Decision Making – Occam's Edge

The cultural norm in business today is all about building consensus before making a decision. Sounds lovely but building consensus is an art and it frequently creates so much complexity. The simple reality is that the goal of decision making should be for leaders to review the facts and relevant opinions and then make a quick decision. The science of decision making. The truth is that good decision making is both an Art and a Science. You won’t really know what the right decision is until after you have actually made it. All you are doing is making a choice from a series of options. The hard part comes after your choice; making it work.

Leaders are responsible for creating and sharing an organized decision-making process. That sounds somewhat formal, but it doesn’t mean that it has to be rigid, cumbersome, or time consuming. It is simply an understandable framework for the organization to establish the basic “rules of the road” when it comes to making decision. Decision rights, delegation of authority, and RACI (Responsible, Accountable, Consulted, Informed) Models are all considered as great tools to avoid chaos and confusion.

Having a decision-making process is crucial for all organizations. However, if it is too cumbersome and time consuming it will stall the organization. Too simple and you run the risk of making the wrong choice. In both cases the impact shows up in outcomes, engagement, and overall effectiveness.

Any decision-making process should include clear objectives about the situation and incorporate input, insights and knowledge from key stakeholders. In thinking about key stakeholders keep it simple by considering three groups of people; Who cares about the decision? Who has knowledge about the issues and alternatives? and who needs to agree to the decision?

These three groups of stakeholders not only help you make the right choice, but they also help in making sure that the decision is implemented. Their participation in the process engages their commitment to see it through, which is probably more important than the decision itself. As they say, an average choice well executed is often better than a good choice poorly executed.

Making choices and executing them go hand in hand. What is important is the commitment to the decision. Commitment is different from consensus. Consensus is a general agreement, shared by all the stakeholders, about a decision. Commitment is a promise to make the decision a success. Commitment is saying, whether you agree with the choice or not, that you will personally do everything you can to make it a successful.

Engaging the three groups of stakeholders to gain commitment can be difficult. We use four exercises to help with the visualization and ownership of the decisions to be made. The first is to imagine and share as a team what success looks like for of each decision alternatives, post implementation. Think in vivid color. Make it the art of the possible. The second is to think about the unintended consequences of the choice. What might be the second and third implications of making the decision. Consider the impact on customers, employees, standard operating procedures, technology, etc. A third exercise is to think about failure. How could this decision make things worse, what could go wrong, what would be the implications? By articulating the failure scenario, we begin to understand potential risks, develop balance in the execution, and gain clarity on the path forward. Finally, we use an assumption-based exercise to help build commitment. Asking the question “What would need to be true in order for this choice to be a success?” This is a simple yet effective way to work through assumptions that stakeholders are making when considering the options in front of them.

Using our three stakeholder groups and four exercises can help to build commitment. Even when making unpopular decisions this method allows for due process; listening, inclusion and consideration of alternatives which leads to better choices and improved execution. Moreover, these techniques keep the decision-making process relatively simple and avoids a complex consensus driven approach.

The final takeaway: The cultural norm of today may be to gain consensus but that doesn’t equate to successful and actionable decision making. What does? Commitment to support a decision once made, regardless of personal views and doing all that needs to be done as a team to implement that decision is the key to success.

Most organizations go through a formal decision-making process when they allocate resources to a particular initiative or when they develop an annual capital plan. Whenever we chose to allocate money or people to something, organizations typically follow a familiar three step process.

Learn

During the learn phase we are gathering data, building knowledge, and curating information on both the problem at hand and potential solutions. Our goal is to articulate the problem, offer a series of potential solutions and maybe articulate a recommendation or a preferred option.

To achieve this, first we spend time to learn about the presenting issue. We conduct extensive research, do analysis, run focus groups and interviews to make sure we fully understand the issues and problems that need to be solved. In a nutshell, the goal is to figure out who our customer is, what needs they have, and how best can we serve them.

Second, once we have identified the issues, we can begin to look at alternative solutions. We analyze the various merits of each solution and develop a cost benefit analysis of each option so we can think about how to best make a recommendation. If our solution includes a third party, for example a piece of technology or software, we will likely do additional diligence to measure things like functionality, integration, and relationships. We’d be inclusive of different stakeholder groups so that we had the opportunity to obtain a broad set of inputs on the final set of answers.

Finally, we prepare our presentation with our findings and recommendation.

Decide

Decision rights for capital spending typically sit with an executive team or a subset thereof. The team doing the “learning” will make their presentation to the executive team and make their recommendation. Usually there is some back and forth discussion, maybe the team has to go away and answer some additional questions but eventually the decision is made to either support or not support the capital allocation.

Act

Once approval has been obtained the team can then move onto the implementation of the solution. The work to solve the problem can now begin.

The Problem

As you can imagine this governance and decision-making process takes a significant amount of time. There are four distinct problems with this approach.

First, with a fast-paced business environment and innovation driving new ways of working, new technologies, and new possibilities it’s more than possible to create capabilities that don’t meet future needs.

Second, the learn phase never quite achieves what you intend it to. There always seems to be a series of “gotchas’ during the act phase. These lead to budget overages, time delays, and the reduction of scope. This is because we don’t know what we don’t know and only through experience can we solve this paradox.

Third, the learn phase doesn’t typically consider the difficulty in driving adoption of a new capability. Skills may need to be developed, behaviors changed, and reliance on old operating procedures need to be undone.

Finally, according to the National Training Laboratory, action-based learning results in three times the retention and understanding as passive based learning, Acting therefore contributes more to learning than simply reading or researching.

An Alternative

One of our principles is to move into action sooner rather than later. We encourage clients to learn by doing so they can better understand the presented issues, potential solutions, and behaviors that will need to be changed to drive adoption of the new capability.

Another principle we live by is to break down a problem into more manageable chunks and work to solve each of them over time. This is grounded in the fact that you want to avoid any kind of “Big Bang” implementation. Better to implement a series of smaller changes rather than one large one.

We prefer a series of small success rather than a death march that results in mediocrity.

Our suggestion therefore is to change the governance and decision-making process to help improve adoption, reduce risk, and create momentum

With the overall goal in mind, work towards taking smaller steps, learn as you go, and then decide which appropriate steps to take next. This iterative approach allows you to uncover and resolve what you don’t know about what you don’t know.