Monday, October 6, 2014

The Decision Effect

Decision making is the arena across the art and science; gut feeling and data-driven, confidence and humility.

Making a decision is one of the significant tasks for business leadership, however, the high ratio of strategic decisions have been made poorly and cause the catastrophic effect. How to avoid such decision pitfalls, to make effective decisions both strategically and tactically?

 The distinction between the decision quality and the outcome is important. If the decision-making process is well designed & well executed, you have the highest probability of getting the best outcome in the state of knowledge accessible at the time of decision. But lucks (and externalities) matter. A good process can still get adverse outcomes. All good process does decrease the risk of the wrong choice, not eliminate it. Too often "Bad Decision" is a judgment of outcome, not decision process.

The vital point in decision making is to be confident in the decision at the time it is made - and this requires a separation of the assessment of the quality of a decision from its outcome. The business outcome is improved if people are CONFIDENT in the quality of the decision. It's kind of obvious: people are not going to go the extra mile, stay late, etc. if they don't have confidence that what they are working on is of value which is reflected in an effective decision-making.

Too many decisions do not have the ambitious performance outcomes that were intended. The decision is not necessarily bad, but the flow and sequence of the subsidiary decision implementations all encounter a different set of context dynamics. In fast moving competitive business environments, the shortcomings inherent in a clear current decision-making knowledge context and top-down vague strategic - 'me-tooism' - style decision-making all lack the much needed essential iterative process dynamics, where the decision is managed as the end effect, not the beginning.

Most of what poor decisions have boiled down to lack of current information/intelligence and decision maker bias. The lack of currently viable information and/or intelligence is critical to the failure of, or consequences of a bad decision. The other main culprit is bias - (according to Thinking Fast and Slow - Kahneman). Bias comes in many forms and is difficult to recognize if you are the decision maker. The more factors contributing to a poor quality decision, including: 
- Not identifying a sufficiently wide range of alternatives to considering. 
- Failing to identify/ agree on the correct criteria. 
- Failing to ask decision makers to commit, that commitment is one that is difficult if the corporate culture is acrimonious and confrontational.

It has to do with insufficient time to think carefully about important decisions. Always challenge the groups with the question: Do you think management agrees to just do things without thinking, or would they value the fact that you put some effort in thinking over facts and observations more carefully. Identify with the need for decision making to include building commitment to execution. It includes involvement of some of the deployment team pretty early in the process, as the chosen alternative starts to emerge; and in getting the deployment team leader to sign on "for the duration". Too many projects fail as a result of the leadership change part way through.

Think fast, think slow. Decision making is the arena crosses the art and science; gut feeling and data driven; confidence and humility; and more often than now, it takes both multi-disciplinary knowledge and light bulb type intuition to make effective decisions.


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