Exactly how to make effective decisions across teams of different sizes, experiences, locations, and with varying amounts of data.
You’re running all out but failing to reach a goal. Your team is grinding through tasks and decisions. If companies want to grow, compete, and win they need to accelerate decisions. It is estimated the average American makes 70 decisions per day, according to Professor Sheena S. Iyengar, at Columbia Business School. Given the frequency, the real need is for a practical approach to lead in a data-driven world.
Our research with 2,100 professionals concluded that data in high doses is harmful. It doesn’t speed decision-making, improve logic, or enable the best decision. In fact, while data is black and white, the truth is clearly gray. The gray comes from intangibles such as bias, risk appetite, history, stakeholders’ conflicting priorities, problem definition, and expectations: things we can’t know through numbers, but only through experience and intuition.
To make effective decisions across teams of different sizes, experiences, locations, and with varying amounts of data, we developed seven lessons to better faster decisions.
A decision represents a change—a moment in time when you are asked to consider a different path. Humans are not wired for change. Organizations do not resist change—people do. Successful leaders recognize the need to create the case for the decision so it resonates with individuals.
The Bechhard and Harris model considers four factors necessary for change to take place: dissatisfaction, vision, first steps, and resistance.
Dissatisfaction [D]: Dissatisfaction with the current state is central as the pain of not changing must be greater than the uncertainty that comes with change. The level of dissatisfaction can vary, but there must be an acknowledgment for the need to change.
Vision [V]: There needs to be a clear and shared picture of the future. A clearly articulated vision should evoke emotions such as security, comfort, aspiration, inspiration, or a sense of control.
First steps [F]: Individuals must see the first steps toward the vision so it is attainable and, more importantly, understand the specific role they will play in making the vision a reality.
Resistance [R]: It’s crucial to invest the time to understand the main reasons why people resist the change, e.g. fear of losing status, security, lack of trust in information or those promoting the change.
These conditions give rise to a change formula:
D × V × F > R
The three components on the left must be present in sufficient quantity to overcome the inherent resistance to change. This algorithm will not yield a mathematical result but serve as a guide for the leader where to focus to enable faster decisions.
Clarity on the outcome is foundational to effective decision-making. Framing provides boundaries to help interpret what you see, while being clear on what you need to deliver and guides how you spend your time. Disparate views on what is needed are at the root of the endless race to make a decision, which fractures into different paths across team members. The team mistakes action for outcomes, failing to have a common definition of winning.
The human fear of failing is tied to the feeling that once a decision is made it is not reversible. This inhibits agility in decision-making. In a shareholder letter, Jeff Bezos described the decision-making mindset as two types:.
Type 1 Decisions: Almost impossible to reverse. They are heavyweight decisions that take a great effort to undo, such as deciding to open a manufacturing facility, shutting down a product line, or entering into a merger.
Type 2 Decisions: Easy to reverse. The majority of decisions are Type 2. The reversibility of the decision relates to the assessment of the risk of the decision at the decision moment.
Basic geometry shows the shortest distance between points A and B depends on the underlying geometry. If the landscape is perfectly flat, then a straight line represents the shortest distance. In decision-making, the landscape is rarely flat and unencumbered.
Big decisions typically involve a set of stakeholders, many inputs, or the need to optimize for multiple outcomes. The decision landscape is therefore “curved” and jagged. In addition to the landscape, there are headwinds that could shift your plan, much like in sailing.
No sailboat can sail directly straight to traverse a path. However, by constantly making adjustments to capture the wind, the boat moves rapidly forward. These adjustments called tacking, regularly assess conditions. Similarly in business, navigating headwinds leads to minor refinements or pivots, ensuring the decision remains on a favorable tack.
Kids playing soccer resembles bees flying from one flower to the next. The whistle blows, the ball is kicked, and the kids fly off chasing the ball. In the end, everyone is exhausted from running all out, the score is usually a tie, and there is a treat for all the effort.
As the players and coaching become more seasoned, they gain skills and learn valuable lessons about passing, assisting, and playing their positions. Players substitute based on the competitor, score, and skill. The energy matches the moment.
When a new project launches, team members pounce with activity often confused with outcomes as people jump to meetings, emails churn, and data is pulled, tormented, and abused. At the end, people are fatigued, and there may be a good decision, a poor decision, or no decision at all.
The better plan is to have the right team match the moment and reach the minimum viable decision rather than burn resources and spin towards the “perfect” unachievable decision.
Knowing the strengths and weaknesses of a decision is much like pushing a product to its limits. In engineering, the objective is to determine the extreme stress that a material can withstand before breaking. Similarly, an extreme scenario is when you understand a recommendation at its limits.
In decision-making, extremes can be defined by examples:
These examples quickly apply the concept of stress testing to daily decisions. Each case represents an extreme point that highlights the boundary of a decision. This does not mean you would get increased funding or that a program would be stopped, but lack of understanding these boundaries exposes a gap in thinking.
In today’s collaborative culture, teams strive to optimize all inputs. Facts, opinions, and rumors are given equal weight. We incorporate all input while often fixating on the boss’s initial biased position. In the end, the process is exhausting, agility is compromised, and the decision is vanilla. Majority approval often leads to minority decisions.
To stop chasing the decision, seek consent ensuring major obstacles are addressed. Satisfying all inputs leads to unnecessary compromise. Achieving thoughtful consent respects the opportunity and the business rather than the hierarchy and uncertainty.
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