Leader-as-Decision-Maker: Decisions Matter

As decisions go, so does a company.

Posted Sep 22, 2014

The first thing I say is that this process isn’t about solving problems; it’s about decision making. When we think about typical problem solving, it involves a series of steps.

  1. Identifying the problem…which involves making a decision on what the problem is.
  2. Finding a solution…which means making a decision on what will solve the problem.
  3. Implementing a solution…which means making a decision on how to put the plan into action.

Therefore, when we talk about ‘problem solving,’ what we really mean is ‘decision making.’

The Importance of Decision Making

Is there any more crucial capability for a business leader or team to have than effective decision making? Are there ever any easy decisions (certainly not important ones)? The fact is that, of all the experience, knowledge, and skill sets that you bring to your company, the most valuable is the ability to make sound decisions.

Why? The decisions that you make determine the direction that your company goes and, ultimately, its success or failure. So why do you make good or poor decisions? And what is your ‘hit’ and ‘miss’ rate for decisions? It’s quite simple: As decisions go, so goes a company.

What is Decision Making?

We’ve now established the importance of decision making in a business. And, presumably, we all know at an intuitive level what decision making is. But I believe that the best decision making occurs at a conscious and deliberate level. And to bring this process to consciousness, and to ensure a shared understanding, let me tell you how I think of decision making.

Most basically, it is the process of making a choice among available alternatives. Decision making involves weighing the benefits and costs of competing alternatives. Many decisions aren’t decisions at all because they are self-evident; one option has demonstrably greater benefits and fewer costs than others. What makes decision making so difficult is when those available alternatives have a fairly equal number of costs and benefits or it’s difficult to weigh their importance.

Another challenge of decision making is that you are required to attempt to predict the future outcome of each alternative. The problem here is that people are notoriously bad at gazing into our crystal balls and making accurate predictions (think Iraq War, The Great Recession).

The bottom line of decision making involves determining which potential decision will offer the best possible outcome based on what we know now. That decision then catalyzes a course of action that, over time, will illuminate whether the decision was, in retrospect, a good one.

Avoid Pitfalls

One of the best ways to increase the chances that you will make a bad decision is to identify and minimize the pitfalls that are common when one or more people are confronted with an important decision.

Get the right people involved. Too often, important decisions are made by one person or a small and homogeneous group of people. They look through the same lens that ensures a particular decision. Or, there is insufficient knowledge, experience, or wisdom to make a sound decision. Or, the decision makers have a specific bias toward one alternative, guaranteeing its selection despite it not necessarily being the best option.

You can circumvent this pitfall by including people with diverse perspectives, different knowledge bases and skill sets, and who can fulfill different roles (e.g., devil’s advocate, consensus builder, BS monitor). These people will ensure that the decision is examined from every possible angle, thus increasing the chances of a good decision being made.

Collect all relevant information. Another pitfall of decision making involves a lack of key information that can result in rendering the best decision. Important information can be missed for several reasons. First, one of the decision makers has already, in their mind, made the decision and excludes information that contradicts that predetermined decision. Second, there is no one involved in the decision with the knowledge or experience to provide that information (see Get the Right People Involved above). Third, the questions being asked are either incorrect or lack the depth or breadth that would ensure the need for essential information to be brought to light. Fourth, time pressures to make the decision may preclude necessary information from being thrown into the mix.

A dearth of information can be mitigated by having the right people involved, looking at the decision from many different angles, and asking the right questions.

Don’t decide too quickly. A rush to a decision can cause you to make a decision before it’s ready to be made. Also, what appears to be an easy decision can also cause a premature conclusion to the decision-making discussion when further exploration may uncover important perspectives and information that would result in a different and potentially better decision.

Important decisions are best not made in haste. Rather, they emerge when allowed to percolate within individuals and among a group. Give yourself time, both in active discussion and quiet contemplation, to allow the best decision to arise naturally.

Be realistic. A key part of the decision-making process involves NOT looking at the decision through ‘rose-colored glasses,’ in other words, to see it for what it is, not for what you would like it to be. There are a number of cognitive biases that cause us to be unrealistic in how we perceive, interpret, evaluate, and, ultimately, make decisions.

As part of your decision-making calculus, you should consciously separate your wishful thinking from your critical thinking. Also, look at the worst-case scenarios of each alternative and weigh their likelihood. The more grounded you can be in what is realistic, the better chance you have of making a decision that actually plays nice with reality.

Evaluate the process. A mistake that many individuals and companies make is, once a decision is made, to put it behind them. Yes, as the well-known quote goes, “Those who cannot learn from history are doomed to repeat it.”

An essential part of the decision-making process is to circle back after the decision has been made and new information about its efficacy is available. With the benefit of hindsight, you can do a ‘forensic analysis’ and determine what you did well and what you missed in your recent decision. You can then use the lessons learned from this evaluation to improve decision making in the future.

Ultimately, there is no way to be sure that the so-called right decision has been made before it has been made and acted on. All you can do is ensure that the process of decision making is deliberately and painstakingly executed. That doesn’t guarantee the best decision, but it sure makes it a lot more likely.