted advisors or implementing cooling-off periods, can help minimize the negative effects of stress on outcomes.
Derisking Uncertainty
As you move forward, embrace this thought: Every uncertainty carries within it the seed of possibility. By choosing possibility, you not only enhance decision-making but also set the tone for a future filled with purpose and potential. By transforming challenges into opportunities, you open the door to innovation and growth. Get in touch with us. We understand how to thrive in uncertain times, and we can help. Let this year be a testament to your capacity to adapt, thrive, and inspire.
Get “The Truth about Transformation”
The 2040 construct to change and transformation. What’s the biggest reason organizations fail? They don’t honor, respect, and acknowledge the human factor. We have compiled a playbook for organizations of all sizes to consider all the elements that comprise change and we have included some provocative case studies that illustrate how transformation can quickly derail.