Improve the quality of your leadership decisions

Decision science can help you get better at making tough calls.

By Eric McNulty
November 29, 2016
Doors. Doors. (source: Pixabay)

Several years ago, I was part of a small team charged with overhauling the e-commerce site of an established company. We developed a strong perspective on the overarching taxonomy for the site after looking at overall market trends and best-of-breed sites. Unfortunately, the product groups whose merchandise populated the site had a distinctly different view based largely on internal organizational boundaries, hierarchies, loyalties, and incentives. At the end of the day, it was their revenue on the line. They ultimately paid for the site (and our salaries). And these product groups had far more political clout than any centralized service functions such as ours. In short, although the redesign had been assigned to us, the product groups had enormous influence over the ultimate decisions on organization and visual presentation.

The debate persisted and ultimately escalated to the CEO. Knowing that we were seriously outgunned, we decided to move our argument away from our opinion versus their opinion. We would have lost that battle. Instead, we proposed that data should drive the decision. We knew that the data on search and user pathways supported our approach; customers did not care about how the product groups divided the world. Customers shopped based on their needs. The CEO agreed with our proposition and, in the end, our approach. The relaunch was a great success with improvements in every key metric.

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The point is not that my team was right (although it felt awfully good). It is that we, albeit inadvertently, introduced a bit of decision science into the equation. Unfortunately, although decision-making always makes it onto the list of core competencies for leaders, formal training in decision-making is rarely offered. My team relied on our experience, intuition, and the advice of the outside experts who were helping us with the site. We agreed that our team’s recommendation would be reached by consensus. None of that was necessarily good or bad in and of itself. The problem is that none of it was particularly intentional or disciplined. We were as much lucky as smart.

Since that time, I have further explored the social, cognitive, and other factors that determine the quality of the decisions leaders make. I learned about the emerging wisdom from the study of decision science about how to improve outcomes by approaching decisions large and small more methodically.

Common decision-making mistakes

One of the most frequent pitfalls in learning to make better decisions is outcome bias. This is the tendency to equate a good outcome with a good decision process and a bad outcome with poor decision-making. You might do everything right yet get a poor outcome resulting from factors outside of your control. Or you might fumble through the process and have everything turn out better than expected. With the many variables in your operating environment, there will never be an automatic correlation between process and outcome. Even the most highly skilled athletes sometimes lose.

Separating your analysis of how decisions were made from the end result is the first step in becoming more disciplined about the decision-making process. It will help you improve critical skills necessary for getting it right more consistently. It will also help you better diagnose where things went wrong when the outcome isn’t what you hoped.

Another common mistake is failing to grasp all of the repercussions of your decision. Often ascribed to an unavoidable law of unintended consequences, repercussion blindness can result from failing to consider or solicit input from all of the relevant stakeholders or bowing to pressure from a particularly vocal constituency.

For perspective, I was with leaders in Louisiana during the response to the Deepwater Horizon oil spill response. After one contentious meeting between local and federal officials, President Obama declared that he would triple the manpower involved in the response. That played well in the media and mollified the local parish presidents and others who had been complaining about the efforts by the government. However, one of the operational leaders I was with said that the decision told him that it was now all about “response theater.” Why? There actually wasn’t work for three times the people and there had been no consideration of how they’d be trained, where they’d be housed, or how they’d be fed. In other disasters, Obama had generally shown great deference to subject matter experts and a penchant for evidence-based decision-making. In this case, though, he created a new problem even as he thought he’d solved another.

A third frequent error is failing to articulate decision-making roles and models. This may seem a bit wonky, but research by Bain and Company has shown that clarifying decision accountability leads to improved performance. For example, in the original example of the e-commerce site cited above, conflict arose because it was not clear which decisions we in marketing and technical development were empowered to make versus those where we were expected to make recommendations to the product teams. This confusion led to delays, ill will, and distraction from the problem which should have been our collective focus—making the best site possible—as we battled for primacy.

The decision model is also important: is the team lead going to make the call alone? Or will she solicit the views of members and then render a decision? Or will the team take a vote? Or will the team debate until consensus is reached? Each of these decision-making models has strengths and weaknesses. Each may be appropriate depending upon the circumstances—and none is right for every situation. When everyone understands and accepts the decision model, they know their role and are more likely to accept whatever verdict is rendered. When you violate someone’s expectations of participation, you sow the seeds of resistance and even subterfuge.

