Accomplishing these tasks is no mean feat for 21st Century Leadership. We are now living in a warp-speed world of compounding complexity, and rapid, often unpredictable change. It is a world in which laggards lose and poor choices can have dangerous consequences. That is why leaders need to increase the PACE and QUALITY of their decisions.
The PACE of decisions is critical because decision windows close rapidly.
The QUALITY of decisions is critical because the decision environment is more complex.
How can we increase the quality and pace of decision in our organizations?
- Clarify the decision leaders
- Follow proven decision processes
- Maintain decision process clarity and speed
- Follow proven steps for effective decision-making
- Align and properly prioritize key decisions
- Maintain trust and accountability regarding decisions
- Rapidly tap the Collective IQ for strategic decisions
- Follow Rules of Engagement for leadership meetings
- Be vigilant to minimize the common thinking errors
Top leadership should make the decisions that affect overall organizational performance, current and future business portfolio and leadership development. They should also make the decisions regarding core principles of conduct, ethical values, and decisions with social and political implications. All other decisions should be made as close to the action as possible. Below are some considerations for determining who makes decisions:
- The Degree of Futurity – the more forward in time, the higher up the decision chain it should be made. Example: Decisions that commit the organization beyond one calendar year.
- Organizational Impact – to what extent the decision impacts other functions or the business as a whole. Example: Decisions that impact other business units or departments require a higher level.
- Financial and Strategic Impact – there are usually preset definitions of authority that determine the financial limits by level. However, there should be equal clarity on decisions that have strategic impact. Examples: Expanding into new markets; innovation priorities, opening or closing a facility.
- Recurrent Impact – decisions that establish a general rule in a team, business unit or organization should be determined by or reviewed and approved by its top leadership. The application of the general rule can then be implemented at lower levels. Example: corporate policies.
- Responses to Major Events – decisions on how to respond to a predictable or unpredictable major event that impacts a team, business unit or organization should be determined by or reviewed and approved by its top leadership. Examples: sudden strategic threats and opportunities, such as a global economic downturn and the arrival of a disruptive innovation.
Effective decision-making is a cognitive process that results in the selection of a course of action from among several alternatives. It should produce a clear, final choice on an action to be taken or a clear guideline for making future choices.
Since decision-making has been the subject of active research for many years, there is a general consensus on the three key steps in an effective decision-making process.
- DEFINE the decision to made. A good definition includes:
- Clarifying Statements – What are we trying to decide? What are the essential elements?
- Decision Drivers – Why do we need to make this decision? By when?
- Assumptions – What are the assumptions upon which decision the will be based?
- GENERATE alternatives. Generation techniques include:
- Brainstorming – Rapidly generate a number of ideas without judging them.
- Information Gathering – Focus on what you don’t know rather than refining what you know.
- Constraint Clarification – Clarify the assumed constraints and ways to work around them.
- Benchmarking – Look at what have others have done in similar circumstances.
- EVALUATE real alternatives, not just minor variations on one theme. This increases the probability of choosing the best course of action, rather than accepting the first alternative that looks like it might work. Evaluation questions include:
- Consequences – Imagine you have chosen an alternative. What might be the consequences?
- Risks / Uncertainties – What are the risks and uncertainties surrounding each alternative?
- Interdependencies – What are the key interdependencies of each alternative?
- Pros and Cons – What are the pros and cons of each alternative?
Practice Two – Maintain decision process clarity and speed
The fastest, easiest and least costly way to increase the probability of success is to accelerate the pace of smart decisions. Below are steps leaders can take.
- Answer core questions upfront:
- What decision are we making?
- When do we have to make it?
- Who are the key stakeholders and subject matter experts to engage?
- Who is the accountable final “decider”?
- Who will ratify or veto the decision?
- Who should be informed of a decision once made?
- What resources (people, funding, etc.) are required to implement the decision?
- Don’t mix strategic decision-making and operational decision making. Have distinctly separate meetings to ensure that:
- Operational issues are addressed in timely, focused fashion.
- Strategic issues are addressed with sufficient preparation and focus (and not jammed into the middle of an operational discussion).
- Prioritize leadership meeting time with a strong bias in favor of making decisions.
- Evaluate each leadership meeting agenda item according to its impact on the organization’s current priorities and long-term objectives. Address high-impact issues only and delegate low-impact issues to lower organizational levels.
- Prioritize the agenda topics in three categories: a) decision-focused discussion and debate; b) review of important FYIs; c) team learning and development.
- Distribute reading materials in advance of meetings and label the purpose.
- Consciously drive the decision-making process pace and the follow-through.
- Develop a decision management mechanism that details what decisions are on the table and what stage it is at within the decision process.
