Sunday, July 19, 2015

Decision-Making in Digital Way

Effective decision making in the digital era requires speed, flexibility, and collective wisdom.

One significant effect of digitization is increased velocity, complexity, unpredictability, and a need for a faster response to changes in business and industry based on effective and efficient decision making. How is that possible? What’s the digital way to make the right decision? And how to avoid the pitfalls to make bad decisions?

Effective decision-making in the digital era requires speed, flexibility, and collective wisdom: The need for speed is actually slowing down the decision-making if the organization won't implement a new methodology and efficient process and tools for working. Decision agility is dependent on better access to right information, at the right time - but also access to right people. Using the traditional ways of working in the silos and through the rigid processes simply won't have enough time to produce the input for the decision makers. And without proper data or other input, no good decisions can be made. Framing the right and structured questions is also the digital way to making better decisions: Look at various classes of questions and ask: Who or what gets to decide? What are the incentives and drivers? What are the limits and constraints? These and similar questions set the stage. Then you can proceed to environmental, organizational and sociological factors that define the environment in which the decisions are made; also, consider technical factors that influence decision-making and decision-makers. Only then, you can hone into the specifics, including psychology and culture. Each of these opens the door to a variety of views.

Harnessing cross-functional communication becomes crucial in digital decision making: With fierce competition and unprecedented changing conditions, organizations need to get decision faster to respond promptly. Digital technology allows you to get the crucial information faster, and yet things become more complex. Digitalization is certainly making access to large quantities of data happen faster, but you run the risk of putting too much faith in the numbers from tools that should primarily support you, not take over you. Thus, you need tools to cope with complexity. That, however, requires you to overcome the archaic reliance on best practice, gut feelings, and innate bias. Therefore, it's essential to both get the right input (no need to know everything) and quickly pick the good idea or choice among the rest. On the other hand, you need to be able to ditch the idea in an agile way if it turns out to be a bad one. Since all this is often done by a group of people, proper facilitation (tool) is required. Decisions are still made by people, so the challenge is to get the relevant people communicating with each other more efficiently, and making the best use of the digital tools.

Business managers also have to live with the consequences of making the wrong decisions faster!  Making leadership team's thinking visible by using a process for decision making will dramatically reduce or eliminate the gaps. In many meetings where managers were talking more about the technology and less about the process of making the real decisions. The more subtle but often dangerous causes of bad decisions are to making a business decision while being in a position of having conflicts of interests with stakeholders in the outcome; being subject to biases such as overconfidence; and, framing the decision incorrectly. Also, corporate cultures that repress dissent are an overarching contributing factor to bad decision-making. Sometimes the worst decisions are made with the best of intentions, and there is the risk that a decision is being made for reasons of popularity rather than logic. As the matter of fact, there are so many reasons decisions could be bad, the effort should be to focus on the most dangerous causes of bad decision-making.

Digital means change and speed. Fast decisions are made of necessity. But a condition of benefiting from considered decisions is having a good decision - making the process to use the time effectively. Digital is the age of people. In complex operations and organizations, group dynamics leads to final results and performance, especially if the involvement of the activity is related to group inputs and processing! Collective wisdom collects the necessary inputs to make better decisions.


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