Achieving decision-making discipline

Among those I’ve come to know in the decision world is Carl Spetzler, co-founder and chairman of the consulting firm Strategic Decisions Group. He’s made a career of helping executives improve decision quality and has even helped bring decision education to teens through the Decision Education Foundation.  In a book written with two of his colleagues, Decision Quality: Value Creation from Better Business Decisions, Spetzler lays out numerous ways to improve even the most complicated conundrums. With great respect for and necessary apologies to Spetzler and other decision experts, here is my distillation of a methodology for improving your leadership decisions and avoiding common pitfalls:

Are we asking the right question?

You may find yourself confronted with a choice, as did the CEO in our e-commerce site redesign. Before picking A or B, stop to consider if that is indeed the decision that needs to be made. The CEO wisely realized that the important decision was not which of us was right, but rather what would best meet the needs of customers. Spetzler calls this having an “appropriate frame.” The right frame provides constructive focus and helps mitigate distortions arising from ego, narrow vision, and fear of moving out of your comfort zone. Get the frame wrong and things are likely to cascade from bad to worse.

Are the right people at the decision-making table?

Every decision has stakeholders. Their input can help you develop a full range of creative options and a richer understanding of the consequences of your choices. Be open to honest feedback—even when it isn’t what you want to hear. When people feel that they have truly been heard, they are more open to compromise and engage in creative problem solving. President Obama would have been well-served to have consulted operational experts before making his commitment in the Gulf.

You may want to designate someone as the official “Devil’s Advocate” to present a forceful counterargument. And be sure that everyone knows their role—decider, recommender, etc.—and the decision-making model in use.

Are we looking at all of the options?

It can be easy to default to a dichotomous choice: A or B. That narrows your focus—at times too much. Probe to find alternate choices, as time allows, to ensure that you understand and consider all aspects of the question at hand. And don’t forget that “do nothing” is always an option. Great questions to widen the aperture on possibilities here are: “What are we missing?” and “What else might we consider?”

Are we clear on the fundamentals?

One of the most important jobs for leaders is to achieve clarity around purpose—the problem the customer is hiring you to help them solve; values—the bedrock principles that govern how you engage with stakeholders; and performance—how you will measure success. These equate to what management-thinking Peter Drucker called “boundary conditions,” an essential element of effective decision-making. Where there is confusion, disagreement, or misperceptions of these fundamentals, you will create skewed options and sub-optimal outcomes.

Any number of recent scandals, such as the Volkswagen emissions debacle that has cost it billions, can be tied to fuzzy fundamentals where a sales goal or earnings target obscured other important considerations. It is true as well with bad business decisions, such as Microsoft’s acquisition of Nokia, which it wrote down to the tune of almost $8 billion in 2015. Several thousand people lost their jobs. Now-CEO Satya Nadella, who objected to the original purchase, earned praise for the decision to admit its failure and move on.

Are we following the evidence?

Spetzler cites relevant and reliable information as an essential component of effective decision-making. I could not agree more. However, I like to add a question that I learned from Gary Loveman when he was CEO of Harrah’s Entertainment. Loveman is a data-driven executive who used the question “Do we think or do we know?” to differentiate verifiable evidence from assumptions and wishful thinking. Leaders are forward-looking and so must speculate a bit. However, it is important not to let those hypotheses be misperceived as facts. Keep asking questions that challenge your worldview.

Are we in the right gear?

The desire for decisiveness can lead to an overemphasis on speed. There are times when a decision must be made right now. There are also many times when it pays to slow things down so that you develop creative options and consider their implications. Too fast is no better than too slow. The methodology I present here is one way of establishing pacing as a variable in the decision process because it provides a series of steps to follow.

What gear is right? Life-and-death decisions must go fast—thankfully, most of us face few of those, although treating everything like a make-or-break call is a common mistake. A decision that can be easily repealed can be made faster than one that can never be revoked, for example. Simply asking the question about how fast you should be going can help you pause to calibrate your efforts appropriately.

Are we committed to action?

A decision that fails to catalyze activity isn’t worth much. This is harder than it sounds because deciding and doing are actually two separate cognitive functions. To bridge the gap, ask yourself and your team implementation questions: what resources do we need to carry out this decision? How must we do business differently for this decision to have its intended effect?

You may need to have people vocalize their support for the decision in order to prime their actions. It is too common, particularly in large organizations, for people to nod “yes” in the conference room only to get into the hallway and mutter “not in a million years.” They may even actively work to undermine your decision. Go around the table, making eye contact with each person, and ask them to verbally confirm that they are on board and understand their next steps. It is hard for people to back away once they have made a public commitment.

Your decisions will be the hallmark of your success as a leader. They can build trust and credibility. Modeling a transparent, intentional, and disciplined process for making those decisions is an important component of your leadership platform as it helps you build decision-making capacity and capability throughout your organization. You won’t make the right call every time, but insights from decision science can greatly improve your odds.

Post topics: Business