- Avoid decision delay by being clear about how decisions will be made, such as: (a) Unanimous agreement is preferred; (b) If there is not unanimity, there is an effort to reach consensus; (c) If consensus cannot be reached, the decision is made by a majority; (d) If there is no majority and delaying a decision could lead to wasted resources, missed opportunities and loss of organizational momentum, the decision is made the team leader.Everyone agrees to endorse and support decisions once they are made.
- Avoid gaps in the decision-making process, such as:
- Overlooking crucial consequences of a decision
- Giving inadequate consideration to trade-offs
- Disregarding the uncertainty factor
- Failing to account for risk tolerance
- Not thinking through how decisions will be implemented
- Make sure that decisions made are promptly and fully implemented by:
- Explicitly agreeing on what was decided in the meeting.
- Clarifying who will drive implementation. The driver role is to: a) effectively communicate what has been decided, how it will be implemented, who is accountable for what and when—especially immediate next steps; b) check back to confirm that the decision has been implemented as agreed and has not been reinterpreted or fallen victim to the silent veto.
Practice Four – Align and properly prioritize key decisions
- For decisions to be aligned, they must be made transparently with the aim of optimizing results for the whole organization. They should never be made in silos or isolation for the interest of only one or a limited number of stakeholders.
- For decisions to be properly prioritized there must be clearly articulated criteria against which priorities will be set. Capital expenditures and R&D investments decisions should be prioritized and aligned with strategies not projects.
Practice Five – Maintain trust and accountability regarding decisions
Below are best practices for maintaining trust and accountability regarding decisions:
- People are trusted to make good decisions within their scope of authority.
- Everyone “speaks their piece” when a decision is on the table. Silence in a decision-making meeting means agreement.
- To avoid miscommunication, everyone uses common decision-making processes.
- For important strategic decisions, formal affirmation in writing is required.
- Everyone understands that decisions made are decisions made. “No” on an alternative does not mean “Maybe” or “Let’s revisit it later.”
Practice Six – Rapidly tap the Collective Intelligence for strategic decisions
There is a fundamental decision dilemma for leaders: too much information for one individual or small group to evaluate. With the hay stack of information growing exponentially, how can leaders ensure well-informed strategic decisions?
One solution is rapidly tapping the Collective IQ of large, diverse groups comprised of stakeholders and internal and external subject matter experts. The case for this approach is strong assuming you have the right conditions, which include:
- A shared cognitive challenge, such as asking everyone to respond to a common set of strategic questions or hypotheses.
- Participant Diversity, not only in age, gender, ethnicity and life experiences, but also cognitive diversity — the way in which people think and how they approach creating, collaborating, learning, and problem-solving.
- Facilitated Processes that encourage independent thinking, freedom of expression, synthesis, feedback and rapid iterations.
- Collaboration Tools that accelerate the processes; these tools must be intuitive, quickly customizable and scalable.
Practice Seven – Follow Rules of Engagement for leadership meetings
Below are some best practice Rules of Engagement for leadership meetings:
- Leadership meetings are primarily decision-making events.
- Because leadership meetings are important and take a significant commitment of time:
- Participants prepare for them in advance.
- Meetings are a disciplined use time with stated outcomes and agenda.
- The agenda reflects the priorities and significant issues facing the team.
- The strategically important topics win over current reactive topics.
- Topics are prioritized as follows: a) decisions to be made; b) team learning and development; c) review of FYIs.
- Preparatory reading materials are distributed in advance of meetings and labeled as to their purpose.
- When a decision is on the table: a) real alternatives are presented and debated; b) the overarching strategic objectives and strategies are the decision filters.
- The meeting participants agree to:
- Leave the meeting with a common understanding of the decisions made.
- Support effective implementation of the decisions made in the meeting.
- Track the implementation status of their decisions.
- The meeting agendas and results are documented and retrievable.
- Periodically, the participants rate the effectiveness of meetings and decisions.
Practice Eight – Be vigilant to minimize the common thinking errors
We are not the rational thinkers we sometimes imagine. Our thought processes are often flawed by common thinking errors caused by cognitive biases. A vast body of research has illuminated the fact that these common thinking errors can lead to bad or sub-optimal decisions.
While no one can rid his or her mind of these ingrained flaws, we can make a conscious effort to understand and compensate for them. There is quite a list to consider.
- Selective Perception – Our brain fits facts into our established mental frameworks. We tend to remember something that is consistent with our worldview and discount statements or unconsciously screen-out information that is not consistent with our current beliefs. We also tend to gather facts that support certain our worldview but disregard other facts that support different worldviews.
- Information Distortion – We unconsciously delete, distort and generalize information to make it conform to our pre-existing beliefs. We also distort our memories of chosen and rejected options to make the chosen options seem more attractive.
