By Mike Myatt
The
one thing everyone on the planet has in common is the undeniable fact we’ve all
made our fair share of regrettable decisions.
Show me someone who hasn’t made a
bad decision and I’ll show you someone who is either not being honest, or
someone who avoids decisioning at all costs. Making sound decisions is a skill
set that needs to be developed like any other. As a person who works with CEOs
on a daily basis, I can tell you with great certainty all leaders are not
created equal when it comes to the competency of their decisioning skills.
Nothing will test your leadership mettle more than your ability to make
decisions.
Why
do leaders fail? They make poor choices that lead to bad decisions. And in some
cases they compound bad decision upon bad decision. You cannot separate
leadership from decisioning, for like it or not, they are inexorably linked.
Put simply, the outcome of a leader’s choices and decisions can, and usually
will, make or break them. The fact of the matter is that senior executives who
rise to the C-suite do so largely based upon their ability to consistently make
sound decisions. What most fail to realize is while it may take years of solid
decision making to reach the boardroom, it often times only takes one bad
decision to fall from the ivory tower. As much as you may wish it wasn’t so,
when it comes to being a leader you’re really only as good as your last
decision.
Here’s
the thing – even leaders who don’t fail make bad decisions from time-to-time.
When I reflect back upon the poor decisions I’ve made, it’s not that I wasn’t
capable of making the correct decision, but for whatever reason I failed to use
sound decisioning methodology. Gut instincts can only take you so far in life,
and anyone who operates outside of a sound decisioning framework will
eventually fall prey to an act of oversight, misinformation, misunderstanding,
manipulation, impulsivity or some other negative influencing factor.
The
first key in understanding how to make great decisions is learning how to
synthesize the overwhelming amount incoming information leaders must deal with
on a daily basis, while making the best decisions possible in a timely fashion.
The key to dealing with the voluminous amounts of information is as simple as
becoming discerning surrounding the filtering of various inputs.
Understanding
that a hierarchy of knowledge exists is critically important when attempting to
make prudent decisions. News Flash – not all inputs should weigh equally in
one’s decisioning process. By developing a qualitative and quantitative
filtering mechanism for your decisioning process you can make better decisions
in a shorter period of time. The hierarchy of knowledge is as follows:
Gut Instincts: This is an
experiential and/or emotional filter that may often times have no current
underpinning of hard analytical support. That said, in absence of other
decisioning filters it can sometimes be all a person has to go on when making a
decision. Even when more refined analytics are available, your instincts can
often provide a very valuable gut check against the reasonability or bias of
other inputs. The big take away here is that intuitive decisioning can be
refined and improved. My advice is to actually work at becoming very
discerning.
Data:
Raw data is comprised of disparate facts, statistics, or random inputs that
in-and-of-themselves hold little value. Making conclusions based on data in its
raw form will lead to flawed decisions based on incomplete data sets.
Information: Information is
simply an evolved, or more complete data set. Information is therefore derived
from a collection of processed data where context and meaning have been added
to disparate facts which allow for a more thorough analysis.
Knowledge: Knowledge is
information that has been refined by analysis such that it has been
assimilated, tested and/or validated. Most importantly, knowledge is actionable
with a high degree of accuracy because proof of concept exists.
Even
though people often treat theory and opinion as fact, they are not one and the
same. I have witnessed many a savvy executive blur the lines between fact and
fiction resulting in an ill advised decision when decisions are made under
extreme pressure and outside of a sound decisioning framework. Decisions made
at the gut instinct or data level can be made quickly, but offer a higher level
of risk. Decisioning at the information level affords a higher degree of risk
management, but are still not as safe as those decisions based upon actionable
knowledge.
Another
aspect that needs to be factored into the decisioning process is the source of
the input. I believe it was Cyrus the Great who said “diversity in counsel,
unity in command” meaning that good leaders seek the counsel of others, but
maintain control over the final decision. While most successful leaders
subscribe to this theory, the real question in not whether you should seek
counsel, but in fact where, and how much counsel you should seek. You see more
input, or the wrong input, doesn’t necessarily add value to a decisioning
process. Volume for the sake of volume will only tend to confuse matters, and
seeking input from sources that can’t offer significant contributions is likely
a waste of time. Two other issues that should be considered in your decisioning
process as they relate to the source of input are as follows:
Credibility: What is the
track record of your source? Is the source reliable and credible? Are they
delivering data, information or knowledge? Will the source tell you what you
want to hear, what they want you to hear, or will they provide the unedited
version of cold hard truth?
Bias:
Are there any hidden and/or competing agendas that are coloring the input being
received? Is the input being provided for the benefit of the source or the
benefit of the enterprise?
The
complexity of the current business landscape, combined with ever increasing
expectations of performance, and the speed at which decisions must be made, are
a potential recipe for disaster for today’s executive unless a defined
methodology for decisioning is put into place. If you incorporate the following
metrics into your decisioning framework you will minimize the chances of making
a bad decision:
Perform a Situation Analysis: What is
motivating the need for a decision? What would happen if no decision is made?
Who will the decision impact (both directly and indirectly)? What data,
analytics, research, or supporting information do you have to validate the
inclinations driving your decision?
Subject your Decision to Public
Scrutiny:
There are no private decisions. Sooner or later the details surrounding any
decision will likely come out. If your decision were printed on the front page
of the newspaper how would you feel? What would your family think of your
decision? How would your shareholders and employees feel about your decision?
Have you sought counsel and/or feedback before making your decision?
Conduct a Cost/Benefit Analysis: Do the
potential benefits derived from the decision justify the expected costs? What
if the costs exceed projections, and the benefits fall short of projections?
Assess the Risk/Reward Ratio: What are all
the possible rewards, and when contrasted with all the potential risks are the
odds in your favor, or are they stacked against you?
Assess Whether it is the Right Thing To
Do:
Standing behind decisions that everyone supports doesn’t particularly require a
lot of chutzpah. On the other hand, standing behind what one believes is the
right decision in the face of tremendous controversy is the stuff great leaders
are made of. My wife has always told me that “you can’t go wrong by going
right,” and as usual, I find her advice to be spot on. There are many areas
where compromise yields significant benefits, but your value system, your
character, or your integrity should never be compromised.
Make The Decision: Perhaps most
importantly, you must have a bias toward action, and be willing to make the
decision. Moreover, you must learn to make the best decision possible even if
you possess an incomplete data set. Don’t fall prey to analysis paralysis, but
rather make the best decision possible with the information at hand using some
of the methods mentioned above. Opportunities and not static, and the law of
diminishing returns applies to most opportunities in that the longer you wait
to seize the opportunity the smaller the return typically is. In fact, more
likely is the case that the opportunity will completely evaporate if you wait
too long to seize it.
Bonus - Always have a back-up plan: The real test of a
leader is what happens in the moments following the realization they’ve made
the wrong decision. Great leaders understand all plans are made up of both
constants and variables, and that sometimes the variables work against you.
Smart leaders always have a contingency plan knowing circumstances can
sometimes fall beyond the boundaries of reason or control – no “Plan B” equals
a
-2011-TM.png){kind=logo}