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The AREA Method: Emotions & Decision Making

How do we deal with emotions in decision making? It’s a question that came up over and again as I ran a workshop this past month for The workshop was for CEOs who run a family business or investment office. While it is hard enough to deal with complex decision making at baseline, once family members are involved it’s even tougher. The reason: No matter how important the decision itself may be, the relationships among the people dealing with the decision are even more important.

Getting emotional while making decisions not only tends to crowd out objectivity, but also it tends to narrow our thinking and our ability to see and vet viable options. We may end up relying more heavily upon the very cognitive biases that tend to regularly impede good decision making. For example, when we feel overwhelmed, we may punt and go with our ‘gut feeling’ or make a leap and ‘follow our heart’ or lean on past experience and ‘rely on intuition.’ In so doing we may make an already fraught situation worse by assuming it will all work out. We use Optimism Bias to supplant or suppress rigorous research and we rely only upon ourselves, missing out on the very ingredient that we need most: collaboration.

What does collaborative decision making look like in practice? One of the scenarios we dealt with at the YPO workshop was a family business management case where a successful family manufacturing firm ($500M+ in revenues) was transitioning from the 3rd to the 4th generation. The current CEO is a member of the 3rd generation and has two sons working in the business and a daughter who is working for a competitor. One son has high potential to lead the business, but is not ready to run it today. The other son is underperforming and probably not best suited long term for the business. The daughter has proven herself running large teams and is ready to assume additional responsibility. However, the sons have put in their time in the family’s business working under their father. How do you help this family make the right decision?

The discussion centered on using the AREA Method to understand:

  1. How does each family member view the transition?
  2. What kind of leadership does each family member think that the company needs and why?
  3. How does each child understand his/her current skill set and professional development needs?
  4. What objective metrics could everyone agree upon for how to measure the company’s – and the family’s — current and future success?

The AREA Method gave everyone a seat at the decision-making table, created buy-in on objective criteria that everyone could agree upon and gave the family something to rally around. Now they were solving the problem in a way that could strengthen the family unit and the business. They all acknowledged the emotions, the behaviors and the data behind this critical decision.

Using AREA’s perspective-taking approach means focusing on the incentives and motives of others as a way to give us a two-for-one: we step into someone else’s perspective and also gain critical distance from our own perspective and biases. The underlying principle is that using collaboration leads to better, and more holistic, decision making. As we hone in on why others think and feel the way they do we are better able to scrutinize our own thinking and tease out our assumptions and judgments. Where might we be wrong? What might be an assertion without evidence? And can we bring data to bear on the situation?

AREA’s perspective taking enables us to operate in the emotionally charged world we all inhabit without letting our emotions run us. It doesn’t make sense to try to turn our emotions off — and why would we want to? They are telling us something important: They let us know we care; that we are invested in the situation. But many times we do want to harness the emotions so that they don’t render us incapable of rational thought. We want them to work for us to strengthen our relationships and connectivity and get us closer to attaining our goals.

That being said, I would be remiss if I did not mention that some high stakes or complex decisions benefit from being driven by emotions –whether or not to marry, or to have another child, or, as readers of Problem Solved know, to start a charity like John Christopher did when he created the Oda Foundation, which provides basic healthcare in a remote region of Nepal. Some of life’s best decisions can be a leap of faith. But AREA can give you the tools for when you want to bring data to bear on your leap.

The bottom line: AREA enables you to place the emotional tenor of your problems in the broader context of the decision. It gives you a chance to face and unpack the emotions, and it enables the other stakeholders in your decision to do the same. It’s that marriage of human behavior and metrics that enables you to not only tackle thorny problems but to acknowledge and use the emotions that are part of your life and your decision making.

How can AREA help you and your business make big decisions better? Sign up for coaching, workshops or have Cheryl come speak to your organization by emailing Cheryl can customize a workshop for your company, or she offers one-day or three-day in-person workshops and a month long, once a week webinar.

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