- Fundamental Attribution Errors – This is the well-documented human tendency to attribute better judgment, motives and morality to ourselves than we do to those we don’t like or with whom we disagree. We are inclined to judge their arguments to be untrue or irrelevant. We are equally inclined to accept a statement by someone we like and generally agree. We also tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other’s success to good luck, and their failures to their mistakes.
- Group Conformity Instinct – Social psychologists have found that individuals tend to lose their personal compass in group settings with either positive or negative consequences. The Group Conformity Instinct is most obvious in an organization’s culture. The prevailing mental norms (beliefs, values and underlying assumptions/mindsets) about how to do things exerts a powerful influence on individuals to conform.
- Overconfidence – Most successful people tend to be overconfident regarding their:
- Personal Performance – For example, a top executive development consultant asks senior executives to rate themselves against their peers and the vast majority rate themselves in the top 20%.
- Ability to Make Accurate Estimates – Behavioral economists often illustrate this point with simple quizzes. Time and again, participants walk into the same trap: rather than playing safe with a wide range, they give a narrow one and miss the right answer. Why? Most of us are unwilling and, in fact, unable to reveal our ignorance by specifying a very wide range.
- Ability to Control Events – We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do. We also tend to believe we have control to minimize potential problems in our decisions.
- Wishful Thinking – We tend to want to see things in a positive light and this can distort our perception and thinking so we sometimes make non-rational decisions based on what is pleasing to imagine instead of making decisions based on objective evidence. Studies have consistently shown that holding all else being equal people will predict positive outcomes to be more likely than negative outcomes.
- Comfort Zone – This is a range of thinking or behavior that is familiar or routine, a psychological space where we feel “at home” and comfortable. Most people have difficulty making decisions that are outside their comfort zone and, when faced with new circumstances, an unwillingness to change thought patterns that they have used in the past. Decision makers tend to display a strong bias toward alternatives that perpetuate the status quo.
- Cognitive Anchoring – When considering a decision, the mind either gives disproportionate weight to: a) the first information it receives and this becomes a baseline reference for subsequent thoughts and judgments; or b) the last information it receives and ignores or forgets older information.
- Repetition Bias and Source Amnesia – A willingness to believe what we have been told most often and by the greatest number of different sources. That is why a false statement from a non-credible source that is not at first believed can gain credibility over time. As the source is forgotten, the message and its implications gain strength.
- Sunk Cost Rationalization – Making current decisions in a way that justifies previous decisions, even when the consequences of the past decisions have proven shortcomings. For example, “We have already invested enormous resources; we can’t stop now.”
While it is impossible to eliminate all of these thinking errors, it is important for leaders to understand that they exist and try to compensate for them. The best defense is the leader’s awareness. Forewarned is forearmed.
Leadership decisions can be faster and smarter when there is a disciplined approach based on best practices. The eight practices presented in this article can provide a foundation for such an approach. How can you implement them?
The first step is to determine the value of improving the quality and pace of your leadership decisions. Would it be worth the effort? If there is agreement that the quality and pace could and should be improved, the next step is to decide what leadership decision practices you will adopt and why.
You can hold yourself accountable for implementing the 8 Leadership Decision Best Practices described in this article using a simple assessment like the one below.
How might you implement these eight practices? Don’t try to eat the elephant all at once. There is a lot to be considered.
Start with general agreement about the bottom-line value of improving the quality and pace of your leadership decisions. Would it really be worth the effort? If the answer is yes, the next step is to decide which leadership decision best practice(s) you will begin with.
If you would like to explore an efficient way to introduce the 8 Decision Practices to your organization, let’s connect.
LELAND RUSSELL is a global strategist and a pioneer in leveraging technology to accelerate action. He has deep expertise in 21st Century Leadership and has advised a wide range of leaders and organizations. He is known for EXTREME CREATIVITY.
“With his advanced ideas and powerful insights, Leland Russell made a tremendous contribution to the Project On National Security Reform.” — CEO, James R. Locher III
Leland founded GEO Group Strategic Services in 1991 to provide strategies and systems for achieving rapid results. GEO’s typical clients are CEOs, business unit leaders, and mission-critical teams, as well as directors of leadership, strategy, and organizational development.
Leland is the co-author of Winning In FastTime®, which has been endorsed by many top corporate and non-profit executives, senior military leaders, and best-selling authors, one of whom described it as “a required handbook for 21st Century leaders.”
Since its publication, the FastTime® approach has been successfully applied by hundreds of leaders in the Fortune 500, mid-size firms and non-profits. Leland’s forthcoming book, “Winning In FastTime II: A New Agenda for A New Century,” will be released in January 2017.
© 2016 Leland Russell | All Rights reserved