Making Better Decisions
There is an astounding
number of decisions made recently in both the public and private
sectors that are poor at best. Some examples include;
Imagine Excite could have bought Google in 1999 for 750k. Maybe
its Blockbuster who decided a 50 Million dollar investment in
Netflix (worth an estimated 125b at the time this was written) was
a joke. Perhaps it was AOL merging with Time Warner?. Or how about
this, Kodak who created its first digital camera in 1974 and
figured it was best to stay out of that business until it was
going out of business. Companies are thinking
differently about how they are making decisions, and if they
aren’t they need to.
Information
Research has shown that having more information doesn’t
necessarily lead to making better decisions. Instead, it can
result in our shifting focus unnecessarily to specific aspects of
the decision, at the loss of the big picture.
Groupthink
There are companies engaged with “groupthink,” which is the
practice of making decisions as a group in a way that discourages
creativity or individual responsibility. Individuals in groups
will look for harmony or conformity leading to irrational and
substandard decision making.
Process driven decisions
Some companies have decided to create a decision making process to
maximize there outcomes. In reality, research has shown that
better processes won’t guarantee better decisions, of course, but
they can make them more likely.
Techniques to make
better decisions
At its core, making decisions is about assessing and examining
what decisions are being made, and what decisions need to be made,
and what information is available. Savvy organizations will make
multilayered decisions addressing technology, data, personnel, and
organizational structure. Utilizing those and other resources
available, they can improve their decision making in four
steps. And at its conclusion assess the results of your
decisions, you’re unlikely to achieve better decisions.
Uncovering what
decisions need to be made
Companies at a departmental or organizational level begin to
prioritize the decisions that need to be made. Get aligned with
your managers about what your top three priorities are. If
they need clarity on how to prioritize there goals, coach
them toward understanding short term distractions and strategic
priorities.
Assessment of Assets
Identify what assets you need to make your decisions. What
factors play a part in making an effective decision. What
resources will support the process of making the decisions?
Questions about who will play a role in the decision and how the
decisions can be supported are critical.
Approach to Decisions
Once you have narrowed your choices and decisions that need to be
made, it’s time to designate the roles, processes, systems, and
behaviors you will be utilizing. The greatest success comes with
an inclusive approach that considers all your judgment methods and
all aspects of the decision process. At this step, consider
everything, including how your decision will be executed.
Measure and be Inclusive
Fine-tune the short, medium, and long term measures for how
you’re going to evaluate success. Those measures should be
quantitative as well as qualitative. Look at things like customer
impacts, revenues, profits costs, net promoter scores, associate
survey comments, document what the metrics are, and track them
over time. Think through what are the metrics that matter?
There are so many things we can measure, and measurement takes
time and resources. Find those metrics that will cause you to
change your decision. Articulate those tolerance levels.
Be mindful that executive
decisions require people to do difficult things. It’s important to
let them know when they were successful. Let people know about the
success of the decision. It builds support for future decisions,
and it gives them comfort that we’re making the right decisions
along the way. It helps them see how their efforts contribute to
the broader success of the organization.
End of Part 1.
Next, we will take a
quick look at some cases and utilizing multiple perspectives.